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Cathy explains how to track the recruiting process in Excel for staffing needs. She recommends starting by creating a new blank workbook in Excel. In the first column (Column A), enter "Candidate Name," followed by "Address" in the next column, and "Hired" in another to indicate hiring status. To enhance the layout, Cathy suggests merging and wrapping text for headers by selecting two cells, accessing the format options on the ribbon, and adjusting alignment settings. This method allows for better organization and tracking of candidates and related documents throughout the recruiting process.