CEOs Say Recruiting Is The #1 Growth Limiting Factor – These Ugly Numbers Reveal Why

CEOs cite recruiting as the #1 factor that restricts business growth! That should shock TA leaders. Because during an economic downturn, literally, nothing comes close to the strategic importance of reviving your organization’s growth rate. So in my view, recruiting leaders should be shocked once they discover that recent survey results reveal their function is the top overall business challenge (not just HR challenge) that keeps CEOs up at night (TA ranked as the top strategic problem). CEOs listed it as often as the next four categories combined: sales, marketing, execution, and finance (source). 

This year, a similar survey by PWC found that 77% of executives ranked recruiting/retention as their most critical driver of growth. Ahead of digital transformation and taxes (source). And because your organization’s current employee retention problems are likely to continue. Recruiting’s inability to find replacements and, at the same time, fill newly created openings. It will continue to remain a thorn in the side of almost all executives unless smart recruiting leaders take immediate dramatic actions. Therefore the “ugly numbers” provided in this article are designed to highlight with data just how bad most recruiting functions are performing.

“How Are We Really Performing In Recruiting?” – These Ugly Numbers Should Startle You!

In my decades of research and practice, I have found the key baseline strategic inadequacy that holds back almost every recruiting function. It’s the fact that recruiting decisions continue to be driven by intuition, false assumptions, and outdated practices rather than by data. I have also found that without the wide distribution of these “startling numbers” (I call them “ugly numbers”) that, by themselves, have forced individual recruiting leaders to instantly face reality. Most serious recruiting problems will continue to fester over an extended period of time.

This article highlights a handful of these “ugly numbers” discovered by external data-driven research. And even though the numbers presented here are not specific to any one company. I have found that it is essential that you at least initially assume that similar numbers are now occurring at your organization.

Part I – Let’s Begin With Two Foundation “Ugly Numbers” That Reveal TA’s Big Picture

There are two ugly numbers that strike at the very foundation of recruiting’s overall failure to boost business growth.

  • Recruiting has an embarrassingly high failure rate – most recruiting leaders are startled to learn that groundbreaking Leadership IQ research found that 46% of newly-hired employees will fail within 18 months. This research also revealed that only a paltry 19% of new hires would achieve “unequivocal success” (source).
  • Half of all recruiting functions are not reaching their goals – on average, 50% of companies failed to meet their hiring goals last year (source). And in the increasingly important diversity area, less than 2% of employers said they were confident “that they were achieving their DEI goals (source).” This diversity goal failure impacts all applications because 76% of job seekers report that a diverse workforce is an important factor when evaluating companies and job offers (source).

Part II – Specific Recruiting Problem Areas Are Revealed By These “Ugly Numbers” 

This second section highlights what I consider the ugliest recruiting subfunction data points and numbers that should shock recruiting leaders into action. The key problem areas are, in this case, listed in the same start-to-finish chronological order that occurs in most standard recruiting processes.

Ugly numbers that reveal… a reduction in applications

  • The application process – A slow or painful application process will drive away most applicants – an amazing 74% of candidates who start a company’s job application process drop off before they complete it. Unfortunately, that means that you could be reducing your applicant pool by three quarters, and you would never know these dropouts never submitted their application (source).
  • Employer brand – A weak brand will discourage applications – if they find that an employer actively manages its employer brand. 75% of active job seekers are more likely to apply for a job at that company (source). And organizations that build a brand that influences the best candidates to apply while dissuading others can improve their applicant quality by 54% and quality of hire by 9% (source).
  • Social media – A weak social media image will reduce your applications 55% of those that “have read a negative company review have decided against applying for a position at that company (source).” It’s also important to realize when potential applicants are considering which company to apply to. 98% of applicants proactively visit social media sites “to see what others are saying about your hiring experience and working at your organization (source).”
  • Job posts – Weak job posts will further cut applications – 75% of candidates say that “the appearance of your job posting” directly affects their decision to apply (source). And obviously, if you post your jobs on sites your target candidates don’t visit, you will dramatically reduce your total applications without ever knowing it.

Ugly numbers related to… informing candidates, the hiring process and offer acceptance

  • Slow hiring – A slow hiring process means your top candidates may be gone by the time you make a decision – even though SHRM has found that the average time to fill a job is 41 days. Many applicants are no longer available by then. 82% of them expect the hiring process to take a maximum of two weeks. So 66% won’t wait beyond two weeks to hear from an employer before moving on to another opportunity (source). While the very best candidates in highly competitive jobs may be gone before even 10 days pass (source).
  • A mystery hiring process – Not revealing details about your hiring process frustrates candidates – the #1 expectation of potential candidates visiting your career site (after listing your open jobs). Prepare them by revealing the details of the hiring process that they are about to face (source). So it’s also a problem when 76% of candidates said that the hiring manager never explained the next steps in the hiring process (source). 
  • The interview process – A painful interview process will increase interviewee dropouts 30% of candidates will abandon potential employers during the interview stage when they don’t find it candidate-friendly (source). 
  • Pre-hire assessments – Unnecessary assessments frustrate candidates47% of candidates dislike pre-hire assessments. Because either they take too long or it’s unclear why they are taking them. And that will lead to higher candidate abandonment rates (source).
  • Offer acceptance – Poor interviews also hurt offer acceptance75% of applicants say they wouldn’t likely accept a job offer if they were treated poorly during the entire recruitment process (source). And 45% of finalists have actually rejected a job offer after a negative interview experience (source).
  • Background screening – Slow screening will also increase finalist dropouts – unfortunately, 31% of employers lose candidates during background screenings because they take too long (source).

Part III – Impacts After The Hiring Process

After hiring has been completed, some ugly numbers still reveal some additional serious problems in recruiting.

  • Onboarding – Weak onboarding impacts new-hire failure 30% of new hires leave their jobs almost immediately within 90 days (source). In part, 88% of employees say their company does not do onboarding well. And a surprising 29% of new hires say they were not fully prepared and supported. And this hurt both their initial performance and their willingness to stay (source).
  • Misleading your candidates – A recruiting process that misleads will limit referrals – a whopping 72% of new hires feel that they were misled during the hiring process. Because after starting, they found that the position or the company was “very different” than they were led to believe during hiring (source). And feeling misled will dramatically hurt what your new hires tell their colleagues about your company. 
  • Customer impacts – A bad candidate experience can also hurt product sales56% of candidates that are current customers report that it is unlikely that they would remain one after a bad experience as a candidate (source). For those that are not currently customers, it is also highly unlikely that they would become a new customer after a bad hiring experience.

Final Thoughts 

Ouch, it’s painfully true and somewhat embarrassing that recruiting has been cited in both Conference Board and PWC executive surveys as their top business/management challenge during most of the last 10 years.

So if you want to stop being a primary factor that limits business growth in your organization it’s important to recognize that even though your company has been having great difficulty in attracting new applicants. Other companies with excellent data-driven recruiting and employer branding efforts are not facing the same shortage of applicants. For example, as recently as last year, Google and IBM received as many as 3 million applications. And the recruiting powerhouse Amazon received an astounding 30 million applications during the tough recruiting year of 2020 (source).

So if you want to end your continuing recruiting problems, in my view, it’s time to face reality. Data and a focus on ugly numbers will quickly reveal the many reasons why your organization has not been meeting its recruiting goals. So as your critical first step. I strongly recommend that you encourage the leaders of your recruiting function to immediately begin the transition to the data-driven, metric-rich model that every other business function has already adopted. And that means that you must also assume that starting today. Most of the startling and embarrassing “ugly numbers” presented in this article are also likely currently occurring at the recruiting function in your organization. 

Author’s Note 

  • Please share these solutions by sending this article to your team/network or posting it on your favorite media. 
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Dr. John Sullivan 10/10/22 for the DJS Aggressive Recruiting Newsletter

About Dr John Sullivan

Dr John Sullivan is an internationally known HR thought-leader from the Silicon Valley who specializes in providing bold and high business impact; strategic Talent Management solutions to large corporations.

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