01 November 2011

Candidate interviews: the dud KPI

When I am running my 'Building a Profitable Desk' workshop and it comes around to the discussion of High Pay-Off Activities (or KPIs, if you prefer), I will inevitably have a participant nominate ‘interviews' as a high pay-off activity. 

When I disagree, there is often a slight pause and then this look of confusion appears on the face of one or more participants. To those recruiters I am sure it seem like I'm slightly odd - I mean haven't we all been told about the importance of interviews? Surely, without interviewing candidates we aren't going to fill the vacant jobs we have? 

Well, of course, I am not proposing that you do away with interviews, far from it. 

My point of dispute in the relative importance of interviews, with respect to all the other activities that a recruiter needs to undertake in order to generate jobs and make placements. 

Interviews are not as important as referring a candidate to a client. 

To be very blunt about it - if you simply interview a candidate and then fail to refer the candidate to a client then you will NEVER make a placement fee from that candidate. Clients do not pay fees for candidates that are not referred to them (I mean, we have enough of a battle convincing some clients to pay fees for candidates that have been ethically referred to them!). 

The problem with designating candidate interviews as a KPI is that there is a very big risk that a consultant gives themselves an imaginary pat on the back for a week when they ‘did a lot of interviews'. As ‘interviews' is included in their KPI spreadsheet, the consultant proudly notes down their (let's say) 12 interviews for the week. 

Of course, the completion of 12 interviews is only the beginning of the story. The critical part is what happens next. The relevant questions to the consultant being; 

·         ‘How many referrals have you made to clients from those 12 candidates you interviewed?

·         ‘How many referrals are you planning to make from those 12 candidates you interviewed? (and by when?)

·         ‘How many of those candidates are not suitable to refer to clients? (and why?) 

Let's imagine, for the sake of any example, that the answers to the above 3 questions are, respectively: 

·         3 candidates referred out to a total of 7 clients

·         2 candidates to be referred out to 3 clients

·         7 candidates 

Seven candidates that are not suitable to be referred is basically one whole day wasted, probably even more when you consider that those unsuitable candidates will probably now call the recruiter to stay in touch, and thereby cause even more time to be lost. 

Consider the alternative when the designated KPI is ‘candidate referrals to clients' and the KPI number for that week is 12. Again, as an example, let's say that, upon investigating, we find out that those 12 referrals have come from 3 candidates interviewed that week (total 5 referrals out) and the balance of 7 referrals have come from candidates that have been interviewed in the past weeks (or months). 

Clearly, the second example demonstrates a far more productive consultant. Instead of focusing on interviewing more candidates to ‘get their KPIs up' the consultant is focusing on better utilising the time he/she has already invested in interviewing. 

In economics this is an example of avoiding a sunk cost. A sunk cost is a cost  that you never directly recoup (eg an AFL club drafts a promising Gaelic footballer from Ireland, spends two years developing his AFL skills then delists him because they have assessed he will never it make to be a regular senior AFL player. All that time and money invested in the Irish lad is now a ‘sunk cost' as no one will reimburse that AFL club for that 2 years of investment). 

It's important to understand the concept of a sunk cost because if a candidate is not referred to a client then they immediately become a sunk cost. Too many candidates not referred each week by too many consultants (because every consultant has ‘candidates interviewed' as a KPI) become a bunch of sunk costs that could, very easily, sink your profit. 

I was told of a recruitment agency that used to deduct KPI points from consultants who interviewed candidates and then didn't refer them to a client. That might be taking things too far but it certainly makes it clear to the consultants that their phone screening skills need to be sharp. 

Also, let's face it, too many consultants interview too many candidates because: 

a)    They haven't learned how to manage their clients' expectations about the existing supply of candidates (therefore agree to go back to the market when the client, after a cursory glance at a shortlist, says ‘I want to see some more candidates').
b)    They don't want to undertake alternative, and harder, KPI activities such as business development calls.
c)    They haven't been told differently.
One of the most effective ways to manage the balance between continuing to re-activate previously interviewed candidates and interviewing new candidates (we all need these, just not so many of them) is to accurately tag candidates on your database. 

Here's an example of how you might tag candidates: 

Immediately available - those candidates that can start within 24 hours

Active Available - those on 1 to 4 weeks notice and actively looking for work

Passive - not actively looking for work but wanting to stay in touch

Placed - placed by us in their current job

Inactive - not suitable to be placed by us (reasons need to be detailed) 

Considering the importance of managing your candidates to fill jobs quickly, it makes complete sense to measure the highest pay-off candidate activity (referrals to clients), accurately tag candidates to facilitate this process, pro-actively call all your active candidates regularly and not include ‘candidate interviews' as a KPI. 

What changes do you need to make to your candidate KPIs?

5 comments:

  1. I couldn't agree more. So many people get caught up with activity as opposed to outcome. Yes, you need to have a robust and sound interview but without the outcome, it is merely a detailed chat.

    ReplyDelete
  2. I've always felt that the interview KPI is 'dud'. It leads consultants to focus on quantity rather than quality. You lose sight of the fact that if you can't refer that candidate to jobs/clients then you're wasting time on unproductive activity even if you are making your KPI's.

    ReplyDelete
  3. Great post Ross. Whilst following some KPIs is important to achieving successful results(because recruitment is an actiivity based business)the problem comes when they are not managed properly. Or to put it another way, when a recruiter is just ticking boxes without any understanding as to why, which is often the fault of a poor manager. The more accurate metric to follow, and which in turn should be the guideline for setting relevant KPIs to an individual, is ratios (eg: interviews:placements). What is certinaly true is that when it comes to KPIs, a one size fits all model is at best pointless and at worst an inhibitor to success.

    ReplyDelete
  4. Great article Ross. Also to be considered is the 'brand damage' you can do when meeting candidates you cannot do anything for. Too many interviews like this and you simply don't have the time to conduct thorough follow up with all the candidates, leaving a trail of unhappy anti-brand ambassadors. There are plenty of candidates out there who won't apply for jobs from specific recruitment firms because they don't want to go in to help someone hit their KPI and have their time wasted. If you want to gather a talent pool 'just in case' you need them for a job down the track, that makes sense, but don't drag them in to see you, as they will have an expectation you can do something for them (rightly so). If you can't do anything for them then and there, phone interview them; tag them in your database with the relevant skills and bring them in when and ‘if’ you have something for them down the track. Respect your candidate’s time and your employers brand. Thanks for this great article Ross!

    ReplyDelete
  5. yes agree and too many candiate interviews usually means not very good prequalifying and wasting of everyones time

    ReplyDelete