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Have 20 years of technology-driven changes in recruiting delivered better quality of hire?


Have 20 years of technology-driven changes in recruiting delivered better quality of hire?
June 4, 2017, 8:00:00 PM EDT   By Mike Russiello

The April 2017 Department of Labor jobs report recently placed the United States near what economists call "Full Employment," which means virtually everyone who wants to work has a job. That means good news for our economy, of course. But it also puts more pressure on recruiters, since hiring is becoming more of a sellers market.

So, are recruiters prepared to deliver in this more challenging market? Good question. What does it mean to be prepared? Does it mean we can process more candidates faster and more cheaply? Not really. It means we can consistently deliver the right people to the organization, even when there are fewer of them looking for work?

Hiring is both one of the most important tasks facing any organization, as well as one of the most difficult to do well. We might be able to affect our production metrics - cost per hire, time to hire, etc. But the core metric - quality of hire, is somewhat elusive.

Quality of hire refers to both performance and tenure - of the people that get hired. Technology is great at reducing costs and time, but they are not the same thing. Hiring poor candidates more quickly and cheaply doesn't help the company. I'm not saying that recruiters are using technology to do that. The question is, are we hiring better candidates or are we just hiring the same old mediocre (on average) staff more quickly and less expensively? 

Let's consider a few key recruiting practices that have changed substantially in the last 20 years. I'll share my (very) qualitative opinions on what the impact was for each. Yours may differ and that's just fine. In fact, I'd very much like to hear about them.

Practice 1: Advertising a Job Posting         
 - Time savings over 20 years:  Medium - Large    
 - Cost savings over 20 years: Large
 - Quality of hire impact over 20 years: Medium

1997: Newspaper advertising was almost mandatory and quite expensive. Upstart job websites, like Monster.com were starting to make headway, but the newspapers still ruled. Attend in-person job fairs.

2017: Employer brand formulated and employment website constructed, carefully coordinated with presence on job websites, and social media platforms. Job postings propagated to both controlled and uncontrolled mediums.

Employee referrals continue to dominate the sources of many new hires, just like they did 20 years ago. Thus, the magic formula for recruitment advertising has still not quite been discovered. We still get most candidates from our friends.

Practice 2: Collecting an Application from a candidate        
 - Time savings over 20 years:  Large
 - Cost savings over 20 years: Large

 - Quality of hire impact over 20 years: Medium

1997: Typically receive a paper resume and cover letter in response to a print ad or emailed as a word document. Use paper files and give the candidate a paper company-specific job application when they come in for an initial interview. Keep adding to the paper file until the candidate accepts the offer. Hand off the package to HR.

2017: Electronic resume PDF, no cover letter, and sometimes just a link to a LinkedIn profile.  Data creates a candidate record in an applicant tracking system (ATS), which triggers “next steps” such as interviews and assessments automatically as the candidate moves through the process. When hired, the ATS system automatically exports data to the HR system.

Sure, it's faster, cheaper. But most recruiters I talk to still seem to be overwhelmed with their tasks and unable to dedicate the appropriate degree of attention to each candidate, or to developing relationships with passive, future candidates.

Practice 3: Testing a Candidate                    
 - Time savings over 20 years:  Large
 - Cost savings over 20 years: Large
 - Quality of hire impact over 20 years: Medium

1997:  Following a lengthy provider selection practice, paper booklets are ordered from using a phone or mail-in form. Candidate must come in to complete the assessment in person.  Mail forms to provider or use specialized scanner to perform scoring. Print results obtained and placed in candidate file.

2017: Select online provider via web search and pay online with a credit card. Send test link to candidate via text message or email. Results texted or emailed when completed by candidate and can be automatically added to tracking system.

Pre-hire testing is quick and fast, and accessible to virtually any organization. If used appropriately, it can have a well-documented and substantial impact on both performance and tenure. A good testing program requires analysis of what is most important for any job and selection of the appropriate measures, and testing companies like HR Avatar keep making it easier. But many recruitment testing programs rely on outdated assessments and measure only a limited slice of what really matters to a given job, even though the technology makes it possible to measure a much larger slice.

Practice 4: Interviewing a Candidate                      
  - Time savings over 20 years:  Medium
  - Cost savings over 20 years: Medium
  - Quality of hire impact over 20 years: Small

1997: Schedule appointment and conduct face-to-face interview(s) in person. Reimburse travel expenses for candidate.  Obtain subjective results and compile in candidate file.

2017: Schedule appointment and conduct face-to-face interview(s) . Use video interviewing to save time and travel expense. Obtain subjective and objective (structured) results and enter into tracking system.

Interviews are still driven by hiring managers, and interview success still remains subject to the skill of the interviewer, which has improved only slightly in two decades.  

Wrapping it up

Yep. A lot has changed. But -- to me -- the performance improvements are lagging in the general case.  You may see it differently and please let me know if you do. In my view, quality of hire, at least in terms of performance and tenure, is a tough nut to crack -- even with our whiz-bang technology. While many individual companies have engineered their selection process and have improved their quality of hire (some very much so), the majority have not. This is the area where the next round of recruiters may make (or break) their reputation.

How do you shift the emphasis to quality of hire? To start, you'd need a way of measuring it. Reliable and accurate performance-related measures are often tough to put in place for many jobs, while tenure-related measures are easier. I'd recommend speaking with an industrial psychologist - people who are trained to do just that. With their guidance, metrics that matter will be formulated and will be available when you make your next technology and process decisions. The results will follow.  For instance, a testing program that is demonstrated to improve sales performance or retention will be easier to put in place if you can measure or estimate its effect.  We always chase the scoring system we design for ourselves.

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