Some business concepts worth considering when developing a hiring strategy:

1. When business conditions change, your strategy has to change along with it.
2. Tactics don’t drive strategy; strategy drives tactics.
3. Strategy drives the planning process. The plan drives the tactics.
4. Plan. Don’t react.
5. If you have the time, worry about the forest more than the trees.
6. You can’t push on a rope.

With this as a backdrop, it seems that most HR/recruiting departments don’t have a fundamental hiring strategy in place that ties directly to their company’s business strategy. If they did, it would seem, as a minimum, that requisitions would be categorized by the impact the job has on the company’s strategy. Some jobs would be more critical than others. Workforce plans would be developed to build pools of potential candidates for these critical jobs long before they’re needed, and hiring managers would be intimately involved and trained on how to find, assess, recruit, and hire the best prospects.

A description for this type of hiring strategy resembles something like this:

Maximize Quality of Hire Strategy: hire A-level talent for all strategic and critical management positions and the top-third for all other positions, without compromise. As part of this, offer careers, not jobs, at every level in the company.

While this is worthy, it seems that most hiring managers react rather than plan, and most don’t have a clue about how to assess and attract the best. HR/recruiting exacerbates the problem by focusing more on cost than quality, giving recruiters so much to do that they become mere paper pushers, and/or jumping from one sourcing idea to another in the vain search for the silver bullet.

Few companies are immune. While defining this type of hodgepodge hiring strategy is not easy, the one being used at your company probably resembles a combination of one or more of the following:

1. The transactional, minimize cost per hire strategy: find anyone who is actively looking who meets the job description at the lowest cost in the shortest period of time using the cheapest approaches possible.
2. The silver bullet strategy: try out every new sourcing idea with the hope that it works better than the last, and now tarnished, silver bullet.
3. The eliminate-the-worst strategy: put as many barriers as possible to eliminate the worst with the expectation that good people will be attracted and persevere because we have a great employer brand and an easy-to-find career site.
4. The proprietary talent pool sourcing strategy: build a talent pool of diverse talent and hope that a few people raise their hands when they’re emailed a boring job. (Note this is actually a pretty good sourcing strategy if coupled with better messaging and a career-focused assessment and recruiting process.)
5. The vendor-driven (aka the comp- or OD- or legal- or IT- or OFCCP-driven) strategy: let’s forsake all our responsibility for hiring and let our vendors tell us what to do, or let some bureaucrat, technocrat, or lawyer tie our hands.
6. The post and pray: post boring jobs on as many boards as possible with the hope that a good person inadvertently sees it.
7. The incomplete strategy: let’s do something really well, but then mess it up by not completing the process. Example: finding top-notch prospects who opt-out of the process early due to one of the following: application process is burdensome, recruiters don’t know the job, managers who are weak interviewers, offers that are uncompetitive, etc.
8. The “I’ll know it when I see it strategy” — aka the hiring manager-driven strategy: let hiring managers do whatever they want to do with heavy reliance on the job descriptions and the manager’s good sense of what success looks like. As part of this, recruiters are just told to send over as many candidates as possible who meet the specs.
9. The knock-out question or survivor strategy: this is a version of the “eliminate the worst” strategy, but starts by asking people a bunch of silly questions that only leave the desperate as survivors.
10. The hide-and-seek arrogance strategy: make it extremely difficult to find job postings, make it more difficult to apply, and require all candidates to bow down to the hiring manager if they’re fortunate enough to be granted an interview.

Of course, no one every starts out with this type of hiring strategy in mind, but somehow, piece-by-piece, this is what it evolves into. Part of the problem is letting the idea of the moment drive activity. As a result, we can often unknowingly affect the final outcome for the worse. This is called sub-optimization. For example, in today’s paper I just read that Orange County (California) is planning on widening its main freeway system into Los Angeles. Unfortunately, LA County is not planning on expanding the junction, with the result just moving the traffic bottleneck north by 10 miles.

Something like this happens every time a new sourcing process is implemented without considering the end-to-end impact. Problems like these can be minimized when there’s an overarching maximize-quality-of-hire strategy in place that everyone adopts. Then every subsequent action or decision can evaluated on how it impacts this strategy.

If you want to implement a maximize quality of hire strategy, you should first go through each step in your current sourcing, interviewing, and recruiting process and see if it’s counterproductive in some way or preventing the best people from consideration. With this as a framework, develop a two-pronged action plan. The first part involves stopping doing the things that prevent you from hiring the best. The second part involves implementing new processes based on how the best people look for new careers, how they compare different opportunities, and the criteria they use to accept an offer.

While I’ve been contending that HR/recruiting must take full responsibility for quality of hire, developing the strategy, plans, and processes is at the core of this. Of course, getting managers on board is the most difficult challenge here, requiring executive-level vision and support to be successful. A strong metrics and feedback program tracking everything pre- and post-hire is the essential piece that ties it all together. Developing, implementing, maintaining, and monitoring this maximize quality of hire strategy is what I mean by ownership. In my mind, maximizing quality of hire is the most second most important function of HR/recruiting. The first is developing and maximizing the talent already on board. Everything else pales in comparison.

1. Cost per hire is a misguided metric that is at best useless, and at worst, can harm the organization. While tracking costs and spending wisely is essential, to divide that cost by the number of hires makes no sense. Instead, track costs in total and focus on reducing them if you’re not hiring as many people, or you can prove an improvement in productivity without a degradation in quality. Reducing quality while reducing costs is a strategic mistake for the sake of a tactical gain.
2. The HR/recruiting department must take company-wide responsibility for quality of hire. Forget the mantra of shared responsibility. If some line manager blows the hiring decision, who has to clean up the mess and find a replacement? While HR/recruiting doesn’t make the hiring decisions, it needs to make sure that the proper decisions are made. This is comparable to finance owning the budgeting and investment analysis process. Finance doesn’t spend the money, but it makes sure the money is spent wisely. Having an audit function in place to validate that the right hiring decisions were made is one way to make sure the process is adhered to.
3. Measure quality of hire on a financial basis. The financial benefit of hiring someone in the top third vs. the bottom third is at least twice the compensation of the person. (Here’s a recording of a recent webinar with a handout including the actual calculations for this.) This benefit is due to increased productivity, less management effort, higher-quality work, and far less turnover.
4. Calculate the ROI of any new recruiting or sourcing initiative on an ROI basis. To do this, figure out how many people you’ll be hiring in the top-third instead of the bottom-third. (Email me if you want to walk through this calculation.) If the minimum financial impact of a top-third person is two times his or her compensation, it’s pretty easy to figure the gross financial gain of this. Compare this to the cost to obtain the gain in order to determine the ROI of the program.

I’d like to add a fifth topic to this list of quality of hire maxims: make your vendors prove quality of hire improvements before you spend any money. No one should be excluded, whether it’s a new ATS or investing in web 2.0 social media or whatever product-of-the-month comes along. If it doesn’t improve quality of hire on an ROI basis, don’t waste your time or money.

Proving a quality of hire improvement is no easy thing, but just going through the effort will get you to think about it at a strategic level.

For example, talent hubs, prospect pools, CRM, and social media are the current craze, and some actually can improve quality of candidate. However, getting better candidates doesn’t mean better hires. I advocate an early-bird sourcing strategy. This means getting candidates before they enter the job-hunting market, or during their first week looking for a new job. This is a huge competitive advantage.

Unfortunately, if you wait a week to call or you make them jump through hoops to talk with someone, you’ll lose them. Now add into the mix hiring managers who blow the interview or who can’t recruit top performers to join the team. So even if a new program offers better candidates, if your backend processes aren’t changed, you won’t improve your quality of hire.

To improve quality of hire, consider everything collectively: sourcing, screening, recruiting assessing, and closing. For now, and for the sake of simplicity, let’s assume your backend is in great shape, and just consider how you could make your sourcing vendors prove an improvement in quality of candidate. The premise is that if you invest in the vendor’s offering, the candidates you’ll be seeing are of a superior quality than what you’re now seeing or you would see by using some alternative.

The ROI calculation would be performed based on the assumption you’ll be hiring more people in the top third than the bottom third. If they can’t justify a quality of hire improvement, which is a strategic impact, then you’re left with the more tactical approach of using cost savings or productivity enhancements to justify the effort.

With the focus on quality of hire improvements, here are some ways you could get your vendor to validate their programs:

1. The smell test. The idea behind this is that it doesn’t make much sense to conduct any type of rigorous analysis unless the vendor’s approach seems logical. For example, one major job board vendor told me at Onrec (Chicago, November 2009) that candidates from her board had lower turnover than from the other major job board for the same job. Not surprisingly, she didn’t know why. This fails the smell test. On the other hand, one vendor told me that candidates in their network were more passive than those in the most well-known network since a person couldn’t join to get listed. The CEO then went on to say that people could only get listed in their network if they were mentioned at least three times in some independent Internet article. This passes the smell test. Of course, you still have to do the analysis to prove that the candidates are better.
2. The before and after biggest stack test. Before you decide to consider any vendor, take 100 candidates at random from your current sourcing process and divide them into three piles. Pile A is comprised of those you absolutely would consider in depth. Pile B is filled with the maybes. Pile C is filled with those you wouldn’t ever consider. Now measure the height of each stack. In a pilot of some type, take another 100 candidates sourced based on the proposed process and divide them into the A-B-C stacks. If the A stack has increased in height and the C stack has decreased, you’re on your way. Now calculate the percent increase in the size of the A stack by the financial impact of each person to determine the total impact. From this you can easily calculate the ROI of the new process. Of course, you could conduct some type of rigorous statistical analysis to validate the results between the two groups, but if the A stack grows significantly, you’ll probably get the same result. If you don’t want to do this yourself, have your vendor show you the statistical results of other clients they’ve done this for.
3. The side-by-side stack test. Using some type of quick pilot test, select 100 candidates at random using the new process and 100 candidates using your current process. This is better than the before-and-after test above, since more things are the same, especially labor market conditions. Now divide the candidates in the A-B-C stacks as above and compare them as before. If the A stack is significantly bigger using the new process, you’ve got a winner. You can compare competing vendors the same way. Find out who has the biggest stack of A-level candidates.
4. Use metrics that indirectly measure quality of candidate. This is a variation of the A-B-C stack approach. If you don’t need to review as many resumes to find someone worth interviewing, it means you’re seeing a higher percentage of better candidates. So start tracking this. Also, track the percent of candidates sent to your hiring managers who are actually interviewed. This is one way to track the quality of your sourcing programs and the quality of your recruiters. Start asking your candidates how long they’ve been looking. If you’re seeing them a few days after they’ve started looking, it means your advertising is highly visible. Now compare the quality of these people using the A-B-C stack approach to determine if the best people are seeing your ads first.

There are many other ways to measure quality of candidate, but the point is that you should make your vendors prove it before you proceed. This is still just the first step. Even if the vendor has proven a quality of candidate improvement, you still must do at least two more things. First, compare the offering of competing vendors who claim the same quality of candidate improvement doing the same thing. There might be a newer approach that is less costly, more efficient, or more effective.

In this case, go with the vendor that brings in the best candidates most efficiently, rather than most cheaply.

Second, ensure your backend processes, including the interview itself and your hiring managers, are capable of reeling in and hiring stronger candidates. This is where most sourcing programs and new recruiting initiatives fall flat. That’s why it’s important to consider quality of hire from an end-to-end perspective, not just at the quality of candidate level. If you ignore the rest of the process, you just might wind up with a lot more great people you won’t be hiring.

In my opinion, we’ve downplayed what it really takes to be successful in our profession — recruiting, counseling, and closing top people who have multiple opportunities, and making sure our hiring manager clients don’t blow it.

To start refocusing on the right stuff, I’d like to nominate quality of hire as the metric to assess recruiting department performance, and relegate cost per hire to the second page.

I believe cost per hire is a misguided means to judge recruiting department performance. For one, it rewards the wrong things and ignores quality of candidate and quality of hire. For another, it’s far too tactical and narrowly focused. Worse, improving costs could degrade quality.

This is a strategic mistake of huge proportions that too many HR and recruiting managers miss entirely.

These problems go away if the focus is on measuring quality of hire first and quality of candidate as a subset. Even if recruiting is reluctant to take on the responsibility of maximizing quality of hire, it must be responsible for setting up a system to measure it. While important, measuring quality of hire is not straightforward.

Here are some ideas on how to get started on thinking about how to do it:

Yves Lermusi, the CEO of Checkster, believes good reference checking before (external) and after the hire (internal 360°) might be the best way to measure, monitor, and improve quality. He might be right, but from what I’ve seen, if the measure of candidate quality pre-hire is different than after the hire, you’re not measuring the same thing. Regardless, Yves’ point of measuring candidate quality post hire and monitoring are absolutely essential. So you should check out Checkster as a means to do this.

Here’s another perspective. I was speaking with a senior recruiting manager with a Fortune 100 company the other day. She told me her company conducted exhaustive post-hire performance reviews at the 90-day, 6-month, and 9-month time periods for new hires. These reviews were based on comparing the new hire’s performance against the performance objectives of the job. If the person fell short here, the review was expanded to include an in-depth competency evaluation. This approach seemed spot on to me. However, the recruiting manager told me under-performance was generally attributed to lack of understanding of real job needs before accepting the offer and problems with culture, especially with the working relationship with the hiring manager, once on the job. This strengthens the argument of measuring pre- and post-hire quality on the same performance standard.

However, some differ on this view. For example, after a recent ERE article I wrote on a related quality of hire article, someone sent me a detailed LinkedIn message describing his company’s approach to measuring the quality of their candidates by sourcing channel. It consisted of a detailed scorecard examining a set of criteria that mapped to the traditional job description. This included things like quality of the academic background, quality of the experience, depth of industry knowledge, and the like. This is probably not too bad, but I suspect that this was not the focus of the interview. But none of this gets at the issues involved in a post-hire quality assessment. For example, the person could be a fine person with all of the experience and academic requirements noted, but someone who was no longer motivated to do the type of work required, or someone whose style was not compatible with the hiring manager’s.

From a pre-hire standpoint, some might argue that the traditional competency or behavioral-based interview is a great way to measure pre-hire quality. My 30-year concern with this is that it still ignores job performance and managerial fit. Being competent to do the work doesn’t mean being motivated to do the work. Nor does competency or behavior measure a person’s ability to prioritize the work, handle too much work, work under pressure, work with different resources, work with comparable teams in similar situations, or work with a weak manager.

For me, it’s pretty easy to conclude that if you want quality of hire to become a useful measurement tool, you must start by measuring pre- and post-hire on the same basis. Further, the measurement standard you should use must be made on some comparison to real job needs. (Send me an email if you’d like a copy of a performance-based talent scorecard from my book, Hire With Your Head (Wiley, 2007).) This means candidates need to be measured before they’re hired on their ability and motivation to perform the actual work required, including fit with the hiring manager.

If pre- and post-hire quality measures are different (up or down) it means that the assessment process is flawed. So it’s important to use feedback from the post-hire quality assessment to change how candidates are assessed. I suspect that few companies do this; regardless, that’s a major reason and benefit for measuring post-hire quality. Then once pre- and post-hire quality assessment are the same and you have a good system for tracking quality of candidate and quality of hire, you can then move on to the more strategic quest of maximizing quality of hire. This includes improving your recruiting and sourcing skills in tandem, and tracking quality by sourcing channels, recruiters, and even hiring managers.

The whole point of this article is to suggest that quality of hire is a much more important measure than cost per hire in measuring recruiting department performance. While cost is important to track, it shouldn’t come at the expense of quality.

Focusing on the internal budget of the recruiting department is insignificant in comparison to the impact the thousands of people the recruiting department hires has on their company. What’s more exciting is that the tools are now available to actually measure and maximize hires, rather than just talk about it.

If not HR/recruiting, then who?

Most HR/recruiting execs would suggest hiring managers themselves as the likely assignee. Others would contend that HR/recruiting is responsible for the quality of the candidates, but managers are responsible for the quality of hire. Others would suggest there are too many variables to assign it to anyone.

Further confusing the issue is determining when quality of hire should be measured. If you do it before the person starts, you’re measuring the sourcing and selection process. After the hire, you’re measuring the hiring manager’s management and leadership abilities as much as you are the candidate’s ability to perform the job needs. Compounding the time variable is the measurement standard. If you use a different measurement technique for before and after, then you’re left with a comparison between oranges and cell phones, or more likely, experience and qualifications vs. performance.

It’s because of these complex issues that I believe that HR/recruiting must take responsibility for quality of hire. If not HR/recruiting, then who?

Here’s my rationale behind the nomination.

1. Maximizing quality of hire is the most important strategic role HR/recruiting can play. Other than maximizing on-the-job performance and retention, there is no more important role for the HR/recruiting department. Not wanting responsibility for this seems odd to an old recruiter like me. All the executives I’ve placed thrive on this type of challenge. Why would HR/recruiting be reluctant to take on — even demand — this responsibility?
2. The CFO is responsible for the capital acquisition process, so why shouldn’t HR/recruiting be responsible for the talent acquisition process? While the financial department doesn’t select, install, and run the capital equipment it approves, it still manages the approval process and strongly influences the ultimate decision. This parallels the role HR/recruiting should play in the talent acquisition process.
3. Having responsibility means the process is adhered to, not the decision itself. Developing and monitoring the hiring/selection process is the role of HR/recruiting. This means developing and implementing processes that ensure that the best candidates are seen and hired. There should be an audit process as part of this to ensure that the best decision has been made, and that if it has not been, the process is modified.
4. There is a huge tactical and strategic cost to making mistakes. HR/recruiting needs to deal with all the mistakes, including finding replacements and dealing with the legal and employee relations issues. The opportunity costs of bad hires alone provides the rationale for some type of vigorous and auditable selection process. Who else could possibly lead this type of cross-functional effort?
5. If not HR/recruiting, then who? Hiring managers should police themselves on quality of hire. Some do it, most don’t, and even those that do, don’t do it well. Regardless, there should be one standardized process that works and is used company-wide. This is the primary reason why hiring managers can only be held responsible for the successful performance of the person hired, not the process used. If some managers want to use their own process, they need to be held 100% responsible for mistakes, including the costs associated with this. This is one way to convince them they should use the approved process.

Of course, if HR/recruiting is given the responsibility for maximizing and measuring quality of hire, there comes some programs that need to be implemented to pull it off. Here are some quick recommendations:

1. Stop using job descriptions to source and select candidates. If you describe the work that needs to be done and assess candidates on this, before and after the hire, you’ll solve the dual measurement problem and reduce turnover dramatically. The primary reasons new hires underperform and/or leave is lack of understanding of real job needs and a poor fit with their hiring manager.
2. Develop sourcing programs that target high-quality candidates, rather than eliminating the worst to see who’s left. This is not insignificant. It means you must stop asking knockout questions and stop posting boring ads. The only reason companies ask knockout questions is to eliminate weak candidates who apply. If you change the sourcing paradigm to target great candidates, rather than hoping great candidates fall through the cracks, you eliminate the “eliminate the weak candidates” problem at the strategic level.
3. Use a performance-based talent scorecard and evidence-based assessment system to measure pre-hire quality. Competency models and behavioral interviews are too generic and do not measure a candidate’s ability and motivation to perform the actual tasks required for success. Instead, candidates should be evaluated across all real jobs, including their ability to work effectively with the hiring manager. Quantifiable evidence of consistent and comparable past performance needs to be the basis of the yes/no decision.

With this type of process in place, HR/recruiting’s role then becomes one of ensuring that the process for maximizing quality of hire is being followed — not making the hiring decision. This is comparable to the authority given, or taken, by the CFO, in ensuring that capital expenditures are justified in some reasonable fashion. Maximizing the quality of every single hiring decision is the primary strategic role of the HR/recruiting department. If HR/recruiting wants a seat at the strategic table it should demand this responsibility.

However, while many will work as advertised, getting budget for them is a different matter entirely. In the past, the only way to get any significant new expenditures past the CFO was with some type of rigorous cost-savings analysis. However, this approach ignored any improvements in candidate quality as possible justification due to its “intangible” nature.

But as Dr. John Sullivan has been ably pointing out for these past 10 years, improvements in candidate quality dwarf potential cost savings. In fact, one could easily justify a cost increase if quality of hire could be proven.

In this article, I’m going to introduce a means to calculate the ROI of any new recruiting program on a quality-of-hire basis. Further, I’m going to suggest that once you have a means to measure quality of hire, you’ll shift your focus toward improving it, and consider cost per hire a secondary priority.

While cost per hire is not unimportant, it’s far less important than quality of hire. In the HR field, ROI has traditionally been calculated based on the cost savings a new process generates in comparison to the investment. These savings traditionally involve recruiter productivity opportunities, the use of lower-cost advertising techniques, or the elimination of outside services like search agencies.

ROIs calculated on this basis only have value if the quality of the candidates seen and hired are the same. If quality declines, the associated cost savings are meaningless.

To get some perspective here, let’s look from a slightly different angle at the financial decisions of hiring — the amount of money your company will be spending on direct compensation for new hires in 2010. For example, if your company will be hiring 1,000 additional people next year at an average compensation of $60,000, you’ll be spending $60 million in additional annual compensation.

While this is a huge amount, most companies don’t look at the financial implications of each of these individual 1,000 hiring decisions from a quality standpoint, relying instead on the transaction costs involved in bringing these people on board. By incorporating quality of hire into the ROI analysis, the strategic consequences of this huge expenditure is more appropriately considered.

Measuring quality of hire starts with having some basic tools: first, a talent scorecard to measure incoming candidate quality and, second, a means to convert this into financial impact. With these tools, calculating quality of hire ROI is relatively straightforward. This is demonstrated graphically in the accompanying figure.

The graph represents the current mix of recent hires, assuming some type of normal distribution across all talent levels from A to F. As the economy recovers, there will be a natural tendency to push this mix to the right, reducing the quality. This can be offset by new programs which will improve the mix, pushing the curve to the left. In this case, the average is somewhere between a B and C level, typical of most companies.

An impact multiplier needs to be assigned for each quality group in order to assess the financial contribution each level makes. In this case, it has been assumed that an A-level person makes a positive business contribution that’s equivalent to four times the person’s total compensation. The impact multiplier for a B-level is two times compensation; a C-level is considered break-even; hiring a D-level person results in a loss equivalent to their compensation; and the F-level cost is five times the compensation.

Developing the impact multipliers is the big assumption in this quality-of-hire ROI calculation, but for staff-level positions, the ones shown in the table are quite reasonable. (Click here for more background on this, including some charts, graphs, and a webinar podcast.) Theses multipliers increase dramatically for senior management, and are a bit lower for hourly and entry-level positions, but probably not much.

While you could use short-term performance reviews to determine quality levels post-hire, some type of talent scorecard needs to be used to evaluate candidates on a pre-hire basis. Logically, from a validation standpoint, it’s best to use the same evaluation process pre- and post-hire. Not having linkage pre- and post-hire has been one of the big problems in using quality of hire for developing ROIs for recruiting initiative.

More important, since most hiring mistakes are associated with hiring a good person for the wrong job, these “grades” must be based on performance, not generic quality descriptions. For example, a brilliant person who needs to be pushed to do the work is at best a C-level. Problems associated with these classic mismatches prevent companies from improving quality of hire, regardless of any great sourcing and employer branding programs. This is why I suggest measuring pre- and post-hire quality based on real job needs using a tool like the performance profile instead of a job description in combination with a multi-factor talent scorecard to measure end-to-end quality of hire.

Using these tools, calculating hire-quality ROI involves a number of steps:

First, calculate the average talent mix for your current hiring processes. To do this, take a sample of your recent hires, assigning each person a realistic quality grade. Then using some weighted average approach, determine your average talent mix. It’s probably somewhat below a B level, with a corresponding multiplier of 1.5X to 1.75X. (Email me if you’d like to participate in a quick SWAG assessment.)

Next, determine the financial contribution of this current talent mix. Multiply your current talent mix multiplier by the total compensation for the group to determine the financial contribution they collectively make to your company. In the example of 1,000 hires at $60 million at a B- mix and a 1.5X multiplier, this would be $90 million, for a net contribution of $30 million.

Now the fun begins. Now you need to determine how a new recruiting initiative improves your current talent mix. Any proposed recruiting initiative should be assessed on how well it improves the overall talent mix, not just how much it reduces costs. Graphically, this means moving the normal curve shown earlier to the left, meaning more As and Bs and less Cs, Ds, and Fs. To obtain a 10% quality of hire improvement, you’d need to hire 10% fewer below-average candidates, replacing them all with above-average candidates. Due to the weighting, a 10% quality shift like this increases the multiplier more than 10%. In the example above, this shift increases the multiplier from 1.5X to 1.75X. (Email me if you’d like to see the model and the math.)

Finally, calculate the quality-of-hire ROI by comparing the improvement in contribution to the cost of the initiative. As shown above, a 10% improvement in talent mix increases the multiplier from 1.5X total compensation to 1.75X. In the example, this means the net contribution of the 1,000 new hires increases from $90 million to $105 million, for a net increase of $15 million. This is an enormous impact, and indicates why quality of hire should be a far more important driver than cost per hire when evaluating new recruiting initiatives. Consider the ROI implications. If you spend $500,000 to obtain this quality improvement, you’d have a first-year quality-of-hire ROI of 2,900% ($15mm- $.5mm/$.5mm)!

Now for the good/bad news. Once the economy recovers, improving quality of hire will be more difficult, as the demand for talent exceeds the supply. As shown in the figure, these economic forces will have a tendency to worsen the talent mix as your best people are aggressively sought by the more aggressive recruiters, or they leave on their own for greener pastures.

Under improving economic conditions, preserving your current talent mix will become more challenging. In this case, preventing the impact of a reduction in talent mix should be used to calculate your quality-of-hire ROI.

Recruiting departments should be measured on how well they improve quality of hire, rather than a single-minded focus on cost/hire. The discussion should start by figuring out who’s responsible for it: recruiting, hiring managers, or both. Regardless, the impact of a minor improvement in quality of hire has such an enormous business impact that it’s irresponsible not to directly consider it in every hiring decision.

In his quest to maintain rule over his tiny kingdom, Rter needs mighty knights to fight dragons, battle anarchists, fight off industrial demons, and fully document all expenses in a timely matter.

However, there is an economic slowdown in Spamalittle, and most would-be knights were unwilling to leave their stable employment. This would make finding enough brave and bold applicants willing to fight for any cause, however noble, quite difficult. A recent survey conducted by the town crier showed clearly that while employee dissatisfaction was on the rise, few of the best, and even the worst for that matter, were willing to risk leaving for other seemingly more attractive endeavors.

Having one’s daily bread seemed to be a powerful incentive indeed.

However, the survey also seemed to indicate that tidings of a near recovery would encourage even the most satisfied to ponder alternate opportunities. In times of want, stale bread is enough; however, in more bountiful times, one’s daily bread can seem less pleasant, especially when thy neighbor is now having his with organic raisins.

Despite these down-trodden times, Rter wouldn’t even consider those who were not fully employed, nor did he even consider the potential that some of his own knights might leave for slightly greener pastures. He strongly felt that the honor of working for Spamalittle would still attract the best and brightest knights around.

To start his knight-for-hire acquisition plan, Rter met with Murlyne, his trusted magician and head of Spamalittle’s talent acquisition team. She immediately wanted to know what Rter considered his perfect knight. He then went into his standard diatribe, pulling out a long-forgotten scroll listing the qualifications for a Senior Knight Level II – Job Code IV-12X9. Murlyne protested, saying times have changed and the old knight description no longer applied. However, Rter would hear none of that, contending that it was good enough, and insisted that the qualifications listed were still required, despite changing demographics and the lack of affordable training in the kingdom.

So with a shrug, Murlyne listened as Rter read off the now familiar list of requirements. These included the required competencies of bold and brave, excellent communication skills, conversant in all known dialects, strong initiative especially in matters of dragons and confronting similar enemies, and of course 5-10 years’ experience as a noble knight, and an official certification from one of the top knight academies in the land.

Murlyn was not flustered by Rter’s apparent lack of understanding of the talent market of the day, and decided that some devious magic was required. In this case she drew upon her trademarked “spell of the clever query.” (Caution: this spell should not be attempted without professional assistance.)

This started with these three core questions:

1. Why would a fully employed knight who possessed all of the qualifications want to take this job?
2. During the trial by ordeal, what are you going to tell any aspiring knights what they’ll be doing if they get accepted to your noble cause?
3. What would a worthy knight do over the course of the next year that would earn such a knight the “best knight of the year” award?

To make a fairly long fairy tale short, here is how King Rter reluctantly responded:

To be considered a worthy, and award-winning knight, the person must accomplish the following:

1. Exceed the basic quota and seek out and banish at least 4-6 dragons and other evil-doers from the kingdom over the course of the first six months.
2. Establish a training school for all aspiring knights that is known and well-respected throughout the land.
3. Use PowerPoint and Excel to present complex industrial demon-fighting plans and strategies at the monthly offsite.
4. Lead a team of knights and procurement squires to reduce the cost of all battlefield equipment.

Rather than break the spell, Murlyne queried Rter further, asking if he’d at least consider someone who could do this work, even if the person didn’t have all of the requirements listed on the scroll of requirements. Rter responded, “Of course, as long as the person’s not a frog!”

Knowing this meeting was probably her last on this subject, she pursued the “why would someone want this job?” line of questioning. She artfully persisted along this same line a bit further, saying that the compensation package wasn’t even competitive, and worse, the kingdom’s healthcare plan did not include a battle-injury coverage provision.

Rter appeared flummoxed, and being on the defensive (this is what good spells can accomplish) sputtered out some unprintable and somewhat cynical expletives. However, Murlyne finally got Rter to agree that this was a real learning opportunity and provided the worthy person a chance to make a real impact on the kingdom’s future prosperity. Based on this, Rter agreed to see someone with lots of potential even if the person’s background was not as perfect as initially requested.

As part of the kingdom’s branding campaign, they argued over whether “Knights of the Breakfast Table” or “Knights of the Purple Squirrel” better represented their overall mission, selecting the latter, for some reason which is now long-forgotten.

A clever ad posted on every tree drew hundreds of potential knights, but few of the fully employed or highly qualified. (It’s shown below for those who have any referrals.)

Hear Ye! Hear Ye! Would-Be Knights of the Purple Squirrel

Be part of a glorious quest! King Rter is seeking a few proud and brave souls to join his team of knightly all-stars to join in the merriment. The few selected will receive the accolades of their peers, have a chance to meet with exciting leaders around the kingdom, and participate in intriguing sports. If you have a track record of performance in the fields of chivalry, dragon slaying, or knight development, send PM (pigeon message) or escroll to Murlyne@spammalittle.com. Be sure to include a short write-up of your bravest endeavor in lieu of a resume.

While many applied, one lowly frog seemed to be the best of the lot. He had slayed dragons and witches and such, in former lives, made complex presentations to advisory boards when he was a mere tadpole during his internship with a much bigger kingdom, had a track record of turning apprentice knights into top performers, and led an award-winning major cost-reduction program for a government contractor.

Alas, he was a frog, and one without the requisite minimum of five years of absolutely identical experience. Even Murlyne was puzzled by this dilemma and felt compelled to use her magic elixir of last resort. Drinking this elixir would cause Rter to be totally objective, but it only lasted 30 minutes, barely enough time for Rter to temporarily forget that the aspirant was just a frog.

After taking the elixir, Murlyne suggested that King Rter spend 10-15 minutes on getting into the details of each of the frog’s major accomplishments. Then, when the elixir’s magic effects wore off, look at the aspirant to see whether anything is different.

King Rter reluctantly complied, but as hard as he tried he could not fight off the idea that the potential knight was nothing more than a frog. However, as he began asking questions about the frog’s accomplishments, something miraculous happened. Before his very eyes he discovered that what initially was a frog disappeared, transformed into a brave and bold knight of the purple squirrel variety.

The frog was ultimately hired and given the chance to prove himself, and while still a frog, did receive the “best knight of the year” flask the very next year. Murlyne received the praise of King Rter, but still had to rely on clever spells to control King Rter and his other Knights of the Purple Squirrel. They somehow forgot most of them were also once just frogs.

Peace and prosperity soon returned to the kingdom and these knights soon became restless looking for other dragons to slay. But that is the way of top performers whatever they may be: frogs, software developers, even accountants.

And that, my friends, is how you turn frogs into purple squirrels. (Note: I have this from trusted sources that this is no fairy tale.)

The idea here is that by tracking changes in satisfaction and the job-hunting activity level for the fully employed, we’ll have a leading indicator of employment churn.

Fully employed people switching positions with other fully employed people doesn’t do much for the national employment rate, but it can still keep a recruiting department extremely active. This employment churn becomes a problem when a company is forced to find a bunch of new hires to replace a significant number of tenured employees who have left voluntarily. This becomes a really big problem when it’s unanticipated and when it’s a company’s best people. Replacing them is then even more difficult.

The underlying cause of employee churn is similar to any financial or real estate bubble — greed, or the feeling of not wanting to be left behind. On the hiring side it’s nothing more than a few people getting better jobs, which leads to more people getting more active and finding better jobs, which in turn leads to even more activity, and so on, until you have a tidal wave or avalanche effect.

On the job-hunting side, it’s obvious that once a few new jobs are created, those who are fully employed, but most dissatisfied with their current jobs, will jump ship first. As these people are replaced, it will create a wave of job-hunting activity for those slightly less dissatisfied, and as these positions are replaced, even more people will start sensing the economy is recovering, and begin looking as well.

This churn will accelerate rapidly, as the pent-up demand for better jobs and salary increases is unleashed.

Based on our survey results, this could happen sooner than expected. These surveys are starting to indicate a decline in overall job satisfaction coupled with increased job hunting activity. None of this job switching will affect the overall employment rates, but this replacement activity will force corporate recruiting departments to gear up their activity level at a rapid rate. Things will be much worse if these replacement hires haven’t been forecasted.

The accompanying chart shows the decline in satisfaction over the six-week period from mid July to late August.

What’s most surprising is the decline is from the group of people who indicated just a few weeks earlier that they were extremely satisfied with their jobs. This has dropped from 21% to 13% in just a few weeks.

Those who indicated they were satisfied didn’t change much, with the biggest pickup in those who indicated they were neither satisfied nor unsatisfied with their jobs. This increased from 11% to 21%. Essentially, 40% of the group who were initially very satisfied with their jobs no longer feel this way.

What happened in two to three short weeks to cause this decline?

It could very well be that as the economy has begun to recover and opportunities have started reappearing, just having a job is no longer good enough.

So people are getting itchy and are starting to do some preliminary searching.

While a hypothesis right now, we should be able to get confirmation of this by conducting a cross-question analysis comparing job-hunting activity by level of satisfaction. The results from this analysis are still preliminary, but this trend is quite apparent and is shown in the graph titled, “The Most Satisfied are Starting to Look.”

As part of the survey, we asked respondents to describe their current job-hunting activity level. The choices ranged from not looking to aggressively looking. In early August, 78% of the extremely satisfied said they were absolutely not looking. This dropped to 57% by the end of August.

A similar drop was noted for those who classified themselves as being satisfied with their jobs, dropping from 51% who were absolutely not looking to just 18%. As you can see by the graph, there was also a major increase in both groups who indicated they would consider something if called by a recruiter.

This drop in job satisfaction in combination with an increased level of job-hunting activity is a strong indicator that employment churn is about to increase dramatically in the next month or two. If this is the case, you’d better get ready right away.

Here are some ideas to consider:

1. Rebuild your recruiting team. If you don’t have enough recruiters to handle the load, you’ll get behind long before the recovery really starts. Then you’ll never be able to catch up.
2. Conduct your own internal satisfaction survey to validate these results and pinpoint your most vulnerable areas. While the survey results are reasonably statistically valid, they’re not specific enough to uncover specific problem areas by industry or job function. Many companies are now aggressively launching internal satisfaction surveys to ensure they’re not caught unaware. This way, they’ll minimize the impact of any potential retention problems.
3. Accelerate your sourcing efforts for your most critical positions. You’ll need to begin an aggressive recruitment advertising effort for those positions that seem most critical and where you are most vulnerable. If you’re a corporate recruiting leader, you might want to use your employee referral program and get everyone to provide you the names of the best people they’ve ever worked with anywhere. Then contact these people and put them in your talent pool. (Here’s a recorded webinar we did showing how you can use LinkedIn to accelerate this effort.)
4. Learn to use hiring ROI to justify to your CFO the cost of any new recruiting or sourcing program. If you’re going to be hiring a bunch of new people before your company’s hiring forecast is approved, you’ll need a creative approach to justify any expenditures. I’m preparing a white paper on a new approach to calculate ROI by measuring the impact any new hiring initiative has on changing a company’s overall talent mix. Email me if you’d like a sneak peak. Here’s a recent article with some background on this important topic.

While it will be a rocky road to recovery, the replacement market is likely to heat up first, and soon.

If you get behind the power curve in these early next few months it will be very difficult to ever catch up. New sourcing technologies offer great new techniques to find the best, but don’t forget: they’ve never been tested in a hot market where the demand for talent exceeds the supply. Some forward planning and some big contingency programs will get you through the worst of it, if employment churn accelerates faster than anticipated.

In a recent ERE article, I made the point that “employment churn” (fully employed people switching seats) will increase dramatically three to four months before any pickup in overall employment. This unplanned spike in voluntary turnover will leave many companies ill-equipped to handle the surge, since most are not considering replacement hires in their new hiring forecasts as a big item.

Based on some recent evidence, I believe that this spike will be more significant that anyone realizes. Worse, this could happen sooner than expected, blindsiding unprepared companies.

Here’s some of the evidence supporting this view.

Over the past few months I’ve been asking people who are fully employed these two questions:

1. How satisfied are you with your current job?
2. Are you looking now for something better?

Interestingly, more people said they were satisfied than unsatisfied, but even those who were dissatisfied most said they weren’t looking right now, probably because there isn’t much worth looking at. We created a formal survey to validate this result, since the impact of this effect on your current and future sourcing plans is huge (here’s the link to the two-minute survey).

Overall, 75% of the people said they would consider something if called, but only 20% of the most satisfied said they’d take the call. You’ll find the detailed results after you complete the survey, but here’s the chart showing job satisfaction vs. job hunting efforts.

Basically, the conclusions drawn from this survey (when validated by more participants) mean you should stop all of your active candidate sourcing programs immediately and aggressively ramp up your passive recruiting efforts.

What the survey results seem to indicate is that just having a job is far better than not having one, even if the job itself provides little personal satisfaction. Since there are so few good jobs out there, it’s not worth looking for something else right now.

As you can see by the chart, less than 10% of those unsatisfied and extremely unsatisfied with their current jobs are aggressively looking. And why would they? We’ve all read about low-ball offers, the number of applicants applying for each job, and the demeaning aspects of looking for a job in the current environment.

Given this situation, it’s unlikely many fully employed people would be looking, risking the jobs they already hold. You can observe a similar effect by tracking the use of the word “jobs” in a Google search.

Last year, this number was about 3.5mm per day. It peaked in March/April at 7.6mm per day, and has been running at 7mm per day for the past three months.

While still a huge number, one could conclude that the steadiness is a result of people not finding anything new. I’d further conclude, based on the survey results, that most of the people looking for these jobs are either the unemployed or those just entering the workforce.

It’s also pretty easy to conclude that as soon as the economy recovers just a little, those least satisfied of the fully employed will leave first. This movement will then trigger the next rung of those slightly less satisfied to ramp up their job-hunting efforts.

This, in turn, will lead the next group to move up their efforts, and so on. Pretty soon, a minor increase in voluntary turnover will lead to a massive game of musical chairs being played out across the country. It will only take a little bit of new job creation to start this major movement.

This is not a far-fetched scenario, with the tea leaves pointing to something like this happening in the next three to four months. Surprisingly, very few companies are ready for this unexpected surge in replacement hiring.

If you think there is a possibility of this type of scenario impacting your company, here are four ideas you might want to ponder at your next recruiting staff meeting. (For more on this topic, check out my September 2 webinar called “How Job Satisfaction Drives the Job Hunting Process.”)

1. If you have any open reqs for experienced hires, don’t expect to hire any good people who respond to your ads. You’ll need to enter into the passive candidate market aggressively to fill these slots or ramp up your employee referral program. Here are links to LinkedIn and Broadlook webinars with some advice on how to use these tools to identify and call these people.
2. Call Jobs2Web, TalentSeekr, or First Advantage and ask them to create talent hubs for you for your most critical positions. There’s no OFCCP reporting required for these microsites as long as you’re just collecting prospects for broad categories of jobs. Here’s a link to a sample of how your CRM system can be designed to convert a prospect into a candidate using a series of auto-response emails without the recruiter even picking up the phone. We call this the “Virtual Recruiter”(sm). The talent hub with this type of drip marketing is the shape of things to come.
3. Figure out how you’re going to attract strong, fully employed experienced people who currently consider their current job as far better than anything you have to offer. Consider that these passive candidates also represent 80% of the total candidate market, and it makes no sense to continue spending 80% of your resources on the other 20%.
4. Become preventative. Figure out how to minimize the impact of voluntary turnover at your company. Minimize “disgruntled employee syndrome” in a period where jobs are going nowhere, salaries are being cut, comp increases are nonexistent, and benefits are declining. This is a tough challenge that needs to addressed, not ignored.

There’s a lot to chew on here, but if we’re moving through an inflection point right now, expect the ride to be comparable to a trip aboard the Enterprise through a black hole. Expect it to be much worse, if you decide to ride it out, without considering the consequences.

From what I can tell, most companies aren’t ready.

Abraham Maslow, in addition to many behavioral economists, provides some underlying rationale for the idea that churn will ramp up quickly before the overall hiring stats increase.

As part of his “Hierarchy of Needs,” Maslow suggested that while people consistently strive for personal improvement, they become conservative in difficult economic times. During these periods, trade-offs are made where people protect their assets, including their jobs, avoid any unnecessary risk, and reduce their expenses. This is why good people, who are fully employed, are reluctant to move during economic slowdowns.

However, as hiring “green shoots” appear, those who are the most fed up with their current jobs (the least satisfied) will begin to pursue other opportunities. As these people leave, companies will fill these empty seats, most likely with others, currently fully employed. Soon these trickles of churn will turn into significant streams of turnover that will be measured in the national labor statistics. This spike in turnover is an early indicator of an economic recovery. To get a handle on this, here’s a super-short satisfaction survey you can send to your employees, everyone in your LinkedIn network, and everyone in your talent pool. We’ll track these results over the next few months to provide you with a sense of churn by industry and job level. Due to the severity of this recession, it’s quite likely that employee churn will really spike up over the next three to six months.

Once these early indicators start flashing yellow, it’s time to implement the hiring plans you’ve been developing aggressively over the past six months.

Here are additional ideas to consider as you get these plans ready for prime time:

Remember that one size doesn’t fit all. While the hub-and-spoke models brought to you by Jobs2Web, TalentSeekr, and First Advantage’s HireEngine are great for entry-level job seekers, college grads, and staff-level professionals, they might not be the ideal sourcing tool for executives, managers, and the top 10% in any field. The same is true for using social media — the new darling of corporate America recruiting — as a primary means to source talent. Developing a sourcing-channel strategy by position, demographic, and quality level is an essential aspect of any recovery plan. As Yogi Berra once said, “Don’t put all of your sourcing eggs in one basket, unless they’re hard-boiled.”

Don’t spend 80% of your resources on 20% of the market. If 15%-20% of the labor market is looking at any one time (active candidates), and even if it surges to 30% once the recovery begins, this means that 70%-80% of the market is passive. Further, one could easily prove that top performers tend to be more passive and more discriminating. Under this assumption, it seems appropriate to categorize your recruiting expenditures by active and passive and by quality to see how well you’re doing on an ROI basis. This might suggest that cost per hire is the dumbest metric on the planet.

Passive candidate sourcing comes with a significant cost, but a great ROI. If you define an A-level candidate as three to five times more productive than a C-level candidate, and B-level somewhere in between, paying a 30% search fee makes sense on an ROI basis. This is true at least for a top 10% person. On this same measure, a 15%-20% fee could be justified for a B-level person. On this basis it makes no sense to me why corporations are adverse to paying these fees, since they need to pay their own recruiters an equivalent amount in effort to hire anyone who’s not looking.

Creating talent pools is the sourcing sweet-spot. The most important tool to emerge over the past few years is the idea of building talent pools of prospects by job class. These are large databases of former candidates, employee referrals, and all of the people you sourced for jobs and came in second or third, among others. Using robust CRM systems, these candidates are sent regular emails describing compelling opportunities, and since they’re prospects, you don’t need to report on them until they apply for a specific job. If you make the apply process something other than just submitting a resume, you can also eliminate the bottom 75% during the first iteration, while attracting the top 10%. (Email me if you’d like to learn how outbound emails can be used this way.)

If you’re insistent on posting individual job requisitions, do it right. I’m predicting a significant decline (50%-75%) in the use of job-board advertising over the next few years. However, if you’re going to resist the move to the hub-and-spoke and talent-pool-sourcing model, make sure your ads are easy to find, and compelling. Emphasize what’s in it for the candidate, stop mentioning skills, and focus instead on the challenges. As part of this, use creative titles, like “Off-road Java Developer” or “So You Think You Can Sell,” to differentiate your jobs and attract a better class of candidates.

Implement a forward-looking workforce-planning process. If you’re not yet forecasting your hiring needs six to 12 months out, you should be. This will give you a big clue to what your line managers are saying about their future needs. Even more important is looking at the changes between these forecasts, especially in the differences two and three quarters out. These are great forward-looking indicators as to when the economy for your company will turn. Better: if you build in churn and turnover assumptions into these forecasts, you’ll be able to prioritize how you allocate your recruiting resources.

The key point here is that you need a specific sourcing strategy by job class (e.g., staff, management, sales, entry-level) and a channel-by-channel plan to implement it. This needs to be planned ahead of time and implemented as soon as you see an increase in involuntary turnover in this job class. This is your first clue that labor churn is beginning.

This will be confirmed by increases in month-to-month increases in your hiring forecast. Collectively this will give you a three- to four-month headstart on your competition. Getting candidates first will be a huge competitive advantage.

To see if your program is working, start asking all of your candidates how long they’ve been looking. If they say they’ve just started, you know you’re in the game. If they say they haven’t started yet, you’ve won.

Here’s why: from a practical standpoint, only 20 to 25% of candidates are actively looking at any one time. This is a high-end estimate, with 15 to 20% more likely, and in normal economic times probably around 15%. This means that 80% of most candidates aren’t looking.

So despite my current fondness for Jobs2Web, and the possibility that TalentSeekr and First Advantage’s HireEngine will become powerful talent hubs, I’m concerned that too many recruiting managers are aiming at the wrong target. It doesn’t take a lot of brain power to prove the case that there are more top-10-15% performers among those people who aren’t looking than those who are. So why are we spending so much effort to find candidates we don’t want to hire, even if we’re doing it more efficiently?

The quick counter to this is that even if you don’t hire the precious few good ones you find, you’ll be able to pipeline these prospects into a talent pool and keep them warm for future positions. As long as there are sufficient numbers of A-level candidates in the active pool, this makes good sense, but this has yet to be proven for companies that don’t have a great employer brand. The other counter to this active/passive argument is that corporate recruiters have too many reqs to handle, and the hub and spoke model is the only way to productively deal with filling positions. This is a valid point, since the hub will be seen by far more people than an individual req, especially if you drive traffic here through dynamic spokes, like Twitter, niche sites, and Facebook pages.

Yet while valid, it’s a bit shortsighted to rely on one basket to put your talent eggs in. An ROI case can easily be made that B+ or A-level candidates outperform their less-competent counterparts by at least two to five times, so that any additional cost to acquire these people is insignificant.

While many corporate recruiters are successfully using LinkedIn, ZoomInfo, and Broadlook to identify passive candidates, their productivity metrics are far below their external agency counterparts. The “too much work to do” excuse is part of the problem here, and this is a valid point. It does take more time to contact, persuade, and recruit passive candidates into the fold. However, from what I’ve seen, even with enough time, most corporate recruiters would still fall short. In my opinion, this is totally due to the use of unsophisticated recruiting techniques. This is where the use of the hub and spoke model for passive candidate sourcing can have a significant impact on both productivity and quality.

First, let’s put the metrics of passive candidate recruiting on the table. As a minimum, you need to track outbound return call rates, the percent of prospects agreeing to talk about the job, the percent of these calls resulting in qualified applicants to send out for interviews, and the number of high quality referrals per call. (Here’s a link to a recorded webinar I prepared for LinkedIn with these metrics described.) It turns out that if you don’t get at least 50 percent of your outbound calls returned, the end results are pretty dismal. For example, if you get 50 return calls out of 100 people randomly contacted based on their titles, it’s unlikely that more than six to eight would be interested in your job, fully qualified (considering location, comp, ability, and availability), and ready to go out for an interview. While pretty good, this number would drop to two to three people if the initial callback rate is around 20%, which is a number we’ve found to be about average for most corporate recruiters. This is not so good.

In my mind, these kind of results are no better than any “dial for dollars” process and are what’s preventing corporate recruiters from competing effectively with their external agency counterparts. A hub and spoke approach to sourcing passive candidates changes the underlying rules here by leveling the playing field.

As pointed out in the LinkedIn webinar, if you consider the names of passive candidates not as prospects but as hubs in a network with dozens or hundreds of spokes of other possible contacts, you’ll be able to reap untold rewards. The secret of passive candidate recruiting, known by all the best third-party recruiters on the planet, is getting these initial contacts to give you the names of better contacts. The reason they’re better is that they’re dead-on hits for your job, they’ll call you back 80 to 90% of the time, and everyone will agree to consider your job opportunity. This means if you contact, recruit, and network properly with this hub and spoke mindset, you’ll get 20 to 30 sendouts for every 50 names called!

Too good to be true?

Not really, but there is a lot of technique and skill required to pull it off. For one, you need to leave very compelling voicemails to get the initial group of people to call you back. For another, you have to be someone worth knowing. This is the only way people you don’t know will give you two to three great referrals every time. My favorite technique here is to recruit them first, get them to give you a 10-minute overview of their background before telling them much about the job, and during this screening process build a 360° network of their connections. Then if the person is not qualified, I go back and ask about some of the people in this extended network. As part of this, you must be persistent and not hang up until you get at least 2-3 great names. This is obviously the critical step in the process, but if you’re worth knowing, these first level prospects will go out their way to help you. (Here’s an article with a detailed example of how to do this.)

While not easy, learning these passive candidate recruiting and networking techniques are much more productive than calling 100 people at random and hoping one becomes a candidate. This is equivalent to writing boring job descriptions and posting them on a big board where no one talented will find it.

Third-party recruiters practice this stuff and constantly hone their techniques on getting better referrals. Since 80% of the market is not looking, getting to these people first is the difference in being a good recruiter and a great one. It also represents the difference between hiring good people and great people. Companies are investing a great deal in becoming more efficient finding these good people. Surprisingly, few companies consider investing similar resources to find the best.

If so, it’s important that you start planning your recruiting activity and resource needs for this worst-case situation.

To take a stab at this complex issue, imagine you’re in the boardroom with your company’s senior executive team discussing the impact of the prolonged economic slowdown on your current business strategy and the current year’s annual operating plan.

Your input involves your employees’ morale and productivity, the company’s organization structure, all of the organizational development plans underway and proposed, and the overall hiring outlook.

The Big Picture: Impact on the Company

While I’m no expert at this, I suspect the initial discussions last year at the initial executive confab, right after black September 2008, focused on massive short-term expense control. Hopefully, you were part of this planning session to make your views known.

Most likely, the results of this session included a hiring freeze, a companywide expense reduction program, and a huge RIF. It’s now recognized this was a bit of a knee-jerk reaction, but typical when business conditions quickly turn south.

Moving forward, when the executive team realized it overreacted (sometime in the first quarter of 2009) these expenses cuts were fine-tuned. If you were in the meeting, you would have said, “I told you so.”

It normally takes about three to six months to realize that reactive expense cuts are too deep and not targeted enough. Based on this, some relief was provided for critical projects, but some appropriate, important deeper cuts were made.

Now moving on to the second quarter of 2009. This is when companies started preliminary planning for the recovery and started to release RFIs and RFQs for projects that were just shelved six months earlier.

As part of this, everyone responsible for approving these projects, especially purchasing, was in expense-control mode, ensuring they’re negotiating very hard, and getting the best price possible for everything.

Nine months later though (July 2009), there is a big shift in the conversations at these board meetings. As long as you are a participant, you know all about these and are a critical part of the go-forward planning. As you’re aware, this talk doesn’t just involve recovery planning and short-term tactical moves; there is an ominous feeling that things just might not return to normal.

One question most executive teams are now considering is what happens if the tepid recovery peters out. Or, what if there’s a short-term bump, followed by an inflation-fueled bust?

These are significant strategic issues, without easy answers.

Whenever there’s a fundamental shift in business conditions, as we’re possibly seeing today, a corresponding shift in business strategy and operational direction is required to ensure long-term company viability.

This is much bigger than budget cuts and hiring freezes. Ultimately, decisions made under this dark cloud will affect every aspect of business, including product and marketing strategy, operational performance, and financing.

Of course, it affects the recruiting department and what it will be doing over the next three to nine months.

Impact on the Recruiting Department

While I have no clue as to how the recovery or non-recovery will affect your company, I have no doubt your company will be affected. Here are some things your executive team is probably considering, and the impact of these on the recruiting department.

With the major expense reductions already implemented, the near-term outlook will most likely focus on improvements in operational efficiency. This will involve major process reengineering efforts in every function and department, including some type of significant reorganization. The goal of all of these programs will be to extract long-term cost savings and increased flexibility. This will allow a company to better react to whatever the economy has in store for it.

These efforts will affect the recruiting department in at least three ways. First, on the hiring front, making sure that the right people are available to conduct whatever reengineering effort is underway. Second, if there’s a reorganization, the recruiting department will need to help move some people out and add a few here and there. Third, and most important, is a reengineering of the recruiting department itself.

From what I’ve seen in just about every company in the Fortune 1000, huge operational efficiency opportunities are available to increase both recruiting department and individual recruiter productivity. One important example is the idea of eliminating requisitions and using a hub-and-spoke sourcing model powered by a robust CRM instead.

Here’s a recent article that describes this approach in more detail, plus some other sourcing ideas that can profoundly increase recruiting department productivity.

Other ideas to increase recruiting department productivity include having recruiters partner much more closely with hiring managers to eliminate wasted effort, overhauling the role of hiring managers to be totally responsible for hiring, implementing a rolling workforce plan to minimize costly reactive sourcing programs, and leveraging the employee referral program to target A-level passive candidates.

All of this needs to be based on a detailed process flow map highlighting inefficiencies and bottlenecks. At a minimum, this will help prioritize your process reengineering efforts. (Email me if you’d like to see a sample of this type of process flow map.)

On a worst-case basis, assuming an extremely shallow recovery, some companies will need to undergo a massive restructuring to have a chance of long-term survival — think GM, Chrysler, many banks, and perhaps some units at GE, to highlight a few.

This restructuring includes disposing of non-productive assets, centralization of core functions, a huge downsizing effort, and possible consolidations with industry rivals. Offsetting this will be increased focus on new product development in combination with alternative marketing and distribution efforts.

In some cases, the recruiting department will be the one being restructured, so it’s important to be part of the solution helping design your organization of the future. This includes being on top of marketing trends, understanding how to implement a flexible and effective sourcing and recruiting program, and having only A-level recruiters on your team.

This is a very high-level view and quite pessimistic, but it’s not out of the range of possibility for many companies. Even if your personal situation isn’t as bad as described, getting prepared and taking some of the actions described will be helpful.

Then the worst-case for you will be the implementation of an extremely productive and efficient recruiting and hiring process for hiring the best talent on the planet. And I think we’d all agree, that’s a pretty good “worst” case.

I’ll also make the contention that only a few companies are ready for this shift and none of the predictions below are far-fetched.

For one thing, they’re now being successfully tried out today in some form by big-time companies. More important — they work, especially on a recruiting-ROI basis. I define this as the quality and impact a candidate makes divided by the cost and effort to find and hire the person. (Email me if you’d like to review this Recruiting ROI calculation.)

To further validate some of the more “off the wall” predictions, I’ve tied the major points to an online survey. The results are currently posted, providing an instant view of where your company stands in comparison to your competition.

With the idea of getting ahead of the recovery, here are my 2010 New Year’s predictions for sourcing and recruiting:

1. Job boards will soon be archaic. Major job board advertising will continue to decline as corporations finally realize that posting individual requisitions on these boards targets “C+” type talent. Money spent here will be reallocated to sourcing programs that actually work.
2. The talent hub and spoke model will dominate active candidate sourcing. Requisition-based advertising will be replaced by bundling similar jobs into talent hubs. Traffic will be driven to this hub via a variety of ever-changing sourcing spokes (blogs, niche boards, social networks, user groups, specialty sites, etc.).
3. Sourcing spokes will come and go. This search-engine-optimized “talent hub and spoke” model will dominate active candidate sourcing with new spokes, like Twitter and Facebook, coming and going. Jobs2Web and TalentSeekr seem well-poised to dominate this market in the short term, with First Advantage’s HireEngine, among others, entering the fray.
4. Applicant tracking systems will eventually react and adapt to the new model. ATS’s will finally re-architect their systems to adapt to this new dynamic sourcing model, but they will not be the driver behind this change. So expect to continue to be disappointed with lag times of one year or more.
5. Companies will be unprepared for the spike in turnover. There will be a six-month spike in hiring as a result of a big jump in voluntary turnover once the recovery begins in earnest. The current pent-up demand for new jobs will finally be unleashed then, as nearly everyone enters the job hunting market. Expect counteroffers and compensation to increase.
6. Twitter will not become the silver bullet. Twitter will be one of the spokes in the talent hub model, but not a dominant source of candidates. However, it will be a very useful means to spread the news about open opportunities to a company’s prospect pool. Here’s a very short survey you can take that validates this.
7. Effort will increase to source passive candidates. Passive candidate sourcing and recruiting will become more aggressive, since this represents 70% of the population (based on surveys indicating that 20%-30% is active). In the short term, LinkedIn, ZoomInfo, and Broadlook will be the primary tools used to find passive candidates, in combination with strong recruiters to drive the process to closure. However, the ERP (see below) will become an increasingly important driver of this.
8. Just-in-time hiring and virtual recruiters will soon arrive. Companies are now building proprietary databases of top talent nurtured by CRM (candidate relationship management) workflow systems. These systems are now becoming more robust with the addition of advanced workflow design and auto-responders. This will result in an online “virtual recruiter” automatically converting prospects into interested candidates. Avature and First Advantage’s Talon seem to be leading the pack here.
9. The employee referral program will become the primary driver for future sourcing. The traditional ERP will be transformed into a far-reaching network of top talent by integrating it directly with tools like LinkedIn, Twitter, and Facebook. This way the ERP will quickly become the prime source of prospects for a company’s proprietary talent pool.
10. There will be increased focus on implementing “Hiring A-level talent” training for both recruiters and hiring managers. Recruiting, interviewing, and hiring A-level talent who have multiple opportunities requires strong recruiters and sophisticated hiring managers. Few corporations can pull this off without a significant investment in the proper training. (Email me for info on who does this best.) This void will keep external recruiters in business by hunting down companies that haven’t figured out how to do this.

Peering into the future, it’s pretty clear that sourcing active candidates will largely rely on a search-engine-optimized talent hub and spoke replacing traditional requisition-based advertising. More important will be the use of proprietary talent pools powered by a “virtual recruiter.” This capability will provide companies the opportunity to hire truly passive candidates before they enter the market. For those companies that haven’t built these models, and to fill specific critical needs, there will be increased reliance on advanced passive candidate recruiting approaches including continued use of external agencies.

As I indicated earlier, I don’t think any of this is too tough to predict, since most progressive companies are already moving in these directions.

However, too many companies think this can all happen without the total involvement of the executive team and every single line manager. This has been the weakest link in the chain in the past, and my prediction for the future is that it will continue to be the problem. I have seen very little effort to get hiring managers totally engaged, and because of this, hiring top talent will still be problematic, despite the efforts of HR and recruiting leaders and some innovative technologies.

Many of you know I’m into whole brain interviewing, so focusing on the reticular activator makes lots of sense as a sub-specialty. Whole brain interviewing is based on the idea of controlling your emotional brain to remain objective and using the two-question performance-based interviewing process to map a candidate’s left and right brain responses. This isn’t as exotic as it sounds. In normal-speak it means asking candidates about their major accomplishments to see how they compare to real job needs. (Email me for more on this.)

The reticular activator is the part of the brain the separates the boring do-to-day stuff from the potentially important and critical stuff. For example, if you ask a candidate if she’d like to hear about a cost-accounting job in Topeka, you probably won’t get as favorable a response as if you ask the person if she’d would like to be considered for the last open cadet position at the Star Fleet Academy’s next class.

The point of all of this is that too many recruiters are boring when they leave voice mail messages for passive candidates. To get a top person to call you back, you can’t be boring. You need to tap into the person’s reticular activator to get them to call you back.

Back in the 90s I spent a year teaching a group of hotshot researchers how to get 100% of their voice mails returned. We got close to 85%, so this was a pretty good record. Here are some of the ideas we actually tried out. Some of them didn’t work at all; some of the them worked some of time; some worked all of the time. Modify the ones below to suit your needs and try them out. Track your results until you get to 80% or more. Don’t be surprised when people start calling you back, saying you’ve aroused their interest.

Some Great and Not-So-Great Reticular Activating Voice Mails

1. Your mother called and told me she wanted you to consider this job. (This actually worked.)
2. Your boss just called and strongly suggested you consider this job. (This didn’t work too well, but it’s worth a shot.)
3. You’re the 87th person I’ve called for this senior-level creative director level position, and I haven’t found anyone creative yet. I hope you’re not like the other 86. Even if you’re not interested in the job, I’d love a new idea for a better voice mail.
4. We’re trying to adopt the marketing concepts Obama used to become President. We’d like to talk to you, if you think you can help.
5. Our team of seven ASIC design engineers is looking for a new leader. Two of them said they’d like that person to be you.
6. We just opened a req for a new security analyst cadet for Star Fleet Academy’s Class of 2387. Is this something you’d like to explore? There is some travel involved.
7. Have you heard the story about the priest and the rabbi who went into the bar across from Fenway? If not, I’d like to tell you about it and what it has to do with our new Plant Manager position.
8. I call every person I’m referred to at least eight times before giving up. This is the 3rd call.
9. (Name) just suggested I give you a call. He said you’re one of the best people he’s every worked with, and while you’re probably not now interested in our executive marketing position, he thought you’d know someone who would be. (This one always works if the name is important enough.)

There are a bunch of points and principles demonstrated by these types of messages. First, they’re marketing-oriented. Since they’re not boring, the candidate’s reticular activating system won’t filter them out. This is the critical point. While the person still might not call you back, at least you’ll get noticed. As your callback rate rises, fine tune your messages to get to the 80% threshold.

Now when the person calls you back, don’t blow it and lose your mojo. Don’t be shocked. Maintain your composure. If you don’t, you might say something stupid, like telling the person about the job. If the job has no interest, or it sounds boring, you’ll shut down the person’s reticular activating system, faster than a bear trap on a frigid day in Montana. Not only won’t you secure a great candidate, but also the possibility of any good referrals. (Here’s an article on this critical point you might find useful.)

So instead of flubbing it, keep the candidate interested with more compelling information and clever pre-planned pitches. Think of this as the old carrot and stick approach by withholding some critical information to induce the candidate to reveal more about herself. Here are some ideas on how to pull off this critical step:

• Once you get the person on the phone, just ask if she’d be open to explore a position if it represented a significant career move.
• The candidate is sure to say yes since he called you back. Then say, “Great. Could you give me a super short overview of your background. I’ll then give a snapshot of the opportunity, and if it sounds like something mutually worth pursuing, we can schedule a time to talk in more depth later.
• Don’t push the process. If there’s a relo involved, or if you’re not sure the candidate is ready to move quickly, suggest another call in a few days, after you’ve talked to the hiring manager. Alternatively, suggest there are other strong candidates you want to contact first before setting up a detailed conversation. For a high-achiever, competition is a great way to maintain or increase interest.
• Don’t be the pursuer. The idea here is to switch roles. If you can get the candidate to pursue you, and sell you on her competency and interest, you’ll not only close more deals, but compensation won’t be the decider.

Whether you follow this process exactly as described, or not, the point is to understand how the reticular activator can be used as a switch to get and keep a top person interested in what you have to offer. Too many recruiters rush the process, lack an understanding of basic human nature, and complain that everyone they call says they’re “not interested.” You know you’re successful here, when you’re the one deciding if you’re interested in the hot passive candidate, not the other way around.

If you’re like me, I don’t like doing searches over again. Early in my recruiting career, this was the driving force behind the creation of Performance-based Hiring — a tool for taming hiring managers. I offered its use to hiring managers for free by suggesting a simple trade-off: they’d see better and fewer candidates from me if they followed some simple steps. Most agreed. As a result my search firm got as many assignments as we could handle, since we were the only one using this performance-based hiring process. It also worked.

With the goal of taming hiring managers in mind, here are some of the basics of Performance-based Hiring. Try them out if your hiring-manager clients want to see too many candidates, can’t decide among the best, or exclude these best ones for bad reasons:

Throw away the job description. We all know that lists of skills, duties, responsibilities, academics, required experience, and industry background are useless for attracting, screening, or selecting top performers. Hiring managers know this, too. So the next time you take a search assignment, ask the hiring manager what the person needs to do to ace the performance review. Then ask what the best people do differently than the average people in the department. Then ask why a top person would want this job. Then ask the manager if she’d see someone who could do all of this work successfully, even if the person didn’t have all of the skills and experiences listed on the job description. (If the manager says “no,” read this article on how to take the assignment.)

Don’t take the assignment until you know the job. Since you’ve thrown away the job description, you can’t leave the room until you have a complete understanding of what the person taking the job must do to be successful. To do this, take every item on the traditional job description and ask the manager what the person must do with it to prove superior competency. For example, if the manager says the person must have three to five years of industry experience, ask what will the person do with this on the job. This is how you convert job descriptions into performance profiles.

Train your managers to focus on performance early in the interview. In addition to the resume I ask candidates to separately summarize two different accomplishments related to the job — one team-based and one as an individual contributor. I then ask the manager to review these during the first 30 minutes of the interview. By having the hiring manager focus on the candidate’s most comparable job-related accomplishments early-on, the interview is more focused, and emotional biases are minimized.

Go out of your way to minimize the impact of first impressions. More mistakes are made in the first 30 minutes of the interview than any other time due to the impact of first impressions. The tactic described in the point above, about focusing on performance early on, offsets this to a great degree. For one thing, the candidate is more confident since she has prepared the write-up. In addition, you should desensitize the manager ahead of time if you perceive a potential first-impression problem. Having the manager conduct a phone screen before the personal meeting can also be extremely helpful. You might to suggest that the manager measure the “first impression” at the end of the interview when he or she is more objective.

Prep your candidate. Here’s a short sample of a video I send to my candidates to prep them before their first interview. As you’ll see, the idea behind this is to minimize candidate nervousness, allow them to ask job- and performance-related questions, and to recognize that there is a formulaic way to answer questions that will overcome the typical weak assessment skills of hiring managers. A formal prep is one of the best ways to minimize the impact of hiring managers who aren’t well trained.

Out-fact your manager. The one-question fact-finding interviewing process was developed to give recruiters enough information to disprove false conclusions. The idea behind this question is to ask the candidate to describe a few significant job-related accomplishments in great detail. The fact-finding process involves getting details, dates, metrics, org charts, and examples of going the extra mile. If you do this for two to three different accomplishments, you‘ll have enough information to challenge any false assertion. From a recruiter’s perspective, accurate information is the only defense for conclusions based on intuition, biased first impressions, or narrow assessments.

Don’t let managers conduct the first interview alone. Unless it’s structured, pre-planned and focused, the initial one-on-one interview can quickly become an irrelevant or personality-based discussion. Making matters worse, if the candidate makes a positive first impression, the interviewer asks easier questions, and if the candidate falls short on the first impression hurdle, the interviewer asks tougher questions. For every new client, I ask to lead the first round of interviews to avoid these problems. You should, too. A well-run panel interview also avoids these pitfalls, since small talk is minimized and structure is ensured. A good lead interviewer can also watch out for — and reduce –  temporary candidate nervousness, by quickly intervening.

Use a multi-factor assessment. Practically speaking, untrained interviewers — like most hiring managers — are unlikely to glean much insight into the candidate’s ability to do the real work required for job success. While technical competency is part of this, it doesn’t represent a complete assessment. For proof, consider the fact that when new employees underperform, it’s typically not due to technical weakness; rather, it’s because of weak team skills, lack of motivation to do the work, or a problem with the hiring manager’s style. To address this, broaden the selection criteria and ask each interviewer to focus on a subset of these factors. A formal debriefing is part of this type of evidence-based assessment process. Here’s a link to the 10-factor candidate assessment template we train managers to use to formalize this approach.

Consider this: if you send in one less candidate per search using some of the techniques above, you’ll increase your productivity by 20-30%! If you use them all, you’ll double your placement rate and be the most sought-after recruiter on your planet.

Taming hiring managers is the big 500-pound gorilla in the room. Yet, somehow in our quest for the next silver sourcing bullet, we ignore which side of the desk we should be aiming our guns at.

As you put the list together, consider these assumptions:

1. The trough of the economic downturn was reached in April 2009.
2. Job losses continued through October 2009, but at a declining rate, with job gains finally turning positive in November 2009, at around 20,000 or so.
3. The unemployment rate peaked at 9.7% in September 2009 and although still at 8.5% in January 2010, it is forecasted to drop to 7.0% by June 2010.
4. The number of searches on Google with the words “jobs” (e.g., “jobs nurses Seattle”) peaked at 7.3mm/day in April and has been declining by an average of 10%/month since then, but started inching up again in October 2009.
5. An article by Lou Adler on ERE in November 2009 suggested that this pickup was due to people who are fully employed but now getting itchy to leave. He contends that the pent-up demand for a new job is finally being seen and that this is a new group of people entering the job market. Note: this will be unexpected for unprepared companies.
6. Hiring for critical positions will begin in earnest three to four months before a general improvement in the jobless rate is seen. This will be exacerbated by an increase in voluntary turnover.

These assumptions are pretty realistic. The question is, are you ready for this scenario? If you are, here are some of the things you’ve probably been doing over the past six months:

1. You’ve developed and implemented a sourcing strategy that emphasizes how top talent looks for new career opportunities, rather than how average people look for new jobs. This is a huge shift in thinking that required some understand and significant selling to your executive and entire hiring manager team.
2. As part of your shift to a top talent hiring strategy, you’ve created a decision matrix based on how these top people compare and select job opportunities and have built this into your sourcing and recruiting process.
3. You developed a rolling workforce planning system highlighting your hiring needs for all critical positions, including a tracking system to identify potential turnover problems.
4. You’ve developed a multi-pronged sourcing strategy, including increased reliance on your employee referral program, more Web 2.0 channels, the grouping of similar jobs into talent hubs, and the use of niche boards instead of major boards coupled with an emphasis on search engine marketing and consumer marketing concepts. Part of this is the wholesale elimination of using traditional job descriptions as the basis for advertising purposes and incorporating messaging that ties directly to what top people are looking for.
5. You’ve put together a succession planning process to tap into some upcoming stars to deal with the anticipated turnover or whenever unexpected promotional opportunities arise.
6. You developed a means to tap into employee satisfaction to ensure you’re not caught unaware by an upsurge in turnover. As part of this, you created a new retention program to minimize the possibility of any business disruption.
7. You’ve started training and rebuilding your existing recruiting team including lining up enough contractors and full-time recruiters to handle the hiring increase. You’ve even developed a short list of retained and contingency recruiters to handle some of your real critical positions and given them some insight on possible positions that will need filling.
8. You’ve set up programs with your hiring managers to fast-track any top performers you identify before reqs have been formally approved. As part of this, and the expected hiring increase, your managers are now trained in using tools like the two-question performance-based interview to assess and recruit top performers.
9. New analytics program have been installed to track in real time recruiter productivity and effectiveness, sourcing channel effectiveness, candidate quality, quality vs. cost, and hiring manager recruiting performance.
10. Not only have you now using the LinkedIn and ZoomInfo premium packages, but your recruiters know how to call everyone they find and get at least two to three top referrals on every call. After just a few months, you’ve fully realized that these tools offer connections to the best people on the planet, not just sources of names.
11. You’ve assessed your technology and have started a major upgrading effort to ensure that you can track quickly prospects, you’ve installed a robust CRM system, you have everyone using the new analytics program, hiring managers are fully versed on using the process, and you can create new talent hubs in days. Bottom line: you’ve used the slowdown to convert your technology from just a data management and reporting tool into a full-fledged productivity improvement system.
12. You’re now building a huge pre-qualified prospect database with a drip marketing program already in operation. You know this is working since it’s growing in size by 5%-10% per month. Much of this build-up is driven by new employee referrals, Twitter feeds, pushed advertising to appropriate blogs and social networks, and an increased focus on getting prospects for future openings rather than finding candidates for current openings. This is another huge strategic shift in thinking for you and your company.

If you’ve done your job as a recruiting leader, the hiring challenges you’re facing in January 2010 are significant but manageable. In the past six months, you’ve probably done everything listed, and more. Here’s a reasonable recovery checklist to get started, but feel free to email me if you’d like the latest version.

Now back to today. If you want this story to be yours, you need to start this stuff right away. And if you haven’t yet started implementing most of the things listed, there’s not enough time to make it.

Consider, while the unemployment rate won’t start declining until late 2010, the demand for the best talent will start increasing three to four months earlier, driven by both business needs coupled with a modest increase in turnover. This means you’ll start feeling the heat by late summer 2009. Anecdotally, we’re already hearing the best third-party recruiters are now – in May — getting more assignments. This is clear evidence that the market for top people is starting to recover a bit right now.

The key to being ready is being more strategic than tactical. The strategic issues involved include a shift to thinking about how the best search for new opportunities, the conversion of technology into a business system, and the idea that building a top prospect database driven will replace posting requisitions as the primary means to fill positions.

If you’re ready for it, January 2010 will be an exciting time.

“How do they do it and what can be done to prevent them from doing it to us?” is a question many corporate recruiting leaders are asking. The underlying premise here is that if corporate recruiting departments could be organized and run like contingency recruiters and executive search firms, lots of money would be saved.

Despite the promise of the objective, very few companies have been able to successfully pull it off.

There are a variety of reasons for the this. Following are the most obvious:

1. The hunter vs. farmer issue. External recruiters are more hunter-types, drawn to the challenge of commission sales. Corporate recruiters are farmer-like, cultivating relationships, seeking more security, and focusing on activity.
2. Compensation vs. security. The best third-party recruiters make tons of money and the pretty good ones do OK. These recruiters are driven by the compensation, just like any top salesperson, so if the pay isn’t comparable, you’ll attract a different person with different motives and achieve different results.
3. The ability to cherry-pick assignments. The best contingency recruiters select the jobs they want to work on, and the best always have enough assignments. They also can walk away from those that turn out to be too time-consuming. Executive search recruiters are known to be industry specialists and seek out assignments that match their interests and abilities. Corporate recruiters just can’t say no.
4. The ability to select hiring managers. The best external recruiters develop long-term relationships with their hiring manager clients. This increases their influence, they hear about potential openings before the reqs are formalized, and they are more influential at every step in the process. This matching isn’t so easy for corporate recruiters who are assigned to work with hiring managers.
5. Workload differences. It’s much easier to develop and maintain client and candidate relationships when a recruiter is working on fewer assignments. Most retained recruiters handle 3-4 assignments at any one time with the help of researchers. Most contingency recruiters handle 8-10 assignments, but only focus on the easiest three or four. This is far less than most corporate recruiters.
6. Multi- vs. single-company focus. External recruiters — again I’m only referring to the best here — tend to be subject-matter experts and represent similar jobs with different companies. This is a real advantage to a candidate, since he or she can leverage her efforts by dealing with fewer recruiters and be exposed to more opportunities. This advantage doesn’t exist for a corporate recruiter who only represents one company and probably a smaller range of job opportunities.
7. Continuous vs. long-term candidate relationships. Good external recruiters have access to more jobs in the short run, and are more likely to be someone whom the candidate will work with again in the future. Corporate recruiters tend to be more transactional, filling jobs and moving on. This is huge disadvantage for corporate recruiters, since they also lose the ability to network and get as many top referrals.
8. Speed vs. bureaucracy. Good active candidates are easy to place. Just call up three to four companies and present your candidate, and bingo — a placement. It’s very likely that one of the companies called will have an instant need for a strong person. Corporate recruiters are tied to the pace of their company, which is usually slow and methodical.

Most of the differences noted above are organizational and compensation-based, and not easy for a large corporation to emulate, but all is not lost. Much of the competitive advantage external contingency recruiters have is speed of execution — finding the best first and getting them out on interviews quickly.

With this in mind, here are some ideas on how corporate recruiters can close this time gap and get to the best people quicker:

1. Be found first. Getting top people as soon as they enter the job-hunting marketing is a huge competitive advantage. A well-connected third-party contingency recruiter can present a top person to multiple clients within days. By the time a corporate recruiter finds this same candidate, it’s often too late. The person has either already accepted another position or is too involved to be interested. External recruiters work very hard at getting candidates to call them first, either through aggressive advertising or word-of-mouth networking. To offset this, corporations need to develop early-bird sourcing programs to compete on this level. This includes compelling advertising, search engine marketing programs, and the use of talent hubs.
2. Leverage your employee referral program. While each individual corporate recruiter is unlikely to be able to develop a deep network of potential prospects, a company’s employees are. To get this going, have your employees reach out to every great person they’ve worked with in the past using LinkedIn or something equivalent to establish the connection. Make the program formal, with regular emails, having your employees tell their contacts to contact them first, whenever they want to consider leaving their current company. This way, you’ll increase your odds that you’ll have a crack at attracting the best before everyone else.
3. Build a pipeline of prospects. Over many years, you should be able to build a huge prospect database filled with leads, business card info, and resumes. Some of the newest and more robust CRM systems can help you nurture this database and reach out with compelling emails when an opportunity arises. RSS feeds, agents, and Twitter job feeds are also good ways to stay in touch. The key is to be compelling and be regular. This is a great way to build your brand and attract good candidates before they’ve thought of looking on the open market.

As part of all this, you must provide prospects you find early in their job hunt an opportunity to learn more about the job on a non-committal, exploratory basis. Too many corporate recruiters, reinforced by their hiring systems, force candidates to commit before they’re ready. This means you need to allow these prospects to talk with or IM recruiters or managers, rather than send a resume or fill in an application. Finding candidates first is important, but if you push too hard you’ll turn the best off, so a balance is required during these initial discussions.

Even if you get the person first, the real work now begins. You’ll need to offer a compelling job that rivals everything else out there. As part of this, your corporate recruiters must be great negotiators and be able to fight off their external rivals who are aggressively trying to place your great catch before you make an offer. It’s important to think through the hiring process end-to-end including how job descriptions are written, the professionalism of the interviewing process, and how offers are presented and closed. It won’t much matter how soon you find these stars if the back-end falls apart.

It’s not possible to create an external search firm environment within a corporate structure. Regardless, there are things recruiting leaders can do to at least be in the hunt and minimize their reliance on external firms. But whatever you do, expect these external firms to do something better, different, and sooner, in response.

The basic premise is that circumstances are far more critical to ultimate success than any other factor. For example, he cites the fact that Gates, Jobs, and comparable computer all-stars were born in the mid-1950s as being a critical factor leading to their industry success. When the PC revolution started they were just the right age — old enough to participate, but not yet established on a career path that prevented them from taking risks.

For another example, Gladwell points out that most professional athletic stars are born in the first quarter of the year they were first allowed to participate in their sport. The idea here is that whether it’s youth hockey, baseball, or any sport for that matter, the best players at this early age are more mature since they’re 3-9 months older than their competition. This difference means a lot when you’re five or six. The chosen ones are then given more opportunities to be trained and play more often. Overall, the best of this group put in thousands of hours more honing their skills, in comparison to those of equal talent who didn’t make the team just because they were too young at the time.

Of course, opportunity is just one factor involved in success. Talent is still critical and essential, but according to Gladwell, not as important as hard work. This is where the extra thousands of hours of effort comes into play.

To become a master at any craft requires plenty of hard work, at least 10,000 hours, according to Gladwell. As an example, he cites Mozart who didn’t write any worthwhile music until he was in his mid-20s, after about 10,000 hours. The Beatles are another example cited, who worked 10 long years perfecting their craft at all-night clubs in Germany.

Now what does all of this have to do with recruiting and hiring top talent? The answer started back in 1978 when I first became a third-party recruiter.

After a few years of dealing with top people, it became clear that the best of the bunch had a number of core traits in common, specifically talent, hard work, and strong team skills.

This eventually became the Formula for Hiring Success described in my book, Hire With Your Head (Wiley, 2007, 3rd edition).

Here’s the abbreviated formula for hiring success:

Adler’s Formula for Hiring Success = Talent X Energy2 plus Team Skills

Translation: Enough talent to do the work times motivation to do the work squared plus comparable team skills.

The reason motivation to do the work is squared is because it’s the driving force behind talent, and without it, strong team skills don’t really matter. This pretty much parallels Gladwell’s observations.

The point is that circumstances and talent can take you only so far, but without hard work, 10,000 hours in Gladwell’s assessment, you won’t go too far. Of course, without the right set of circumstances, you won’t go as far as possible, even if you work extremely hard.

With the Gladwell insight, I’ve modified the success formula slightly, as shown below:

The Adler/Gladwell Formula for Hiring Success = Appropriate Job Circumstances plus Talent X Energy2 plus Team Skills

Although I didn’t use this exact formula, the simple concept allowed me to become a more effective recruiter. You might find it useful as well, whether you are a recruiter or a hiring manager facing a tough selection decision.

Here’s how:

Consider the formula from two perspectives, one from an assessment standpoint and the other from a career-counseling point of view.

Obviously, whether you’re a recruiter or hiring manager you only want to hire people who are highly motivated to do the actual work required and have the appropriate level of talent and team skills. On the flip side, if the job can be clearly presented as a worthy career move, the candidate will value it more highly than a job of lesser opportunity, even one paying more.

None of this matters much if you don’t define the actual work required. This is the core problem with vague or generic job descriptions. They don’t define the work in enough depth to allow the interviewer to accurately assess motivation to do it. Instead, motivation to get the job and the degree of extroversion is used to assess motivation to do the work. Making matters worse is the use of generic skills and competencies to assess talent and the degree of affability used to assess team skills.

The result? Once the probation period ends, many new employees settle in to a routine of average effort, average performance, and satisfactory team skills, despite so much promise during the interview.

Recruiting and closing are made more difficult without a meaningful job description, since it’s more difficult to prove that vagueness and an employer brand represent career opportunity. Under this situation, every job looks like every other one, with compensation the only differentiator.

If compensation is the primary reason a candidate is taking one job over another, the job shouldn’t be offered or taken. This results in the worst of all possible situations — a person who is overpaid while not learning or growing.

This is a pretty powerful case for the idea that job descriptions need to be defined in enough detail to more accurately assess motivation and better present the true career opportunity. In our company, we use performance profiles to describe actual job needs.

Here’s the quick description from Hire With Your Head:

“A performance profile describes the six to eight performance objectives a person taking the job needs to do in order to be considered successful. It differs from a job description in that it doesn’t describe skills or traits, but rather what the person needs to accomplish with his or her skills and traits.”

For example, rather than say a software developer must have 3-5 years of C++ and Java background, it’s more relevant to say the person will lead the development of a robust online search query system for a new eCommerce site.

This type of clarity allows an interviewer to determine direct competency and motivation by getting examples of recent accomplishments doing comparable work. (Here’s an article on using just one question demonstrating how to do this.)

From a recruiting standpoint, it’s also easier to position your opening as a good career move if the candidate finds the work itself meaningful while providing a strong learning opportunity.

The right circumstances lay the foundation for personal success. Of course, it takes enough talent to take advantage of the situation and strong degree of self-motivation to maximize the opportunity.

Whether you’re a recruiter or hiring manager, you’ll need to convert your job descriptions into challenges, projects, and performance expectations. Then use the interview to determine whether these represent a growth and learning opportunity for the candidate. During the interview, find six or more examples of where the candidate exceeded expectations or pushed herself to excel.

If these are comparable to the work you need done, you have found a star, and your star has found a true opportunity to take advantage of her talent.

Things will get better for you when you get better.

Sage advice indeed, and now might be the best time to take heed.

When I assess candidates, this is one of the factors I examine — finding out how the person got better. Not surprisingly, the best people have this core trait in common, and in spades. They’re always getting better. All of them improved themselves and the activities they were directly responsible for. A good portion of these people went out of their way to improve things they weren’t directly responsible for, so you need to give these people an extra star.

A much smaller group went out of their way to improve not only themselves, but also the people they worked with, whether they were responsible for them or not. These were the true leaders of the bunch.

As you assess candidates in the future, look for the degree the person got better, which will help you more easily separate the best from the merely good.

Surprisingly, very few had the exact level of skills, academics, and experience requirements listed on the job description. While they all possessed enough of the requirements to do the work required, the mix was different than the “must haves” listed, and the level of experience in absolute terms was generally much less.

Offsetting this was something far more important — a track record of consistent high performance doing comparable work, often in different industries.

Just like top people in any field, recruiters needs to consistently change and improve, just to stay even. To get better, you need to change even faster.

With that said, here are some ideas on how to get massively better. With recruiting departments being cut 30%-70% on average, getting massively better represents a survival of the fittest mentality.

In my opinion, if you don’t want to get massively better, drop out of the industry and do something you want to get massively better at.

How to Get Massively Better

1. Become someone worth knowing. Recruiters need to be able to connect with lots of top-notch people on an ongoing basis. This is the best way to get referrals of great passive candidates. If you’re worth knowing, hiring managers and candidates will seek you out. They’ll refer the best people they know to you without asking. If you’re not worth knowing, you’ll only attract the attention of those desperate for the job you’re currently representing. This is a transactional relationship. Those who are worth knowing develop long-term relationships that span years, not just a few days. Here’s an article on how to become someone worth knowing.
2. Know the job. If you don’t know the job, the best you can do is screen on skills and experience. If you know the job, you can quickly become someone worth knowing. You’ll be able to counsel and advise your candidates and hiring managers alike. You’ll be more accurate in your assessments and you’ll be able to defend qualified candidates from those hiring managers who conduct superficial or narrow interviews.
3. Build a network of all-stars. If you’re placing similar type positions (e.g., developers, tax managers, ASIC engineers, pharma sales reps), most of your placements should come from referrals. To get these referrals, you’ll need to be considered an expert in your field. Part of this is cultivating relationship (not transactions) with every top person your best employees are connected with on LinkedIn. If you’re a third-party recruiter, build these relationships with the best people on your LinkedIn list. While they won’t give you great referrals right away, after a few months of professional nurturing and knowledge sharing, you’ll have a strong network to work once the req is approved.
4. Become partners with your best managers. Recruiters are at least 50% more productive when they have a peer relationship with their hiring manager clients instead of a subservient one. This recruiter/manager partnership is developed when recruiters have a strong understanding of real job needs, present a few highly qualified candidates in a timely manner, have strong assessment skills, and can influence the shape of the job and the person ultimately hired. You know you’ve arrived when your hiring managers see everyone you recommend without having to review their resumes.
5. Implement an early-bird sourcing strategy. During the first few days of a job search, the best active candidates contact their close confidantes, previous mentors, and a short network of influential people. In parallel, they Google for jobs by searching on the job title, the city, and the word “jobs.” The best of this group start interviewing within the first week. Time is now a competitive advantage, so being called first and being found first is the key to hiring the best as soon as they enter the market. Becoming an early-bird is an essential skill if you’re sourcing active candidates.
6. Become an expert in consumer marketing. The messaging (ad copy) is a critical aspect of implementing an early-bird sourcing strategy. Rather than benchmark other recruiting departments, benchmark the best consumer products companies. When you do, you’ll notice that their advertising is written to appeal to their target audience with a focus on the benefits of the product rather than the technical specifications. For recruiting, this means eliminating traditional job descriptions filled with requirements (comparable to the product specifications) and start describing what the person will do, learn, and become (the benefits). While there’s much more than this consumer marketing stuff, it won’t help much if you’re posting boring job descriptions.

These are just some ideas on how to get massively better, and it really doesn’t matter if you do these exact things. What does matter is that you start getting massively better at what you’re doing today. Once you get on the path of getting better — whether it’s more training, attending meetings, leading workshops, taking on more challenging assignments, or becoming more innovative — don’t stop. Getting continuously and massively better is the real goal here.

As Jim Rohn said, “Things will get better for you when you get better.”

Half of these cuts are probably necessary anyway, the balance most likely an overreaction to the dismal economic conditions most companies are now facing.

There is an expectation that along with the cuts these recruiting departments need to drastically improve their productivity by 30%-50%, almost overnight.

The good news is that while most corporate recruiters are working hard, the majority are not working smart.

As a result, getting 50% or 100% productivity gains isn’t that hard to do. With this in mind, here are some things recruiting leaders can do to increase overall productivity by at least 100%.

An Almost Endless Stream of Ideas on How to Increase Corporate Recruiting Department Productivity by Over 100%

1. Only hire recruiters who are, or can become, partners with their hiring managers. Recruiters who are partners with their clients get more time to discuss real job needs, they send out fewer candidates, make more hires, and overcome natural hiring manager resistance to see top candidates who don’t fit the bill on paper. Partners make twice as many placements per month than recruiters who are perceived as vendors to their clients, so this is a huge productivity opportunity.
2. Make sure your recruiters are competent to do the work assigned. One way to increase productivity is to ensure all of your recruiters are as good as those in the top 10% on your team. (Contact me if you’d like to check out our new online recruiter assessment tool we’ve created with Profiles International.)
3. Make sure every recruiter understands the jobs they’re filling. Sadly, most recruiters don’t know much about the jobs they’re representing. Whether it’s a call center in Chicago, a sales rep in San Jose, or a J2EE architect in Ashtabula, recruiters need to know what drives on-the-job success, why the job is critical to the company, and why a top person should consider it.
4. Make sure your recruiters totally understand their target market. Recruiters need to be subject-matter experts regarding the job, the industry, and especially the needs of their ideal “target” candidates. Creating candidate personas is the first step, including demographics, associations, first- and second-degree networks, conferences, recognition awards, academic connections, and motivating needs. This allows them to write compelling ads, post them in the best places, know exactly who to call, what to say, how to get great referrals, and how to convince the best people your job is the best of the bunch.
5. Make sure your recruiters know how to recruit. Recruiting means getting more candidates interested at the beginning, ensuring that few drop out in the middle, and 95% of all offers are accepted on fair terms. Effective applicant control is at the core of this and most recruiters don’t even know what this even means. Do you know how many candidates you’ve lost because your recruiters dropped the ball somewhere in the process?
6. Make sure your recruiters are respected by the candidates they represent. If recruiters aren’t seen as subject-matter experts and career advisors by their candidates, you’re losing some great people before the process even begins. You’ll get a good sense of this by calculating how many “A” level candidates your recruiters uncover and place on a typical search. If it’s not 70% or more, you’ve found a huge productivity improvement opportunity.
7. Make sure your recruiters can accurately assess candidate competency. Recruiters should be able to get this right 80% of the time with a 30-minute performance-based phone screen, at least to the point of not embarrassing themselves by recommending a totally unqualified person. Think of the time wasted sending out a candidate who shouldn’t be seen in the first place.
8. Make sure your recruiters are tough-minded, confident, and persistent. The best recruiters don’t take no for an answer, they defend their candidates from superficial assessments, and they close on career opportunities more than money. These recruiters are 2-3 times more productive than those who cave at every negative. Double your team’s productivity by making sure your recruiters are those who don’t give up without a fight.
9. Manage time. Cold-calling people you don’t know is a big time-waster. Calling people who are good who will call you back is an ok thing to do if a great ad didn’t work. A sequenced sourcing strategy based on the “low-hanging fruit principle” of selling should be established for every search assignment. Then, measure your recruiters on qualified sendouts/hour to start finding out where your team is wasting its time.
10. Don’t let your recruiters call people who won’t call them back. Start tracking voice-mail return rates. Those with the highest percentages (target a minimum of 75% to start) usually spend more time calling referrals, are seen as subject-matter experts or come across as extremely professional. To improve productivity 300%, either train your recruiters to increase their callback rate from 25% to 75%, or hire those who already do it without complaining how hard it is.
11. Make sure your recruiters get 2-3 high-quality referrals on every call. The ability to get high-quality referrals is the secret behind passive candidate recruiting. A great referral will call you back if you mention the name of the great person who provided the referral. Recruiters then need to prequalify every referral and only call those who are worthy. If you track great referrals per call, you’ll quickly know which recruiters are able to play in the passive candidate recruiting talent game.
12. Prepare a process-flow diagram of every step in your hiring process and calculate the yield at each of these steps. Look at each step in your hiring processes and see where you lose the most candidates. First, track ad response and apply rates. At the back end of the process, figure out how many good candidates were poorly assessed or excluded for dumb reasons. Then start working on those process steps that can double or triple your team productivity.
13. Make sure you’re attracting early-birds, not leftovers. When you examine the problems associated with most active candidate sourcing programs, you quickly discover that they’re attracting leftovers, or candidates who have been in the market a few weeks or more. If you’re not attracting the best of the bunch as soon as they start looking, you’re wasting time and resources going through electronic stacks of resumes of unqualified people. Implementing an early-bird sourcing strategy can increase your active candidate sourcing productivity by 100-200%!
14. Eliminate all barriers-to-entry. The best people, whether they’re active or passive, are more discriminating and don’t want to be pushed into filling in an application before they’re ready. To address this critical need, establish an open-door policy where you allow candidates to “just look around” before getting serious. This is what Web 2.0 is really about — establishing two-way relationships using a variety of entry points to attract someone’s attention.
15. Manage your 500-pound gorillas. A huge productivity loss is managers who can’t recruit, don’t know real job needs, or can’t accurately interview. If you’ve ever lost a good candidate for one of these reasons, or if managers refuse to see a top-notch person with a slightly different skill set, you know how much time is wasted here. Getting hiring managers inducted into the real world of hiring top performers will double your productivity almost overnight. Not doing it will diminish the impact of everything else mentioned here. (Contact me if you’d like to find out about our new gorilla taming programs.)

Doing everything described will absolutely result in a 100%-200% productivity gain. If not, you didn’t do them right, so start over and try again. Even if you did achieve the productivity improvements, start over again anyway to get another 100%-200% productivity improvement.

Things are changing so fast you need to keep at it by establishing a continuous improvement program. Bottom line, this is what this article is really about.

With this sobering news in mind, I offer those of you in all quartiles this short, 10-point personal evaluation guide. While some of them are a bit crazy, they’re based on comparing your performance to the best in the business. It will tell you quickly whether you’re in the top 25% and how to stay there.

If you’re not in this double RIF-proof group, you’ll find out what you have to do to get there. For those of you doing any pre-RIF assessments, it will help you figure out who goes, who stays, and who’s worth saving. What a crazy idea! (Note: your comments are being collected on my Recruiter’s Wall blog.)

Using Adler’s Crazy Metrics as the New Recruiter Scorecard

The world of recruiting continues to evolve faster than most of us can adapt. To see where you rank in the new age of recruiting, evaluate yourself on each of these factors on a zero- to 10-point scale.

This has been designed for full-cycle recruiters and it’s based on a curve, so you need to score around 65-75 points to be in the upper quartile.

1. Voice Mail Return Percent. If you’re calling passive candidates (those not looking) you should be in the 70%-80% range here. This is worth a full 10 points. Average in the current economy is about a 20% return rate and is worth about 3 points. You only score points here if you’re calling people who are fully employed or where your personal influence is the key to getting them interested. (Note: see point 3 for how to increase your voice mail return rate.)
2. Number of Days Looking. Getting people as soon as they enter the job-hunting market is a huge competitive advantage. So start asking your active candidates how long they’ve been looking. If you’re the first recruiter or company they’ve spoken to, give yourself all 10 points, but only if you had anything to do with pulling this feat off. You get a big donut if the candidate says they’ve already accepted another offer, they’ve got other offers pending, or if they’ve been in the market for more than two weeks. Give yourself 5 points if most of your candidates found your ad in the first 5-10 days of their search. If you had nothing to do with making sure the ad was found, that it was compelling, or in causing your candidate to respond, you don’t get any of these points. Instead, give them to the person who pulled this off.
3. Referrals Per Call. To score all 10 points on this factor, you need to average 2-3 worthy referrals per call. Someone is worthy if they are highly qualified and a strong candidate for your open job, or personally knows someone who is. An average score (3 points) on this factor is about one decent referral per call. I have a personal rule that has enabled me to increase my personal productivity by 300%! It goes like this: first, don’t call anyone who will not call you back! Second, don’t call anyone who’s not a top performer. Third, only call worthy prospects. The only way to pull this is off is to get 2-3 worthy referrals on every single call you make. (Here’s a networking tips article for help on improving your score here.)
4. The Maslow vs. Money Index. Here’s an article summarizing Maslow’s hierarchy of needs. It’s must-read material for recruiters. The key point here is that good candidates don’t take new jobs primarily for the money. They take them for some combination of growth, opportunity, a chance to learn new skills, to do something important, or to increase their personal satisfaction. Unfortunately, most candidates ask “what’s the money?” early in the courting phase, putting most recruiters on the defensive. Good recruiters quickly shift the conversation to Maslow-related ideas, suggesting that the primary reason a person should select one job over another is because of the opportunity for growth and personal satisfaction it represents, not the money received. (Caution: this will only work as long as your comp is reasonably competitive.) Score all 10 points if you handle this money question smoothly all of the time, and zero points if you stumble all of the time. Give yourself 2-3 points if you can convince a fair percent of your candidates to reconsider, independent of the pay.
5. Not Interested Conversion Rate. This is the percent of candidates who initially say they are not interested in your job opening but who reconsider. You score all 10 points if you phrase your questions in such a way that everyone says they’d like to talk with you about your open opportunities. Score zero points if you walk away from most of these candidates without some type of clever rebuttal. The key to good recruiting and scoring high on this factor is applicant control. You know you have it when you — the recruiter — determine if you’re interested in the candidate, not the other way around.
6. Partner vs. Vendor Ratio. If you’re a partner with your hiring manager clients you have a better understanding of real job needs, you’re more influential, they’ll see candidates who are a bit off the mark based on your recommendation, they’ll trust your judgment, and you’ll make more placements without wasting time. A vendor-like relationship with a client puts the recruiter into a subordinate and less-influential role. The recruiter typically has less knowledge of real job requirements, the hiring manager refuses to see candidates who don’t meet the exact requirements, and the manager won’t reconsider candidates he or she has incorrectly assessed. Divide the percent of your clients who are partners by those who are vendors (Note: 50/50 is equal to one and is worth 4 points.) A good ratio here is two, meaning two-thirds of your clients treat you as a true partner, so give yourself 7-8 points for this.
7. Unsolicited Referral Rate. If you regularly get great referrals without asking for them you score high on this factor. Great recruiters are known in their niche market and top people want to connect with them. Give yourself all 10 points if at least 50% of your placements are made from these unsolicited referrals. If you get 4-5 strong unsolicited referrals each month, whether you place them or not, give yourself 5 points on this factor. You get a big zero if you don’t get any good referrals, unsolicited or not.
8. Technology Utilization Factor. Whether it’s being an ATS geek, a Web 2.0 aficionado, a search optimization fanatic, or a CRM guru, recruiting in today’s era requires significant technology expertise. If you still advocate a tech-free environment, you earn a big zero on this factor. Googling for resumes is not a big deal anymore, so you get nothing for being good at this. If you’re training others in using the latest recruiter-tech stuff take all 10 points. If no one laughs at your lack of tech-expertise, score 5 points here.
9. Advertising Efficiency. To get all 10 points on this factor, you have to make sure your ads are found and at least 50% of the people who find them click through. This means you need to use reverse engineering to select the best boards and make sure your ads are so compelling top people are intrigued enough to respond. If you just post your traditional job descriptions on boards that have not been vetted, your score is equal to the number of great people who apply — zero!
10. Gauge of Persistence. Recruiting top people is never smooth. People always have concerns. Candidates always have other offers. Managers always want to see more candidates. Pushing through these issues is at the heart of great recruiters. If you can convince most of your candidates to reconsider, get your managers to see and hire people who don’t meet the exact requirements, and are constantly pushing the process forward, regardless of the challenges, you deserve most of these 10 points. Take them all if your candidates and clients thank you for persevering. You don’t deserve any points here, if you complain about all of the challenges involved, procrastinate, or make excuses about your lack of results.

Free BONUS ADD-ON: Buyer vs. Seller Quotient

Divide the percent of the time your strong passive candidates are selling you (meaning you’re the buyer) by the amount of time you’re selling them (i.e., 50/50 is equal to one and worth 5 points). If you sell more than you buy, you get 1-2 points, and if you buy a lot more than you sell, you get 7-8 points. Good recruiting is about getting a strong candidate to sell you on why he or she is qualified for the job. They’ll only do this if they believe your job represents a strong career move for them. This is also referred to as applicant control and is a core competency of every top recruiter.

New-age recruiting is about influencing people who have multiple opportunities to consider what you have to offer. While there is more technology now available to find people, this is now the easy part. Getting on the phone, recruiting them, and networking is now the real skill involved with being a great new-age recruiter. That’s a crazy idea, isn’t it?