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Recruitment Best Practices from DrivingSales’ Most Valuable Insight Competition

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Recently, Hireology was fortunate to speak and present at the DrivingSales Presidents Club 2016 event as a finalist for the Most Valuable Insight Awards. As a way to share our “most valuable insight,” Hireology presented the findings from an in-house study on how effective employment branding drives quality hires and improved store performance at dealerships. After conducting our research, we found something to be true across all retail automotive dealerships: employment brand matters.

Strong employment branding, when combined with a data-driven evaluation process, is one of the best investments a dealership can make. When dealerships build a strong employment brand and utilize procedures to manage the recruiting and hiring effort, the results are staggering.

How we did this study

(Short on time to read? Jump to the results and learn how to use them.)

While conducting our research, Hireology studied two control groups (for easy reference, I’ll refer to these as “Group A” and “Group B”). Group A consisted of a six-rooftop dealer group from the Mid-Atlantic region, and Group B was composed of a three-rooftop group located in the Midwest. Management teams were surveyed electronically, which covered their approach to employment branding and recruitment process as well as their results from such efforts.

Before diving into the results, let’s take a look at some of the industry-wide data related to human capital:

Therefore, we anticipated a correlation between the way dealerships present themselves as employers to today’s younger workforce online and the harmful effects of their staff turnover.

What we found: A branded career site yields better candidates

Our survey exposed numerous challenges facing the automotive industry when it comes to finding and hiring employees. Hireology discovered that there was a clear difference between utilizing job boards and a company career site when it comes to recruiting talent. Here are our results.

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Applicant conversion by source

We analyzed the rate at which inbound page traffic to Group A’s career page converted into candidate applications and found that conversion rates from organic traffic delivered as a result of a branded career site substantially over-performed the conversion rates generated from paid job board traffic:

  • 0.2% conversion rate from job boards
  • 11.5% conversion rate from organic traffic

Candidates by source

In this analysis, “candidate” is defined as someone who has applied for an open position via the career site and who has been deemed qualified at the first review so that a next step, such as an interview, is warranted. What Hireology found was that nearly 94% of candidates who applied for an open job were attributable to a paid job board, versus organic traffic due to a career site.

  • 6.1% career site
  • 93.8% job boards

Hires by source

Our analysis of Group A data showed that 77% of all hires resulted from organic traffic generated by the dealer’s career site versus job boards. This insight, when examined against conversion rate and candidate source data, shows that even though organic traffic attributable to a dealer career site generated just 6% of all candidate traffic, the career site cohort produced a whopping 77% of all hires. In other words, 6% of traffic generated 77% of hires.

  • 22.7% job boards
  • 77.3% career site

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Quality of hires by source

Our analysis defined “quality hire” as “a hire who was able to meet or exceed 75% of their states production or performance target.” In sales roles, this might be a monthly vehicle unit sales quota. When controlling for the candidate source, 75% of all “quality hires” originated from the candidate pool generated via organic career site traffic. Just 25% of Group A’s quality hires came from a paid job board.

  • 25% job boards
  • 75% career site

Turnover percentage by source

Most importantly, the results show that turnover rates diverge substantially based on the cohort. The new variable ops hires that originated from a candidate attributable to a branded career site turned over at a rate two-thirds less than the industry average.

  • 25% from Group A
  • 72% industry average

Group B (Three-rooftop control group—Midwest)

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For this second control group, we similarly analyzed the rate at which inbound page traffic to Group B’s career page converted into candidate applications. Hireology found that conversion rates from organic traffic delivered as a result of a branded career site substantially over-performed the conversion rates generated from paid job board traffic.

Applicant conversion by source

We examined the rate at which inbound page traffic to this dealership group’s career page converted into candidate applications and found that conversion rates from organic traffic delivered as a result of a branded career site significantly over-performed the conversion rates that came from paid job board traffic:

  • 1% came from job boards
  • 13% came from the dealership’s career site

Candidates by source

In this analysis of Group B data, we defined “candidate” as someone who has applied for an open position via the career site and is a qualified applicant warranting a next step, such as an interview. Hireology found that nearly 82% of candidates who applied for an open position were attributable to a paid job board, compared with organic traffic due to a career site.

  • 82% job boards
  • 18% career site

Hires by source

Our analysis of the data showed that 71% of all hires resulted from organic traffic generated by the dealer’s career site versus job boards. When evaluated along with conversion rate and candidate source data, we concluded that even though organic traffic attributable to a dealer career site generated just 18% of all candidate traffic, this cohort produced a whopping 71% of all hires made. In other words, 18% of traffic generated 71% of hires.

  • 29% job boards
  • 71% career site

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As previously mentioned, Hireology defined “quality hire” as “a hire who was able to meet or exceed 75% of their states production or performance target.” When controlling for the candidate source, 70% of all “quality hires” came from the candidate pool generated via organic career site traffic; only 30% of quality hires resulted from a paid job board.

  • 30% job boards
  • 70% career site

Turnover percentage by source

What’s essential here is that the results show that turnover rates deviate significantly based on the cohort. The new variable ops hires that came from a candidate attributable to a branded career site turned over at a rate that’s nearly 50 percent less than the industry average.

  • 21% from Group B
  • 70% industry average

A branded career site for improves hiring and turnover

So, what’s the value in having a branded career site for your dealership? Here are four things to consider:

  1. Organic applicant traffic and process is over 5x more cost-effective
    1. Organic cost-per-hire: $245
    2. Third-party sources cost-per-hire: $1,700
  2. Organic applicant traffic and process yields the majority of hires—20% of the traffic yields 80% of the hires
  3. Hires sourced this way are 2.5x more likely to be an A or B player
  4. Hires sources this way have higher retention rates—
    1. 27% versus 67% industry average

Key takeaways for dealers

Retail automotive dealers who want to build better teams and reduce turnover should invest in employment branding and adopt a data-driven hiring process. The financial benefits of such an approach far surpass nearly all potential operational improvements through which dealers can generate a return on investment.

Assuming your dealership has 55 employees (the average) and a turnover of 67% per year, turnover is costing you nearly $600,000 per year, every year.

                        37 turns (67% x 55) @ $16,000 cost-per-turnover ea.  = $592,000

Based on our study, dealerships can anticipate dramatic changes in turnover after adopting a structured hiring process and creating a branded career site. As soon as you produce a turnover rate similar to the cases studies discussed above (i.e., 25%), your dealership turnover calculation would improve:

                        14 turns (25% x 55) @ $16,000 cost-per-turnover ea. = $224,000

That’s a profit add-back of $368,000 per store per year. Dealers are hard-pressed to figure out a more straightforward way to generate a higher return in this amount of time.

The bottom line is that dealers must take charge of the hiring challenge by taking control of the recruitment process. Strong employment branding, when combined with a data-driven evaluation process, is one of the best investments a dealership can make.

If you’re not already taking this approach, it might be time to reconsider the way your dealership hires employees because your employment brand most definitely matters.

Special thanks to NCM Associates’ partner, Hireology, for sharing the results of their study. Learn more about Hireology.

About the author

Adam Robinson

Adam Robinson

Adam Robinson is the co-founder and CEO of Hireology (www.Hireology.com), where he's on mission to help business owners make better hiring decisions using predictive data and innovative technology. He is a noted recruiting industry expert, speaker, and author with over 20 years of experience in the field of hiring and selection management. Previously, Adam was the founder and CEO of Illuma, a provider of high-volume recruitment outsourcing programs, and the creator of the Ionix Hiring System, a full suite of interview and assessment tools. Adam is passionate about entrepreneurship, donating time to a number of organizations that support the entrepreneurial cause. Through multiple leadership roles at Entrepreneurs Organization (www.eonetwork.org), he has helped to develop and launch programs that teach core business skills to early-stage entrepreneurs around the world. In 2015, Robinson was added to the Chicago Tribune's Blue Network, a listing of Chicago's most influential entrepreneurs and innovators, and named a "Top 25 HR Industry Game Changer Under 40" in 2015 by Workforce magazine. Under his leadership, Hireology was recognized nationally by Entrepreneur magazine as a "Top Company Culture" and by Crain's Chicago Business as a "Best Places to Work" for both Millennials and GenX. Hireology has been named the "#1 Talent Management Platform" in 2014, 2015, and 2016 and "#1 in Customer Service" in 2013, 2014, 2015, and 2016 by Human Resources Online magazine. Adam has a BA from the University of Illinois at Urbana-Champaign, and received his MBA from DePaul University. He lives in Chicago's Rogers Park community with his wife and three sons.

Permanent link to this article: http://blog.ncm20.com/2016/05/recruitment-best-practices-from-drivingsales-most-valuable-insight-competition/

1 comment

  1. Joe Basil

    Adam Great Study! Every dealer should read this and make it their mission to clearly define and market their employment brand. We just covered this in a 20 group meeting when reviewing turn over stats. Most dealers and GM’s don’t understand the concept of employment brand. The dealers that do get it are recruiting the best people for the right positions and keeping them!
    Just a note, I have had my members do calculations on the cost of a bad hire. We calculate the direct cost and indirect cost and when you factor in lost back end manufacture bonus money and bad online reviews it easily can reach 7 figures!
    Joe Basil
    NCM

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