Sources Of Hire 2008

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CareerXroads The Staffing Strategy Connectionwww.careerxroads.com

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Methodology

Late in December 2007, emails were sent to individuals known to CareerXroads principals,Gerry Crispin and Mark Mehler, at more than 200 different companies. All recipients hadcorporate staffing responsibilities or direct access to the companys staffing leader. Reminderswere sent after one week intervals during January 2008. Additional efforts to reach a broaderaudience were made but the majority of respondents were similar to previous years. The Surveywas closed January 30, 2008.

Results from 49 large corporations having hard data are included here. It is worth noting that asignificant portion of the respondents expressed concern about the quality of the data in theirsystems.

Respondent Profile

Mostly Exempt: Approximately 60% of all the external hires reported in the study were for

exempt-level employees.

We did not breakout SOH differences between exempt or non-exempt employees butstrongly encourage this line of analysis internally. As shown in the bottom two distributionpoints of Table 1, the SOH data for nearly one of every three respondents was 90-100%exempt employees

Table 1: Distribution of SOH - Exempt vs. Non-exempt

All Full Time:We did not collect or include SOH data for contract, part-time or contingent hires.Few firms track SOH data for this category of employee (and many Staffing functions do nothave responsibility for their hire). Three of four respondents, as seen in Table 2, employ 10% ormore contract, contingent or P/T employees in their workforce.


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Given the continuing growth, staffing leaders would be well advised to understand thedemographics of this group especially since Temp-to-perm as a SOH for F/T hires is onthe rise.

Table 2: Distribution of Contract, Contingent or P/T


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The reason why corporate staffing functions are not paying much attention to SOH inthis area is shown in Table 3. A typical comment to this question was: We havededicated sourcers targeting specific areas where the vendor struggles. Otherwise, westay out of this area as much as possible.

Table 3: Staffing Involvement with Hiring Non-F/T Workers

Some Gaps in Responsibilities:The typical company staffing leader is not always responsible

for allthe F/T hiring that goes on around them.Table 4: Respondent Responsibilities for F/T

We asked respondents to select which ofseveral choices best described their situation.A third of the respondents have gaps in theirhiring responsibilities.


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Limited Outsourcing:We wanted to get at whether the gaps might be due to outsourcing.Draw your own conclusions, but we believe large firms are less likely than ever to outsource allstaffing to another firm.

Table 5: Respondent Involvement in RPO


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Results: 2007 Sources of Hire

Internal Movement

The # 1 Source of Hire is still the one right under our nose. Company employees are the mostlikely source for filling open positions. Of the 303,000 positions that were filled and could be

identified as either Internal or External fills, three out of every 10 positions were filled as a resultof internal mobility (see Table 6).

The long term trend for competitive companies is to calibrate their succession, bidding andinternal development programs with their business plans.

Table 6: Internal vs. External Positions Filled 2007-2003

Table 7: Distribution ofInternal Movement

Internal Movement is Proof of Development

Many competitive corporations aspire to fill 40-50% oftheir core openings through internal movement in orderto ensure strong retention levels for their highestperformers. As shown in Table 7, 15 respondents filled40% or more of their openings with their currentemployees.

While high levels of internal movement can (likereferrals) pose challenges for firms with insufficientdiversity or those suffering from a lack of innovation,generally the higher the number of positions filledinternally the better.

We regularly review 1,000 or more organization staffingpages each year and we are amazed that we have failedto uncover a single firm that transparently shares theirinternal movement figures on their website to bolstertheir claims of employee development.


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External Sources of Hire

While we continue to refine what we ask employers about their sources of hire, it is clear thatReferrals (28.15%) play the largest role followed by Online Job Boards (25.68%), Walk-ins(.81%) and Open Houses (.66%) bring up the rear. (See Figure 1).

Recent Trends (Table 8) show some growth in areas like Direct Sourcing and long term declines[perhaps connected] in Print.

What is not evident at this level of analysis is that for a specific specialty, level orgeography, a SOH that appears very limited may, in fact, be dominant: Agencies for the C-level; Walk-ins and Print for hourly workers being hired in a rural plant and so on. As wellsee later, the category Other is difficult to reduce much further and Job Boards may not beall they seem to be.

Figure 1: External Sources of Hire 2007


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Table 8: Sources of Hire 2007-2005 (Recent Trends)

Additional Observations about Each Source of Hire

Referrals(28.2%) Table 9: Distribution of Referral Hires

Despite the reliance on referralsas a basic source of qualityhires, they are too often taken forgranted.

In study after study, 98% of firmsboth large and small usereferrals, but the range, even inour narrow selection of highlycompetitive firms, is very wide(See Table 9).


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Our survey respondents pointed out that 80-90% of their referral hires in 2007 came fromemployees and 10-20% were referrals from other sources e.g. vendors, suppliers, alumni,friends, etc. (see Table 10). We know of one large firm (not in our study) who hires 25% of alltheir management from alumni referrals.

Table 11: Contribution of Non-Employee Referrals

The most compelling data, however, is when companies supply the number of total referrals ittook to make all those referral hires. The efficiency or yield of the referral process is clearlysecond to none (See Figure 2).

Figure 2: Yield How Many Referrals to Make One Hire?

Good or bad, we advise jobseekers to neverapply to a company without firstnetworking to an employee in that firm for a referral. The difference in probability ofgetting up to bat is too large to ignore.


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The growth of referral technologies, the explosion of social networks and applications toenhance communication and tracking of referrals is continuing unabated. Lagging,however, is the ability to measure the quality of the referral relationship.

When employees refer someone they are not (necessarily) recommending them, yet mostreferral programs fail to distinguish between the two. Learning whether the referral

relationship is social, casual or something else that might include a previously shared workconnection may become important as this category growsand it will grow. In the futureemphasis must be placed on differentiating the referrals that lead to better performance,faster on-boarding and increased retention. A separate CareerXroads Colloquium membersurvey of referral practices during 2006 and again in 2007 indicated that the yield shownabove is extraordinary and scalable for most positions.

Job Boards(25.7%)A few survey participants have eliminated the company website from their list of sources for2007. They accept the notion that the company website is a destination not a source. Thatsthe good news. The challenge is that 54.4% of the hires in this category are attributed to thecompany site as shown in Figure 3.

Figure 3: Breakdown of Job Boards as SOHCustomers buying products online mightbe tempted to cross to the companywebsites jobs pages. Job seekers might

just know that they want to work for aspecific company and go directly to theirsite. These are behaviors that should bemeasured as a customer conversion oreven branding but not as a catch-allcategory labeled Company Website.

We applaud some companies efforts to

eliminate a job seekers ability to self-report that their originating source is theCompany Website. Realistically, wedont expect to live long enough to see itsdemise.

We are seeing some squeezing on niche sites but it would be wrong to conclude they arelosing ground. In fact, if companies are becoming more targeted in their approach, theyseem to be using the niche sites more effectively. Remember we are counting hires hereand it is to be expected that a specialty site like Medzilla or a specific location emphasis likeJobing in Phoenix, etc. would only represent a very small proportion of the total hires of thenational firms that are our respondent base. It is worth noting that Careerbuilder, with all

their hype, still hasnt made up ground in the hires reported versus Monster.

The numbers for Monster, CareerBuilder and Hotjobs in Figure 3 are slightly inflated as a resultof including only firms that reported they had contracts with Monster, CareerBuilder or HotJobsas shown in Table 12. Had we included firms that did not have contracts, their respective hireswould have been lower.


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On the other hand, most respondent firms contracts are for both posting and resumeaccess yet few tracked or attributed hires from the resume databases to Monster et al.Instead, they were often included in Direct Sourcing. Most of the attributed hires shown arefrom postings. (Isnt number crunching a wonderful art?)

Table 12: Contracts with Major Sites

We also asked this year about the demise of Americas Job Bank. The answers as shown inTable 13 are self evident. Most firms say they rely on support from Direct Employers.

Table 13: Response to AJB Disappearing in 2007


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What is very clear is that more and more firms are developing sourcing teams (see Table17). The use of search engine optimization and search engine advertising as tools toresearch and build prospect lists, to develop high-volume, extensive contact capabilitiesand more that has been primarily the strategy of agency professionals, is rapidly beingadopted by corporate staffing departments.

We also believe that the growth of thousands of closed social networks (closed except toprofessional society or college alumni memberships) will explode in the next 18 monthsand offer corporations direct access to millions of professionals with relative ease.

Table 17: Growth of a Sourcer Class

Rehires or Boomerangs(4.8%)Technology and changing attitudes about former employees have combined to create new waysto develop and maintain relationships with alumni. Website content specifically designed to keepin touch with former employees seems to be bearing fruit.

We believe smaller, lesser-known firms will probably not tap Alumni as readily as largerfirms but the emergence of social network applications targeting specific types of affinitygroups i.e. corporate alumni, college alumni, etc. are bound to add to referral numbers aswell. Some of the numbers reported by firms pioneering this area are staggering.

Staffing functions should brainstorm with their HR Colleagues the following question:What touchpoints could we install beginning with the day a valued employee resignsuntil the day he or she returns (say three years). Draw a timeline, identify a champion foreach. Determine the cost for investment and assume in three years that re-hires of formeremployees at least doubles. Assess the added value of their outside experience and theability to get up to speed and perform faster in your ROI.

Media/Print(4.6%)Hires attributed to print sources are down significantly in 2007 from 2006 (6.9%), returning to2005 numbers. Despite the fact that the heydays of print classifieds are gone forever, webelieve (and wrote in our New Year predictions) that newspapers represent great

investmentsfor innovative online businesses.

Giving the devil its due, there is plenty of reason to conclude that the increasingconvergence of job boards aligned visibly with print partners may cloud this categorystrue influence. But, we still think the floor for print (under the present owners) is lower maybe 3-4%


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College(3.8%)The bulk of college hires are from on-campus programs targeting specific colleges. We askedwhat proportion of college hires are not connected to their campus programs and the results areshown in Table 18. The fact that nearly a third of the companies responding to the survey(31.8%) get at least 10% of their hires from outside their college programs is significant. Webelieve over time a virtual set of initiatives will expand college hiring for competitive firms

beyond their current targeted college strategy and we wanted to try and get a baseline.

Table 18: Proportion of College Hires OutsideCampus Programs

It may not look like college is a strong component of our respondent group but, in the US,

college hires might very well be the equivalent of the miners canary in the cage. Thehealth of our entire employment structure might well depend on the viability of havingsufficient college graduates engineering and sciences, accounting and MBAs. Withoutthem multi-nationals are more likely to move even larger segments of their workforceoverseas. The competition for top talent has never been more fierce and 2008 may be awatershed. Adding pressure is the fact that critical college degree programs have highpercentages of foreign born nationals and, with the US immigration policies in disarray,firms are becoming increasingly frustrated. (See www.NACEweb.org for much more oncollege hiring.)

3rdParty/ Agency(3.3%)3rd party placement/agency hires have declined. We believe the traditional agency model (a

given % of a F/T hires compensation) is essentially a pure commodity and being squeezed fromseveral directions. Non-traditional agencies are experimenting with various RPO models,offering extensive candidate care services as added value, or joining large affinity networks ofagencies to leverage capabilities and manage splits.

Many companies are finding they dont need everything a traditional agency offers and can findindividuals to do specialized research such as name generation or they can hire contractors for


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short term-assignments via networking. Such new models supporting corporate staffingfunctions are exploding and some of them are not tracked as SOH by internal staffingorganizations or are simply folded into Direct Sourcing. Small firms with 50-500 employees willcontinue to be the sweet-spot for Agencies. C-level Search will not change but their numbersare finite and the pressure of search firms to find line extensions for mid-market executives willbe the battleground as corporations gear up their own sourcing efforts.

Temp-to-hire(3.0%)Temp-to-hire and Contract-to-Hire are increasingly important sources as contingent workersmake up a larger and larger segment of the workforce. Firewalls between employers and thesuppliers of contingent workers often have barriers that prevent this category from becomingmuch larger. It is a missed opportunity.

Career Fairs(2.3%)According to some sources Career Fairs are staging a comeback. We dont buy it. Manycompanies no longer accept paper resumes at these events thus complicating the way they areseen by employers and attendees. New formats with extensive online components are beingoffered but may be limited to special situations.

Search Engine Advertising(1.2%)Small numbers with high potential. We continue to feel that the advantages of variousadvertising and optimization methods with search engines will drive targeted professionals todevelop relationships but measuring its impact as a source will be difficult at best.

Walk-ins(.8%)Walk-ins may be under-represented in this survey because retail and plant employees are oftentracked and recorded locally. Walk-ins are also among many traditional sources replaced bykiosks in malls and the web for consistency.

Open Houses(.7%)

We had thought that asking about open houses might fill some gaps. We thought wrong. Openhouses, unlike Career Fairs are usually a means to attract large numbers of prospects tocompany facilities. A useful tool but clearly applied in small doses.


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Recommendations:Changing the Model, One Hire at a Time

Our recommendations are essentially unchanged from last year. For the first time in sevenyears, the responses to our final survey question: How many hires will you make next year(2008) as compared to last year (2007)? changed substantially. More firms (34%) predictedthey would have fewer hires in 2008 than those that predicted a greater number of hires (22%).44% said they would hire the same number. The average difference was about 10% fewer hiresexpected. Perhaps that will free up some time to improve SOH collection methods. We can onlyhope.

Report and analyze SOHat least yearly

Think Yield. Test for performance differences. Invest in it.

What are the cuts of your data that show a difference in Source of Hire: C-Level, Exempt vs.Non-exempt, Clinical Research vs. Marketing, etc.? Is there a SOH that is more efficient, lesscostly? Are there differences in retention, performance, training time, or other quality variables?

Just about everyone has an employee referral program. Too often it is evaluated on the basis ofhow much money and time it takes to administer, rather than the value it delivers. Just imagineif every 3rd referral in a critical, high-volume job family was a quality hire who, on average, cameup-to-speed in their job 10 days faster and stayed one year longer. Wouldnt you want to scalethis source of hire from 30% to 40%?

Define SOH Carefully

Referrals come in all flavors. So do college hires. They all do.

Are employee referrals the only kind or can you build a channel of referrals from customer,vendors, suppliers, former employees and more? Do you only count college hires as those from

your target colleges, intern programs, MBAs etc.? We see many disconnects in definitions thattell only a part of the picture.

Confirm Self-Report

Prove it to yourself. Table 19: How do you collect SOH data?

As shown in Table 19, 88% of our surveyrespondents use self-report, pull-down menus ontheir online application form. Several publishedexperiments with self-report approaches havedemonstrated high error rates. We believe self

reporting can be much more accurate with carefuldesign. Multiple sources can and should be used toconfirm data and increase confidence that your datais accurate. For example, automated tracking of theIP addresses where a candidate originated from canbe used to confirm self-report.


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We also believe that survey instruments, properly designed, can be easily deployed with newhires to map the way a company finds, targets, contacts and engages their candidates. And withhires, as opposed to candidates and applicants, it is essential that information on all the factorsthat influenced their decision to apply be extracted during onboarding.

Track and Collect SOH for Every Hire

Just dont know doesnt cut it.

Approximately one of every 10 firms can account for every hireat least the ones for which theyare responsible. Unfortunately, that is only half the problem since 50% of the firms do not haveresponsibility for some of the hires in their company (class, location, level, etc.). The staffingfunction must be disciplined enough to collect allthe data to ensure the picture they are creatingabout talent acquisition is complete. Maybe six sigma is unreachable but one sigma isunacceptableand were nowhere near that level. The supply chain isnt a just a visual conceptits a process that requires disciplined measurement

Diversity

There is no silver bullet.

We think it is particularly useful to examine diversity hiring practices and sources (see Table20). While specific hire data was not available we asked staffing leaders to speculate. It wouldbe good to compare their actual results with their perceptions. During 2006 and 2007 weconducted several diversity mini-surveys for CareerXroads Colloquium members to betterunderstand specific diversity practices. Table 20 offers some insights. For example, few firmshave dedicated diversity recruiters. Those that do perceive that they are getting good value.

Table 20: Diversity Sources of Hire?


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About CareerXroads: The Staffing Strategy Connection

Gerry Crispin and Mark Mehler are committed to writing, researching and sharing theiradventures, opinions and data about evolving staffing models with members of the HRprofession, CareerXroads Colloquium members, clients and friends. Passionate about how

firms design and build staffing processes, the technology to enhance them and the systems tomanage them, Gerry and Mark strive to observe and influence new and evolving models thataspire to world-class, measurable standards and satisfy every stakeholder.

We want to know more about the playing fields where candidates and employers meet andthey are more than a little curious about how they treat one another: specifically how JobSeekers game their next career move while Employers tout their latest opportunities.

We are always on the lookout for stories about staffing challenges, benchmarks, and results aswell as the people who live the stories they tell. You can reach us at 732-821-6652 [email protected]

For more on CareerXroads and CareerXroads Colloquium go to http://www.careerxroads.comor http://www.careerxroads.com/colloquium/colloquium.asp


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Forward: Authors Notes

Study Goals

This public report, CareerXroads (CXR) 7th Source of Hire (SOH) study in as many years, is adetailed description of how one group of corporations fill their [US] open positions or, moreaccurately, what some corporate staffing functions are able to measure and report as thesources of their hires for the openings they fill.

We are indebted to each one of our survey respondents for their willingness to open theirbooks, voice their concerns and trust that the information they share will be helpful to theircolleagues. Thank you.

Study Restrictions

TimingWe limit our collection period to the month of January 2008. We want to better understand thedifficulty firms face in gathering data from their systems. At the same time we believe thatorganizations that can quickly and accurately collect, organize and analyze their SOH data gaina competitive edge in improving their future recruiting effectiveness.

We invited our contacts in more than 200 large [5000+], high-profile, name-brand firms toparticipate in our study by supplying us with their source of hire data. 59 firms responded byJanuary 30, 2008. 10 submissions were eliminated because of our company size restrictions orbecause their data was incomplete.

Transparent and Anonymous

As with all our work, we seek to stimulate discussion about staffing issues rather thanencourage blind acceptance of data at face value ours included. We are often publicly criticalof surveys conducted by others and would be remiss if we were any less critical of our ownwork. This survey is less about benchmarks and more about SOH practices. We used an onlinesurvey instrument that required individuals supplying the data to provide contact information andsubsequently challenged some of our respondents to explain their data and, indeed, had manyfollow up conversations during the short collection and analysis period.

On the other hand, complete transparency has potential consequences and, while studyauthors, Gerry Crispin and Mark Mehler, are aware of the companies and the individuals in eachcompany who responded, the names of the companies who participated in this study will not bedisclosed. We can tell you they represent a cross-section of highly recognizable retail,

technology, transportation, manufacturing, pharmaceutical and finance firms. Many respondentscould accurately be described as industry leaders.


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YourTalent Supply Chain is only as good as your weakest link

Executive Summary

The CareerXroads Annual Source of Hire Survey is a snapshot of how large, highly-competitive,high-profile firms maintain and track their SOH data.

Two Major Supply-Chain Challenges are Embedded in the Staffing Process

Data integrityObtaining reliable and valid information about the source of any hire has been a continuingconcern of staffing leaders for many years. Very few companies are confident that their ownSOH information is either accurate or complete. Occasionally they blame their ApplicantTracking Systems (ATS) although these and other technologies are, at most, contributingfactors. Poor design and configuration of application self-report fields, acceptance of missingdata, lack of integration with multiple methods of confirmation, etc. are historically standardproblems.

The real culprit however is that most firms do not pay serious attention to SOH data as apotential impact on the corporate bottom line. This, coupled with a lack of discipline by recruitersand their leaders in providing training and enforcement of good data collection protocols, all but

guarantees questionable results.

Our survey is not intended to be representative about how allcompanies find allemployees or,even whether any one method is better, more efficient or valuable simply because it is morefrequently used. Were especially critical of studies implying that one source is inherently betterthan another based on the collection of flawed data. The truth is that (1) claims of more efficient,more productive methods are relevant only when applied to a specific combination of job family,location, level and specialty levels; (2) all methods of collecting SOH information force a singleSOH choicedespite the fact that research shows that multiple sources influence a hire to movethrough a recruiting pipeline and (3) at least 6% of the SOH data are missing in almost everyfirm no company we know of currently requires SOH choices in their application process andvia other confirming collection methods to ensure every hire has SOH data associated with it

before a requisition is closed.

AccessRecruiters access to SOH data for recent/similar hires [sorted by job title, job family] in real-timeis not improving. A business opportunity to push data down to the level it can be used mosteffectively goes unfilled. We are not talking about capability here. We are talking about actuallydoing it.


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Sources Of Hire 2008

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