This mathematical opus is inspired by one of the comments to the previous article. For those who haven’t read it, of course, read it immediately, but if you’re lazy (and you are lazy!), then I’ll remind you that the article was about how multi-stage interviews are being introduced by companies solely to reduce employee salaries.
The comment seemed to hint that all your savings on salary reductions will be more than eaten up by the costs of interviewers. And today we will try to calculate how much an interview, including a multi-stage one, costs.
To begin with, I should state that I do not work for Avito, I do not know any accurate information about hiring for this company. But approximate estimation is one of my trivial work tasks, so I can estimate the cost of hiring quite accurately. And enough of the prefaces, let’s go!
It is quite obvious that to determine the cost of hiring, you need to calculate the number of hours spent and the positions of the hiring specialists. Let’s start with this.
In a standard situation, we have 2 interview stages:
– scoring with HR (15-30 minutes). Conducted by a recruiter;
– the technical interview itself (an hour and a half). It is carried out by one or two (less often a large number) senior developers or team leads.
In Avito (based on Nemitap):
– scoring with HR (30 minutes). Conducted by a recruiter;
– scoring by a technical specialist (30 minutes). I think it is carried out by a developer at least middle level;
– technical sections (3 pieces, 1 hour each). Typically, such sections are conducted by either a technical lead or a senior developer, or both at once.
– final part (1 hour). There are interested managers there, as well as an HR employee. Apparently, it may happen more than once if someone couldn’t come. But we will think that everything worked out right away, we are optimists.
Summing up the costs, we get:
1. With the traditional approach:
– 30 minutes of recruiter work;
– 1-3 hours of work by top-level technical specialists
2. When approaching Avito:
– 1.5 hours of recruiter work;
– 30 minutes of work by a mid-level technician;
– 3-6 hours of work by top-level technical specialists;
– from 1 hour (depending on the number of managers at the final part) of work of middle management. For the calculation you can take 2 hours, I think there won’t be a big mistake.
We’ve sorted out the obvious, now let’s look into the secrets of hiring.
And there, among the forgotten tasks and undeveloped cases, we will see such a concept as conversion. This is the ratio of the number of specialists hired to the number of candidates interviewed. Conversion is influenced by many things, such as the brand, the level of candidates (it is clear that the conversion will be higher among seniors than among juniors), and much more. It is now important for us to understand how the introduction of a multi-level interview will affect conversion. I think it will have a negative impact, including because the candidate may be intercepted while he is going through the stages.
According to my modest estimate (I’m not HR, just a team lead), the conversion rate for standard hiring will be about 30%. Some candidates will not pass the scoring, some will lose their hard skills, some will not accept the final offer and will go to competitors.
Evaluating a multi-stage interview, I would put the conversion at about 10% due to the greater chance of missing out on hard skills (three chances instead of one), and the length of the process over time.
Why do I spend so much time on conversion? Yes, because business (like us in this study) cares about the costs per HIRED specialist, and not per candidate. Therefore, hiring costs need to be multiplied by the inverse of conversion.
With the traditional option, the costs will be three times higher than what we estimated, with a multi-stage interview – ten times higher.
Let’s move on to the most interesting part – money.
We have 4 positions interviewing candidates:
– recruiter;
– middle developer (or tester, depending on the job profile);
– senior developer, technical lead, team lead;
– middle manager.
To simplify the calculation, we will think that middle receives earns twice as much as a recruiter, a senior (technical lead, team lead) earns twice as much as a middle manager, and a manager earns the same amount as a senior. In fact, of course, this is not entirely true, but it will do for evaluation. We will list everything in the senior salary, since their hours are simply higher.
With the traditional approach, we spend 1.5 hours of recruiter work and 3-9 hours of senior work (remember about conversion) per hired employee, that is, on average 6,375 senior hours.
The Avito approach requires 15 hours of recruiter work, 5 hours of middle specialists, 45 hours (on average) of senior specialists, and 20 hours of managers. Total 71.25 quoted senior hours.
If we express all this splendor in rubles (we define the salary of a senior specialist as 350,000 rubles per month), we get something like 12,700 rubles with the traditional approach and 141,750 rubles with the Avito approach. The difference is 129,050 rubles.
But this is not the main thing.
Now Avito has 387 vacancies on hh, about half of them are in the IT field, that is, they relate to our topic. Let’s assume that there are 200 such vacancies, and that half of them will be closed within a month (then new ones will appear). In total, Avito employs about 5,000 people, let’s assume that about half are in the development sector, that is, 2,500. Well, the average salary of a developer is 200,000 rubles.
All these assumptions are given for the final conclusion.
An increase in the cost of hiring specialists per month will cost Avito 12,905,000 rubles per month. A reduction in developer salaries by 10% will give about 50,000,000 rubles per month. So I consider the thesis from the commentary to be conclusively refuted.
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