Recruit+Onomics

Recruitment is process of identifying the target market-pool of candidates for the organization’s product-Employee Value Proposition undertaken by the marketer/recruiter.

Selection is the filtering of the target market into sub groups such that we have the primary and secondary target audience is well defined thereby giving us the suitable/unsuitable candidate pool.

Demand Theory of recruitment would define the relationship between the recruiter’s desire to pay the price of EVP and the availability of goods-the talent. So if the talent is available in abundance then the price that he willing to pay, being the EVP, would automatically fall hence displaying the inverse relationship. Similarly, for the candidate if there are jobs available in abundance then the demand for a certain job would be low and hence the price demanded i.e. EVP would be high.

The Supply theory would come into play as the importance of filling the position/price of talent=EVP/opportunity cost of talent=Competitive Advantage increases, the recruiter increases the talent as that fetches him a higher overall return. Hence, the logic of giving priority to those goods which make more money over those which do not make as much, applies here.

Elasticity of recruitment = %change in demand for talent/% change in business environment
So the elaticity of recruitment is the responsiveness of the demand for talent to the chnages in the business environment.

Applying the funda of innovation economics here, the central goal of the economic policy (in this case recruitment strategy) should be to spur higher productivity and greater innovation. This when applied to recruitment would mean meeting the recruitment metrics effectively and have better and more innovative ways of achieving the same. Secondly, this form of economics also says that markets (organizations/recruiters) relying on price signals, in this case salary, alone will not be as effective. Hence, the EVP has to be packaged as a bundle of offerings and not just salary alone. The recruitment/marketing strategy (Employee Value Proposition) would then be created based on the need identification of the end customer which would be needs of the prospective employee. The Marketing Strategy would attempt to ensure that there are no gaps in the customer’s demand and the product’s (job) promise (EVP=Employee Demands). Hence, making the product i.e. the EVP attractive enough to convert the sale leading to the acceptance of the offer. Being the first point of contact between the customer (candidate) and the product (EVP), it is the recruiter’s responsibility to effectively utilize pull & push strategies to create the magic and convert the sale.

The Opportunity Cost of foregoing talent acquisition would be the competitive advantage that he would gain from that acquisition. Talent being the constant source of differentiation amongst competitors would have too high a return on investment to forego.

Cost Benefit Analysis of recruitment can be done on the following basis:

1) Recruiting Cost Ratio = (Total Recruitment Costs/ Total Compensation recruited)*100
2) Recruiting Efficiency = 1-RCR
3) New Hire Performance (based on the grading systems)
4) Manager Satisfaction Feedback Score
5) Time Taken to fill the position
6) New Employee Loss Ratio
7) Turnover Index
8) Source Value Index = (%New Hires fro Source/% Recruitment Budget Allocation) {Booz Allen's Recruiting Survey}
9) Competency Opportunity Cost: On the loss of an experienced and more efficient employee and replacement with a less experienced and efficient employee that comes with new hire costs (fixed costs+ variable costs)
(For calculations refer: http://www.staffing.org/)