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Consider the Source: Applicant Sources Dramatically Impact the Quality of Hire

by Sep 3, 2008, 1:09 pm ET

In the quest for quality hires, talent acquisition leaders often spend considerable time extracting DNA from the company’s top performers in hopes of cloning the outstanding workers. After reviewing performance goals and synthesizing multiple data inputs, line managers and recruiters collaborate to craft tightly honed hiring profiles for each position. Next, it’s up to the recruiter to source the candidates, which is a critical step in the process, because sourcing plays a vital role in achieving quality of hire (a topic explored in depth in the October Journal of Corporate Recruiting Leadership).

Targeted sourcing is the second step in hiring top performers, as shown in this chart (click to enlarge) illustrating the complete quality of hire process, from Taleo Research.

Most recruiters instinctively return to the same source when searching for candidates, because historically the source has produced a quick response from a large number of prospects with the required skills. But a deeper dive into employee turnover statistics and performance ratings might result in some surprises about the quality of the candidates secured through each source, according to Andrew Carges, vice president of worldwide talent acquisition for Success Factors.

Carges says that he found first-year turnover was high for employees sourced through agencies, during his experience at SuccessFactors and in his previous roles as a talent leader. A closer review as to why those employees left revealed that many had a history of job-hopping, and he concluded that employees represented by recruiters were frequently hunting for new opportunities and had easy access to other positions. Now he evaluates source effectiveness and its impact on quality of hire.

“To drive quality of hire, compare the employee’s first-year performance rating to their hiring source and the cost of hire,” says Carges. “It’s something every company can do to evaluate the effectiveness of the hiring source in delivering top performers and value.”

(See the example of hiring-source analysis provided by SuccessFactors.)

Managers frequently request candidates with previous industry experience because they believe it’s a predictor of on-the-job success. That hiring criteria often limits the sources recruiters can tap to find experienced prospects. A review of the employees’ actual performance ratings and the competencies possessed by top performers might be the first step in shifting the hiring paradigm, which in turn opens the door for new sources of hire.

At R.L. Polk & Co., a review of the company’s top performers revealed that previous industry experience had little correlation to job performance, according to Jay Marshall, manager of talent acquisition. In fact, the requirement accelerated the cost of hire because candidates came from a boutique industry and often had to be enticed with higher salaries.

And at the same time, industry dynamics were changing, forcing employees into more business-facing roles that required different skills. As Marshall dug a bit deeper into what was really making employees successful, an entirely new profile began to emerge.

“When I looked at the behavior behind the performance, it was driven by teamwork,” says Marshall. “The bottom line is that it really altered what we were looking for, and now we look for team players with strong business acumen. That opened up many new candidate sources, and our average cost of hire has dropped $10,000 in the last 24 months.”

Today, Marshall says he no longer worries about how long it takes his team to hire new employees or how much a new hire costs, because by focusing on quality of hire, he has improved all the recruiting metrics at Polk.

This article is provided for informational purposes only and is not intended to offer specific legal advice. You should consult your legal counsel regarding any threatened or pending litigation.

  • Jim Sullivan

    “Carges says that he found first-year turnover was high for employees sourced through agencies, during his experience at SuccessFactors and in his previous roles as a talent leader.”

    Then I can only assume he is using low cost, internet job board agencies and not real “recruiting” search firms that actually tap the passive candidate market. In my 30 years of recruiting as a 3rd party recruiter I can’t remember the last time one of my candidates didn’t stay with the company for years – on average – over 5 years.

    Third party recruiters, like any other professional service, include the good the bad and the “hit and run experts”. If quality of hire is what you need from your “agency” then develop a WORKING RELATIONSHIP with your external recruiters that they can focus on your issues, give them the real facts and partner with them to find the quality candidates that end up as quality hires and long term employees.

    MOST of the firms that agree to lowering their fees also deliver lower quality because they just give you their “leftovers” those are the candidates that their full fee paying clients don’t want to hire.

    When cost is the overriding factor in decisions on how to source candidates you will most likely not get the quality of hire that you are looking for to fill that critical opening.

    I was pleased to see that you also mentioned to look outside the “normal” skill set and direct industry experience. I have always been a proponent of “hire the person – not the skill set”. If you have the right individual that has the basic skills and knowledge to perform in a given position AND the personality that fits the team, then you have a better chance of having a long term employee that will learn your business and stay longer because it is more challenging and interesting.

    Hire for attitude – train for skills!

    And when you need a critical player for your team, get a good third party recruiter on your team and see the difference a quality firm can provide.

    Just my $0.02………….

    Jim Sullivan
    Ethical Search Professionals, Ltd.

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