The 80/20 Talent Rule: Invest 80% of your hiring and recruiting efforts on the most important 20% of the talent market.
Twenty years ago I had this cartoon drawn to reflect the then state-of-affairs of the hiring process in corporate America. I’m in the process of a major rewrite of my two books, Hire With Your Head and The Essential Guide for Hiring & Getting Hired, so I thought this would be a good place to start.
The initial purpose of the revised edition was to show how much progress has been made in the past two decades when it comes to hiring great people for great jobs. Now I’m not so sure. (Upcoming webcast.)
At the time, the merging of the Internet, job boards, and the ATS as well as the creation of the in-house corporate recruiting department offered every company the promise of hiring great people seamlessly, painlessly, quickly and at low cost. It didn’t happen.
As you study the image and compare it with the progress that’s been made, how much of this vision do you think has been realized?
When LinkedIn came into existence about 10 years ago, there was a great pick-up in quality since a new source of talent became instantly visible. However, this impact was quickly diluted once everyone got ahold of this invaluable asset. To offset the predictable drop in response rates, ATS vendors reacted by adding AI and CRM (candidate relationship management) tools to increase efficiency. To me, this masks the true problem and better solution. Being more efficient doing the wrong things mistakes activity for progress.
Being more efficient doing the wrong things mistakes activity for progress.
For some instant proof consider that total recruiting costs have increased, quality of hire has not improved, turnover has increased, speed to hire has not improved and according to Gallup, employee engagement has not moved much from the 20 year trend of only 33%. I contend it’s related to fundamental problems that have existed for as long as I can remember. Here’s my analysis of why not much has changed:
Companies are violating the 80/20 rule. Roughly 80% of the talent market is passive and the other 20% active. Unfortunately too many recruiters and ATS vendors spend 80% of their hiring efforts and budgets on the 20%. The reason is obvious: It seems easier and a lot of companies make a lot of money selling job postings to companies like yours.
The underlying strategy is flawed. Companies continue to rely on a “surplus of candidates” assumption when designing their hiring processes. This involves allowing anyone and everyone to apply and weeding out the weakest. The problem is that you can’t use a surplus assumption when there isn’t a surplus. In a talent scarcity situation you to need to identify, attract and nurture the best. Implementing a “Small Batch, High Touch” process solves the problem while improving quality, speed and cost collectively.
Hiring managers aren’t held accountable for hiring top people. If they were, those who get promoted would be those who do the best job of hiring people. If managers aren’t able to attract, hire and develop top talent they shouldn’t be hiring managers or they should cede the hiring decision to others.
HR leaders are too vendor driven. You can’t solve a complex multi-dimensional problem like hiring by bolting together one-dimensional linear solutions. Few HR leaders are selected for their systems implementation and data analytics expertise. As a result they rely too much on their vendors for advice, counsel and insight. One might argue this point, but since we haven’t solved the problem yet, it’s pretty obvious this is a contributing factor.
Job descriptions put a lid on quality of hire. The best and most diverse people frequently have a different mix of skills and experiences than listed on the traditional skills- and experience-laden job descriptions. Defining the work that needs to be done as a series of performance objectives solves this problem. It doesn’t take much insight to conclude that if the person can do the work he/she has all of the skills and experiences necessary.
Bias is insidious. Even if these problems are solved, bias will still be the number one cause of hiring mistakes. The impact of first impressions, personality style, communication skills and the halo effect must be systematized out of the hiring process in order to reach an objective and correct decision. Here are my 10 great ideas for reducing bias. The best is a well-organized panel interview.
Being more efficient targeting the wrong talent market will not improve quality of hire. I contend that violating the 80/20 rule is the underlying reason why quality of hire has not improved in the past 20 years. I also predict it will not improve in the next 20 unless the cycle is broken.