As a leader, sometimes you have to adapt to changing circumstances and disrupt the status quo. This is one of those times. Hiring practices that once worked can become stale, and you need to try a new approach. Consider the following and determine if your hiring practices need a facelift:
Indications Your Approach to Hiring is Out of Date
Job postings and recruiters (either in-house or agency) are two of the primary means for finding job candidates. However, you may have realized that both of these methods have become less effective in recent years. If these are the pillars of your hiring efforts, you have probably already felt the impact. Fewer qualified candidates are applying to your job postings, and recruiters aren’t as effective as they were a few years ago.
Talent Acquisition is Different in a Tight Economy
One of the main reasons why recruiting is harder than it used to be is that we are living in a “tight” economy. Specifically, the unemployment rate has been under 4% for almost three years, the lowest it has been in 50 years, and pretty much as low as it can get outside of a major war (the unemployment rate went as low as 1.2% in 1944!). When the unemployment rate is this low, pretty much every desirable candidate already has a job (if they want one).
Simply put, when unemployment is low, not as many people are looking for jobs. The best candidates are already happily employed which means they are not looking at job boards and are not visible to recruiters. Good candidates are certainly still out there but they are much harder to acquire, especially at scale.
Employee Referrals is the Key to Hiring in a Tight Economy
Luckily, there is another method of recruiting, which is often overlooked but tends to be more effective in a tight economy: employee referrals. Even when unemployment is low, people still have friends. And some of those friends work at your company. So in a tight economy you need to refocus your hiring efforts on employee referrals. Employee referrals are warm introductions to your employee’s best former coworkers and they blow other candidates out of the water.
In addition to being effective in a tight economy, employee referrals have a number of other benefits:
- It only takes 10 referrals to fill a position compared with 80 candidates from a job board or 40 from an agency.
- Referrals through our system stay 70% longer, so you’re not rehiring for the same positions over and over.
- Referred candidates are less likely to drop out because they have the support of a friend.
- Referring employees will stay longer after they've had a friend get hired.
In addition to the tight economy, the explosive growth of social networking technology (think facebook and LinkedIn) means people have bigger networks than ever, and more connections with potential candidates. Therefore, in the current environment, it is more important than ever to make employee referrals a top priority. Sometimes all a candidate needs is a familiar voice to win them over. At the best firms, employee referrals account for around 50% of hiring. Where is your company at?