Does Your Company Gain A Competitive Advantage From Recruiting? – Can You Prove It To Skeptical Executives?

Sadly it’s rare to find “gaining a competitive advantage” on any list of strategic recruiting goals.

This is a strategic thinkpiece.

And that omission from our goals is troubling. Because every other strategic business function that operates in a “highly competitive environment” like finance, product development, and supply chain.” 

For years, beating the results produced by other functional competitors in their industry was one of their primary strategic goals. The leaders of these business functions have emphasized gaining a competitive advantage within their company. They have learned that their executives are fierce competitors. They spend much of their time trying to figure out how to “crush their competitors” in every functional area. They do that to gain and then maintain a competitive advantage, which will eventually also directly improve the company’s bottom line results. 

However, I should note that there is one glaring exception to striving for a competitive advantage. And that is corporate recruiting. Where the highest goal is usually just “catching up” or “not falling behind the average firm with more resources.” In addition, many times, recruiting leaders are often satisfied with stating that they just want to “be the best.” 

However, they have absolutely no metrics or even a process for directly measuring when they actually become “the best.” So instead, I recommend a more formal approach for determining when you actually become “the best function” in your industry.

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What Is A Competitive Advantage And Why Must It Be Measured? 

A competitive advantage (CA) is when a strategic business function within a corporation (i.e., product development, finance marketing, or recruiting). Produces functional results that clearly exceed the results produced by other top corporate functions in their industry. That difference is usually measured by a predetermined percentage (often 10%). And having a functional area produce a competitive advantage ends up contributing to an overall increase in that corporation’s overall bottom line results. Those superior functional results are usually created by one or more “functional excellent” factors, including innovation, leadership, strategy, team talent, quality processes, technology, superior resources, adaptability, and being forward-looking or their available tools. 

And because almost all executives are justifiably extremely cynical about all verbal claims of a CA. Before they are likely to accept your claim of a real advantage that functional performance must be objectively quantified, measured, and compared side-by-side to the results in the same functional performance area at each individual top-performing firm in your industry.

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Recruiting example – the talent function at Amazon would provide a competitive advantage to the company. Whenever it’s, Giveaway/Takeaway ratio was at least one point higher than each of its product competitor firms’ ratio each year (e.g., 7-5). This ratio is the number of hires directly recruited away from a top company (7), compared to the number of employees that the company directly hired away (poached) from your company (5) during the past year. Obviously, excelling in this measurement area shows that you have a recruiting and retention competitive advantage against this specific firm.

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The Benefits Of “A Competitive Advantage Recruiting Function”

In case it’s not automatically obvious to the reader. Many advantages accrue to a function and its leaders when company executives agree that it does provide a CA and the recruiting function is an “industry leader.” Those top five benefits include:

  • Your company’s business results will improve – because excellence in the functional results of strategic functions directly impacts business results. The bottom line results of your company are likely to improve proportionately as long as that competitive advantage is maintained.
  • Benchmarking your competitors will improve your company’s recruiting processes – because developing a competitive advantage requires the constant benchmarking and monitoring of what your competitors are doing. The data that you gather will help you learn a great deal about the best and the developing recruiting practices at other top firms. And smart recruiting leaders will proactively look ahead and develop new recruiting approaches at your firm before other companies get around to adopting these new approaches. 
  • You will earn increased credibility and support from your executives – and because of this significant CA accomplishment. Your company’s executives will be more aware of your function and its leaders. But they are also more likely to listen to and approve new and riskier projects from your leaders. Also, you will no longer hurt your reputation every time that you publicly voice that you are in “catch-up mode.”
  • Your team’s ability to measure will improve – because gathering data about and measuring your competitive advantage will be new and difficult. This focus on metrics and measuring performance differentials will have the unintended consequences of speeding up recruiting’s complete transition to a data-driven function. And that will likely lead to the improvement of your recruiting metrics in all other areas. 
  • Your reputation as a leader in recruiting will make attracting great recruiters easier– your improved internal and external image of your recruiting function of being a top recruiting function in your industry. This will make it easier for your recruiting leaders to attract more high-quality recruiters and data experts to your team. 

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Recruiting Performance Comparison Areas For Your Competitive Advantage Scorecard 

In order to prove to your executives that your recruiting function has really developed a competitive advantage, you will need to provide them with a scorecard that includes individual measures of each of the critical head-to-head comparison areas between your and every other top company in your industry. The 8 head-to-head measurement areas that you are most likely to cover in their scorecard are listed below. Where the most impactful recruiting comparison areas and those that make it easier to collect data are listed first.

  • Show your competitive advantage in employer brand strength – because employer brand strength is usually among the recruiting areas with the highest overall impact. But also because comparison data is easy to obtain. It makes sense to start measuring your competitive advantage in this performance area. You can easily make numerical comparisons between your employer brand strength and those of other top companies. The brand data can be found on multiple “employer comment sites” (e.g., glassdoor.com). Where the company reviews from applicants, candidates, and new hires are publicly available. You should also compare “best place to work” rankings of your company versus your talent competitors. These objective rankings are provided by Glassdoor, Forbes, and LinkedIn.
  • Show your advantage in net talent gain – the best way to show that your company is winning the industry’s head-to-head aggressive recruiting competition. This is by comparing the number of employees that your recruiters directly hired away from each individual competitor company directly with the number of your employees that each individual firm has successfully poached from your company. Data for this insightful “giveaway/takeaway ratio” can be obtained primarily from individual LinkedIn profiles. Where you can identify the company that each of your departed employees is now working at. And then, you compare that number to the number of new hires that you have directly recruited away from each top firm during the last year. Obviously, a higher first number 7, in a 7 – 5 ratio, shows you have a competitive advantage in net talent gain.
  • Ask a University Professor to make all of the company submitted data anonymous – some of the most insightful data that can show which firm has a competitive advantage against each other specific firm is clearly not available to anyone outside of each company. That valuable company-protected data often includes their number of applicants, the % of unfilled positions, their percentage of referral hires, time to fill, colleges they target, and their finalist offer acceptance rate. However, there is a way that this “reluctant to share private company information” from each major company can be obtained. This approach uses a neutral professor to gather and make this valuable information anonymous. The professor is required to swear secrecy. And then disguise the names of each firm (by assigning each a random ID number, so there is no way to connect the data with the name of the real firm. And then anonymously highlight the best-performing firms under each assessment area. I have participated in this approach. And it was highly successful because it allowed recruiting leaders to quickly understand the competition. While honestly being able to say that their confidential information would never be openly disclosed. Many professors will do it for little or no money (because it gives them an opportunity to build relationships with the industry).
  • Assessing whether you attract quality candidates by determining where your “not hired” finalists ended up working – is one of the best ways to determine if you are attracting quality candidates. It is by assessing the quality of the firms that your finalists ended up joining (after they were not hired by your firm). Obviously, if they end up getting hired at top-ranked firms, you know that you have successfully attracted some top-quality candidates. You can gather this data by waiting a few weeks after your job closes. And then identifying whether the new workplace of each finalist was a top company by searching on their individual LinkedIn profile.
  • Determine if you attracted quality candidates by where else they applied – an alternative approach to the assessment of candidate quality requires a little additional effort from recruiters. You merely make it a formal part of the interview process to require every individual recruiter to specifically ask every final interviewee to list the other major firms that they have recently applied to. This data will not only reveal which top firms are successfully attracting your top applicants (to better know who are your direct talent competitors). And if you also ask them what attracted them to each of these top firms. You will better understand what your top applicants believe that the other top firms have to offer.
  • The visibility of your ads and branding materials – obviously, if your job postings and recruiting/branding materials are more visible. You’re much more likely to attract a higher number of and more diverse applicants rather than gathering this visibility data yourself. I recommend that you use a media expert to gather it for you. With this visibility data, you can track the number of times and when your own and the job postings of your competitors appear to the public. Media consultants can also continually track the number of lines of visible script (about working at your company) that appear in the media each month (compared to your talent competitors).
  • Conduct a company attractiveness poll at industry events – your company (or group of companies) can conduct a poll of random attendees at industry events. Ask participants to anonymously rate the attractiveness, the diversity, the employee experience, the leadership, and their likelihood of applying to each top industry firm. This information will provide you with deep insights into what potential applicants in your industry are currently thinking.
  • Begin to focus on adding unique recruiting approaches that have proven to provide a CA – gaining a competitive advantage almost always requires that you utilize unique recruiting tools the other top firms don’t currently use. These recruiting tools are often not widely used by large conservative firms because they are highly aggressive. And because these aggressive tools are rarely used, they usually provide a competitive advantage. Include in your list of aggressive recruiting tools to consider: referrals from top performers, direct poaching from your competitors, a talent pipeline, hiring to hurt, and boomerang rehiring. Also, in three other cases, merely adding something else that most others don’t have. will instantly provide you with a competitive edge. The most impactful of those additions is moving the entire recruiting department to a data-driven approach. However, also. adding proven leading-edge technology, as well as hiring a handful of data-driven aggressive recruiters by themselves, will also provide you with a competitive advantage. And finally, changing to a flexible recruiting strategy that automatically shifts with the supply and the type of talent that is available. It can also provide you with an instant recruiting edge.
  • Additional measurement areas – of course, you should add any additional competitive advantage comparison areas to your competitive advantage scorecard. Especially in the critical recruiting areas of sourcing, referrals, identifying applicant attraction factors, improving candidate assessment, and reference checking. Provided that you can find the comparison data from the other top firms in your industry.

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Action Steps For Developing A Competitive Advantage Recruiting Plan

I have also found that there are 4 critical action steps that you should include in your competitive advantage recruiting plan. They include

  • Start by developing an “us against them” competitive mindset throughout your team – because recruiting is a zero-sum game where one company must win, and another must lose. Everyone on your recruiting team must be guided to develop a “us against them” competitive mindset where all decision choices and new recruiting ideas must provide a reasonable chance for our firm to improve our competitive advantage. And in addition to proactive recruiting. We must add to our tools aggressive recruiting approaches that are designed specifically to “weaken” our talent competitors, as one CEO put it to me. “Hiring from among the unemployed doesn’t hurt our talent competitors at all. However, directly poaching away their critical talent. Significantly raises our ship while simultaneously lowering the competitor’s ship. I really prefer the approach that hurts our competitor”.
  • A competitive advantage approach must be data-driven in order to be successful – because a competitive advantage can only be proven with comparison numbers. And an increase in the availability of data makes it much easier to continuously improve. The entire recruiting function must shift to a data-driven approach which is one that is dominated by quantified results metrics.
  • The tracking of competitors must be continuous – in order to keep up and beat our talent competitors. The recruiting team must commit to an externally focused continuous benchmarking approach. Which continually tracks both the actions and the plans of our top recruiting competitors. 
  • The approach must be future-focused – because merely copying whatever your competitor successfully does often forces you into a game of “catch-up.” In order to avoid surprises, the competitive advantage plan must be forward-looking, predictive, and anticipatory. So that we know about, plan on, and adequately prepare for all likely program upgrades at each major competitor. The plan must also adequately prepare us for the likely upcoming shifts in the talent marketplace.

Final Thoughts

Recruiting leaders constantly state publicly that they want to be more strategic and businesslike. Unfortunately, I have found that most recruiting departments end up, in reality, not being very businesslike. Because its leaders are too often satisfied with providing results that do not make us industry leaders and this, unfortunately, means that recruiting has the highest business impact of any HR area. Recruiting leaders will be responsible for failing to provide the company and our fellow employees with many competitive advantages. That would directly increase the company’s revenue, profit, and stock price which would reduce the likelihood of future layoffs and increase the available salary pool.

Author’s Note

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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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