The Talent Business Model with a Talent Acquisition Strategy Template
Any leader with P&L accountability understands that tracking margin (i.e., the difference between your revenue and what it cost you to earn that revenue) is fundamental to your economics. Margins of 60%+ for tech companies are what provides them with incredible valuations because the “talent acquisition spend” for adding the 10,000th customer isn’t much more than adding the 1,000th customer. If you believe that the economics and ROI of your talent business model are as crucial as your core business model, integrating “recruiting metrics that matter” may offer a fresh perspective on analyzing the ROI of your talent business model.
Business Metrics for Recruiting and Metrics for Recruiters
An entrepreneur starting a business uses metrics like ‘CAC’ (customer acquisition cost) and LTV (lifetime value of that customer). This entrepreneur ponders the “recruiter metrics” equivalent: how much it takes to get a candidate and the return they offer before they leave. This perspective transitions to a measure of acquisition and a measure of value for those retained.
Applying these metrics to your talent business model, equipped with a “recruitment marketing metrics that matter” lens, can pinpoint where to allocate your HR budget for optimal ROI. Consider your CAC as your candidate and talent acquisition cost.
- How much does it cost your business to employ one person, factoring in both direct and “internal mobility metrics”?
- Your LTV represents the long-term value of your talent. What’s the average duration of new hires in the business?
- Are many of your leadership roles occupied by internal talent, which incurs a lower acquisition cost than external recruitment? How frequently are your new hires promoted early?
- For professional service firms, the time to promote might be a significant performance differentiator. Ever wondered how AI could reduce your Candidate Acquisition Costs?
Look at how AI drives down your Candidate Acquisition Costs?
Three Factors that Influence Your CAC:
- Direct recruitment costs: How many recruiters are you employing?
- The productivity and speed of your recruitment team (its scalability): How many candidates do they screen within specific periods?
- The layers of assessment in your recruitment and their costs: Are you employing CV screening, phone screening, video interviews, 1:1 interviews, panel interviews, group assessments, coffee chats?
Each assessment layer, some backed by science and others less so, contributes to your CAC. We evaluated CAC for our clients by contrasting their ‘old’ recruitment process with the efficiency of using our AI for screening and assessment, considering the “metrics for recruiters.”
The results are genuinely impressive.
PHAI (PredictiveHire AI) can screen 100,000 applicants in roughly six hours, a task that would take a team of 5 recruiters with traditional “recruiter metrics” 476 working days to accomplish. This is a staggering 600 times faster. Assumptions include every recruiter screening for 7 hours a day, CV screening taking 10 minutes per applicant, and 10% of those CVs leading to 30-minute phone screens. These speed differences become even more pronounced with increasing numbers because, unlike humans, technology can scale efficiently.
The dramatic differences in cost and time for handling 1,000 and 100,000 applicants make the case for AI in recruitment undeniable for large enterprises and governments. It’s even compelling for smaller businesses with more modest volumes.
Suggested Reading
https://sapia.ai/blog/hr-job-metrics/
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