If you are a recruiting leader whose executives have extremely high expectations for dominating their industry, this is the article for you. After 20 years of studying Silicon Valley and West Coast firms that dominate their industries, I have found that there are clear differentiators that cause firms like Google, Amazon, Facebook, and Salesforce to produce truly exceptional business outcomes, as a direct result of their exceptional recruiting. Some call these differentiators “strategic principles”, while others use the phrase “focus areas”. Instead, I call them “critical success factors” or CSFs. Applying these factors comprehensively is a critical strategic step that leads to success, at least for those whose goal is to dominate the recruiting competition in their industry.
Coincidentally, I recently completed a survey of the future “big bets” being made by the top 10 most attractive firms to work at. And not surprisingly, the future recruiting directions of these elite firms differ significantly from the future direction laid out at most average companies. Fortunately, for recruiting leaders that have the courage to set dominance as a goal, the critical success factors listed here can serve as a roadmap for reaching that goal. I have broken these strategic and operational factors into four categories, with the most impactful factors listed first under each category.
Roadmap Category 1: Critical Strategic Shifts That Must Be Made Across The Entire Recruiting Function
Every strategic aspect of corporate recruiting will be impacted by these top 20 critical strategic shifts. Obviously, the shifts require recruiting functions to rapidly move away from many traditional recruiting strategies.
- A strategic shift toward a focus on increasing business impacts — This first step in achieving dominance, requires the primary goal and strategic focus of the recruiting function to shift toward measurably impacting strategic business goals, rather than simply aligning with them. The shift is essential because executive interest and exceptional support are only given to business functions that unambiguously impact the organization’s strategic goals. Simply making executives aware of your recruiting results may not be enough. To guarantee they understand the scope of your impact, your recruiting results and impacts must also be converted into dollars (i.e. their dollar impact on corporate revenue). Then, for example, rather than merely stating that you hired 22 salespeople last year. You could boast that each of the salespeople that you hired produced an increase in sales that resulted in $11 million of additional revenue to ensure the believability of your revenue impacts. Recruiting must work closely with the CFO “the king of metrics and quantification” to validate the true dollar value of its business impacts. A secondary strategic recruiting goal should be the proactive solving of major business problems using recruiting tools.
- A strategic shift to data-driven recruiting decisions — Shifting to data-driven decision-making allows the previously “soft” employer branding, recruitment marketing, sourcing, assessment, and candidate selling decisions to now be made faster and more accurately. Under this data-driven approach, rather than assuming that standard practices and programs are okay, recruiting instead adopts the assumption that each recruiting element does not work and that it will soon become obsolete or that there is a superior option that should be tried. This “everything can improve” assumption aids in forcing continuous improvement. It’s also true that machine learning can’t be effective without large amounts of digital data. A data-driven function becomes an absolute necessity if you want to take advantage of the amazing capabilities provided by machine learning.
- Shifting to a focus on innovators — For decades most recruiting processes have focused on hiring productive workers. However, performance differentials calculated by firms like Apple and Google reveal that innovators may add exponentially higher economic value (10 to 25 times more) than the average productive worker. And as a result, innovators become the primary recruiting target in most key jobs. Top performers are the secondary target because they can produce 5 to 9 times more than the average worker in the same job. As a result, the finding and hiring of innovators and top performers get prioritized. And jobs targeting them are assigned the best recruiters and the most resources.
- A shift to a War for Talent posture — In today’s highly competitive talent marketplace, the best firms adopt an aggressive “war for talent” strategy. This war footing means taking a highly aggressive and competitive stance. Once you become a fierce competitor, you have no choice but to continually use data and experimentation to develop recruiting strategies that provide your firm with a competitive advantage. Fierce competitors also adopt targeted poaching strategies and tools. Because hiring away critical top talent from your competitors helps your firm, while it simultaneously hinders your competitors.
- A focus on developing a dominant employer brand — The most powerful long-term attraction factor is an external employer brand image. The most effective employer brands are data-driven, so their brand pillars match the attraction factors of your top prospects. But a powerful brand also makes it possible for an outsider to easily “feel the excitement” of working at your company. These brand pillars also clearly differentiate your firm, which provides it with a competitive advantage. Like all critical success factors, a powerful employer brand has measurable impacts. To start with, it dramatically increases your number of applicants each year (the target is 50 times your number of employees). You can tell if your brand was the most powerful draw by asking a sample of applicants to rank the factors that influenced their final decision to apply. A powerful employer brand also helps to land your firm on the most visible “best place to work” lists.
- Be more businesslike and adapt business processes and tools — The speed of change within HR almost always lags behind the rest of the business. So, recruiting should make a concerted effort to benchmark other business functions to learn about any advanced parallel best practices that could be modified for their recruiting function. The key goal is to unabashedly learn, borrow and adapt from internal functions that are more than willing to share. The key internal business functions to benchmark and learn from include sales, marketing, CRM and supply chain.
- A strategic shift toward an emphasis on selling — As a result of extremely low unemployment, the power in the relationship between the company and the applicant has now shifted over to the candidate because of the severe shortage of talent with the right skills. Because top candidates now have so many choices, the importance of selling goes up dramatically. As a first step, the recruiting function must strengthen its selling component at each step of the recruiting funnel. The sales department, obviously, excels at data-driven selling. It makes sense for recruiting to start its learning by benchmarking with their own sales department. Next, recruiters and hiring managers must then be provided with stories, data, podcasts and videos that have been proven to effectively sell candidates. Data must then be continually gathered to ensure that the most effective selling approaches are being constantly used. Finally, in order to continually improve your selling approach, when top candidates accept, drop out or reject your offer, a formal effort must be made to survey them to find out which selling aspects worked and which did not.
- A strategic shift to recruitment marketing — as part of your focus on improving your selling capabilities. It makes sense to shift away from using intuition and relying on dated past practices. Start by studying product marketing and try to learn from their more advanced scientific and data-driven approach. Then try to adapt their more advanced marketing approaches to our recruiting model. Your new data-driven recruitment marketing approach will allow your firm to more accurately identify the key “attraction factors” for each target segment. Under your new data-driven approach, it also makes sense to gather data that reveals the best communications channels. Because that will help to ensure that your recruiting messages will be seen by each of your target segments.
- A strategic shift toward the passive job seeker — Most recruiting tools are designed to attract active job seekers. However, in times of low unemployment, most of the most desirable recruiting targets are already working. And, that also means, that most active recruiting tools will no longer work as effectively. It makes sense to shift to a direct sourcing approach, which focuses instead on finding and attracting employed top performers that are not actively seeking a new job (some people call them passive job seekers). It also makes sense to utilize employee referrals and LinkedIn which are not usually dominated by active jobseekers. Next, data needs to be continually gathered in order to determine which sources and sourcing tools should be given priority, because of their current effectiveness.
- A gradual shift to where technology is applied everywhere — Every aspect of the recruiting function must be digitalized. Because digitalization allows recruiting to operate faster, more accurately, cheaper and across the globe. The highest impact technology over time will be machine learning. Its constant automated feedback allows for the continuous improvement of recruitment messaging, sourcing, job matching, screening, candidate assessment, and selling. Other technologies will also begin to permeate recruiting including chatbots, live and automated video interviews, virtual reality assessments, CRM and automated recruiting processes. One important success factor will be using technology effectively, while at the same time maintaining the personalized human touch.
- A strategic shift towards pipeline continuous recruiting —At the average firm, sourcing only begins when a job opens. And that often means that recruiters must employ what I call “panic sourcing.” This is often ineffective because it takes a great amount of time to convince satisfied employed individuals to even consider a new job. A superior alternative for key jobs is a talent pipeline or talent community approach. This model not only provides more time to assess them but also additional time to build trust and a relationship with top performers that are not currently actively looking for a job. It works by convincing top prospects that might “someday want to work at your firm” to join your informal talent community. As a member, they are periodically sent information about your firm and what it’s like to work there, without any formal pressure to apply. After the assessment is complete and a relationship is built, selected members may be sent notices of job openings that clearly fit their needs. Having a pool of pre-assessed and presold individuals will directly impact the quality of your hires and lessen the chances of a mishire.
- A shift towards becoming candidate-centric — To hire the very best, you need to focus on whatever applicants and candidates expect and need. Being candidate-centric means understanding that they now hold the balance of power in the relationship. Start by making a concerted effort to understand their likes and dislikes. Next, make the entire recruiting process transparent. As a result of being candidate-centric you will have a lower dropout rate of top performer candidates and a higher offer acceptance rate.
- There must be a shift away from managers subjectively choosing hiring criteria — A large percentage of hiring errors and delays occur because hiring managers are allowed to use their gut in order to determine the hiring criteria for their jobs. However, a major change is needed toward a more data-driven approach which only allows the use of hiring criteria that have been statistically validated. Only allowing screening and selection criteria that highly correlated with on-the-job success will increase new-hire productivity, while dramatically decreasing hiring failures. Forcing managers to only use objective criteria for assessing “hiring fit” also reduces the number of candidates that were rejected because of their diversity or innovativeness. And, it will minimize the rejection of candidates that could have easily adapted to your culture.
- There must be a shift to ensure that the firm acquires future skills — In the fast-changing volatile VUCA (Volatile, Uncertain, Complex and Ambiguous) world we operate in there is a constant introduction of new technologies and products. This requires firms to recruit employees with both current job skills and what is known as “future skills.” The best firms use data to determine which non-job specific skills will be needed by the company over the next two years. And then hiring managers and recruiters are charged with bringing in qualified applicants, that also possess the needed future skills. Often those future skills cover functional areas like machine learning, cybersecurity, robotics, and quantum computing. Future soft skills that are essential in a fast-changing world often include rapid self-directed learning, adaptiveness, the ability to scale and having a large professional learning network. And in a volatile world of ups and downs, recruiting leaders must also help management create a flexible “fluid workforce” where labor capabilities can be quickly expanded, and labor costs can be rapidly but painlessly cut.
- A shift towards complementary talent management — Often, buy, build or borrow talent decisions are made in relative isolation. And as a result, the work of recruiting can directly conflict with the parallel work being done at other talent functions like internal redeployment. Instead, what is needed is a more complementary approach, where the different talent functions coordinate more and avoid overlap. Therefore, recruiting needs to shift to a more complementary posture where it increases its information sharing, communications, and coordination with other talent functions. Complementary talent functions often include including learning, compensation, internal movement, and leadership development. Operating in such a way that the different talent efforts build on and complement each other which will maximize workforce productivity and innovation, while simultaneously cutting overall costs by eliminating unnecessary duplication.
- A shift to a hiring strategy with a global capability — Firms that want to dominate their industry are almost always global in scope. And, in order to grow globally, they need the capability of recruiting in every major country. With the expansion of remote work possibilities, nearly every firm of any size must be able to hire from almost every country. For any global recruiting strategy to be effective, it needs to ensure that there is some degree of global uniformity, while at the same time allowing for unique local needs. A global “one size fits one approach” guarantees some degree of consistency, while allowing just enough local flexibility to meet unique local needs, customs and laws.
The strategic shift to data-driven decision-making must also include these critical sub-processes.
In addition, the function wide shift to a data-driven model that was outlined in CSF #2 above, is also critical for four of the most impactful recruiting sub-processes to shift to a data-based decision-making approach.
- The critical sourcing process must become data-driven — You can’t hire top candidates that never apply. It is essential that the sourcing function takes the lead in becoming data driven. This generally means using data to find and then emphasize the recruiting sources that produce the most top-performing hires. Often that source quality data indicates that employee referrals, rehiring boomerangs and direct sourcing are the most effective sources for finding and attracting top performing currently employed individuals. The best sources for active jobseekers are usually both large and niche job boards
- The candidate assessment process must become data-driven — Currently, a great deal of applicants and candidate assessment is highly subjective and full of conscious and unconscious biases. The top firms are now acknowledging that there are multiple potential bias areas in the resume screening process. And top firms are striving to minimize those bias points by using information reduction software and AI screening on their resumes. Also, in order to reduce biases, data is being used to show the value of structure in interviews, to limit questions to only those that are job-related. To minimize the effects of interview coaching, the best firms also give candidates both current real and future problems to solve during their interview process.
- The offer process must also become more data-driven — In today’s highly competitive talent marketplace, in-demand candidates have so many choices that it’s essential that you get your offer right the first time around. Lowball offers will offend top candidates. You can minimize the chances of an off the mark offer by asking the top candidates to directly list their “job acceptance criteria.” With this information coupled with data from previous successful offers, recruiters and compensation professionals can more accurately sculpt an offer that has a high probability of being accepted.
- The diversity hiring process must shift to a data-driven model — Data now makes it evident that your sales will improve proportionately when the diversity of your design and customer contact employees reflects your customer base. It also makes sense to avoid the pitfalls of the past by collecting data covering past diversity recruiting and hiring successes and failures. Use that data to determine the most effective ways to find and then sell each individual subgroup of diverse candidates.
Roadmap Category 2: Elements Of Key Recruitment Steps Must Improve To Provide A Competitive Advantage
The following critical success factor (CSF) changes are a little less strategic than the shifts in strategy outlined in the previous section. However, these changes in key elements of seven of the critical recruitment steps are still critical because they can provide a firm with a significant competitive advantage.
- Accelerating hiring speed can give you a competitive advantage — In a tight job market, the top candidates may receive multiple offers within 10 days of applying for your job. Unless you have a powerhouse recruiting brand like Google or Amazon, slow hiring will eliminate any chance that you had for dominating your industry. The first step for reducing time-to-fill is collecting data on the average elapsed time until most of your top candidates drop out of your recruiting process. It’s also important to realize that hiring speed also influences offer acceptance because many top candidates view hiring speed as an indicator of the decision-making speed throughout the organization. If you want to excel at reducing hiring speed, you must educate your hiring managers on the causes of most delays. The goal is to ensure that the time-to-fill for each of your current jobs is noticeably shorter than the decision time at your direct talent competitors.
- Any short-term hiring focus by hiring managers must be minimized — All too often desperate hiring managers will lower their standards and request a “butts in chairs” hire. Unfortunately, settling for a barely qualified candidate to fill a short-term need can hurt the firm in the long run. In order to ensure that all hires are strategic, some of the top firms have instituted barriers that restrict hiring managers from hiring to fill their own selfish short-term needs. Google, for example, puts the decision 100% in the hand of a professional hiring committee, while Amazon utilizes “bar raisers” that can veto hiring decisions if they aren’t of sufficient quality or they aren’t filling a strategic skill need. Because of their high volume of hiring each year, professional hiring committees often excel at assessing and selling top candidates.
- A component for motivating and engaging hiring managers can be a competitive advantage — Hiring managers have the highest impact on recruiting success, so it is essential that they devote enough time to recruiting. Unfortunately, most don’t, so there must be a formal element in the recruiting process that increases hiring manager engagement with the recruiting process. Start by gathering data that helps you first understand and then eliminate their causes of frustration. Then, pare down their hiring responsibilities to minimize any waste of a manager’s time. The most effective way of increasing their commitment is by showing them the tremendous costs to their team whenever there is a slow, weak or bad hire. Hiring managers also need to be aware of the high correlation between great recruiting and great business results. To further increase their motivation, it may be necessary to measure and reward both recruiters and hiring managers for great recruiting and retention.
- By involving everyone, collaborative recruiting provides a competitive advantage — Collaborative recruiting purposely increases the involvement of every employee and manager in the hiring process. By making “every employee a recruiter” and a talent hawk, a firm increases the number of people that are seeking out top talent 24/7. The largest component of collaborative hiring involves employee referrals where team members are encouraged to help recruit, not for the money but simply to help build their own teams. Team members should also be encouraged to actively participate in interviews, one-on-one coffee talks and candidate closings. This expanded involvement will lighten your recruiter’s load and create a cadre of 24/7 employee “brand ambassadors.”
- Including an intraplacement capability will give you a competitive advantage — During times when your business is growing slowly, often facilitating and speeding up internal movement will have a higher business impact than external recruiting. In those cases, the recruiting function should implement an intra-placement process where internal recruiters proactively work to find the best work location for underutilized current employees.
- A process for making the work itself more attractive will provide a competitive advantage — Candidate research data often reveals that the most powerful attraction factor for innovators and top performers is the work itself. If you want to increase your hiring success rate, you may need a formal process that encourages managers to at least partially adjust elements of an open job to meet the individual needs and interests of the top finalist. Incidentally, the second most impactful factor for innovators and top performers is seeing that their work makes a difference. Recruiting staff may need to work with individual managers to ensure that exceptional candidates fully appreciate the impact they will have if they join the firm.
- A process for making objective robot vs human choices may provide a competitive advantage — although, it might not seem to be a dominant issue now. The march of the robots will soon be upon us. To prepare, recruiting needs to negotiate a say in every decision covering whether work should be done by humans or robots, recruiting leaders need to work with the Chief Technical Officer and the COO’s office to ensure that objective criteria are used. The “hire new employees option” should have a reasonable chance of being chosen over hardware and software options, whenever new work needs to be done.
Now we highlight the last two remaining critical success factor (CSF) categories covering actions within the recruiting function that contribute to the development of a culture of continuous improvement and operational changes that support recruiting domination. Within each category, the most impactful factors are listed first.
Roadmap Category 3: Critical Success Factors Related To Ensuring Continuous Improvement
As you follow this roadmap to industry domination in recruiting, it’s important to add process elements that will ensure a steadily higher rate of continuous improvement. The critical success factors that contribute the most to continuous improvement include:
- Mass experimentation and hypothesis testing are primary contributors to domination (not copying) — In my experience, the fastest and most reliable indicator that a TA function (Talent Acquisition) is well on its way to recruiting domination is frequent experimentation. In direct contrast, being happy with “catching up” to top-performing firms may by itself doom your firm to mediocracy. Borrowing will not get you to domination — you must lead by instituting new and better performing programs and actions before others in your industry. Rather than benchmarking, the primary leading indicator is mass experimentation, an approach that has been championed at Amazon and Google. The most common and beneficial form of experimentation is hypothesis testing. You start with a hypothesis about an assumption in recruiting, and then you go out and quickly prove it. For example, you could test the hypotheses that college grades predict on-the-job success or that diverse interviewers hire more diverse candidates. Then, you could use a split sample test, a pilot implementation, or even correlations to prove whether either of these hypotheses was true (or not). Mass experimentation also requires recruiting management to accept a high level of tolerance for risk and to relentlessly find a way around obstacles and resistance factors that block new ideas.
- Assume obsolescence and prove individual program effectiveness — My research reveals that as many as half of all recruiting subprograms fail to have any positive impact on the quality of new-hire or recruiting’s business impact. Under a data-driven recruiting function, it’s best to start with the assumption that all existing recruiting programs or processes eventually stop working. With that assumption of obsolescence, it becomes necessary to periodically verify that literally every key recruiting step, element, or sub-program actually works. When possible, their efficacy should be periodically tested using the split sample control group approach, and even when a program element does work, it should be improved with the use of A/B testing.
- Continually improve by learning from each major hiring success and failure — Under the data-driven model, data is gathered in order to systematically identify every major hiring success and failure for continuous improvement purposes. This systematic “failure analysis” process should identify the root cause factors that led to success or failure. And then, there needs to be a formal continuous improvement process that applies that data to improve the performance of the relevant recruiting approach.
- Formalize best practice sharing for continuous improvement — The cheapest and fastest way to improve recruiting performance is the rapid and widespread internal sharing of best practices. Unfortunately, without a formal acceleration process, the speed and breadth of best practice sharing are almost always extremely limited. That sharing can be sped up by measuring and recognizing those in recruiting that excel at sharing and cooperating. Finally, recruiting leadership should also establish a formal process for developing the firm’s “next practices.”
- Report only strategic metrics to improve continuous improvement — What recruiting leaders measure and report have a critical impact on recruiting results. Reporting too many metrics will only cloud the picture, at least initially, so only the four most strategic metrics should be reported to executives. The first and most impactful metric is the estimated total dollar impact of recruiting on corporate revenue. This is closely followed in importance by what many call “quality of hire” (a better description of the measure is the “on-the-job performance of the new hire”). Report the percentage increase in the performance of new hires in each job family from quarter to quarter, and if you don’t want to measure new-hire performance directly, substitute the percentage of new hires that a manager would choose to rehire after six months on the job. The third strategic metric to report covers mis-hires, which include early regrettable turnover and the percentage of new hires that could only be classified as failures on-the-job. And finally, whenever possible, recruiting should supply hiring managers with forward-looking predictive metrics, so they can prepare for upcoming recruiting problems and opportunities.
- Require a scalable capacity to meet changing business needs — In a volatile world, it’s critical to prepare for the inevitable economic downturn. As part of that planning, recruiting leaders must insist that scalability becomes an essential part of every new and existing recruiting program, where scalability means the ability to quickly adjust hiring volume down to meet the cost-cutting needs of your company’s different business units, facilities, and geographies. Scalability during growth means the ability to add new talent and new skills rapidly so that no business goal is missed because of a talent shortage.
Roadmap Category 4: Critical Success Factors Related To Recruiting Operations
In many cases, critical success factors in the operational and administrative elements of the recruiting function also play a critical role in achieving industry domination. Those recruiting operations and administrative CSF’s include:
- In order to dominate your industry, you must begin by setting domination as a goal — The first step in the roadmap to industry domination is to set domination as the superordinate goal of the function. Internal goal setting is important, but it won’t lead to success unless you also get your COO and your executive committee to also adopt it as a strategic corporate goal. Every manager, employee, and shareholder should know that dominating in recruiting is a primary critical success factor for business success.
- To win a talent war, the composition of your recruiting staff must change — As recruiting shifts to become more businesslike, technology and data-driven, it should be obvious that the skill sets of those that work in talent acquisition will also have to change. The job requirements of future hires in recruiting must include strong business acumen and experience, and a working knowledge of finance, data, and technology. Together these will build credibility with executives and help convince hiring managers to devote more time to recruiting. Also, because direct talent poaching will be involved, recruiters and support staff will need to be extremely aggressive and willing to accept major risks.
- A centralized recruiting function is the best option — in almost all cases in large corporations, dominating recruiting in an industry requires a centralized recruiting function. Centralization is superior when you want to implement technology. It speeds up best practice sharing, collaboration, and innovation, and it is also a superior option when you want to maximize integration, cooperation and the use of data.
- Moving towards the expanded Talent Advisor role — It is inevitable that many elements of recruiting will eventually become automated and have less repetitive work. Recruiters that expect to remain employed at the same firm will need to increase and broaden their capabilities so that they can accept an expanded talent advisor role. In this more strategic and impactful role, Talent Advisors can provide advanced consulting advice not just in recruiting but also in additional talent areas including retention, internal movement, and leader assessment and development.
- Working with HR leaders to secure higher budget resources — When the recruiting function faces reduced funding levels, it will be much more difficult to meet each of the 35+ critical success factors listed in this article. To ensure long-term success, continuously building a compelling business case will be essential. As part of this funding effort, it is critical that recruiting leadership work with HR leadership, the COO and the CFO to ensure that they all fully understand the negative business impacts that will occur when the budget allocation percentage falls below the budget percentages allocated at other top-tier firms in the industry. For example, Google, an acknowledged leader in recruiting, once acknowledged that its recruiting budget was nearly double what you would expect to find at any similar sized firm.
Some Recruiting Factors Have A Lower Impact
When researching the critical success factors that lead to recruiting domination, I discovered that not every factor had a significant impact. For example, I couldn’t find much hard evidence that some common recruiting areas generated any significant business impacts. Those important but generally lower impact factors included legal compliance, cost per hire cost-cutting, affirmative action and ATS technology. Also, I found little evidence that achieving a level of excellence in the candidate experience and in college recruiting would result in a significant ROI.
If you study the listings of the world’s most valuable companies by market cap value, the most innovative companies or the most desirable companies to work at, you will consistently find one feature in common, and that is that they excel at aggressive recruiting and powerful employer branding. By drilling down to identify the critical success factors that drive industry-leading success at these top firms, I have found that they all follow a consistent set of strategic principles. I hope that I have highlighted to your satisfaction, in this article, a useful list of critical success factors as a roadmap to transformation and eventual industry domination.