The graphic below shows you my take on the recruiting funnel and how to optimize your journey through it in order to improve quality of hire.
Before you go through the funnel, however, it’s important to note that a great hire at the end of the process is only possible if there was a great job at the beginning. Without this the metrics won’t matter and you’ll never be able to maximize quality of hire.
It’s essential to also recognize that a great job is not a skills-laden list of prerequisites and generic boilerplate. Instead it’s a list of 5-6 performance objectives that define outstanding performance headlined with a clear and true employee value proposition. Something like, “Your advanced knowledge of turbulent Mach 1 airflow will help us design the next generation of high-speed human transportation systems,” is a good first step.
With this as a starting point you need to identify a short-list of high potential candidates. As long as you pre-select ahead of time the people who see the opening as an obvious career move, you don’t need to source a lot of people at the top of the funnel.
For example, for a VP HR at a mid-size company, we found 20 senior directors at larger firms. The VP title and the EVP – Get a Seat at the Strategic Table – was enough to get their attention. About half of these people were direct sourced on LinkedIn and the other half were referred. Tracking response rates is critical. I shoot for over 50% for direct sourced candidates and close to 100% for referred candidates.
Now you need to convert these interested prospects into serious candidates. Start by telling these people the only reason they should change jobs is if the new one offers at least a 30% non-monetary increase in terms of stretch, growth, impact and satisfaction. You’ll be able to get a rough sense of this during the exploratory phone screen by comparing the candidate’s major accomplishments to the key performance objectives of the job. If you can describe some elements of the 30%, it’s easy to get candidates to engage more deeply. Of course, this conversion rate needs to be tracked.
During the interviewing phase this 30% gap needs to be completely defined. The performance-based interview is a good technique for this since it measures exactly what a candidate has accomplished in comparison to what needs to be done. This information is also used to predict quality of hire. One simple way is to just total up the scores for each of the factors in the Quality of Hire Talent Predictor graphic.
The concept underlying this approach is the assumption that if the candidate has a track record of comparable accomplishments, fits within the company culture and sees the job as a true career move, the probability the person will be a top performer is high. This is a critical piece of the closing process since the candidate will be judging the opportunity on its career merits, not just the compensation package.
Obviously the close rate is an important metric to track, but an even more important one is the pre-close rate. As part of our recruiting training we emphasize the point that offers should never be formally given unless you’re 100% sure the candidate will accept it.
One way to test an offer is to just ask the candidate if he or she is seriously interested in the job. If so, ask when the person could start if a satisfactory offer was made. Then ask the candidate to put the compensation in the parking lot and have the person rank your job from a career perspective to everything else the person is considering. If the person is vague, non-committal, can’t even mention a start date or says, “I have to think about it,” the person is not ready to be given an offer. You need a 100% yes on all of these pre-closing conditions before you negotiate the final offer.
It’s important to note that metrics by themselves have little value unless they’re measured as they occur. This is the feedback needed to determine if what you’re doing is working or if changes need to be made. As important is the target. When the goal is improving quality of hire versus shortening time to fill, different actions will be taken. For example, when response rates drop under a quality of hire target, extra time will be spent getting more referrals, but under a time-to-fill goal this same feedback will result in more emails sent to more direct sourced candidates.
Recognize, though, that a great hire at the end of the process starts with a great job at the beginning. Without this mindset all of the metrics in the world won’t matter.
Whenever a hiring manager needs to see more than 4-5 people before hiring someone, there's a problem.
This problem existed long before job boards and LinkedIn came along.
And it still exists and there's no diet-pill easy solution.
I first confronted the problem in the early '80s as a rookie recruiter. Since my previous experience was in engineering, manufacturing and cost controls, I decided to do something about the "too many people needed to be seen before hiring someone problem." It started by putting together a prioritized list of the reasons why hiring managers needed to see too many hiring mistakes.
To start I found 15 hiring managers who were willing to try out different ideas to eliminate the problem. It took a while but we succeeded. We not only figured out techniques to keep the maximum number of candidates seen to about 3-4, but in the process something else remarkable happened - hiring mistakes dropped to nearly zero, interviewing accuracy increased dramatically and quality of hire soared.
In essence the problem had to do with the proverbial, "If you don't know what you're looking for, you'll never know when you have found it."
But before getting to the end of the story, here's the beginning:
Most hiring managers wouldn't see and couldn't hire the best people since they over spec'd the job and assessed the wrong skill set.
Long before I became a recruiter I learned that the best people were promoted based on their ability to successfully tackle tough problems irrespective of their years of experience. Based on this concept I started asking hiring managers what people in the open job needed to do or accomplish in order to be considered successful. As part of this I asked them if they would meet candidates who had a track record of comparable accomplishments even if they had a different mix of skills and experiences than initially listed. Very few disagreed.
The assessment was non-traditional, too. I asked the hiring manager to dig into the person's comparable accomplishments to determine competency, fit and motivation. When these performance qualified people were hired, quality of hire and job satisfaction increased, interviews per hire declined and interviewing accuracy improved. As important, diversity hiring increased since the artificial skills and experience barriers-to-entry were removed.
The best people always wanted more money than the budget.
Finding A-level talent with all of the requisite skills and experience was an impossibility within the salary constraints typically offered. After a few years of trying to negotiate compensation, I changed focus and proactively sourced people who would see the job as a career move rather than a lateral transfer. For example, we targeted people who would see the title as better or that a shift to the company would accelerate their growth or the actual work content was more satisfying. By defining the work as a series of performance objectives it was much easier for these A-level candidates to evaluate the job based more on what they would be doing, learning and becoming rather than the increase in compensation they'd be getting.
Switching to a long-term career focus became a classic win-win-win for the hiring manager, the candidate and the recruiter. I refer to this as the 30% solution - giving new hires a combined 30% increase consisting of job stretch, more impact, faster growth and more satisfaction.
The best candidates weren't overtly or actively looking for another job.
After a few years recruiting staff-level professionals and managers, I discovered that the ideal candidate was someone who was very talented and had just started looking for another job. I refer to these people as tiptoers. By building a deep network of people in my search area specialty I soon got regular referrals of talented people at the moment they started looking.
However, there were never enough of these tiptoers to go around. So as part of completing a search project I would contact people in my network and ask them to tell me about the best people they knew who were not looking. I then contacted and recruited these candidates by suggesting we just talk to see if one of the open positions I was handling offered a 30% non-monetary increase. If the spot wasn't perfect for them I'd then get referrals of the best people they knew who also weren't looking.
Use a Less is More Approach to improve Quality of Hire
Sourcing is the diet pill of hiring. It might feel good for awhile, but the long term results are rarely satisfying. Hiring better people takes hard work. I make the contention that less sourcing and more recruiting is the work needed - better jobs, more engaged hiring managers and stronger recruiters. The idea is to spend more time with fewer higher quality candidates. Above all, remember that, "If you don't know what you're looking for, you'll never know when you have found it."
Over the years (and last week in particular) I’ve suggested the use of any psychometric pre-screening assessment tests should be stopped since they are either invalid, discriminatory or counterproductive. Worse, all are designed to make the hiring process more efficient, not help attract stronger people or improve quality of hire. Those who sell or have invested their careers in the validation of the statistical merits of these tests (for pre-screening purposes) argue points that miss this point.
Rather than rehash the obvious let me summarize my anti-assessment banter with the following:
- Finding top people for a career move is not the same as filling jobs with people who are willing to take jobs that are, at best, ill-defined lateral transfers.
- If the best people won’t take the test in order to be considered for a job you instantly rule out the best people including the 85% of the talent market that is classified as passive.
- The process is too leaky. Even the best active candidates recognize that applying directly for a job is the least effective way to get an interview. Instead they use a bunch of backdoor techniques to get an interview which bypass the initial screen. (Take this survey and review the results to validate this.)
- You can’t build a two sigma hiring process using one sigma statistics, aka, “Any hiring chain is only as strong as its weakest link.” There are just too many false negatives – good people being excluded for the wrong reasons – to use them to eliminate people before they’re properly qualified.
- Cloning people like you’ve always hired is a great way to build a non-diverse workforce. This is why these tests are discriminatory.
There is little dispute that using psychometric tests as part of a total assessment process is appropriate. Using them as a point of entry is what I oppose. The big argument for using them is the need to eliminate unqualified people who apply from consideration as quickly as possible. However, there are other ways to get the same result without eliminating good people in the process.
One way is to stop the problem at its source: Preventing unqualified people from applying to jobs they’re not qualified to handle. LinkedIn already advises candidates if they’re qualified or not, implying they shouldn’t apply, so the technology behind this advisory statement could easily morph into a locked door. Candidates think that by applying to as many jobs as possible they’ll increase their chances of getting an interview. This is a waste of everyone’s time. The most talented people don’t think this way. That’s why they use the backdoor approach to find jobs in the hidden job market.
Here’s how the hidden job market is created. Before hiring managers formally open a requisition and post it on a job board, they first try to find candidates internally or through their referral network. Over half of these jobs are filled before they’re ever posted. So it’s a huge market. Interestingly, candidates don’t need to be a perfect fit on skills and experiences to get these jobs. Instead they’re assessed on their comparable past performance, promotability and upside potential. It also turns out making assessments this way is more accurate than a combination of pre-screening assessments and behavioral interviewing.
A similar approach could be used to increase quality of hire for all positions – just open the backdoor to everyone. Here’s how this process works. Rather than forcing candidates to apply, state in your job posting that interested candidates need to prepare a one or two paragraph summary of some major accomplishment related to an actual job need to be considered. The job posting or email should emphasize the key performance objectives of the job, minimize the required skill set to the bare minimum and highlight the importance of the job as a career move. This will attract a broader group of top performers including passive candidates.
Since this approach is non-traditional and I wanted to include it in The Essential Guide for Hiring and Getting Hired, I first asked David Goldstein, a senior labor attorney with Littler Mendelson, for his opinion on the validity of this two-step process. He fully supported it and his whitepaper describing why is included in the book’s appendix. (For those interested, here’s a link to the summary and a webcast I did with David on this topic.)
It’s clear that pre-assessment screening along with competency models and behavioral interviewing have reduced hiring mistakes. But it’s equally clear to anyone who looks at the data, these tools have not improved quality of hire. This underscores the problem most business leaders have with HR: Their focus is on the wrong goal. Reducing costs, being more efficient and making fewer hiring mistakes is not the measure of success when it comes to talent management. It should be improving the quality of every person hired.
I've given half a dozen talks in the past few weeks to more than 1,000 recruiters. They all complained they couldn't measure quality of hire until the person has been on the job for at least three-to-six months.
I said this was a bunch of bull.
It's Like Magic
I then showed them what I call my magic card, and said if they followed all the directions on the card without taking any shortcuts, they would call me in a year and thank me for showing them how to hire a great person. (Complete this form before October 22nd and I'll send you one, gratis. You can also sign-up for our next demo webcast.)
To prove it, I said, now let's go through my magic time machine one year into the future. You call me on the phone and thank me for helping you make a great hire. I then ask you to tell me why the person is great. Here's what you say:
Things New Hires Do that Prove They're a Great Hire
- Exceed expectations
- Work well with the team
- Fit the culture
- Work well with hiring manager
- Get things done without making excuses
- Deal with change without complaining (too much)
- Figure out new ways to solve job-related problems
- Create good plans and deliver the results
- Coach and develop others
I say, "That's a great list, but every one of these things was predictable before you hired the person."
You say, "That's a bunch of bull."
I then show you how to predict quality of hire based on the factors you say demonstrate quality of hire. Here are the instructions for using the magic card:
Step 1 -- define the work, the people, and the environment.
- Clarify job expectations up front. Every job can be represented by six to eight performance objectives. Skills, behaviors, and competencies are poor predictors of performance.
- Define the big or typical problems the person is likely to face on the job.
- Define the team he/she will be working with.
- Define the culture. This is largely dependent on the pace of the organization.
- Define the manager's leadership style. This will determine the success or failure of a a fully-qualified new hire more than any other factor.
Step 2 -- conduct a performance-based Interview.
- Conduct an in-depth work history review looking for the Achiever Pattern. This indicates the person is in the top 25 percent of his/her peer group.
- Get an example of a comparable accomplishment for each performance objective.
- Ask the person how she would solve the job-related problems. Assess the processof getting the answer, not the answer.
- Find out how the environment, the culture, and the hiring manager impacted by the person's success.
- Understand what motivates the person to excel.
- Examine the person's trend of growth over time.
Step 3 -- Figure out if your job offers a career move.
A career move needs to offer at least a 30 percent nonmonetary increase. This is the sum of job stretch (a bigger job), an increase in job satisfaction (the mix of work is more satisfying) and an increase in job growth (bigger jobs and more learning over time). You can figure this out during the performance-based interview by comparing your opportunity to what the candidate has done and is doing, how fast she is growing, and how satisfied she is in the current job.
Predicting quality of hire -- before hiring.
After you've completed the above, rank the person on these factors using a 1-5 scale (5 being the best):
- Comparable results
- Trend of growth
- Achiever Pattern
- Managerial and cultural fit
- Job represents a career move
If the person scores at least a 20 out of 25 on all of the factors, you can be highly confident the person will be a great hire. Try it out. I'll wait for your call next year.
Metrics matter, and the best metrics matter more.
Back in 1982, one of my search clients (a Fortune 200 company) revealed the results of a two-year study regarding the source of their best employees. Less than 5% came from people applying to job postings. One-third came from their university hiring program, and the balance were people who were referred by an employee or direct sourced by a highly-networked recruiter. More recently, I heard about a similar multi-year study at another Fortune 100 company. The results were the same.
Conclusion: Referrals (A) always drive quality of hire, and if hiring managers see more referrals they won’t need to interview as many candidates (B).
Now consider the following analytics rule:
If A and B predict C, then track A and B to ensure C.
Substitute sourcing mix and sendouts per hire for A and B and Quality of Hire for C.
If that’s the case then sourcing mix and sendouts per hire need to be monitored consistently. One way is to calculate the ratio of referred or direct sourced candidates presented to the hiring manager on any assignment to those who applied directly to a job posting. A 2:1 ratio is a good start. This means two out of every three candidates are either referred or direct sourced.
Quality of hire problems arise whenever the ratio falls below 50/50 or 1:1. This means the recruiter is spending too much time sourcing active candidates. This is revealed by another metric: candidates per hire. Whenever a hiring manager needs to see more than four candidates to make a hiring decision, it means the recruiter is on fishing expedition – sending out too many candidates in the hope one fits.
The cause here is less clear. It could be the hiring manager doesn’t know the job, can’t attract good people or is overemphasizing skills and experiences as a prerequisite. Alternatively, it could mean the recruiter is working too many requisitions, is not spending enough time networking or is not strong at recruiting passive candidates. It could also mean there’s a problem with the company or the job. Regardless of the cause of the problem it’s revealed by an excessive number candidates needed to be seen to make one hire. So rather than send out more candidates, stop the process and figure out the cause.
Here’s some troubleshooting advice so that you can have fewer sendouts per hire:
1. Examine the sourcing mix of the slate of candidates presented.
If it’s not at least 50% this is likely the problem. In this case you’ll need to shift your emphasis to obtaining more high quality employee referrals and more direct sourced passive candidates.
2. Is the recruiter requisition load appropriate?
It’s impossible to obtain a sourcing mix of 2:1 when working more than 15 unique jobs alone at any one time. In this case, recruiters will need to concentrate their passive candidate recruiting efforts on only the more important jobs.
3. Determine if the job is worthy.
The best people are looking for career moves, not lateral transfers. You can attribute much of your quality of hire problems to managers who over-specify skills and experiences as barriers to entry. The solution: Shift to a performance qualified assessment approach.
4. Assess the quality of your recruitment advertising.
Most recruitment advertising is designed to weed out the weak rather than attract the best. If your job descriptions are full of must-haves and generic hyperbole, you can rest assured this is part of the problem.
5. Determine if the hiring manager is the problem or the solution.
If the hiring manager won’t or can’t prepare a performance-based job description, you’ll never attract a top person. Another clue the problem is the hiring manager: No track record of hiring and developing top people. Use this advanced troubleshooting guide to help hiring managers overcome these critical barriers.
6. Figure out if your hiring process is too restrictive or unwieldy.
Track opt-rates of those who see the job post but don’t apply, those who refuse to take pre-hire questionnaires, the ratio of good candidates to weak candidates who do apply, and the number of candidates at the top of the funnel needed to make one hire. When these numbers are too high it means more time is spent weeding out the weak rather than attracting the best.
Prediction is not the same as achievement. If doing A and B consistently results in C, then you need to consistently track A and B. That’s the difference between predictive analytics and process control. While candidates per hire and sourcing mix predict quality of hire and time to fill, you need to track both for every recruiter on every assignment. This is how to ensure you’ll maximize quality of hire and reduce time to fill, rather than having to explain why you didn’t.