Steve Jobs once said, “The secret of my success is that we have gone to exceptional lengths to hire the best people in the world.”
And while most CEOs make a big show of expressing appreciation for their employees, Steve Jobs really meant it.
Beginning in 2005, he asked CEOs at Google, Intel, and Adobe to stop poaching his talent. They eventually came to a gentlemen’s agreement not to hire each other’s employees. Unfortunately, this agreement violated antitrust laws and ended in a $415M settlement.
There are a couple of lessons I take away from this story. The first is that it’s not worth risking my career over an illegal hiring practice.
The second is how highly the Nation’s top CEOs valued their top performers! If securing top talent is important enough to make Steve Jobs and Eric Schmidt risk a $400M lawsuit, it should be important enough for me to make it a priority.
Finding the best talent
So how do we hire the best people in the world’? After all, as talent sourcers we don’t conduct interviews and we don’t get to pick who's hired.
So what can we do? We can source better candidates. You’re probably thinking “Of course we try to source better candidates. Everyone does.” But do they really? Peter Cappelli, Professor of Management at the Wharton School in Philadelphia found that only a third of U.S. companies check to see whether their recruiting has a track record of producing good employees.
Only a third.
Ranking talent sources based on employee performance
So how do we remedy this? You can start by ranking your talent sources by the longevity and performance of the employees they produce. How do employees who were found on a job board compare to those who were referred by an agency?
After that, you should adjust your sourcing strategy by investing more heavily in the sources that produce better candidates.
It’s tempting to look at cost-per-acquisition as a way to determine which candidate sources to rely most heavily on.
The problem is that the cost of acquiring an employee is just the tip of the iceberg. The costs associated with interviewing, onboarding, training, and lost productivity vastly outweigh the initial investment of generating a candidate.
Those employees who stay with you only accrue those costs once. But those who leave require you to go through the hiring process all over again, doubling your costs.
Employee Referrals stay 70% longer, cutting future hiring costs by 41%
Here at EmployeeReferals we’ve often heard that referrals produce great quality candidates. It’s a truism that most people in our industry just seem to agree with.
But we wanted to verify it so we conducted a study based on our largest clients (over 50 different brands with over 90,000 employees). We compared the retention referral hires against that of hires sourced by other methods. (None of our clients would supply us with the performance evaluations for their employees or we would have calculated that as well).
We found that referral hires stay 70% longer than hires sourced by other methods. Here’s a link to the report if you’d like to read it.
Because referral hires stay 70% longer their positions don’t need to be refilled as often, leading to a 41% reduction in all the costs associated with refilling a position.
If you’d like to reduce your recruiting costs and boost the quality of your candidates we suggest you take a good hard look at your candidate sources and consider investing more heavily in employee referrals.
We’d love to show you how our software can help you achieve your goals. If you’re interested you can book a time to talk with our team.