Recruiting with Pareto's Principle

Leela Srinivasan posted a response to my recent blog on passive candidates; she wrote, “Leaving aside the debate over whether passive candidates are ‘better’ or not, the fact of the matter is there are simply many more passive than active candidates ‘out there’. If you don’t consider passive candidates, you’re ignoring 80% or more of the talent pool. That’s not a risk that most companies with an interest in hiring the best are willing to take.” For those of you who don’t know Leela, she is marketing lead LinkedIn Recruiting Solutions and a thought leader for how to hire. LinkedIn is often held in high regard as the go-to place to find passive candidates. Having someone of her stature comment on my post got me thinking…about the 80/20 rule and how it could be applied to the talent pool.

I think most people are aware of the Pareto’s Principle, commonly referred to as the 80/20 rule. To greatly simplify it, 80% of results comes from 20% of effort. When I ran a sales team, we used it to prioritize our efforts because 80% of our sales came from 20% of our products. When I ran a recruitment agency, 80% of our fees came from 20% of our recruiters. The idea is to dramatically improve productivity by focusing on the 20%, rather than waste resources on the 80%.

As a sales manager, I was able to dramatically impact my sales staff’s production when I forced them to whittle down their lead list from thousands to 50. Talk about resistance! It was like trying to take a beef bone from my dog! But, when the sales people were able to focus on what mattered, their sales numbers started ramping up. They were energized by their productivity. They were working smart, not hard.

Why do we use Pareto’s Principle?

The biggest reason is to make sure the cost of the sale doesn’t outweigh profit margins.

In recruiting, especially internally, there is a high cost to source talent. Most staffing metrics look at the grosser costs, such as salaries, job board posts, agency fees, etc. It is just as critical to look at opportunity costs.

As a talent acquisition process improvement consultant, I have seen recruiting teams spend too much time pouring over LinkedIn profiles that might fit a position and route them to hiring managers without ever making contact. One major company tasks their sourcing team to do this, without even having an opening. It’s called “profile harvesting.” Harvesting (for those of us who garden or farm) means tilling the ground, fertilizing, sowing seeds, and ongoing care BEFORE we reap the rewards. This practice is really no different than going through a bunch of business cards gathered at a conference. Unless you connect with the person behind the profile, the activity is a waste of time. I’ve seen fillable jobs stay vacant for months. Leela might respond that the wise recruiter should pay for a job post on LinkedIn. And, I agree. But, the person who responds to a job post is NOT a passive candidate. They might not be shopping their resume, but they have more than a passing interest in making a change, or they wouldn’t even notice the posting.

I think smart companies will focus on finding the 20% of the talent that can make a difference to their organizations. They will invest in their visibility as an employer (a marketing activity) so that appropriate talent will think of them first when they feel dissatisfied at work. They will focus their recruiters on activities that help convert mild interest into passion for a new challenge. The really smart ones will leverage their internal networks by having an employee friendly referral program, one that makes it easy for employees to refer talent, get prompt feedback and a meaningful financial reward.

Focusing on 80% of a disinterested labor pool is a waste of resources. It slows down the hiring process. I have seen fillable positions (help desk, systems administrators, software developers) stay open for many months. I’ve had qualified people (who were eventually hired) tell me that they had submitted their resumes six months earlier and received no response other than the “We got your resume. Don’t call us. We’ll call you when we get around to it.” (It may be worded differently, but the message is the same.)

The right people in the right job will give a company a real edge in the market. It’s called “competitive advantage.” But, often the pursuit of “talent,” distracts managers from finding good people who can deliver, because they are looking for the “perfect” candidate. Good people “on the market” get snapped up while corporate recruiters look for the perfect passive candidate.

It is our job as recruiters to know the available talent in our markets and industries and advise on the most effective talent acquisition strategy for our companies. It is our job to make sure we focus on activities that will provide the greatest return on our time. We need to talk to real candidates, not waste time harvesting profiles. We need to get out and mix with our employees and let them know how they can get that referral fee. That’s where I spend 80% of my time. But I know when to make the call to the person who isn’t looking and sell them on making a move. That’s the 20% I want to be sure pays off.

Pat Sharp, The Talent Architect blends strategy, technology tools, and assessment tools with marketing magic to create unique talent solutions. Past and current clients include: Motorola, Deloitte, TiVo, and Cloudscaling. Visit The Talent Architect or drop her a line at pat@thetalentarchitect.com.