Mirror, Mirror ...What is the best recruiting source of all?
My two year old daughter loves Snow White. With the challenges facing hiring managers today, a magic mirror that answers our questions would be helpful. But, as the wicked Queen discovers, we may not always like the answers.
So, what is the best recruiting source of all? Last year, a study sponsored by the Direct Employer’s Association and conducted by Booz Allen Hamilton reviewed recruiting trends. In this study, they introduced a nifty Source Value Index concept that compares recruiting sources using the following formula:
(% of New Hires from Source) / (% of Recruitment Budget Allocation)
We pushed this one step forward to add a quality of hire component to the formula. Our clients use our testing platform to qualify job candidates for front line agent positions in contact centers. Not only do we capture testing scores by candidate, but we also capture recruiting source, job tenure, and job performance data downstream in the employee's lifecycle. Our goal is to create and end to end hiring optimization model that links sourcing strategy to job candidate qualification to job performance output. In order to reduce hiring risk, just knowing how much was spent to hire someone compared by source is not enough. We need to understand the quality of that hire.
So, using the same methodology, we added factors for tenure and job performance. We aggregated data across several clients to create our own Source Value Index. We also divided recruiting sources into tiers to make it easier to analyze. Tier 1 is for traditional recruiting sources like print ads. Tier 2 is for internet related sourcing. Tier 3 is for person to person sources like an employee referral. Keep in mind that we are focused exclusively on call center hiring for hourly job positions in the $9 to $14 per hour range.
In our chart below, a higher ranking is better. The position (1:1) represents an equilibrium point. OUr results are similar to the Booz Allen study except that we see a larger gap between Tier 3 sources (person to person referrals primarily) and Tier 1 sources because of the added performance component. Efficiency refers to the dollars spent versus quantity of hires received. Effectiveness refers to the quality of hire
A few comments about recruiting sources - In our case, referrals are traditional person to person referrals, not the H3 or Jobster variety. Not very many of our clients use the web based referral model that is the rage in the HR space. We're not sure in the hourly market if this model has the same punch as it may for professional, salaried positions. We hope to update our model with data from web based referrals later this year.
As the Booz Allen study showed and ours supports, solid data analysis linking recruiting sources to expenditures and quality of hire can lay the foundation of a data driven recruiting model. Perhaps we won’t need that magic Mirror after all.