Matters That Measure

Recently, Raghav Singh wrote an excellent column entitled “Measure What Matters.” It was a formula for judging recruiting effectiveness, and Raghav seemed to boil all the rhetoric down to one stunning fact when he said, “The clearest measure of an organization’s success is the number on the bottom line…anything that makes more money for an organization is strategic.”

He then went on to say, “Being able to show that recruiting makes more money for the company is unambiguous proof of effectiveness.”

It sounded like a challenge to me, and that’s what this article is about. I am going to show you how telephone names sourcing makes money for an organization by saving money.

Now that we understand names sourcing, I would like to clarify just how it brings more money to the bottom-line in your organization.

If you have five telephone-names sourcers in your recruiting organization (who are tasked with doing nothing but names sourcing) supporting 20 recruiters, and those five names sourcers each produce 200 names and titles per week, you have 1,000 names per week flowing into your company’s pipeline.

Remember, these names have been telephone sourced and the majority of these names (some +/-80%) carry the very high likelihood of never having been placed into a pipeline before. These names have been “dug out” from behind their corporate brick-and-mortar walls, and they were busy doing the job your company needs them to do.

However, they were doing it as an employee for someone else, somewhere else. They are not thinking about another job; they’re too busy effectively performing their present jobs to have another job even cross their minds. Until you come along!

Okay, those 1,000 names per week (and let’s use Raghav’s six-month marker, though I believe results will begin to show after 30 days) means that 26,000 new names will be entered into your company’s bloodstream in that 26-week period.

To make it simple, let’s back down our calculations to the 1,000 new names per week and run the numbers on those: out of 1,000 names contacted, 100 to 200 are going to tell you they’re actually looking, “Hey, you’ve had my resume for four months. Why haven’t I heard from you?” (I don’t know if you want to open that can of worms!); 300 to 400 are going to tell you, “Uh…I wasn’t really looking for a job, but what do you have??; yet another 200 to 300 are going to say, “I’m not really looking right now, but you never know what the future holds, so what do you have?”

One hundred unenlightened souls will tell you, “No thanks, I don’t have time to talk and am not interested” or maybe even just hang up on you. Or perhaps you won’t be able to reach them for whatever reason in a specific timeline (vacation, maternity leave, just left the company, etc.).

Let’s examine those numbers and use the greater of each category because they add up to 10. They’re also hard-number results that I’ve seen emerge over 10 years of telephone-names sourcing, so I have every confidence in them.

Out of 1,000 new names being mainlined into your company’s veins, 800 are going to be the truly passive type in which nobody has recently seen their resumes, haven’t been pitched before, or weren’t really thinking about changing jobs. That is true until, allow me to say it again, you come along.

Out of those original 1,000 names, it’s a pretty good bet 100 of them can become immediate hires. Of course this number is contingent upon the overall scarcity of talent in the specific industry you’re working to fill, but overall, it’s a solid number. Yes, I mean immediate or as long as your company’s hiring process takes to bring them on-board.

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Taking this number out to the six-month marker again, we see that in the first six months after implementing a functional and aggressive telephone names sourcing campaign, your company has the potential to be invigorated with 2,600 new hires!

All of them are hand-picked by you at the orchard for quality. You’ve been the chooser, not the chosen.

Adding the Numbers

If you pay $42 per name to exorcize these folks out of corporate America, we can calculate that for 1,000 names at $42 each, it adds up to $42,000 to affect 100 hires.

I understand there are other costs associated with handling these hires, but think about it, what does 100 hires normally cost you in your organization? I offer that it’s a whole lot more, I mean a whole lot more, than this number plus your costs of ownership.

We’re not finished. Those same 1,000 names is likely to produce another 100 hires (as long as you’re pipelining the names correctly and your recruiting organization is creating “relationships” with these people) in the next five months and another 50 or so hires in months seven through 12.

So, to fractionalize, about 250 potential hires out of an initial investment of $42,000. It makes my head spin.

Remember, this is only for one week of names sourcing! Imagine the results when you take it out over six months with the constant streaming of potential new hires at a rate of 1,000 per week. The value ratio is mind-boggling and as soon as the CFO’s office gets wind of these savings it catches her attention like very few other products can.

I am going to close by quoting Raghav again, “Results matter, and there is no better measure of results for an organization than money added to the organization.”

Or money saved.

Maureen Sharib has been a “Socratic sourcer” her entire sourcing career; from the moment she first picked up the faxed list of Silicon Valley high-tech companies that was her target list to “phone source” in 1996 to today she has instinctively followed this method of investigative sourcing using (mostly) the telephone.  She is a proponent of sourcing as a synonym for success and envisions the craft moving away from a dangerously drudgery-paced life-form existence to an exciting investigative/competitive place within organizations where practitioners co-exist within a framework of market research, human resources, and C-level future planning. She owns the phone sourcing and competitive intelligence firm TechTrak.com, Inc. You can contact her at Maureen at techtrak.com or call her at (513) 646-7306.  If she’s not on the phone she’ll pick up!

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9 Comments on “Matters That Measure

  1. While I like the article and its justification for using this sourcing method I think two major points are missing. The first is that HR needs to stop measuring soley in terms of cost – instead cost benefit should be used. No other investment in an organization is looked at soley by a cost factor. The return is just as important. The second part is quality. While the argument is made about cost savings it is implied that the candidates are of a higher quality. That should certainly be measured. Lastly, the objective of the organization is to hire quality candidates as efficiently as possible. This sourcing method should be tried and tested. If it were to yield quality candidates more efficiently than other sources then the investment should be increased but numbers of hires, quality, and cost should all be tracked. Those measures should be in place for all sourcing methods in order to refine your recruiting approach and fairly assess your recruiting methods.

  2. Rob, I couldn?t agree more, except I would make the point that in reality, it is a whole lot harder. You mention the myriad ?challenges and obstacles that corporate recruiting faces?. You couldn?t be more succinct when you suggest that ?the challenge generally comes back to a few simple areas that ultimately determine if an organization will have success from this or any passive…approach?.

    You point out that an organization must ensure that it can bring a ?passive? through the process effectively; that the path of least resistance must be overcome in human nature to make this work and that a true measure must be found to measure recruiting results. If you read my suggestions carefully, (and I see you have) you will see that I say that over the extended (first) six months, the hiring ratio can even increase ? I do not believe that it can increase much above what I suggest but for this to happen the names must be pipelined correctly. This means a database must be maintained and relationships are cultivated with the names. Much of this hiring ratio success depends wholly on excellent recruiter skills. Corporate recruiting for the most part doesn?t understand this mindset. It?s what I?m working to change and it?s the change I hope to see embraced.

    I am the first one to admit that what I propose is radical and outside the capability of most corporate recruiting departments, in the state they’re in today. But make no mistake about it ? the process is being embraced and implemented by a bold few and it is my firm belief that both active ?passive? sourcing AND the traditional routes have a place in the recruiting departments of corporate America and can exist side-by-side. I believe the ?stats? that have evolved over the past decade or so are contaminated with reactive recruiting practices and we have lost sight of the old style of recruiting where many names were actively sourced in a typical recruiter?s day in addition to resume mining activity.

    I am not suggesting ?proactive? sourcing replace all present ?reactive? activity. I believe recruiting in America is almost 100% board and resume driven these days. If corporate America would embrace telephone (and internet) sourcers like they do the boards, in large numbers, they would see their recruiting results multiply progressively. I stand by my numbers if corporations implement telephone sourcing into their process across all of their hiring landscape. But it?s a tough job moving this mountain, as you have so perceptively indicated, when you said, ?In my humble opinion, if you do not have the culture, processes, infrastructure, leadership by-in/support (critical) and strategy to invest in this for the long haul then corporations will dip their toe in the name gen/sourcing pool to find it a little to chilly after awhile and head back to what feels safe, warm and familiar.

    ?He that’s secure is not safe.? ~ Benjamin Franklin

  3. Maureen – You know I support your approach (as we have discussed before) and do feel that Corp recruiting is now at a point where they are looking at clearly defining the functions and there has never been a greater appetite on working out how to connect with the hidden talent that sourcing can produce…but, I think people reading this need to go in with ‘eyes wide open’, as on the surface this makes sense but in reality it is a little harder.

    To Define: Sourcing (finding talent full time) vs. Full life cycle Recruiting/Account Management (Sourcing when I can get the time)

    Here is the rub, as what sounds great at a high level (250 potential hires out of an initial investment of $42,000) has to make it’s way through the myriad of challenges and obstacles that corporate recruiting faces.

    As you know I have worked primarily on building sourcing functions (includes finding hidden talent through Primary Sourcing = Phone vs. Secondary Sourcing = Internet, etc) for many years now and the challenge generally comes back to a few simple areas that ultimately determine if an organization will have success from this or any passive (hate that word but best for the example here) channel approach.

    a) You have to ensure that the recruiting function and business has the mindset, processes and understanding of how you need to look at bringing a passive candidate though the interview process since we approached them vs. pulling them off an active channel (job board or your own database). If every candidate gets painted with the same brush (example: I have seen some corporations approach fully active candidates that are sometimes pushed through the process like a cattle call), then expect a large drop off through the process when finding talent through passive channels.
    b) The path of lease resistance. If you give a recruiter 100 names vs. 100 resumes to follow up on it is human nature to gravitate towards the 100 resumes as you can make a quicker determination as to quality by looking at a resume vs. trying to work out what is quality out of the 100 names that contain just job titles or limited information. The bottom line here is that you need to make a lot of phone calls/emails, play telephone tag, etc before you can actually get to the essence of what is actual hirable quality now. So you need to factor in not just how much did I pay for the 1,000 names but multiply it by how much time a recruiter needs to invest getting to the end result which is finding (or converting) an interested candidate now to be hired. When recruiters are under the gun to make their numbers, plus manage the hiring manager relationship, update the ATS, do email, sit in meetings, move existing candidates through the interview processes, etc, etc, then a lot will be forced to take the path of least resistance (reviewing resumes) vs. calling down a list.
    c) Comparing apples and banana’s. While the majority of corporations generally like to boil down recruiting metrics to the ultimate goal which is hires (and, that should be the end by-product of any sourcing activity), be very, very, very careful of trying to measure these activities against traditional active recruiting methods (own ATS, employee referrals, job boards). The reality is that it does not matter how efficient your passive channel sourcing strategy is, if you try a apples to apples comparison approach against straight ROI metrics of passive vs. active then the cost to play in the active space and what it produces in volume will always outshine passive channel strategies. If you are going to do true passive channel sourcing be prepared to take some time to measure it in a way you probably have not been historically used to measuring recruiting. If you do not then you are flirting with danger.

    To be clear I am not suggestion that this and other proactive passive strategies should not be leveraged (heck, I have bet my career on it can be done and must be done for a company to have a competitive advantage), but that company looking to make these types of investments, has to make sure it is ready to effectively consume what it produces. In my humble opinion, if you do not have the culture, processes, infrastructure, leadership by-in/support (critical) and strategy to invest in this for the long haul then corporations will dip their toe in the name gen/sourcing pool to find it a little to chilly after awhile and head back to what feels safe, warm and familiar.

    Rob

  4. Good article. I’d like some one to discuss how they measure the quality of hires. Are we talking about looking at someone?s annual evaluation because if we are then we have other issues to deal with…like the fact that most companies rate most employees as middle of the road performers (75%). On top of that, if my name sourced hire doesn’t join the company at the right moment in time he/she may not receive an annual rating until a full 18 months have gone by. It would be tough to come up with any significant measurement if a company only dipped its toe into the name gen arena for 24 months. ROI is the issue but how do you measure it?

    Rob, how far up the executive ladder does the buy in for passive candidate development /name gen have to be before you can feel confident that you have a true shot at developing a passive candidate/name gen/CRM type of environment? How long would you give it to develop before you would cash in your chips and hang up your marathon running shoes? 24 months, 36 months, 5 years?

  5. John – Will do my best to answer a few of these.

    The ‘Holy Grail’ of recruiting is trying to effectively (the optiminal word here) track quality of hire. I think organizations are doing a better job on defining quality but none that I know of truly can capture full quality of hire data mainly because the systems that track performance have no tie into what so ever what the ATS database tracks. Once you reach hire in a ATS that is pretty much the end of what recruiting does with the data (beyond looking backwards at sourcer of hire or number of diverse candidates, etc, etc).

    Now where the real fun would begin is to take the backend data out of a SAP as an example that might also connect with performance management tools then sync that data up with your ATS hires. What you could then do, which would really start to have some value, is looking at the quality of hire data with source of hire data by job profiles by location by job level, etc. One thing to note is looking a quality of hire data just by job performance alone is dangerous given so many factors like a bad boss; poor new job decision; department/group within a company in decline; etc, so looking at other key factors need to be considered in my opinion (revenue generated, costs saved, number of promotions, customer sat, etc).

    Regarding your questions, I go up as high and as often as possible as this is a paradigm shift for a lot of recruiting and business leaders. Evangelizing and educating people on the function is where I spend the bulk of my time in the last few years. On how long would I give is a tough one as most people expects results now since we are certainly live in a instant gratification, fast food culture. I think the trick is having a longer term plan with clear communication and realistic goals over milestones while still delivering on the fast quick hits as much as possible. If you do not deliver the results in some way that show progress then of course the appetite and patience of leadership to buy into the longer term vision and strategy will definitely start to wane. Personally, I am now fully committed and entrenched in building sourcing into what I know it can and will be for corporations and I continue to fight the fight on a daily basis to move function to where it needs to be, along side traditional recruiting and in many case out in front vs. some people who see it as a stepping stone or training ground for a ‘real’ recruiting job 🙂

    Rob

  6. ‘ I happen to find myself to be an exceptionally intelligent man’-Howard Cosell.

    Rob, my compliments….

    The metrics involved in tracking quality hires is, from this seat anyway, exremely heady stuff to aspire to. As you had mentioned, there are too many variables involved that determine the success or failure of a hire.
    As I am a third-party recruiter and work with a large client base, my perspective for quality hires is based completely on how long someone stays on with a company. I think that it can be safe to say the it was a quality hire if someone that you placed has been there for a significant period. So, again, from my seat, to simplify: Number of hires placed through actual recruitment efforts and how many are still there for at least 2 years. If they have left, determine if it was self imposed or decided by the company. This would be a good baseline to start from and very easy to research.

  7. Okay, I have a question, how many companies actually do metrics on the employees Who are actually staying at the company.

    Do they know what the actual tenure and longevity is at their companies?
    Do they ask Why are you still here, why haven’t you considered leaving?

    Of course there is the obvious exit interviews – but I wonder how many companies do implement them? and really look at the results. Do they know why people are leaving?

    But I wonder, how many actually do polls of their actively employed to understand what makes their company sizzle to their current employees, and what can they do to help ALL of their employees want to stay..

    Are these also not important metrics?

  8. Karen-

    Most of what you refer to is involved in retention programs, something that I am a great believer in and assist my clients with. I have created employee surveys that my clients have used with some success. To be straight to the point on this subject, unless your intentions are to create retention programs, there is no point to trying to track quality hires. As I said in my last post, there are way, way too many variables involved, and even if we had a grip on those variables, we would still have to ‘trust’ the information we gathered through exit interviews, employee surveys and performance reviews. I am sure your employer would prefer you put your efforts elsewhere.

    -Pobuta the Recruta

  9. Karen – the metrics you talk about are very important and we don’t see enough companies talking about those types of surveys/research because it is kept internal when it is actually done. The fact is that Exit Surveys are not enough and of minimal value at best.

    Regarding the other posts in relation to ‘quality of hire’, it can be measured and it doesn’t have to be sophisticated or heady. A fair quality assessement would be mutually determined by the hiring manager and recruiter before the hire. They would agree upon the most important measurable aspects of the job (all of which should be able to be measured) as well as the pre-determined point in time that the measurement would occur before organizational influences would be a positive or negative factor. Using this process would ensure shared ownership of quality and be more fair to recruiters. Simple length of tenure in a company alone is not a good indicator of quality because it has little to do with the performance of the hire.

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