Did you know that 80% of employee turnover is the result of bad hiring decisions? So, if you happen to be a hiring manager, you must have gauged the primary pain point of the competitive job market today. It is all about manpower, and that too, attracting and retaining the creme de la creme out of the bunch of qualified candidates.
Organizations are constantly striving and investing a significant sum to navigate the best talent pool in the market. The average cost per hire for an entry-level or subordinate role in the USA sums to around $4700 which shoots to a whopping $28,000 when it comes to an executive role.
One critical metric that provides insights into the effectiveness of a company’s recruitment process is the Offer Acceptance Rate (OAR). A high OAR not only reflects a company’s ability to meet candidate expectations but also points to strong employer branding and an efficient hiring process. On the flip side, a low OAR is a glaring sign of underlying issues that need to be addressed as quickly as possible by the authorities.
The Offer Acceptance Rate, once calculated, can serve as the key to all your data-driven decisions to bettering your recruitment strategy. Considering the broad implications it has on your hiring procedure and the brand as a whole, it is imperative to explore effective ways to enhance your OAR while ensuring that your organization can attract and secure the best-qualified candidates.
What is the Offer Acceptance Rate?
The Offer Acceptance Rate, also termed the OAR, is a recruitment KPI who’e function is to identify the percentage of job offers extended by a company that is accepted by candidates. Simply put, it is a measure of the company’s acceptability and imaging among the candidates.
The OAR provides a clear indication of how well a company’s offer aligns with candidate expectations and how effective the hiring process and in turn the team is in convincing candidates to accept the job offer.
A high Offer Acceptance Rate suggests that the organization is successful in its recruitment efforts, while a low or average offer acceptance rate points to potential issues in the hiring process, such as misaligned expectations, problematic brand imaging, poor workplace environments, or uncompetitive offers.
Offer Acceptance Rate Formula
Calculating the Offer Acceptance Rate is simple. The formula is as follows:
Offer acceptance rate = (Number of accepted offers / Number of job offers made) X 100.
For example, company ABC Pvt Ltd extended 50 job offers during their hiring drive. This means they finalized and connected with 50 candidates in total. Now, only 40 candidates reverted back with an acceptance. So, in this case, the OAR would be:
OAR= (40/50) x 100 = 80%
As we can infer, this percentage gives a clear view of how many candidates are accepting the job offers relative to the number of offers made. So, 80% of candidates accepted the offers, and 20% of them declined.
The Implications of Varying Offer Acceptance Rates
Positive Offer Acceptance Rate
A high Offer Acceptance Rate generally indicates that your recruitment process is functioning well. If you have a high OAR, it means that candidates are finding your offers attractive, and your employer brand resonates with them. This positive rate is often a sign of:
Competitive offers
Your compensation packages, including salary, benefits, and perks, are competitive within the industry, making them appealing to candidates. So, you do not need to reconsider the budgeting for your hires.
Effective recruitment process
Your average time to hire is within a reasonable period, which keeps candidates engaged and interested. Some companies drag on the recruitment process for too long leading to candidates feeling burnt out and moving on to better, more efficient alternatives. Also, reports show that 72% of candidates are likely to share their bad experiences during the hiring process with their network. Glad you’re not part of that crowd!
Strong employer brand
Whatever your marketing team is up to, they’re doing it right. A high OAR signifies that your company’s reputation and employer branding are strong, making candidates eager to join.
Alignment with candidates’ expectations
A high OAR shows that you are in sync with your candidate’s expectations. Your job offers to align well with what they were looking forward to, both in terms of job role and company culture among other factors.
Negative Offer Acceptance Rate
Conversely, a low Offer Acceptance Rate is, in very Gen-Z terms, a “red flag” that indicates several potential issues:
Misaligned offers
This generally means there is a misunderstanding between the job type and the candidate type you have picked for the offers. Your job offers might not meet candidates' expectations in terms of salary, benefits, or career growth opportunities. This is further backed by the fact that a shocking 72% of applicants reported feeling misled by a job description, understanding which is the first step towards negotiating an offer or declining it altogether.
Ineffective recruitment process
A lengthy time to hire could result in candidates losing interest or accepting other offers. Especially in this fast-paced world, where the time to hire fell 18% in the last two years if your brand is taking weeks to get back to candidates, you need to pull up your socks and take it in your stride to optimize your candidate experience.
Weak employer brand
If your employer brand is not strong, chances are that candidates you approach will turn down the offer, inevitably. This is because they might accept job offers from better companies who have a more visible and acceptable presence in the industry or they simply might not want to engage with your brand and stall their career growth even if they do not have a plan B. Sounds brutal, right?
Budget impact
Now, if your company has a low OAR, it means that you have a lot of vacancies waiting to be filled. This directly hampers your day-to-day outputs and compromises, both your long and short-term goals for the company. However, this also means that now you have increased recruitment costs on your hands as you have to extend more offers to fill a position, affecting the overall recruitment budget.
Increasing manpower gaps
As we discussed, a poor OAR leads to substantial financial and operational impacts. Now, the cost of recruitment increases with every rejected offer, as the recruitment process needs to be rebooted or prolonged. Additionally, unfilled positions can not only delay projects but also overburden current employees who turn in their resignations and jeopardize your situation even further.
7 Ways to Enhance Offer Acceptance Rate
Improving your Offer Acceptance Rate demands a comprehensive approach that addresses every aspect of your recruitment process, right from application to the screening rounds and sending out final offer letters. Here are seven strategies to consider:
Enhance your employer's brand
Your employer brand is your company’s reputation in the job market. A strong employer brand makes your organization more attractive to top talent. Companies like Google, Microsoft, and Apple, known for their strong employer brands, consistently report high Offer Acceptance Rates and in turn become the most “attractive” employers dominating the top 10 most coveted workplaces.
Similarly, invest in building a positive image by showcasing your company culture, employee testimonials, and the benefits of working at your company on your careers page and social media channels.
Streamline the hiring process
Time is critical in recruitment. A lengthy hiring process can lead to candidate drop-off, as top candidates are often in high demand and may accept other offers if your process is too slow.
Reduce the time to hire by automating administrative tasks, conducting efficient interviews, and maintaining clear communication with candidates throughout the hiring process. You can also take the help of ATS software and optimize the hiring cycle further, cutting down the lag by 60%.
Offer competitive compensation packages
Salary and benefits are among the top factors candidates consider when deciding whether to accept a job offer. To supervise an ideal budgeting benchmark when it comes to extending offers, create a research and data-intensive mechanism to crunch your numbers.
Regularly measure your compensation packages against industry standards to ensure they are competitive. This includes not only salary but also bonuses, health benefits, retirement plans, and other perks that can make your offer more lucrative.
Personalize the offer
Candidates are more likely to accept offers that feel personalized to their needs and career goals. During the interview process, take the time to understand what each candidate values most in a job offer—whether it’s a flexible work schedule, professional development opportunities, or work-life balance—and tailor your offer accordingly.
You can also personalize your offer with perks and benefits that align more closely with the candidate’s social or cultural background, previous experience, and work profile. However, keep an eye out while you customize and craft these offers to avoid falling into the pit of offensive stereotypes that can take a toll on your employer branding.
Improve communication
Clear, transparent, and timely communication can significantly influence a candidate’s decision to accept a job offer. Keep candidates informed about where they stand in the recruitment process, and be prompt in extending offers once a decision has been made. Ensure that the offer letter is detailed, clear, and free of any ambiguity.
Foster a positive candidate experience
The experience candidates have during the recruitment process can heavily influence their decision to accept or decline an offer. Ensure that every interaction—from the initial application to the final offer—is positive, respectful, and professional.
78% of candidates report to judging a company’s communication with their employees based on their candidate experience during the hiring cycle. So, a positive candidate experience reflects well on your company and can not only boost your Offer Acceptance Rate but also work wonders for your brand imaging in the industry.
Use data-driven insights
Data is power. Your dependence on data could be one of the most trivial yet significant changes you make to your hiring process. Leverage recruiting metrics to track and improve your Offer Acceptance Rate.
Analyze the factors that contribute to accepted and declined offers. This might include reviewing data on the number of offers made, the time period between interviews and offers, and feedback from candidates. Use these insights to refine your recruitment strategies and make data-backed decisions.
Wrapping Up
The Offer Acceptance Rate is more than just a number; it’s a reflection of your company’s ability to attract and secure top talent. By focusing on improving this metric, you can enhance your recruitment process, reduce hiring costs, and ensure that your organization remains competitive in the job market.
Ultimately, a high Offer Acceptance Rate is not just about making more offers; it’s about making the right offers that align with the needs and expectations of qualified candidates. With the right strategies in place, you can increase your Offer Acceptance Rate and secure the talent needed to drive your company forward.
