Employers seeking to utilize social media tools for recruiting are seeking to lower their risk by waiting until there is substantial demonstrable evidence of utility. While this might seem like a smart strategy, it creates a false sense of comfort and ignores the fundamentals of risk & return. Instead of waiting for other employers to lower the risk of investment, focus on creating a measurable strategy with milestone-driven decision points to manage the uncertainty in social recruiting based on the unique risk tolerance of your company.

Risk vs. Return Tradeoff

When making the decision about whether to invest in a new tool or modify your recruiting strategy to achieve superior results, it is important to consider the risk vs. return tradeoff. Investopedia defines the risk-return tradeoff as:

“The principle that potential return rises with an increase in risk. Low levels of uncertainty (low risk) are associated with low potential returns, whereas high levels of uncertainty (high risk) are associated with high potential returns. According to the risk-return tradeoff, investments can render higher profits only if it is subject to the possibility of being lost.”

With this definition in mind, employers that are waiting to invest their resources (time, energy, and talent) in social recruiting until there is greater certainty about its utility will receive a return. However, that return will not be as great as those employers that are willing to take more risk. By the same logic, those employers that take more risk by diving into social recruiting before its utility is proven have the potential to reap outsized returns. However, they also risk losing their entire investment of resources (time, energy, and talent).

Risk Management

If you are like most folks, neither of the previous options sounds terribly appealing; do nothing and risk being left behind or go full speed ahead and risk losing everything. Instead of selecting one of the extreme options, I think that it makes more sense to attempt to manage your social recruiting risk. Investopedia defines risk management as:

“The process of identification, analysis and either acceptance or mitigation of uncertainty in investment decision-making. Essentially, risk management occurs anytime an investor or fund manager analyzes and attempts to quantify the potential for losses in an investment and then takes the appropriate action (or inaction) given their investment objectives and risk tolerance.”

As a recruiting or HR professional, you have unique insight into your organization’s risk tolerance as it relates to the uncertainty of investment in social recruiting. Based on this analysis, you can develop a strategic action plan that takes these different variables into account as well as the specific goals that your organization would like to achieve by using these tools. With this process, there is much greater control and increased comfort in moving at your own pace and determining specific decision points for continued investment in these new tools based on the results you are achieving and ongoing risk tolerance of your organization.

–Omowale Casselle (@mysensay)

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About the Author: Omowale Casselle is the co-founder and CEO of mySenSay, a social recruiting community focused on connecting talented college students with amazing entry-level employment opportunities. Our solution integrates social media, real-time web-based communication, and intelligent analytics to enable employers and students to discover, interact, and connect with each other.

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