The Clock and the Compass by Jon Bartos

We have all heard of the 80/20 rule.   Vilfredo Pareto, an Italian economist developed this principle in 1906 based on the fact that 20% of people owned 80% of the land.  He also noticed that 20% of the pea pods in his garden contained 80% of the peas.  Thus the rule of thumb was born.  We can just look around our office and see that 20% of the people produce 80% of the results as a quick example.  The principle also works in all areas of business and life.

If we drill down even further, we will notice that there are about 20% of the recruiting activities that also produce 80% of our result.   These are the known as the Pareto Recruiting activities. Let’s start with the activity that lead to the greatest results.

#1: Marketing – Take Great Search Assignments/Job Orders

If you talk to a group of big billers and even the elite Million dollar producers, most will agree that getting a high quality search is the top Pareto activity that will generate the majority of your success and thus revenue.   

A high quality search or job orders is one where you are guaranteed to make a placement if you find the right candidate.  Some of the characteristics are: You know the match, the client is motivated to fill the position, you are working with the hiring manager, the hiring process is reasonable, the compensation is within the market range and you are exclusive.  

If you are guaranteed to make a placement with the searches you work on, the recruiting game becomes easier.  There is a specific ratio that tells us how well we are doing when it comes to the quality of job orders we take – and it’s the job order to placement ratio.  In retained search firms that ratio runs around 1.2/1 to 1.5/1.  Meaning almost every job order they take, they make a successful placement.  In contingency search firms that ratio runs from 5/1 to 10/1.  Now if I am working on 10 job orders to get one placement – that’s a long day of wasting time on 9 searches that will not end up in a placement or commission dollars in a recruiters pocket. 

So let’s do the math on this so we can really understand the importance of this concept.  For time purposes – let’s say it takes us one week to fulfill a search (3 quality candidates delivered just to put a line in the sand).  If our ratio was 10/1 – every 10 weeks we would make a placement.  If our ratio was 5/1 we would make about a placement every 5 weeks.  If we got it down to 1/1 we would be making a placement, every week.  If our average fee is $20,000 and we take home 50% of that (just for grins), then here is the difference in our placements and income based on taking better job orders – with the same delivery/recruiting skill set and time in the day.

 

     Ratio            Placements/Per Year                 Revenue/Year                       Commission Dollars/year

     10/1                        5                                          100,000                                      50,000
      5/1                       10                                          200,000                                    100,000
      1/1                       52                                        1,040,000                                   520,000

The above example is assuming we are only delivering three candidates per week.  That’s it!  Low to average recruiting skills at best.   However if the quality of job order is there, the revenue can be incredible based on consistent delivery.  

Focus your efforts on improving the quality of the work that you take.  If you don’t have enough “guaranteed placement” searches on your desk, it’s time to get back on the phone and get them.  Use the Job Order Matrix at www.jonbartos.com to make sure your job orders are the quality of which you would like to work on.

By getting better at the Pareto activity of Marketing, you can see your revenue quickly improve, and your path to significance shorter.

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