On today's XtremeRecruiting.tv I interview Shally Steckerl and ask:

Question of the week:
With the many tools available for identifying and recruiting passive candidates how do you measure your return on invested time and effectiveness for your favorite web tools?


ipod with Big Biller bookCheck out Shally's video and answer the question here in the discussion. My trusted friend Dave Staats will judge the best answer and the winning XtremeRecruiting.tv group member will be announced next week, and receive an i-Pod loaded with over 10 hours of live interviews from my e-book Big Biller. You may also be interested in the book Happy About LinkedIn for Recruiting: The roadmap for recruiters using LinkedIn .

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We track, very closely, the genesis of every candidate we recruit or is referred to us. This allows us to determine which approach to recruiting is the most successful. This analysis is unique to each recruiting firm and its niche industry/discipline. In our case, in 2007 we found that 84 % of the candidates we placed were by executing telephone based direct sourcing techniques, 11% were from referrals of existing contacts and 5% were created by various web tools from "soup to nuts". By this we determined where the vast majority of our candidates can be found, at work and available by telephone. Much of the recruiting lead generations came from existing industry database listing. In summary, 92% of our placed candidates came to us via telephone based direct sourcing techniques, 7% by referrals and the balance by web tools.

Doug Beabout CPC CSP
850.424.6933
With the many tools available for identifying and recruiting passive candidates how do you measure your return on invested time and effectiveness for your favorite web tools?

Today we have so many tools to choose from for finding passive candidates, that it can become overwhelming for the even the novice to know where to start. Because of forums such as Recruiting Blogs, Six Degrees, ERE and many others, we now have the choices narrowed down and can learn from the wisdom of others.

I’ve been recruiting for 20 years and the one thing I know about my style is that I’ve learned to work smarter, not harder. Interestingly, I’ve narrowed my most effective tools for finding passive candidates to LinkedIn, Boolean Search strings on various Search Engines and our in-house database of candidates. I have my Firefox browser set up with various tools I use, networking sites, and folders for active search categories. The top entries in the folders are the search strings, with the remaining bookmarks being the passive candidates I’ve found that match my criteria – through plenty of sorting through results.

Our corporate applicant tracking system allows us to run reports based on where our candidates are generated, so I can look at data (my specific metrics) that shows me how many submittals, phone interviews, in person interviews and hires I’ve made in the last X period of time. I can easily run through and see where I’ve had the most hits – was it LinkedIn, Xing, Spoke, Facebook referrals, a pre-existing candidate in our database, etc.?

Since I recruit internationally, I’ve used sites recommended by friends in my network, blogs, videos and static web pages. Yes – sharing of information is critical piece in how effective I am as a recruiter. I build my networks with potential candidates and others that may see me as the competition. I don’t see other recruiters as competition, but as potential colleagues and partners. I’ve certainly run into my share of recruiters who don’t feel the same way, but it’s just like a candidate – NEXT.

I now have two decades of experience in using a ‘pay it forward’ philosophy in recruiting and trying (and buying) the latest and greatest technology available. I’ve determined that when it comes down to measuring my return on time invested and effectiveness of various web tools, obviously I can look at numbers and sources. However, the differentiator for me has been the ability to grow something that eventually sustains and grows itself. Of course I feed it, water it and attend to it, but can I get it to grow and thrive on it’s own, and produce increasingly impressive results and be my top source of passive candidates? How I measure things today will probably differ than how I’ll do so in the coming months or years. Dashboard me! I check the pulse of my resources, network and success, and the only tool I use that I’ve been able to grow to this level is LinkedIn. As Shally mentioned, if you use it to network, get involved and help others grow as well as figuring out how to effectively search for candidates – you’ve got a winner!
Bill, you pose a powerful (and some would say ‘complex’) question because social media as a source (from a more pragmatic, mass-adoption standpoint) is in its relative infancy. I have been a strong proponent of pushing for more of a decision science within the Talent Acquisition function since first entering the field – even in my early days of recruiting inexperience, I knew that we were not leveraging any of the similar decision sciences I had seen or used among my previous marketing, sales, and/or operations background.

Due to the potential complexity of your question, it’s important that we set a few guidelines up front. From a scientific standpoint, it’s important we state our assumptions before attempting to build a model. Let’s quickly do that:

1. First, your question involves web tools that enable ‘identifying and recruiting passive candidates’. Since your question revolves around the ‘passive’ candidate, we can eliminate any job boards and explicit advertising from our answer. In addition, we can also eliminate any non full-time direct-hire employees (as most are aware that short-term contractors usually fall into the ‘active-candidate’ category).
2. Secondly, your question involves the notion of ‘Return on Time Invested’ (ROTI). The notion of ‘Return’ originally derives from the Accounting and Finance function, and is stated quantitatively. As such, there must be a numerator and denominator, and depending on the circumstances, the quotient/product can be stated in one of the following manners:
a. Ratio (i.e. x:x, 5:1, 7.3:1)
b. Percentage (i.e. 200%, 0.98%)
c. Index Score (this will take into account certain independent variables and sometimes allows for a better side-by-side comparison of values.)
3. Thirdly, it is important that we define ‘Effectiveness’ to properly answer this question. The best definition I was able to find is, “The extent to which actual outcomes are achieved, against the outcomes planned, via relevant outputs or administered expenses.” The reason I believe this to be the superior definition is because there is attention given to ‘impact’ as well (this is where well-intentioned HR and TA programs fail as the programs may be effective, however lack true impact on organizational performance).
4. Third-Party Recruitment is concerned with several metrics, however there are 3 true mother metrics that drive all others:
a. Number of Placements
b. Avg Placement Fee
c. Annual Billings
[See note below.]
5. Corporate Recruitment is concerned with several metrics, however there are 3 true mother metrics that drive all others:
a. Cost-of-Hire
b. Time-To-Fill
c. Quality-Of-Hire
[See note below.]

[Note: Some may argue that there are several other important metrics to follow on the TPR side (such as Sendouts:Offer, Sendouts:Month, etc.), however the true mother metrics are listed above. Likewise, some may argue that there are several other important metrics to follow on the Corp Recruitment side as well (such as Interviews:Offer, Recruiter Efficiency, etc.), however the true mother metrics are listed above. The analogy is that we can follow numerous financial indicators for a firm and each metric offers independent value (such as ROE, ROA, Asset Turnover, etc.) . . . however the true mother metrics are Earnings-Per-Share (EPS), Market Capitalization, P/E Ratio, and Stock-Price.

This is where the tricky part begins – time allocation in terms of identifying ROTI. For example, we may spend a total of 8 hours ‘sourcing’ for a given role, however only 1 of those hours may have been spent on the actual source/channel upon which we’ve identified the passive candidate. What compounds this is exactly what Shally mentions – the current notion of an ‘integrated’ desk which involves several applications and browser windows open. As such, we may quickly source 10 channels in an hour period, upon which we enter a ‘deeper dive’ depending on our initial results. I only mention this because it’s easy to see just how complex the answer to your question can become. The only ‘real way’ to note true ROTI would be to keep clicking a timer as you move from source to source and from channel to channel.

Also, we must ask ourselves whether we are going to allocate the entire amount of time spent on the search itself into our ROTI number. Doing so will truly allow us to answer the question of how much our time was worth (for example, if we spend 40 total hours on a $40k fee, then we can identify that our time was worth $1k per hour on this individual search). However, although this will allow us to identify specifically how valuable our time was, there is no correlation back to the source itself. When I say that, I mean that we’re dealing with human beings and some take more emotional attention, persuasion, and closing than others.

Another factor that may serve to greatly complicate our attempts to quantify source value is how many degrees away our placed candidate is from the original source that led us in the candidate’s direction. For example, let’s say we find an initial candidate on LinkedIn, who then refers us to the candidate we actually place. Would that mean LI was not of value to us? Obviously, the original source was of great value, but it’s not so easy to identify this if we’re looking at things with black-and-white ratios.

In going through this process, I’ve given the concept of ‘waste’ considerable thought (in the Six Sigma and LEAN sense). I say that because some may say that although we spent 40 hours within a given search, 20 were spent on sources that did not yield a placement or hire. But were those hours technically waste? Not really, as sourcing is an overall process. An analogy would be an engineer that spends 40 hours trying to correct a problem, but spends the final 1 hour reconnecting a wire that was disconnected. Would this mean his prior 39 hours were waste? No, not at all. His previous 39 hours may have led him to the root cause of the problem.

Based upon all these things, this is my recommendation:

a. Group sources into categories. For example, LinkedIn may be in its own category due to its power as a source. Facebook, Twitter, and MySpace may also be in their own categories. Blog Searching may fall into a distinct category, as may several Boolean search strings using Google and MS Live. This would all be dependent on the individual organization and the differing external talent pools, etc.
b. Block out your ‘Sourcing Time’ into 15-minute blocks. By doing so, you will allow yourself to remain committed to a given ‘Source Category’ without overdoing it.
c. Source individual projects at a time. When I say this, I mean to focus on a given requisition or job family, etc. This is imperative for tracking purposes later.

[Note: I would recommend against grouping too many sources into the same category as this will reduce the power of this technique. If you know certain sources are effective given your personal needs, ensure the source is in its own category for tracking purposes.]

By engaging in categorizing out your different channels and sources, blocking out your time spent within each source/channel, and by sourcing individual projects or job families at a time, you’ll be able to track the entire time spent sourcing for a search. Upon doing so, this is how your tracking matrix may look per project or job family:

a. Source A (LinkedIn) = 6 hours
b. Source B (MySpace/Facebook) = 8 hours
c. Source C (Blog Searching) = 2 hours
d. Source D (Twittering) = 1 hour
e. Source E (Boolean Search ‘xyz’) = 4 hours
f. Source F (Direct Sourcing) = 16 hours

At the end of a month, quarter, or year, you can return to review your sources and total time spent within them . . . in addition to the mother metrics given your role (TPR or Corp Recruitment).

At this point, we can then overlay this time information onto our aforementioned mother metrics. Examples would include the following:

Third-Party Recruitment (LinkedIn Annual Review)
a. Time Spent Within Source = 240 hours
b. # of Source Placements = 12
c. Source Avg Placement Fee = $25,000
d. ROTI = 240 hours / 12 placements = 20:1 (i.e. we make a placement for every 20 hours spent within this source).

Third-Party Recruitment (Direct Sourcing)
a. Time Spent Within Source = 800 hours
b. # of Source Placements = 24
c. Source Avg Placement Fee = $28,500
d. ROTI = 800 hours / 12 placements = 66.7:1 (i.e. we make a placement for every 66.7 hours spent within this source).

Third-Party Recruitment (OVERALL Source Review - Annual)
a. Source A (LinkedIn) = 20:1
b. Source B (MySpace/Facebook) = 120:1
c. Source F (Direct Sourcing) = 66.7:1
[Note: Obviously, the lower the ratio, the more effective the source.]

Corporate Recruitment (Facebook Annual Review)
a. Time Spent Within Source = 110 hours
b. # of Source Hires = 6
c. Source Cost-of-Hire = $5,500
d. Time-to-Fill = 45 days
d. Quality-of-Hire = 3.5/5 Stars
e. ROTI = 110 hours / 6 hires = 15.7:1 (i.e. we make a hire for every 15.7 hours spent within this source).

Corporate Recruitment (Boolean Search ‘xyz’ Annual Review)
a. Time Spent Within Source = 150 hours
b. # of Source Hires = 15
c. Source Cost-of-Hire = $4,000
d. Time-to-Fill = 27 days
e. Quality-of-Hire = 4.1/5 Stars
f. ROTI = 150 hours / 15 hires = 10:1 (i.e. we make a hire for every 10 hours spent within this source).

Corporate Recruitment (OVERALL Source Review - Annual)
a. Source B (Facebook) = 15.7:1
b. Source E (Boolean Search ‘xyz’) = 10:1
c. Source F (Direct Sourcing) = 200:1
[Note: Obviously, the lower the ratio, the more effective the source.]

To conclude, Bill, I would suggest that we look at our Source data in such a way as to accumulate knowledge for targeted use on future searches/requisitions. In this manner, we will be better able to increase performance by using forward-looking projections to formulate leading indicators (an example would be TPRs’ or Corp Recruitment using the knowledge that Pivotal Talent Pool ‘X’ is populated primarily with candidates from Source ‘A’).

Our industry is in perfect position for a more intelligent decision framework to be architected and implemented, much as is being done by John Boudreau (Research Director of the Center for Organizational Effectiveness at USC Marshall School of Business) has done with the new notion of "Talentship". I would hope that some of the above answer adds to the growing field of opinions and research in our sector and I look forward to your thoughts and feedback.

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