08 September 2009

'Source of Talent 09' - some thoughts

Last week the first Australian Source of Talent (SOT) report was released (see details in Ross Recommends below) and it contains a host of fascinating information. 

I haven't had an opportunity to fully digest its contents but I wanted to bring to your attention some initial highlights and make some comments in time for this week's InSight. I expect I will write further about the report in coming weeks. 

So here, for the time being, are six things for recruitment agencies to consider:
  1. Job boards are the most successful SOT, generating 29.6% of all hires
    This is a huge red flashing light for recruitment agencies that rely upon job boards as their major SOT. How likely is it that your clients will do their own recruitment when they can use job boards just as easily as recruitment agencies (unless you write far better job ads than your clients)?
     
  2. Social media ranks 17th (last) as a SOT, generating 0.33% of all hires
    A big opportunity here for recruitment agencies to work out how to utilise social media channels for recruitment, before your clients do. Don't wait a minute longer - you only have to look at what Deloitte are doing in this space to see how quickly clients can have an impact in this area.

  3. Referrals from employees make up 16.7% of SOT in the USA, compared to 7.6% in Australia
    Properly constructed and effectively run internal employee referral programs have been around longer in the USA, compared to Australia. Again, Deloitte have shown the way here in proving that the highest quality of hire comes from internal referrals, with recruitment agencies well down the list. Once other organisations cotton on to this (and the difference with the USA shows how much upside there is) and take action, recruitment agencies will be the big losers.
     
  4. In Australia, recruitment agencies are the source of 9.9% of hires (removing HR/Recruitment from the sample), compared to 1.7% in the USA
    The USA figure for ‘hiring through agencies' has dropped significantly every year (5.2% in 2005, 4.8% in 2006, 3.3% in 2007 and 2.7% in 2008) which has occurred in parallel to the greatest hiring bull market in history! Clearly strong recruitment agency profitability has distracted (blinded?) the sector from a huge drop in ‘hiring' market share in the USA. Is Australia likely to be any different? I very much doubt it.
     
  5. Micro firms (1-20 employees) only made 0.4% of their hires through recruitment firms
    So much time and energy is spent chasing the corporate end of town by recruiters that their toddler cousins are mostly overlooked. Micro businesses are the fastest growing sector of the economy. They don't have any internal recruitment capability and need an external advocate to sell their employer brand. They are unlikely to be inundated with approaches from rival recruiters and are genuinely in need of effective recruitment consulting advice. I hear opportunity knocking.

  6. Print media ranked as the 7th most effective SOT, at 4.7%
    Print advertising isn't dead yet. For roles in certain sectors, (predominantly Oil/Gas/Mining and Retail/Consumer Goods) print still appears to work. The important question is; does print represent value, given how vastly more expensive most print advertising is compared to online advertising?
The big unanswered question (for me at least) is ... how effective is each source of talent when you consider both money and time invested? 

It's a truism that if you throw enough mud, some of it will stick, so effectiveness is what I am most interested in. 

I will do some more digging through the SOT report as well as speak to the authors and report back what I discover. 

In the meantime, what are the important questions to ask yourself and your team about these findings of the Source of Talent 09?

4 comments:

  1. Hey Ross

    I really commend Michael Specht and Phillip Tusing for putting this together. Independent and accurate analysis of 'source of hires' is a much needed service for employers and recruiters in Australia. Its good to see the broad range of hiring techniques represented out there for the first time.

    Sadly, these stats are very far from accurate or useful.

    The report makes a fundamental error in that it confuses sources of hire (where a candidate first found the information about a job) with the process by which someone ends up in the job (eg seek advert-> recruitment agent-> internal hr -> direct hire into a different job with the same employer company with a facebook check en route).

    Comparing your source number one with your source number 4, they are not mutually exclusive. Almost certainly source number 4 used sources 1-9.

    Print media cannot possibly account for 4.7% of hires even on the most basic statistical analysis. The number of roles advertised in Australia is a subset of the roles that people end up in. Of the roles that do get advertised, only a minority are advertised in print. Of the adverts that are online, for two of the major job boards the majority of the ads are directly uploaded from newspapers with no method of applying online for jobseekers. The maths cannot possibly add up to 4.7% of hires unless there was a greater-than-100% success rate for print ads.

    The claim that "recruitment agencies are the source of 9.9% of hires (removing HR/Recruitment from the sample), compared to 1.7% in the USA" clashes somewhat with a lot of other data out there.

    For starters, what's a recruitment agency: does it include search firms, staffing firms, labour hire, US 'staffing' agencies, talent pool providers, all, some or none of the above, in both countries?

    How can you compare sources of hire in % for recruitment agencies (however defined) who all use different sources of hire?

    You get the idea.

    Big thumbs up to Michael and Phillip for the report and what they're trying to achieve - hopefully the next round will sharpen up the distinction between the sources, resources and processes people use.

    In the meantime, I'd ignore the statistics.

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  2. Thanks for the view Carey and all points are valid.

    As Michael and Phillip had acknowledged the shortcomings of the data in the body of the report I decided to work with what was reported.

    My concerns, suggestions and questions have been pushed to one side (for now) and will provide the material for a further article on SOT09 in due course.

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  3. Hi Ross,

    Thanks for the comments. I took some time to respond as we continue to monitor and analyse feedback; interest continues to be healthy. We are grateful for the many suggestions sent our way and hope to absorb many of them in our future work.

    Reservations expressed here and elsewhere are valid. I’ll try to clarify some of them. At this point, I wanted to stress that we made no claims in our report. We merely presented the data we collected (many of them, as we noted, are a complete contrast to our own perceptions).

    Classifications of sources (the inclusion of internal recruiters and recruitment firms as sources)
    In the study, ‘Internal recruiter’ refers to any hire attributed to a recruiter and is classified as a source. Indeed, there is a high likelihood respondents identify ‘internal recruiter’ as a source, even though a candidate may have been sourced from a job board or other channels. We agonise whether to exclude or put recruiters in an entirely different category, but decided our method is the simplest way to present an overall view of hiring activity within organisations.

    Besides opting for simplicity, we were curious how ‘internal recruiters’ are viewed within organisations. It is important to note that respondents were given a choice, they can easily ignore ‘internal recruiter’ as a source (it would have been a different story if this was compulsory). Why ‘internal recruiter’ ranked so high in the sourcing ladder rather than its inclusion as a source is, to my mind, a development worth investigating. That so many assigned ‘internal recruiters’ as a source may suggest two things – lack of proper tools or processes to collect hiring data within organisations. We believe many respondents attribute a source to an internal recruiter because of the difficulty of pinpointing where a particular hire came from. Alternatively, it could be the value and profile of a recruiter has increased to the point where ‘source of talent’ is automatically associated with a recruiter.

    Anyway, classifying recruiters as a source is not unheard of. Gartner’s report on IT professionals lumped internal recruiters, recruitment firms and job boards together under one umbrella (See page 4 http://www.gartner.com/hcm/pdf/ITCMS_Overview.pdf). The Booz Allen Hamilton & Job Central study in the US also took an almost similar route (Report http://www.jobcentral.com/pdfs/DEsurvey.pdf). CareerXroads included recruiters under internal sources. To our knowledge, including staffing firms and internal recruiters as a source is rather common.

    Tracking a hire to the original source is unlikely to be an exact science. Some suggested surveying hired candidate is the way forward. Without doubt, as awareness grows and technology improves, organisations/recruiters will get better at tracking sources. Indeed, in our next study we will look at how we can improve the classifications. It’s an evolving task. For this year’s report, our believe is, ignoring recruiters as a source will do more harm than good (One can’t ignore 13,457 hires respondents couldn’t associate with any other source than ‘internal recruiters’).

    Meanwhile, there is a solution for observers piqued by the fact that we included ‘Internal Recruiters’ as a source. Simply take out ‘internal recruiter’ or ‘recruitment firms’ from the equation and recalibrate the numbers. The result will compares lesser number of sources, but is useful data than having no data at all. Disagreement on the classification of sources should not negate the value of the data collected.

    more...

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  4. part 2

    Contribution of Recruitment Firms
    The contribution of recruitment firms (the definition of recruitment firms wasn’t made clear in the original survey, but it refers to all third-party organisations engaged in staffing. It’s a flaw we will correct) to the overall pie does not surprise us. According to CIETT http://www.docstoc.com/docs/6574480/ASA-Slides-ACSESS-Conference-05-30-09-finalppt Australia & NZ accounted for 4% of the global staffing revenue. That’s a significant number, given we have a working population of only 10 mil. ABS data (cat: 6359.0, Nov 2008) shows that 576,700 people or 5% of all employed people in Australia found their job through a labour hire firm/employment agency. It’s public knowledge that majority of jobs listed on job boards are advertised by recruiters. My own experience is that the penetration rate of staffing firms, per capita, is much higher in Australia than US or UK.

    Print Media
    Print media’s ranking surprised us. It completely went against our own perceptions about the channel. We did believe there is room in the survey for respondents to erroneously equate advertising activity as being the same as a successful hire (meaning, if you advertise on print, you tend to track your talent to print even if the hire was made from another source. Just another example of the problems inherent in tracking hires within organisations). Regional (in NT and SA print ranked third) and industry influence may have also further skewed the numbers in print’s favour.

    Bear in mind, Australian organisations still spend more on print classifieds advertising (around $600 million) than job boards (around $300-350 million). In 2007-2008 (the same period covered in our survey) ANZ’s series tells us, on average 19,273 jobs were advertised on newspapers each week. This is small compared to the 243,379 jobs on employment sites (even taking into account the duplication of job ads) http://www.anz.com/resources/d/e/de613c004f7bfaaea134b9f6653c0166/ANZ-JobAds-20090907.pdf but the fact is hires are made through print advertising. Whether it’s value for money or sustainable is another story all together.

    In conclusion, we are aware of the limitations of the study. However, I’d encourage readers not to ignore the data. The report, wart et al, offers a platform to objectively review various sources. Besides, as we pointed out repeatedly, our aim is to encourage better collection of hiring data within organisations. We hope to improve the report just as organisations strive to improve their data collection.

    Cheers

    Phillip

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