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Keeping Tabs on Productivity of Recruiting Tools

March 22, 2005
Related Topics: The HR Profession, Candidate Sourcing, Featured Article, Staffing Management
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Today, only a minority of companies nationwide are able to make investment decisions about staffing and recruitment based on hard data, rather than anecdotal evidence.

    Those that keep track of their hires and measure the success of recruitment channels have slashed budgets and saved valuable time. Here is a look at some of these forward thinkers, starting with Valero Energy Corp.

    Two years ago, the San Antonio-based company hired Dan Hilbert as employment manager to transform a staffing group for a company with a couple of hundred people into a human resources department for a Fortune 25 company.

    Valero had acquired Ultramar Diamond Shamrock Corp., making it one of the top three U.S. refiners of petroleum products, a $55 billion company with 15 refineries and 4,700 stores. Hilbert believes strongly that what you can’t measure, you can’t improve.

    A year ago, the company began using HR Smart’s Smart Reporter product, which allows it to keep track of the effectiveness of recruitment advertising and gives Hilbert a weekly snapshot of which sources produce the most hires. His metrics show how well each advertising channel is delivering.

    Valero then created a tool that integrates employment data pulled from the company’s HR information system, budgetary data and performance data from employee reviews and uses it to predict which channels will be most effective at filling a position and producing a quality employee. "It has been a monstrous undertaking," Hilbert says.

    Hilbert has saved the company money. February’s data, for example, showed that of the 30 recruitment channels Valero uses, it got better candidates by advertising on niche industry sites than on major job boards or through other channels. Hilbert said the average cost-to-hire for candidates from niche boards is about $1,100; from major job boards it’s about $1,600; and outside recruiters cost the company nearly $22,000 per hire. "We’ve reduced our cost-to-hire 60 percent over the last two years and rely on outside recruiters now for less than 10 percent of our hires," he says.

    With results like that, tracking and measuring exactly where new hires come from would seem to be a no-brainer. It’s not.Nick Burkholder, founder of Staffing.org, an organization that helps members use human capital measurements to make hiring decisions, says one reason more companies aren’t measuring recruiting performance is that workforce management executives are obsessed with strategies rather than numbers. "Real leaders are obsessed with objectives, not strategy. You can’t measure strategy," Burkholder says. "The No. 1 reason HR execs lose their jobs is because they can’t document what they do for the organization."

    Mark Mehler and Gerry Crispin, co-founders of CareerXroads, a recruiting consulting firm in Kendall Park, New Jersey, released the results of their annual Sources of Hire survey in March. Of the 150-plus Fortune 500 companies contacted, only 40 were able to participate, a sign that many don’t track source of hire. "If you are hiring thousands and tens of thousands of people, that’s a lot of data to manage," Mehler says. "A recruiter is trying to source candidates, set up interviews. They have 50 jobs on their plates, and then you’re asking them to do more administrative work? It’s not high on their list of priorities."

Convincing engineers
    Drew Farren, staffing manager for North America, the Middle East, Europe and Africa at Corning Inc. in Corning, New York, says the company has been tracking hiring data since 1999. Corning is ahead of the curve, Farren says, because numbers are at the heart of the engineering company’s culture. "Everyone we have to convince when we want to make changes are engineers, and we need numbers to convince them," he says.

    Although Corning outsources all its recruiting to outside vendors, Farren says the company decides how recruiters spend their money and gives them specific objectives in terms of hires needed, when they’re needed and what qualifications are required.

    Farren gets monthly reports from Corning’s recruiting partner (an outside vendor that Farren declined to disclose) showing the number of applicants versus hires from each source, including all major and niche job boards. That data allows Farren to dictate to recruiters what percentage of their budget is spent on each sourcing channel. Thirty percent of Corning’s open positions are filled internally, and 40 percent come from employee referrals.

    "We would probably spend 50 percent more on recruiting if we didn’t track this information and look at it," Farren says. "We would be throwing money away on the wrong sources. Especially with online job boards, they can’t tell you the true ROI numbers. They tell you they have X amount of resumes for a position you’ve posted, but do those resumes match your industry?"

    Based on its hiring data, Corning has decreased its visibility at career fairs and spends more now on networking for employee referrals and lists of people that either could be candidates or who may know others that would make suitable candidates for jobs at Corning. Two years ago, it spent no money on such lists.

Getting better rates
    Plantronics, a leading manufacturer of lightweight communication headsets, uses metrics to back up every decision made, says Layne Buckley. The human resources manager at the Santa Cruz, California, company uses tools from Hire.com to track applicants and hires. Buckley looks at the results at least monthly, usually more often. The cost to track hires is minimal, he says, because the technology to do it exists in the automated services the company gets from Hire.com anyway.

    Buckley also uses the data to gauge the effectiveness of a direct-mail campaign he conducts every month, where a targeted marketing mailer is e-mailed to a specific group of potential candidates. Buckley determines who gets the mailer--sent to 10,000-35,000 people a month—by mining his database for those who have not been hired but who have a particular skill set. "We keep track of how many open the e-mail, click through to apply for positions and how many get hired," he says.

    Plantronics uses tracking data from job boards to improve the terms of its contracts. "One major job board we were using went from constituting about 40 percent of our applicant traffic to less than 5 percent, and we were able to show (the job board) we weren’t as heavily dependant on them as we once were," Buckley says. "We wound up securing greater services from them without increasing our investment."

Most productive, most effective
    Federated Department Stores--owner of Macy’s, Bloomingdale’s and, after a February merger with May Department Stores Co., 15 other brands--has been tracking its hires since 2001 using WetFeet Recruiter, which supports all of the company’s online recruiting efforts.

    Federated’s No 1. priority is its own recruitment Web sites, such as Bloomingdalesjobs.com and Macysjobs.com, because of the tremendous overlap between job seeker and consumer. Susan Burns, director of employment initiatives at Federated, says her data shows that both employee referrals and company sites are key sources of good hires. "Not only are our own corporate recruiting sites the most productive--in terms of hires and conversion rate from applicant to hire--but they are the most cost-effective," she says.

    Burns looks at how successful a source is in driving traffic that results in a completed application and a hire. Last year, Federated noticed that a major job board had changed its list of affiliated job sites--the smaller sites to which larger ones like Monster sometimes funnel jobs. "For us it was a pretty significant thing, very positive. And based on our hiring data, we made a decision to aggressively reallocate funds," Burns says. "A year later we looked at the numbers and saw it was the right move."

    Sarah George, senior vice president and director of recruiting business, strategy and operations atWachovia, used hiring information to change the company’s Internet recruiting strategy. Three years ago, Wachovia decided to look more closely at its data and found that although Internet job boards were the cheapest way to get hires, the volume of applicants was overwhelming. "It was costing us money to deal with it," she says. "You get a lot of spam. Abundance is what the Internet is good at, but in this labor market we don’t need abundance, we need quality," George says.

    Peter Weddle, who publishes an annual guide to employment Web sites, says volume is a problem for many companies. He estimates that there are about 40,000 commercial job sites on the Internet at any one time. "That’s a good reason to use niche sites--at least everyone is an engineer or a software designer. We are in the third generation of job postings online, and we need to be more savvy buyers than we were as early adopters," he says.

    Wachovia’s George used sources-of-hire tracking data to see where the company’s investment in Internet advertising was paying off. "We began looking at sites in terms of quality of hire, rather than number of hires," she says. Her analysis led to more limited posting of jobs through job boards and for shorter periods of time.

    Technology from Kenexa, a human capital management company in Wayne, Pennsylvania, allows George to track her hires at minimal cost, following them from application through employment and also giving information about where potential hires drop out of the process. Her goal is to get more qualified candidates faster. Today Wachovia’s recruiters deal with hundreds of candidates as they try to fill open positions; George says that a year from now she hopes each recruiter will have 10 well-qualified people in the palm of their hand.

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