In this guest column, Ken Lazarus, chief executive at Scout Exchange, argues that leveraging external recruiter performance data can provide an accurate predictor of success for quickly landing qualified candidates.
For years, the magical “resume-to-job-matching” algorithm has represented the Holy Grail of recruiting for corporate talent acquisition leaders. Unfortunately, despite dozens of much-hyped resume matching solutions and hundreds of millions of dollars invested in the technology, there is still no generally applicable solution for effectively matching candidates to jobs directly.
Successful Matching Requires Large Amounts of (Objective) Data
For any matching algorithm to be truly effective, the data being matched needs to be objective and there needs to be a lot of it. In the case of corporate recruiting, you need millions of objective resumes (ideally, with quantifiable assessment and/or skills test results) and millions of accurate and well-written job descriptions for the technology to “learn,” and therefore predict successful matches. Unfortunately, as anyone in the industry knows, resumes are inherently subjective and job descriptions are limited and often inaccurate. As a result, acquiring the volume of objective data required to make resume matching ready for prime time will take many years.
The Critical Role of External Recruiters, Particularly Specialists
Given these challenges, companies have long turned to external recruiters for help, especially for the most critical and difficult to fill positions.
But with over 20,000 staffing and recruiting companies in the U.S. alone, there’s an overwhelming choice of external resources for candidate sourcing, screening and matching. And while most will promise to find the best people for all of your roles, research proves otherwise. In fact, analysis from a massive database of search firm recruiter placements over 18 months shows that that 91 percent of successful placements come from specialty recruiters.
What is a Specialty Recruiter?
Specialty recruiters are external search firm recruiters who focus on particular job type, category, industry and/or geographic region. Through years of experience, these recruiters have become experts in their specialty, and they typically possess the following qualities:
- Strong understanding of hard and soft skills required (despite poorly written job descriptions).
- Trusted relationships with both passive and active candidates.
- Ability to screen applicants down to a small slate of the most qualified candidates.
- Proven track record of success (quality candidates delivered quickly).
While the advantages of specialty recruiters are clear, until recently there’s been no easy way for employers to locate and assess the right search firm recruiter for every job. Consequently, most employers resort to using search firm recruiters who they know, or a search firm recruiter recommended by colleagues. While obviously not optimal, this seems like an easier alternative to searching blindly online or sitting through sales pitches from untested vendors. As a result, most employer/search firm relationships are not ideally matched, which makes for dissatisfying and frustrating experiences. It’s no wonder people have sought technological solutions to match candidates to jobs and bypass search firm recruiters completely. However, since such technology doesn’t exist, many employers rely on a new and innovative approach called marketplace recruiting that has proven to be reliable and successful.
Emergence of the Recruitment Marketplace
Over the past few years, the emergence of new “recruitment marketplaces” have made it possible for employers to quickly find the right specialty search firm recruiters to provide great candidates and fill their open positions. Combining a sort of intelligent crowdsourcing with machine learning, these marketplaces offer a new, data-driven way to successfully match employers with the specialty search firm recruiters who are most qualified to help fill particular jobs. Similar to the marketplaces created by Airbnb and Uber/Lyft, which find the best room for your stay or the driver best able to take you from Point A to Point B, recruitment marketplaces find the best search firm recruiter to fill your job. Of course, as with all marketplaces, certain elements are required for success.
- Liquidity/Critical Mass: There must be enough search firm recruiters to work on every job type in every geography, and enough jobs for all recruiters to work on.
- Low Transaction Cost: The platform interface must be intuitive and easy to use. All transactions should be handled using one standard contract to eliminate the need to negotiate separate contracts for each relationship. Employers must have seamless access to post jobs via ATS for maximum efficiency and accuracy.
- Efficient Matching: Algorithms must be capable of accurately aligning each job with recruiter performance variables such as job type (e.g. sales or software development), geographic location, industry expertise (e.g. healthcare, banking), cultural style, previous company relationships and other factors.
- Effective Reputation System: User ratings must be assigned for both employers and search firms to build trust and ensure transparency. Comprehensive privacy, reliability and security, validated by external SOC 2 audits, is imperative.
- Data Collection & Analytics: All marketplace activity and transaction information (such as time to fill, cost per hire, average fee, total spend, etc.) must be tracked to measure results, determine key success indicators and drive improved recruiting results.
Benefits to Employers
Provided the recruitment marketplace includes these elements, results are inspiring to even the most pessimistic employers. Typical employer users receive more high-quality candidates, enabling them to fill positions 40 percent faster and achieve 32 percent higher fill rates. In fact, after one year of using a recruitment marketplace, employers typically find that nearly 50 percent of their successful placements come from marketplace recruiters—new search firm recruiters introduced via the marketplace.
In addition to quality and speed, recruitment marketplaces improve efficiency as a result of streamlined vendor management and reduced administrative requirements. They also typically reduce spending by over 30 percent, compared to traditional outsourced recruiting costs.
Benefits to Search Firm Recruiters
While sometimes skeptical at first, search firms using recruitment marketplaces are quick to realize the benefits. Most appealing is they gain immediate access as an approved vendor to premier employers they wouldn’t have previously been able to work with. The only requirement for getting matched to new marque employers is good performance, thereby dramatically reducing their new business development costs. And by staying focused on the jobs in their specialty and getting instant access to qualification and other important data, search firm recruiters are able to dramatically increase their efficiency, fill more positions and make more money.
The network effect
Just as seen with the evolution of consumer marketplaces, as more and more participants enter the recruitment marketplace, more data is captured and acted upon, which continually improves the experience. This “network effect,” helps make predictions for job-to-recruiter matches more and more accurate, thus attracting more employers and external recruiters to participate.
While no one disputes that having the right talent in the right role is a make-or-break success factor for any business, most people acknowledge that great people aren’t easy to find. Thankfully, advances in marketplace dynamics and machine learning make it possible to find and engage specialty search firms with proven success in sourcing and recruiting hard-to-land candidates. And with the right external recruiters in place, internal TA professionals can spend less time on low-value administrative tasks and more time focusing on high-value activities such as interviewing candidates and ensuring a great hire for each position.
Ken Lazarus is chief executive of Scout Exchange, a Boston-based provider of technology that integrates with applicant tracking systems to simplify and streamline engagement with search firms.