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;
Let's imagine, for the sake of any example, that the answers to the above 3 questions are, respectively:
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 NFL team drafts a promising college footballer, spends two years developing his skills then fires him because they have assessed he will never it make to be a regular NFL player. All that time and money invested in that player is now a ‘sunk cost' as no one will reimburse that NFL 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?