Question

Project 7: Evaluating Recruiting Sources

The purpose of this exercise is to (a) conduct an in-depth analysis of various recruitment sources and (b) recommend the ideal mix of sources for an organization.

	Recruitment Sources
	Company Web Site	Employee Referrals	In-Store Kiosk	Staffing Service
Applicants	1400	3362	2963	4236
Qualified Candidates	536	1564	1315	1598
Hires	204	1026	652	378
6 Mo Retention	124	819	502	310
1 Yr Retention	92	703	358	284
Above Avg Perform	92	544	302	234
Qualification %	38%	47%	44%	38%
Hiring %	15%	31%	22%	9%
6 Mo Retention %	61%	80%	77%	82%
1 Yr Retention %	45%	69%	55%	75%
Above Avg Perf %	45%	53%	46%	62%
Fixed Costs
Setup (per location)	$20,000	$30,000	$20,000	$40,000
Number of locations	25	25	25	25
Program Costs (Co.)	$250,000	$250,000	$1,000,000	$250,000
Variable Costs
Materials per Applic.	$5.00	$10.00	$1.00	$5.00
Processing per Applic.	$30.00	$30.00	$15.00	$15.00
Added cost per Hire	$20.00	$200.00	$20.00	$0.00
Orientation/Train cost	$2,000	$2,000	$2,000	$1,000
Total Variable Costs	461,080.00
Total Cost	$1,211,080.00
Cost per hire	$5,936.67
Cost per 6 mo survival
Cost per 1 yr survival
Cost per above avg performer

Using the data above, compute the following:

• Cost per hire
• Cost per 6 month of survival
• Cost per 1 year of survival
• Cost per above average performer

What is your best source and why?

What is the worst source and why?

If no one source could supply more than 40% of the total number of hires needed, what mix of recruitment sources would you recommend and why?

Answer 1

In the given data there are 4 recruiting sources given. to find which is the best, we will compute cost for each source.

Now we compute Total Cost, Cost per Hire, Cost per 6 month Survival, Cost per 1 year Survival and Cost per Average Performer for each of the recruiting sources.

	Company Website	Referrals	Instore Kiosk	Staffing Service
Applicants	1400	3362	2963	4236
Qualified Candidates	536	1564	1315	1598
Hires	204	1026	652	378
6MO Retention	124	819	502	310
One year retention	92	703	358	284
Above average perform	92	544	302	234
Qualification%	=0.38	=0.47	=0.44	=0.38
Hiring%	=0.15	=0.31	0.22	0.09
6MO Retention%	0.61	0.8	0.77	0.82
One year retention%	0.45	0.69	0.55	0.75
Above average perform%	0.45	0.53	0.46	0.62
Fixed costs
Setup (per location)	20000	30000	20000	40000
Number of locations	25	25	25	25
Program costs	250000	250000	1000000	250000
Variable Costs
Materials per application	5	10	1	5
Processing per application	30	30	15	15
Added cost per hire	20	200	20	0
Orientation/Train cost	2000	2000	2000	1000
Total variable cost	=(B21+B22)xB2+B23xB4+B24xB4	=(D21+D22)xD2+D23xD4+D24xD4	=(E21+E22)xE2+E23xE4+E24xE4
Total Cost	=B25+B18+B17xB16	=C25+C18+C17xC16	=D25+D18+D17xD16
Cost per hire	=B27/B4	=C27/C4	=D27/D4	=E27/E4
Cost per 6 mon survival	=$B$27/B5	=$C$27/C5	=$D$27/D5	=$E$27/E5
Cost per one year survival	=$B$27/B6	=$C$27/C6	=$D$27/D6	=$E$27/E6
Cost per above avg perform	=$B$27/B7	=$C$27/C7	=$D$27/D7	=$E$27/E7

	Company Website	Referrals	Instore Kiosk	Staffing Service
Applicants	1400	3362	2963	4236
Qualified Candidates	536	1564	1315	1598
Hires	204	1026	652	378
6MO Retention	124	819	502	310
One year retention	92	703	358	284
Above average perform	92	544	302	234
Qualification%	38%	47%	44%	38%
Hiring%	15%	31%	22%	9%
6MO Retention%	61%	80%	77%	82%
One year retention%	45%	69%	55%	75%
Above average perform%	45%	53%	46%	62%
Fixed costs
Setup (per location)	$20,000.00	$30,000.00	$20,000.00	$40,000.00
Number of locations	$25.00	$25.00	$25.00	$25.00
Program costs	$2,50,000.00	$2,50,000.00	$1,000,000.00	$2,50,000.00
Variable Costs
Materials per application	$5.00	$10.00	$1.00	$5.00
Processing per application	$30.00	$30.00	$15.00	$15.00
Added cost per hire	$20.00	$200.00	$20.00	-
Orientation/Train cost	$2000.00	$2000.00	$2000.00	$1000.00
Total variable cost	$461080.00	$2,391,680.00	$1,364,448.00	$462,720.00
Total Cost	$1,211,080.00	$3,391,680.00	$2,864,448.00	$1,712,720.00
Cost per hire	$5936.67	$3,305.73	$4,393.33	$4,531.01
Cost per 6 mon survival	$9766.77	$4,141.25	$5,706.07	$5,524.90
Cost per one year survival	$13,163.91	$4,824.58	$8,001.25	$6,030.70
Cost per above avg perform	$13,163.91	$6,234.71	$9,484.93	$7,319.32

Therefore, from the above results, the best survivals undoubtedly is referrals as the Cost per Hire is least ($3,305.73) and no. of recruits is maximum and retention is good.

The worst source of recruiting is company website as the Cost per Hire is highest due to low conversion and absolute no. of recruits and retention is lowest through this channel.

To calculate mix of sources of recruiting, we need to determine the lowest cost of hiring and retention. Hence the two best sources which must account for 40% hiring each are referrals and staffing service and the remaining 20% should be done by in store kiosks. Since the 1 Year retention cost of in store kiosks is higher than staffing service it is not preferred over staffing service.

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