The Impact of COVID-19 on Recruiting Benchmarks

Despite tens of millions of people currently unemployed, the cost of recruiting has skyrocketed.

In January 2020, the average cost to attract a job seeker and convert them into a job applicant was $12. The cost per applicant (CPA) had been averaging $11-12 throughout 2019. But when the new coronavirus became a pandemic and businesses across the country closed in March, recruiting costs began an upward trajectory that reached a CPA of $19 in June—a 60% increase, according to recruiting benchmark data from programmatic recruitment advertising provider, Appcast.

With a double-digit unemployment rate and so many people out of work, why is the cost of recruitment rising?

I reached out to Leah Daniels, SVP of Strategy at Appcast, to understand the impact of COVID-19 on recruiting benchmarks and budgets, get her outlook on the job market in the second half of 2020 and discuss strategies and tactics that talent acquisition and Recruitment Marketing practitioners can use to stay agile during this challenging time.

Leah and I recorded our conversation, so you can watch the video below, or keep reading for the Q&A.

Video: 2020 Recruiting Benchmarks and the Impact of COVID-19

Do you want to download the 2020 recruiting benchmark data?

All of the charts and graphs shown in the video (plus a few more!) are packaged up in a “bonus chapter” that you can download in our Rally Ideabook: 6 Lessons in Programmatic Online Job Posting. Take this data to your boss:

• Cost per applicant and cost per click, by month – January 2019 to June 2020
• Cost per click is rising – 2020
• Apply rates are declining – 2020
• Cost per applicant and apply rates, by month – 2019 to June 2020
• Apply rates per month – January 2019 to June 2020
• Cost per applicant by month – January 2019 to June 2020
• Cost per click by month – January 2019 to June 2020
• Apply rate by day of week
• Percent of mobile clicks and applies – 2018 to June 2020

Ok, on to the interview with Leah!

Q&A with Leah Daniels: The Impact of COVID-19 on Recruiting Budgets and Strategy

Leah Daniels is the SVP of Strategy at programmatic job posting platform, Appcast. Since joining Appcast, Leah has helped employers, top recruitment ad agencies, job boards, RPOs, gig employers and staffing firms understand their data in the context of the job market to find ways to lower their overall cost of candidate acquisition through programmatic ad buying. Prior to joining Appcast, Leah was the Director of Product Strategy at Monster and Director of Global Alliances & Business Development at Bullhorn. Earlier in her career, Leah spent 10 years at ZoomInfo leading sales operations, product management, national accounts, business development and data services.

Why recruiting costs are rising due to COVID-19

Lori: Hi Leah! Thanks for joining me. I want to tap into your brain about the state of recruiting and the job market, because I know this is something that you and Appcast track closely. Appcast recruiting benchmark data shows there is a rise in cost per application (CPA) and cost per click (CPC). For me, this seems counterintuitive because there’s such high unemployment right now. With so many candidates in the job market, why is the cost of recruiting going up?

Leah: It’s a great question, and one that a lot of practitioners are trying to explain to their bosses and their bosses’ bosses right now. Most of us have worked through the Great Recession, so we have preconceived notions that when the number of jobs goes down, we should be flooded with candidates.

But we’re living in unusual times. The biggest difference in this recession is we have the CARES Act that was implemented on April 1st. It turns out that the CARES Act is actually discouraging many, many people from looking for a job. That’s because it offers an extra $600 stipend every week. For people who were working minimum wage jobs, they’re making two to three times more not working than if they were back to work. The CARES Act states that they don’t have to apply for jobs to continue to get unemployment insurance. In normal circumstances you have to prove you’ve continued to make an effort to get reemployed, and the CARES Act suspended that.

The CARES Act is discouraging many, many people from looking for a job because the extra $600 weekly stipend means some people are making two to three times more not working than if they were back to work.

Another factor is that the majority of the unemployed are in the hourly workforce. For a lot of companies, the jobs that remain open are professional roles which require a number of years of experience. That’s not the candidate pool that’s available right now.

Employers that are hiring are having just as hard of a time recruiting today as they were at the beginning of 2020. In some ways it’s harder now because in January and February there were candidates actively looking for a new job and passive candidates who were open to a change. With all the uncertainty in the world, many people are staying put.

So, when we look at the cost of recruiting, our recruiting benchmark data shows that CPC is up about 40% over January. That’s due to supply and demand. But the CPA has gone up even further. Since January, it now costs 50-60% more to attract a candidate and convert them into a job applicant.

Using recruiting benchmark data to understand labor market conditions

Lori: This must have a huge impact on recruiting budgets right now. Most talent acquisition teams went into 2020 with a hiring plan and a recruiting budget. Of course, the number of people that they’re hiring has changed significantly due to the pandemic, but they had factored in a certain CPA or a certain cost per hire and now it’s completely changed. What advice do you have for talent acquisition leaders to adjust their expectations and help them manage expectations internally about what it’s going to cost to recruit?

Leah: This is an important issue for talent acquisition leaders — how do you reset recruitment budget expectations with your leadership given that everything that you know is now incorrect, and you still need to reach your hiring goals? The data shows that most employers will need to spend more on recruiting. That’s a tricky conversation. But understanding the labor market conditions and having a data partner can be very helpful because it’s hard to make that argument or build a business case without really good benchmark data to support you.

Rally note: You can download up-to-date recruiting benchmark data referenced in this article in a “bonus chapter” of our Rally Ideabook: 6 Lessons in Programmatic Online Job Posting. In this Rally Ideabook, you’ll learn how programmatic job posting allows employers to gain tighter control over recruitment ad spending, higher-quality applicants and real-time data to make better recruiting decisions. Be sure to download the ideabook with the new bonus chapter to get 9 charts and graphs with 2020 data!

3 ways to increase your job application rate

Lori: Another chart you shared is that the apply rate is going down significantly. What changes should recruiters and recruitment marketers be making to their strategy when there are fewer job applications being completed?

Leah: The data is very clear that apply rates are absolutely heading south. As an employer, you have to understand why this is happening. Yes, there’s a market situation, but practitioners should also be asking: What can I do to improve our apply rate? There are three specific tactics you can take:

1. Improve your mobile job application process. Can you remove the friction to make the process easier?
2. Shorten the length of the job titles in your job descriptions and recruitment advertising. The data shows that more words in the job title mean lower apply rates. Tighten up job titles to two to three words, focusing on what a candidate might search for.
3. Change the day you post your jobs. Mondays have the highest apply rates. They also have the lowest cost per application. Another way to lower your recruiting costs is to post your jobs in the back half of a month. More employers advertise their jobs at the beginning of the month because they operate on monthly budget cycles.

You can use these three tactics to shift your own recruiting processes, even if you can’t control the market dynamics.

People are looking for stability from existing and prospective employers

Lori: For people who are fortunate to have a job, they’re looking to their existing employer for stability, or if they are looking for work, they’re scrutinizing prospective employers about how stable they are. So, in recruiting, you’ve really got to make a case about why someone should change jobs right now and join your company.

Leah: Yes. Another thing to consider about influencing candidates is that you need a very different careers site experience. Focusing on office perks isn’t important now that nobody’s in the office. So, what is it that candidates care about today? I think we could all make a strong argument that it’s a very different set of concerns than they had even six months ago, when the economy and the world looked different. For companies that are actively laying off, these are target-rich organizations for you to recruit from. But then your message should be about an environment that’s stable, and how your company is doing well.

Lori: We’ve had a lot of contributions from the Rally community on this very topic about updating their careers site, refreshing their employer value proposition, as well as creating new Recruitment Marketing content that’s effective at attracting and engaging candidates right now.

Leah: There is good news in that some candidates are starting to pop their heads back up. The challenge is that we’re trying to hire, as a country, at a faster rate than candidates are ready to engage, so recruiting costs are still rising. There’s a lot happening in the world, and we’ll need to adjust our business expectations around it.

Recruiting outlook in the second half of 2020

Lori: There’s so much uncertainty in the world right now, and it’s particularly challenging for our community because they’re having to implement these really heavy decisions about shifting to a work from home model or furloughing employees or shutting down entire locations and laying people off. And they’re the ones having to help their organizations through these changes. We don’t have a crystal ball but at the same time we need to be prepared for more change. What do you think talent acquisition and Recruitment Marketing should be thinking about as we move into the second half of the year?

Leah: Data is moving so fast and the world is shifting so quickly — and there are more changes potentially coming. For example:

1. Congress is discussing a new bill called the HEROES Act. The job market could change again as people’s behavior changes due to what the government does.
2. The CARES Act is set to expire at the end of July. More on that in a moment.
3. What will the schools do? One in three working Americans have kids at home that don’t have a second adult in the house to watch the children. So, 37% of our workforce is impacted by the simple decisions of our school systems. All the unemployment in the world doesn’t fix the challenge of parents having to homeschool their children.
4. There’s one more element that’s really pressing for all organizations right now, and that’s a focus on diversity and inclusion. Employers need to make sure that their automated screening and AI isn’t actually contributing negatively to your own D&I initiatives. In our efforts to make sure that we’re not getting too many candidates, we must ensure that we aren’t doing other harmful things for the business and society.

If the CARES Act expires, I would guess that come August 1st, we are all getting flooded with candidates. Even if you don’t have any jobs open, they’re going to be calling you and trying to find a way in. We’re going to go from candidate dry to candidate rich. Now, they may not be the candidates you want or need, but that doesn’t mean it won’t impact your employer brand. So you should start thinking about how to provide a candidate experience that isn’t just about the application process, but also about how we treat our candidates as people.

If the CARES Act expires, come August 1st we could all get flooded with candidates. Even if you don’t have any jobs open, they’re going to be calling you and trying to find a way in. They may not be the candidates you want or need, but that doesn’t mean it won’t impact your employer brand.

Lori: I’ve been concerned about this over the past few months. The last time there was high unemployment, we didn’t have the prevalence of applicant tracking systems that let someone apply for a job in one click. We’ve made it so easy to apply and there’s going to be a huge amount of people looking for work, as you say. Employers probably aren’t ready for what might happen.

Leah: They’re definitely not ready because they’ve been preparing for the last five years for the other problem, which was not enough qualified candidates and that time to hire was getting longer.

Being prepared for change by staying agile

Leah: There are many unknowns in front of us and I think everybody’s best offense right now is being very agile and making sure you haven’t locked yourself into commitments and decisions internally and externally that don’t adapt well.

Who doesn’t love a good plan? But when the plan goes south, it’s always good to have a way to adapt. You can build contingency plans, of course. But almost every one of them will be wrong right now. So, I would recommend moving as close to real-time decision making and delivery as you possibly can.

You can build contingency plans. But almost every one of them will be wrong right now. So, I would recommend moving as close to real-time decision making and delivery as you possibly can.

Lori: You’ve brought up staying agile a number of times. One of our speakers at our RallyFwd Virtual Conference spoke about that as well, not just in your strategy, but also in your career right now. From a tactical perspective, what has been the impact on job boards in terms of the way employers are having to make changes to their hiring plans this year?

Leah: It’s a great question. One of the reasons why job boards love a good pre-buy is that they have your money and they know you’re locked in for the year. They offer a lot of great incentives to get that commitment from employers. I think this year has been really telling for a lot of companies realizing that they have overcommitted their recruiting budget.

Most of the job sites that charge for recruitment advertising on a “cost per basis” will allow you to pay month by month or what we call an “arrears basis,” so you just pay for what you use. This is a good time to reconsider your strategy and is that a better way for you. It allows you to be more flexible long-term. There’s no time like the present to ask about how do you manage through what you won’t be using for inventory for the rest of the year.

Another way to stay agile is to consider using programmatic job posting. Programmatic is a system that allows you to figure out where the candidates are and at the right price point and spend in those places. It’s also something that very much lends itself to an arrears-based approach and helps you work with your organic traffic first before you spend money on recruitment advertising, which is a good thing to do right now.

Lori: Thank you so much Leah for the data and insights that you’ve brought to help the Rally community think through what’s coming. We especially appreciate this benchmark data to help us build a business case and manage expectations internally through a time of great uncertainty and a lot of change.

Leah: Anytime!

 

Appcast is a sponsor of Rally. Their sponsorship fee helps us to create educational programs on Recruitment Marketing.