Section 3. Sourcing: Do you spend the majority of your money and time on the most effective sources?
1. Which recruiting source produces the very best on-the-job performers? Which source produces the worst quality hires? Does the budget percentage spent on specific sources match the effectiveness of the source?
Discussion: If you run the data in recruiting, you invariably find that among each of its elements, sourcing has the highest impact on the overall success of the hiring process. Unfortunately, few recruiting departments have accurate processes for identifying which sources produce the best candidates for key jobs. In order to be strategic, recruiting managers must look at not only the cost of every source, but also the quality of the hires that come from those sources. In addition, it is invariably true that, for some unknown reason, the percentage of the recruiting budget spent on weak sources exceeds that spent on the very best sources. (For example, top-performer referrals are almost always the best source of candidates, but most companies have not funded a single program designed to solicit top-performer referrals.)
2. Which recruiting source produces candidates that stay a long time (i.e. have a high retention rate)?
Discussion: In addition to assessing recruiting sources based on their ability to produce top-performing hires, it’s equally important to look at sources based on their ability to produce employees who stay on the job a long time. Since some sources produce hires with high voluntary turnover rates, it’s important for recruiting managers to identify the sources that produce both high-quality candidates and those who don’t quit within two years. (For example, recruits from third-party search firms often have a higher turnover rate than similar hires from employee referrals.)
3. What schools do your top performers come from? Do you spend the most time and money recruiting at those schools that produce the best performing hires? How long does it take for a college hire to reach the performance level of an equivalent experienced hire?
Discussion: Few college recruiting programs are data driven, and many collect no effectiveness data at all other than the number of hires made. As a result, companies continually return to the same schools and use the same approaches to college recruiting. But strategic recruiting managers continually reassess the schools they attend and the techniques they use based on the effectiveness metrics from the previous years. In addition, recruiting managers quantify the economic cost/benefit ratio of college hires to ensure that their firms hire the right mix of college hires and experienced hires based on their relative economic return. Incidentally, many firms find that their very best current employees did not in fact graduate from “top 10” targeted schools. In addition, close analysis of college recruiting processes almost always finds that most current college recruiting programs are incapable of truly global recruiting.
4. Do the best hires come from active candidates (people actively seeking jobs) or from currently employed top performers that are not actively looking for a new job (often known as “passive” candidates)?
Discussion: The single biggest error that recruiting departments make in sourcing is focusing on active candidates. The majority of candidates at most firms are in fact active candidates. Although these active candidates will literally come to you, they might not become the very best performers on the job. Strategic recruiting managers go the next step and compare (and quantify in dollars) the on-the-job performance differential between active candidates and currently employed candidates who must be poached from other firms. Because the performance difference is often significant in key jobs, it’s important to continually reassess sourcing to ensure that your processes and recruiters focus on the harder-to-recruit currently employed top performers.
5. Which has a higher ROI, recruiting great talent from the outside, or recruiting, retraining, and developing your current average employees?
Discussion: In most firms, external recruiting is independent and totally divorced from internal job transfers and promotions. Unfortunately, this “silo” approach can result in some bad decisions regarding when to hire externally and when to look internally. Wise recruiting managers calculate the costs, benefits, and relative success rates of each approach. They then develop systems to coordinate their efforts with those of the internal transfer/promotion function to ensure optimal overall results.
6. Which source produces the top diversity hires? What factors cause such a large number of diversity candidates to be screened out before hiring? Why doesn’t diversity recruiting also take responsibility for diversity retention in order to effectively increase the number of diverse employees?
Discussion: If diversity recruiting programs are to increase their effectiveness, they must, like all other business processes, become data or metrics driven. Yet few diversity recruiting managers track source effectiveness, and even fewer do failure analysis in order to identify why such a high proportion of diversity candidates are screened out of higher level job searches. It’s important to identify these reasons and to develop mechanisms for eliminating these barriers. Barriers often include unnecessarily high experience requirements and difficulties that occur during the interview process that are unique to diverse candidates. One final area of concern is the relative lack of connection between diversity recruiting and diversity retention. Since a high diversity turnover rate essentially “negates” effective recruiting, it’s important for recruiting to work closely with diversity retention efforts to ensure that the reasons for early turnover are factored into the recruiting process.
Section 4: Questions from purgatory.
This section contains questions, that although important, don’t quite have as much impact as the questions from hell in this and my last article. They are still, however, important questions that most recruiting managers cannot answer with facts rather than opinions.
- If recruiting is so important, why aren’t managers measured and rewarded for doing it effectively?
- What factors cause managers to undervalue recruiting and give it a low priority?
- How should recruiting strategies and practices change with fluctuations in the rate of economic growth and unemployment?
- What is the name of your recruiting strategy, and what are your top recruiting goals? If you asked your 10 most senior managers to name your recruiting strategy and its top goals, what percentage would get them right? Would your recruiters do much better?
- How does your recruiting function give your firm a competitive advantage? Have you done a side-by-side competitive analysis to show how each element of your recruiting process is superior in performance to the comparable function at your direct competitors?
- If your recruiting budget doubled, how long would it take before the impact could be seen in increased employee productivity, profits, or stock value? If you cut your budget in half, would the same impact happen in reverse?
- Does your recruiting function forecast accurately? Do you adequately warn managers about upcoming recruiting problems and opportunities? If so, what is the name of that forecasting report that is regularly sent to managers?
- Although most candidates who reject offers say “it’s the money,” how could you identify the real causes of rejection? (Note: Asking “turndowns” six months later often gets you more accurate answers.)
- Which firms have the world’s best recruiting function? How would you know what world-class looks like?
- What are the most strategic metrics for measuring recruiting effectiveness?
- What are the characteristics, skills, experience, and competencies that make a great recruiter? Do you identify those characteristics within your firm and use them in selecting your recruiters?
- What is your most effective recruitment tool? Screening tool? Who is your most effective recruiter? Do you really know or are you just guessing?
- If external recruiters are significantly rewarded based on successful hires, why don’t corporate recruiters receive a performance bonus or reward?
- Do the people with the “best” resumes turn out to be the best employees? Have you ever tracked this connection with current employees in order to validate your resume screening process?
- Do people who do really well during job interviews perform really well on the job? Have you ever checked to see if what should be logically true actually is?
- What are the critical success factors in the recruiting process that “cause” it to succeed or fail? What process do you utilize to identify failure factors?
- Does outsourcing recruiting have a higher ROI than maintaining a complete corporate recruiting function?
After reviewing these “questions from hell” in recruiting, I hope you have found that the questions themselves are, on the surface, reasonable questions that should be periodically asked by senior recruiting management. Most find that these are not outlandish theoretical questions, but rather practical questions that, if answered correctly, could help guide any recruiting department from mediocrity to excellence.
Unfortunately, recruiting has historically suffered through an endless cycle of budget cuts whenever the economy goes sour. If your recruiting department is to break that cycle and become a true business partner, everyone in it must learn to think differently and to become more analytical. Becoming more analytical means a shift in decision-making toward a model that relies on facts and data as opposed to intuition.
Unfortunately, most recruiting metrics and measurements miss the boat because they rely more heavily on tracking costs than on identifying business and revenue impacts. As a result, most of the metrics reported by recruiting are disappointing to VPs of HR, CEOs, and CFOs. Until individuals and departments can learn how to quantify the business impact of great recruiting and to answer these questions from hell, professionals in recruiting will be continually treated as second-class citizens.
I hope these questions stimulated your thinking and that, over time, this article will become one of your favorite reference sources.
Author’s Note: If this article stimulated your thinking and provided you with actionable tips, please take a minute to follow and/or connect with Dr. Sullivan on LinkedIn.