Why would one use conversion rate optimization as a part of People Operations? The short answer is that it’s a powerful tool that can help us understand where to focus our efforts as HR professionals and create more value for our organization.
This one-hour course covers specific conversion rates within the recruiting funnel, how they impact operations, as well as how they relate to HR metrics and ROI. We’ll also touch on how calculating ROI can help with getting HR projects approved with the necessary budget.
To begin, you can watch the intro video below!
Conversion Rates 101
Welcome to our course on People Ops conversion rates, part of our larger People MBA.
In this first chapter, you’ll find out the basics of what conversion rates are. A conversion rate is the percentage of something that gets converted into something else. For example, the acceptance rate at a university (10,000 applicants, 1,500 students accepted, 15% acceptance rate). Conversion rate optimization, or CRO, is the process of finding and implementing ways of improving this rate.
Regardless of your background, this video should be enough to get you started on how this tactic can be implemented within the People Ops role.
- One of the main ways CRO is used in People Ops, is to measure the percentage of people that apply for a job after landing in your career site.
- A conversion rate is the percentage of something that gets converted into something else. For example, the acceptance rate at a university (10,000 applicants, 1,500 students accepted, 15% acceptance rate).
- For instance, if you get 1,000 monthly visits for a job’s landing page and during the first month 30 people applied for a job, your conversion rate for that month is 3%.
- Conversion rate optimization, or CRO, is the process of finding and implementing ways of improving this rate. In other words, finding ways to increase the percentage of users, or website visitors, or candidates that take the desired action.
- This is a powerful concept because it can be applied to all sorts of areas and professions, way beyond human resources, marketing, and even business.
Next up, we’ll talk about conversion rates within a typical hiring funnel.
Conversion Rates in Your Hiring Funnel
- A funnel can help with any sort of process where we can speak of a conversion, whether it's recruiting as a whole, or focused on diversity hiring, particular roles, candidate sourcing, etc.
- A typical hiring funnel, for instance, starts with the number of applicants we have on a job, and then each step of the hiring process is a stage in the funnel, with its own conversion rate.
- At the end of the funnel, there’s the number of people hired. We can also have a conversion rate for the entire funnel comparing the first and last stages.
How can you optimize your recruiting funnel?
- Understanding your hiring funnel and its various stages is an essential part of starting to optimize each step.
- The first step towards optimization is looking at the current numbers within each stage of your funnel and determining where are the weaknesses and where are the strengths.
- To help you select weaknesses and strengths, you could have benchmark data to compare your results with.
- Of course, percentages are simply implications of what’s going on with the process. They’re the quantitative reflection of what you’re currently doing, so they can help with deriving qualitative insights.
- This helps with deciding where to deploy resources as an HR leader so that you can get a return on that investment.
- For instance, a small percentage difference at the beginning of your recruiting funnel can have a massive impact on outcomes like cost-per-hire and TA budget.
- This small percentage can be tweaked by actions such as mobile optimization, a better job description, not requiring job seekers to create an account in order to apply, an integration that lets them import their LinkedIn profile, etc.
For more on ROI within a human resources department, take a look at the next video.
Conversion Rates ROI
Let’s now take a look at how to understand the return on investment that you can get from optimizing your conversion rates as a People Ops team. This will be a math-heavy section! But it’s important in order to present a project to your financial colleagues in terms they’ll appreciate better.
Summary of the math in this video:
- Let’s say 1,000 people go to your career site and 8% apply. You then have 80 applicants in your ATS.
- If 30% of them get a phone screen, you'll do 24 phone screens.
- If 80% of those that do a phone screen are hired, you’re down to 19 hires.
- This means that out of 1,000 visitors to your career site, you hire 19 people.
What if you run some initiatives and change those rates?
- If you improve the job description or optimize your career site for mobile and get the conversion rate to 11% from 8%, you now have 110 candidates instead of 80.
- If you improve your candidate sources, perhaps 35% of candidates will now do a phone interview instead of 30%. This means 28 phone screens instead of 24.
- Finally, if you decrease the time to hire and raise your hiring rate to 90% of those that do phone screens, you hire 22 people instead of 19.
- That’s 30 more applicants, 4 more screens, and 3 extra hires
What does this mean in dollars and cents?
- Let’s say your incremental cost per hire is $1,000 USD.
- If out of the 80 people that apply to your job from every 1,000, you hire 19, those 80 applicants are worth $19,000.
- If you divide those $19,000 by the total number of applicants, 80, you get $237.50 This is the value of each applicant.
- So, if you manage to get 30 extra applicants per each batch of 1,000, these 30 applicants would be worth ($30*$237.50) = $7125.
- So, if the project of optimizing your career site for mobile costs $15,000, that investment is nearly recouped in 2 months.
Of course, this framework can be applied to any conversion rate within your People Ops funnels and to organizations of all sizes, and not just in the HR department. Now we’ll look at how this can be applied to other HR processes.
For our final chapter, let’s take a look at other examples within PeopleOps where an HR team can leverage conversion rate optimization.
- There can be a conversion rate between each stage of the employee lifecycle. For instance, how many people make it through onboarding.
- In career paths, you can look at what percentage of entry-level hires make it to the next stage, study the characteristics of those that make the jump and think of how to guide the right people through that path.
Conversion rates frameworks can be used in much more tactical things like sending a company-wide email or improving the employee experience and company culture. It’s just a matter of finding the key metrics and the funnels they happen in.
And that's a wrap! We put together this course as conversion rates are so essential to calculating the ROI from HR Tech. If you're looking to buy HR Tech, make sure to check out our 100+ buyer guides to help you find the right software across different categories.
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