Violate the 80/20 Talent Rule at Your Peril
The 80/20 Talent Rule: Invest 80% of your hiring and recruiting efforts on the most important 20% of the talent market.
Twenty years ago I had this cartoon drawn to reflect the then state-of-affairs of the hiring process in corporate America. I’m in the process of a major rewrite of my two books, Hire With Your Head and The Essential Guide for Hiring & Getting Hired, so I thought this would be a good place to start.
The initial purpose of the revised edition was to show how much progress has been made in the past two decades when it comes to hiring great people for great jobs. Now I’m not so sure. (Upcoming webcast.)
At the time, the merging of the Internet, job boards, and the ATS as well as the creation of the in-house corporate recruiting department offered every company the promise of hiring great people seamlessly, painlessly, quickly and at low cost. It didn’t happen.
As you study the image and compare it with the progress that’s been made, how much of this vision do you think has been realized?
When LinkedIn came into existence about 10 years ago, there was a great pick-up in quality since a new source of talent became instantly visible. However, this impact was quickly diluted once everyone got ahold of this invaluable asset. To offset the predictable drop in response rates, ATS vendors reacted by adding AI and CRM (candidate relationship management) tools to increase efficiency. To me, this masks the true problem and better solution. Being more efficient doing the wrong things mistakes activity for progress.
Being more efficient doing the wrong things mistakes activity for progress.
For some instant proof consider that total recruiting costs have increased, quality of hire has not improved, turnover has increased, speed to hire has not improved and according to Gallup, employee engagement has not moved much from the 20 year trend of only 33%. I contend it’s related to fundamental problems that have existed for as long as I can remember. Here’s my analysis of why not much has changed:
Companies are violating the 80/20 rule. Roughly 80% of the talent market is passive and the other 20% active. Unfortunately too many recruiters and ATS vendors spend 80% of their hiring efforts and budgets on the 20%. The reason is obvious: It seems easier and a lot of companies make a lot of money selling job postings to companies like yours.
The underlying strategy is flawed. Companies continue to rely on a “surplus of candidates” assumption when designing their hiring processes. This involves allowing anyone and everyone to apply and weeding out the weakest. The problem is that you can’t use a surplus assumption when there isn’t a surplus. In a talent scarcity situation you to need to identify, attract and nurture the best. Implementing a “Small Batch, High Touch” process solves the problem while improving quality, speed and cost collectively.
Hiring managers aren’t held accountable for hiring top people. If they were, those who get promoted would be those who do the best job of hiring people. If managers aren’t able to attract, hire and develop top talent they shouldn’t be hiring managers or they should cede the hiring decision to others.
HR leaders are too vendor driven. You can’t solve a complex multi-dimensional problem like hiring by bolting together one-dimensional linear solutions. Few HR leaders are selected for their systems implementation and data analytics expertise. As a result they rely too much on their vendors for advice, counsel and insight. One might argue this point, but since we haven’t solved the problem yet, it’s pretty obvious this is a contributing factor.
Job descriptions put a lid on quality of hire. The best and most diverse people frequently have a different mix of skills and experiences than listed on the traditional skills- and experience-laden job descriptions. Defining the work that needs to be done as a series of performance objectives solves this problem. It doesn’t take much insight to conclude that if the person can do the work he/she has all of the skills and experiences necessary.
Bias is insidious. Even if these problems are solved, bias will still be the number one cause of hiring mistakes. The impact of first impressions, personality style, communication skills and the halo effect must be systematized out of the hiring process in order to reach an objective and correct decision. Here are my 10 great ideas for reducing bias. The best is a well-organized panel interview.
Being more efficient targeting the wrong talent market will not improve quality of hire. I contend that violating the 80/20 rule is the underlying reason why quality of hire has not improved in the past 20 years. I also predict it will not improve in the next 20 unless the cycle is broken.
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Lou Adler (@LouA) is the CEO of The Adler Group, a consulting and training firm helping companies implement Performance-based Hiring. He's also a regular columnist for Inc. Magazine, SHRM and BusinessInsider. His new Performance-based Hiring self-paced learning course - The Hiring Machine - is now available 24/7. His latest book, The Essential Guide for Hiring & Getting Hired (Workbench, 2013) is now being published in Korea and Japan. It provides hands-on advice for job-seekers, hiring managers and recruiters on how to find the best job and hire the best people.
Travel Nursing at Dedicated Nursing Associates, Inc.
5yMost employers still rely on age-old hiring practices. In my line of work, this is glaringly obvious. But their approach...you know the saying, "If you keep doing what you're doing, you'll keep getting what you've got." I know that staffing is poor and they need people badly, but their approach is ineffective. They don't need more workers; they just need good workers. A manager can hire 100 people, but it means nothing if they aren't able to perform the job. There is a difference between a surplus of workers and a surplus of talent. Out of a hundred applicants, maybe 5 or 10 are actually talented and can perform the job. Those are the ones to hire, but they have to be attracted to apply first. Here's my complaint about my field: They put all this extra effort into fancy websites that often don't work or are cumbersome. They post boring ads on job boards. They go all out with planning hiring events. They let anybody and everybody apply and then start the elimination process, if you want to call it that. They are so hard-pressed for staff, they often hire people on the spot as long as they have the necessary training and professional licenses. They want to put a warm body on the floor to work. They don't take the time to determine if an applicant can actually perform the job. With this process, they won't attract high quality hires. No talented person wants to work at a place where the only requirement to get hired is to possess a professional license and maintain a body temperature somewhere roughly in the 90s. There needs to be some thought and effort, real effort, put into the hiring process. Talented people want to feel like they are making a career move, not just applying for a job.
Senior Procurement Analyst at Wellstar Health System.
6yGreat insight, but this is the case where you are not the only company interested in these candidates. In the end there is high possibility the candidate will end up with your competitor after proactively targeting for months or even years. What about new talents coming fresh out of universities and colleges?
Area Vice President Global Accounts -- Global High Tech Division
6yIn all fairness you have to look at this from the perspective of both employer AND employee. Adam Smith observed that the “division of labor” in a given area or field typically leads to a greater degree of specialization and eventually productivity. Lou points out: “using my approach you only proactively target people you're going to hire”. He’s arguably looking for a “body for body replacement”. I suppose that's understandable. The above said, “division of labor” does not serve the best interests of the employee. When the division of labor is taken to its logical limits and tasks are distilled to relatively few operations, no matter how complex these may be, prolonged work in such areas stymies one’s development and ultimately undermines one’s economic value. Adam Smith (Father of Capitalism) notes: , it will make people “as stupid and ignorant as it is possible for a human creature to become.” (WN, V) Are you looking at this from the employer or employee perspective? I chose to look at it from the employee perspective.
Ecommerce | Inspection | Management | Quality | Remote / Virtual | Volunteer | Veteran
6y- From a applicants perspective I think this speaks true as well. "Job descriptions put a lid on quality of hire. The best and most diverse people frequently have a different mix of skills and experiences than listed on the traditional skills- and experience-laden job descriptions." How much potential talent is overlooked or bypassed simply because of the "Keyword" algorithms. I wonder?
Realtor | Real Estate Consultant & Investor | Keller Williams | Open Networker
6yThis is absolutely true: "The best and most diverse people frequently have a different mix of skills and experiences than listed on the traditional skills- and experience-laden job descriptions." The candidate, therefore, needs to articulate VALUE rather than just the skills. Value on a resume would include the problem, steps taken for resolution and MEASURABLE results. Here's how to create a resume that hiring managers will notice: https://goo.gl/tWpNud