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How to Improve Quality of Hire by Changing the Way You Source Candidates

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Maximizing quality of hire and spending less money at the same time may seem impossible, but it isn’t. It all comes down to allocating a company’s recruiting budget based on the channels that produce the best candidates.

Just take a look at the graphic below, which shows quality of hire by sourcing channel:

The data behind the chart (more details) reveals the following:

Less than 20% of those who apply end wind up being top performers.
Direct sourcing on skills is only slightly better in terms of performance than hiring those who apply.
About half of the people hired using simple AI-based direct sourcing, i.e., “cherry picking,” in combination with skilled recruiters become top performers.
About two-thirds of the people who are promoted or highly referred wind up being top performers.
Here are four strategies you can use to effectively increase your quality of hire:

Don’t spend more than 25% of your recruiting efforts on job postings
Job postings are designed to find active candidates who are both perfectly qualified and willing to take an ill-defined job for an average salary. Our research indicates that only one in six candidates who apply for a senior staff or management role under these conditions actually becomes a top-third performer.

The big problem is a lack of clarification around real job needs, so it’s problematic if the person will wind up highly qualified or motivated to do the actual work required. Given this, it’s clear that no more than 25% of your sourcing budget and resources should be spent on job postings for these positions.

Avoid using traditional Boolean direct sourcing
Searching for resumes on LinkedIn or elsewhere using the same skills-intensive Boolean filtering isn’t much better. All this does is find candidates who are skills-qualified who didn’t apply but would be willing to accept an ill-defined job. In this case, however, these people have a negotiating advantage since the company reached out to them. Our experience is that only one in five people hired this way turn out to be top third performers.

While many of the people found this way could be top performers, most don’t respond to the outbound messages, many opt-out early in the process, offers are rejected more often, and those hired tend to underperform since the actual job turned out to be different than the one promised.

Try prequalified direct sourcing to find top performing candidates 50% of the time
It’s possible to prequalify candidates using simple AI concepts (i.e., logic) with LinkedIn Recruiter to improve the quality of the people seen and hired. In this case, we suggest only reaching out to people who meet these criteria:

They’re performance qualified. This means they can meet the performance objectives of the job. In most cases, these people have a different mix of skills and experiences than written on the job description since they learn faster, have been assigned stretch projects sooner, and are promoted more rapidly than their peers.
They possess the Achiever Pattern indicating they’re in the top third of their peer group.
As important, they would see the job as an obvious career move and one worth at least discussing so their response rates are higher.
This is the “sweet spot” for talent but it takes expectational recruiting skills and engaged hiring managers to nurture these people and get them hired. Since these people were “cherry-picked,” and there was more due diligence conducted by both the company and prospects, the probability is about 50% the person hired will wind up as a top third performer.

Networking, referrals, and internal promotions lead to hiring top performers most frequently
The performance of strong people who are highly referred or already known to the hiring manager is very predictable. Our research based on the hundreds of people we have placed and tracked over 20+ years indicates that two out of three people hired for new jobs this way continue to be top third performers. This is why referrals driven by proactive networking is the sourcing channel of choice to maximize quality of hire, reduce cost per hire, and minimize time to fill. Internal promotions, which are a subset of this process, demonstrate that it isn’t the number of skills that predict performance, but rather a track record of successful performance.

While companies use a mix of these sourcing channels, it’s important to emphasize the targeted direct sourcing and referral-based models for critical hiring needs and deemphasize job postings. However, job postings have a role as long as they’re compelling and define the true challenges of the job.

Underlying all of these approaches is the idea that the best people are driven to take jobs that offer the most career growth. That’s why companies need to be more proactive seeking out these talented people rather than hoping one magically applies.