When evaluating your business strategy, we apply lean thinking to record each step in your flowchart and construct a separate value-stream map. Your processes can be analyzed for time reductions to reduce non-value added steps, and unnecessary costs are minimized or eliminated with the development of process improvement tools. Below is an example of how we would transform a company’s hiring process:
Original Flowchart for Hiring a New Employee Turning In A Paper Application:
As you can see with this example, the company receives an average of 580 applicants every year. Out of those 580 applicants, 450 of them do not move on to an interview. In other words, the company is wasting $5,542.50 per year just to receive and review applications that end up taking space in a filing cabinet. And that doesn’t include the paper costs for the applications themselves. In a separate calculation (not shown) the Department Manager was found to be wasting an average of 2.16 hours per week on reviewing applications that don’t meet the criteria for an interview, when they could be using that time performing their actual duties.
Moving on past the interviews, it’s apparent that only 14 of those 130 interviewees get hired, leaving 116 of them also wasting company expenses. That’s another $4,183.73 down the drain. Grand total? $5,542.50 + $4,183.73 = $9,726.23 per year.
Once hired, a single new employee currently costs the company $2,276.50 on on-boarding alone. Again, this does not include the cost of their uniform or any materials or service products that are used or damaged during training. With 14 new hires a year, they’re looking at $31,871.00 on turnover (as it pertains to time translating into money).
So What’s Our Strategy?
In this scenario, we could start by removing paper applications altogether. Instead, we’d create an electronic application that the company could put on their website. The application would have all of the same questions, and would alert the applicant if something is not filled out properly, thus reducing time in the verification steps. Furthermore, the application can be set up to automatically filter those applications that do not meet certain criteria for an interview, reducing unnecessary time spent by the Department Manager.
The electronic application, once submitted, would be emailed as a PDF that looks identical to their current paper application so nobody has to learn how to read a new format. The prospect no longer has to interrupt the secretary to obtain an application and again to turn it in. It would also automatically route to the HR Manager and the Department Manager, eliminating the need to scan and email.
So far, we’ve calculated a savings of 64.82%, or $6,304.23 per year out of the previous $9,726.23, plus all paper costs.
The applications are also automatically stored in the website’s database, so there is no longer a need to file anything away. Additionally, if the company is struggling for a quick hire, HR can simply categorize and search through the electronic application fields. This capability can reduce an entire week’s work into a matter of a couple of hours. We’ll say 30 hours at $20/hr = $600, reduced to an approximate 4 hours = $80.
Moving on to on-boarding, the same can be done with new hire paperwork. We could create electronic forms that can be completed on a computer or tablet with an electronic signature device. No need to create a physical employee file, and no need for paper and ink costs.
A training video can be produced to eliminate labor costs during orientation, training material can be developed for at-home studying, the training program itself can be reevaluated for efficiency, and online tests can be created to manage certifications.
All of this can also be finely tweaked by switching some of the roles. If you automate a lot of what the $12/hr Secretary does, they will have more time to perform some of the tasks that the $20/hr HR Manager currently does. That cuts those costs nearly in half. The more administrative tasks you can take away from HR, the more they can focus on the human aspects of their job.
An additional $8,701.00 per year can be saved on on-boarding.
Total savings just on the hiring process? An estimated $15,005.23 per year, or 36.07%.
If you’re looking for more specific analytical services, GRW offers the following:
Anonymous Consumer Analysis: