Internal Hiring Dominates 2009 Job Fills

The ninth Source of Hire report from CareerXroads is out and it shows the CareerXroadsimpact of the U.S. recession on hiring patterns over the last few years while offering some encouraging news about hiring in 2010.

The whitepaper’s top-line findings show that, on average, 41 of the nation’s larger companies filled just over half their vacancies in 2009 by internal transfers and promotions. This is the largest percentage since CareerXroads first reported the data in 2002.

For 2010, however, 48 percent of the participating companies expect to hire and hire robustly. The prediction is for 29 percent growth in hiring. Only 10.8 percent of the surveyed participants expect to higher fewer workers this year. Compare those percentages to the Source of Hire report issued last year at this time. Then, 100 percent of the companies predicted they would hire fewer workers.

Recession boost internal hiring SOH 2009“The spike in internal movement is a strong artifact of the recession and suppressed many other sources of hire,” says the report, authored by Gerry Crispin and Mark Mehler, founders and principals in the recruitment-oriented CareerXroads consultancy. “Expect internal movement to fall to more normal levels in 2010.”

Another key finding — and one recruiting managers and HR executives should take to heart (a subtle way of saying, “Fix it”) — is that 30 percent of the respondents were clueless about the size of their contingent workforce.

Technically speaking, the survey choice selected by the 30 percent was “do not know and cannot even guess” the size of the contingent workforce. Of those who did report a size, the average was 13.6 percent of the workforce was contingent.

However, the large number of respondents who couldn’t even guess is troubling. Crispin and Mehler warn that “staffing leaders not in touch with this contingent (workforce) are likely to fall behind. If predictions that contingent workers could become 25-35 (percent) of a company’s workforce in the next few years are correct, then the business plans and staffing functions have a ‘disconnect’ that must be addressed.”

The bulk of the report deals with the source of hire of full-time workers.

As Crispin and Mehler have reported for the last eight years, referrals are the largest source of external hires. Not only were 26.7 percent of the external hires made from referrals from employees (who account for the biggest share), vendors, alumni, customers, and others, but referrals are an efficient candidate source.

Source of Hire for 2009“The yield for referrals is one hire for every 15 referrals, making this category the most efficient source by far,” say Crispin and Mehler. “The growth of social media could change the dynamic of referral, and firms need to re-examine their efforts to stay ahead of the curve.”

Next to referrals, corporate career sites, at 22.3 percent of the total external hires, produce the most hires.

This is a category that has caused Crispin and Mehler to hold their nose even as they list it as a source of hire. In every one of their reports on the subject, they counsel that corporate sites should be considered a “destination” and not a source.

Their reasoning is that candidates get to the company site from somewhere else; perhaps from a search engine or a job post link or an email from a friend. As the authors write, “So when more than one in every five external hires is attributed to the firm’s career website you can only imagine how many other sources were also involved.”

Personally, as I have seen more and more effort being put into corporate career sites (Microsoft, for instance), I’ve begun to think it may be time to reconsider them as true sources. So it was interesting to see Crispin and Mehler wave the white flag on this.

“Ok, we’re over it,” they write. “We’ve accepted the notion from our colleague  Elaine Orler, Talent Function Group, that ‘source’ should be viewed as a channel. We like the nautical feel of this imagery and that it evokes a desire to map the entire course — the waters, shore, shoals, and narrows as an aid to navigation.”

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A few more details from the report:

  • Job boards accounted for 12.3 percent of external hires, which translates into 6.3 percent of all hires.

Say the authors, “Every respondent reported success in hiring employees from job boards. We wanted more and designed one question to tease out the number of hires attributed to each job board. Unfortunately only 61% of the respondents can track back to specific sites.”

Don’t count out job boards, they add.

  • Direct sourcing accounted for 6.9 percent of the external hires. This year, direct sourcing includes social media, SEM and SEO, the corporate ATS, and mining external databases for leads.

Write the authors: “We asked respondents to enter the number of hires they could attribute to social networks and related SEM strategies such LinkedIn, Facebook, Twitter, Entice Labs, Jobs2Web, and “other.” The total reported, fewer than 500 hires, represents less than 1% of external sources.”

An added observation: LinkedIn accounts for 60 percent of all hires attributed to social media.

There’s much more great information in the whitepaper than I can hope to include here. It’s so detailed and so full of suggestions and recommendations that Crispin presented the report in a one-hour webinar today. If you missed it, the webinar will be archived and made available here.

The free whitepaper will be posted to the CareerXroads site shortly, if it’s not already there now.

One caveat, which is especially important if all you do is read this summary and glance at the chart: source of hire reporting is not entirely reliable and, as they say in the commercials, your results may vary.

Or, to quote Crispin and Mehler, “There are dozens of reasons why source-of-hire data is replete with errors. Dr. John Sullivan pointed out as much in his excellent September, 2009 ERE article. He argued that source of hire was the first step in developing functional excellence. In his usual understated style he noted, ‘It’s (SOH) almost always wrong’. We agree.”

John Zappe is the editor of TLNT.com and a contributing editor of ERE.net. John was a newspaper reporter and editor until his geek gene lead him to launch his first website in 1994. He developed and managed online newspaper employment sites and sold advertising services to recruiters and employers. Before joining ERE Media in 2006, John was a senior consultant and analyst with Advanced Interactive Media and previously was Vice President of Digital Media for the Los Angeles Newspaper Group.

Besides writing for ERE, John consults with staffing firms and employment agencies, providing content and managing their social media programs. He also works with organizations and businesses to assist with audience development and marketing. In his spare time  he can be found hiking in the California mountains or competing in canine agility and obedience competitions.

You can contact him here.

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10 Comments on “Internal Hiring Dominates 2009 Job Fills

  1. @John…Great Insights!! The power of social media, ATS, and new upcoming softwares in the recruitment industry will outpace the conventional ways of hiring . This new technological era will bridge the gaps between great talents and recruiters.

  2. Thank you again Gerry and Mark for the “hard” facts.

    I found it particularly interesting to note the long-term stability and large contribution of the percentage of referral hires, a largely under-discussed topic here on ERE. Also, I noted the continuing long-term decline in both TPR hires and sourced hires. IMHO, our TPR and sourcer colleagues might consider reaching out to different potential clients for their services than the large employers surveyed here.

    Cheers,

    Keith

  3. Thanks for the kind words John. the whitepaper and links to the ere archived webinar are here http://www.careerxroads.com/news/articles.asp.

    I would also suggest 3rd party folks pay particular attention to strategies of both large and small firms around their services. As Keith Halperin correctly noted last year 3rd party professionals took what was arguably the biggest hit in history…and the trend was predictable. The basic model really needs change. No question if we had lots more data and could dice it by level, I would speculate that 3rd party would rise to nearly 100% for C-level but even there firms are chipping away. Small firms under 1000 employees are definitely using 3rd party service more but….

  4. Gerry and Mark,

    This may be covered in the white paper itself, or perhaps in other research you have done, but do you know what the determining factors are in the use of a given recruiting resource by the survey participants? I would assume that cost would be a factor, but perhaps not THE factor (as in the case of 35% retained firms looking for CXOs)….

    Thanks,

    Keith

  5. Good question Keith, we stay away from answering that directly because acquiring enough data for a definitive answer would be impractical. Yes, cost is an important piece but you woould have to dice your own internal data by job family to drill into this area. A firm that was growing exponentially for example might make a deal with a 3rd party to supllment their work. Time frame for when the hire needs to be up and running might also dictate higher cost…or really low cost instead of the most effective source. Last year ERE had jointly developed a nice repeort that took into account cost efficiencies. John may have written about it so it will be in the archives.

  6. Thanks Gerry, and fair enough. At the same time, does anybody know which of these recruiting factors are relatively price-elastic and which aren’t, i.e., which recruiting factors are greatly influenced by price and which aren’t?

    Cheers,
    Keith

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