How is Estimated Value calculated?
We're so excited to welcome users to explore Estimated Value, a key set of data right at the top of Executive Analytics, providing valuable statistics to better quantify savings. Estimated Value insights help connect your hiring process with bottom-line impact, but how do we calculate the specific numbers?
Our calculations for each of Estimated Value components (Estimated Value, Total Engineering Hours Saved, Average Reduction in Cost per Hire, and Average Reduction in Time to Hire) begin with your Pre-Screen and Tech Screen usage data and incorporate robust industry research to generate estimates for the real return on advancing your hiring process with CodeSignal. Read on for deeper insights on what goes into our formulas.
Where does the data come from?
Before we talk about individual calculations, let's lay the foundation for where the data is coming from. We base our calculations on customer usage values, some of which are based on your company's CodeSignal history, and these values update as you use CodeSignal more. We also use values that describe your team's hiring before using CodeSignal, using default values derived from research across our entire customer base. However, the section below explains how you can change these values to align to your company's data, if you have it available.
How do I customize my Estimated Value?
The default values we generate based on our research are representative of averages across many companies in a range of industries. While these values are a good starting point for most people, they may not fully reflect all hiring practices. If you'd like to enter your own values, you will need the appropriate account permission, specifically "Can edit Estimated Value inputs for the executive report for my company." If you have that specific permission, you're welcome to enter different values for these variables by clicking the "Customize" button (outlined here in orange) in the Estimated Value panel in Executive Analytics.
Changing the values here will update the Estimated Value calculations automatically.
Note that any changes you make to the defaults will save for your entire organization, and that the defaults are recoverable at any time by clicking "Restore Defaults."
In addition, changing the selected time period using the date picker tool in the top right of the screen will automatically update the Estimated Value. By default, Executive Analytics will show metrics based on the last 12 months of CodeSignal use. Changing the dates using the date picker will show you metrics calculated based on your CodeSignal use during the selected time period.
Estimated Value
Estimated Value is the amount of money we estimate you've saved so far using CodeSignal. For this metric, we take one Pre-Screen or Tech Screen completion and calculate your individual Estimated Value for that completion, and then multiply by the total number of completed Pre-Screens and Tech Screens to calculate total Estimated Value. The formulas are as follows:
Individual_EstimatedValue =
Eng_hours_existing_process * Eng_costs_lookup_table(Industry).cost_per_hour *
(1 + Eng_productivity_gain)
Total_EstimatedValue =
(Num_of_completed_pre_screens + Num_of_completed_tech_screens) * Individual_EstimatedValue
To calculate individual Estimated Value, we use an estimate based on industry research for how many engineering hours were spent per applicant prior to using CodeSignal (Eng_hours_existing_process). The default value here is 1.5 hours, and that is customizable with the proper permissions. We also look at the average cost for one engineering hour (Eng_costs_lookup_table(Industry).cost_per_hour), based on per-hour prorated costs for technical and non-technical interviewers.
Then, we consider some efficiency gains (Eng_productivity_gain) due to reduced context switching and not having to create/maintain take-home evaluations. Our productivity gains numbers come from research on the amount of time it takes for our brains to fully switch over to a different task. This productivity boost affects engineers who would have otherwise needed to context switch from their regular work to candidate screening work and back, perhaps multiple times a day. We estimate that the productivity gain for engineering time using CodeSignal is about 20%. This number is not customizable.
Finally, we extrapolate out to total Estimated Value by multiplying individual Estimated Value by the number of completed Pre-Screens and Tech Screens your company had for the selected time period (Num_of_completed_pre_screens + Num_of_completed_tech_screens).
Example calculation:
Num_of_completed_pre_screens = 5100
Num_of_completed_tech_screens = 2935
Eng_costs_lookup_table(Industry).cost_per_hour = $100
Individual_EstimatedValue = 1.5 hours * $100/hour * (1 + 0.2) = $180
Total_EstimatedValue = (5100+2935) * $180 = $1.44M
Total Engineering Hours Saved
Total Engineering Hours Saved is the estimated amount of hours of candidate screening work saved for your engineering team. We calculate this based on the number of completed Pre-Screens and Tech Screens for the company, the amount of engineering hours spent per applicant before using CodeSignal, and efficiency gains. Here's our formula:
Total_Eng_Hours_Saved =
(Num_of_completed_pre_screens + Num_of_completed_tech_screens) * Eng_hours_existing_process *
(1 + Eng_productivity_gain)
When calculating the total amount of engineering hours saved across all Pre-Screens and Tech Screens, we first pull the latest data on the number of completed Pre-Screens and Tech Screens across your company (Num_of_completed_pre_screens + Num_of_completed_tech_screens).
Then, we multiply that by the amount of engineering hours spent in your hiring process before switching to CodeSignal (Eng_hours_existing_process). The default number of hours is 1.5, and that reflects an average across our customer base for screening, reviewing, and grading candidates. If you have the appropriate permissions, you can customize this number using the "Customize" button.
We also consider productivity gains (Eng_productivity_gain) from engineers not needing to do as much context switching when the hiring process is less manual. We estimate that the productivity gain for engineering time using CodeSignal is about 20%, based on research on productivity maximization. This number is not customizable.
Example calculation:
Num_of_completed_pre_screens = 5100
Num_of_completed_tech_screens = 2935
Total_Eng_Hours_Saved = (5100+2935) * 1.5 hours * (1 + 0.2) = 14,463 hours
Average Reduction in Cost per Hire
Average Reduction in Cost per Hire is your average savings per offer, when accounting for the cost of screening all of the candidates in that pool. We base this number off the individual Estimated Value calculated earlier as part of Estimated Total Estimated Value, and a default onsite to offer ratio based on industry research. The formula looks like this:
Impact_On_Cost_Per_Hire =
Individual_EstimatedValue / Existing_onsite_to_offer_ratio
To calculate the impact on cost per hire (expressed as the Average Reduction in Cost per Hire), we divide Individual_EstimatedValue by the percentage of candidates coming onsite who receive an offer (Existing_onsite_to_offer_ratio). Our default value for the onsite to offer ratio is 0.2, meaning 20% of candidates brought onsite receive offers. As with other default variables, if you have existing statistics for your hiring practices before switching to CodeSignal, you're welcome to enter those in the Customize screen.
Example calculation:
Individual_EstimatedValue = 180
Existing_onsite_to_offer_ratio = 0.2
Impact_On_Cost_Per_Hire = $180 / 0.2 = $900
Average Reduction in Time to Hire
Finally, we compute a value for the time efficiency gain in the hiring process. A time savings here represents being able to start onboarding earlier, as well as reduced time "in limbo" for candidates awaiting news. We base this number on the average time it takes for an individual candidate to complete a Pre-Screen or Tech Screen after being invited by your company, as well as on a default average for time spent in the review and screening stages before switching to CodeSignal. Here's the formula:
Impact_On_Time_To_Hire =
Existing_screening_time - Avg_completion_duration_in_days
Impact on Time to Hire, also expressed as Average Reduction in Time to Hire, starts with the time candidates spend being screened and reviewed in a pre-CodeSignal hiring process (Existing_screening_time). The default value, 20 days, is based on research across our customer base, and can be edited in the Customize tool.
Then we subtract out your CodeSignal completion duration (Avg_completion_duration_in_days) using the latest available data for your company. The completion duration is the time between when you send an invite and when a candidate completes the Pre-Screen or Tech Screen. As more candidates complete Pre-Screens and Tech Screens for your company, the average is updated and used to generate timely metrics for Average Reduction in Time to Hire.
Example calculation:
Existing_screening_time = 20
Avg_completion_duration_in_days = 6.1
Impact_On_Time_To_Hire = 20 - 6.1 = ~13.9 days
More questions?
Want to get into the nitty-gritty? Have questions about adjusting default values? Get in touch with your CSM, or reach out to us at support@codesignal.com.