The Not In The Remotest Bit Hidden Cost Of Stranger Recruitment

by Community Admin in Corporate Alumni   |    Last Edited: 12th November 2019

Recruiting has stayed roughly the same since WW2. The organization identifies a need, builds out a job description of what they think the skills required and the type of person who would be a good fit and posts it into the ether.

This model is often the most invested model in an organization but yields not only the lowest conversion to employees but also the most likely to fail. It is just incredibly difficult to use the traits of prior performance in a different company to predict the applicability and success of that person in your organization.

Many organizations have countered this “good candidate gap” in a number of ways:

  • Expanding testing to include IQ/EQ
  • Extensive interviews to learn more about the “culture fit”
  • Programmatic testing on the explicit skills required
  • Digital footprinting to advertise where the “applicants” might live online

All with the sole intent of increasing the number of applicants in the funnel. The solution to conversion issues or talent pool limitations has been to increase and find more people, spread the message even further.

However, it has become clear that the process and investment in finding potential candidates for a role that have no existing relationship to your organization (Stranger Recruiting) is yielding lower and lower results.

Yet, for most organizations, this is the highest cost source of recruitment and for many, there is no actual data showing whether this source of hiring leads to good hires.

Why do employers spend so much on a program without knowing whether it actually works?

The Data On Hiring Strangers

  • 86% of 20,000 survey participants stated their recruiting organizations focused “very much so” or “to some extent” on passive candidates.
  • Employee tenure for stranger recruits is now down to only 4.2 years.
  • The average hiring failure rate for a passive recruit is 46%
  • The average cost per hire (for below management grade) is $4,129
  • Job Boards / Career Sites are the #6 source of quality hires for an organization
  • Recruiters who chase passive candidates only fill about 11% of positions
  • Applicants are more and more likely to ghost organizations midway through the application process.

Every single applicant costs money, independent of fit. The cost of legal compliance and associated candidate obligations such as not to discriminate is an example that exists for every applicant that starts the journey with your organization. The solution is a smaller funnel of potential recruits who have more understanding of the role.

Modern organizations are recognizing the value of “Known Person Recruiting” which refers to people who have an existing affinity or relationship to your organization. For many companies, this is Alumni Programming and Referral Programs. Learn more about Known Person Recruiting here.