Calculating HR and Recruiting Chatbot ROI
Chatbots are now ubiquitous in our lives as online consumers. We live in a world of “now” and expect to get answers to our questions in a timely manner. As a result, marketers have quickly adopted chatbots to drive new customer acquisition.
We’re now also seeing recruiting and HR teams adopt chatbots in order to increase the candidates experience, and drive faster hiring cycles.
You’ve probably seen a chatbot vendor at the last HR conference you’ve gone to, or interacted with a chatbot on a career site.
Like any new purchase, it’s important to think about the ROI of this new tool. And so I wanted to dive into the main ways I’d calculate the value that an HR chatbot can bring.
Calculating the ROI – It’s All About Time To Fill
The ROI from a new chatbot can come from a few different sources. It can decrease the time recruiters spend on a given req as it handles many of the HR coordination tasks that can bog down hiring processes. It can also expand the top of funnel as more candidates are driven to an application that is easier to fill out than the typical ATS provides.
However, the largest value driver is definitely the ability to decrease the time to fill for a given role. Time to fill is decreased through more quality applicants applying, less time playing phone tag to setup interviews, and more efficient interviews due to pre-screening that the bot conducts.
Value of Employees
Most companies are driven by employees. They build, sell, and support new products. It’s fairly safe to say that the value an employee brings to the company is at least the amount they make in salary. If it wasn’t, they wouldn’t have a job! I even go as far as to put a 1.5x multiple on the value of an employee as they are almost certainly bringing that to a company, assuming the business is profitable.
So, for an employee that makes $50,000 per year, they are bringing $50k/365 = $137 of value per day to the company. $137 * 1.5x (value multiplier) = $205 in value. So, each day we can get this employee in the job, means $205 in additional value to the organization. And, if we hire 10 people like this pre year, all with a decreased time to fill of one day, that means $2,050 per year in savings.
Here is a quick video overview of how this is all calculated and how you can customize this calculation for your business:
If you want, feel free to download the spreadsheet here and use it for your own value calculations.
Also, if you’re looking to get an HR chatbot, you may want to checkout one of these solutions:
One final pro tip: 6 months after you implement your chatbot, go back and re-visit your ROI model to understand what went right and what went wrong with the assumptions you originally made.
This research is part of SelectSoftware’s overview of the best HR Chatbots.