Tuesday, December 22, 2009

Moneyball and Recruiting

Michael Lewis wrote a book, Moneyball: The Art of Winning an Unfair Game in 2003 to chronicle the unusual strategies employed by Billy Beane, GM of the Oakland A's, to keep his team competitive even though he was at a severe financial disadvantage compared to the Yankees and other big-market teams.

The book has received a lot of condemnation by the traditional baseball folks, it is largely misunderstood. Lewis' main point was that the A's did a good job exploiting market inefficiencies by using advanced statistical analysis to gain an advantage. In the early 2000's, teams cared less about On Base Percentage, so the A's were able to acquire high OBP players for below market rates. As time went on, other teams properly valued OBP and it was no longer a market inefficiency. Last year, my Mariners exploited an inefficient market for defense, and improved their team significantly at a below-market rate. General Managers are all trying to find out what the next undervalued skill is to put their team ahead.

So what does this have to do with recruiting? I think that there are undervalued resources and techniques that could allow recruiters to get ahead of the curve.

Lou Adler addressed this in an article back in 2003 (I didn't realize this until I started writing this post, but it's too late to turn back now), and approaches it from a "challenging conventional wisdom" approach. I like to think about what is undervalued, and I'm thinking particularly about the agency recruiting model right now. The only way to test these theories is to collect data, but I think it's interesting to think about.

Here are three off the top of my head that I think are assumed in the industry, but that most agencies probably don't have the data to support:

Job Boards
There was a time when finding candidates posted on Monster was a fools errand. There weren't very many candidates, and there were lots and lots of recruiters. A generation of recruiters has been brought up with the mantra that "job boards are useless." What if that isn't true? I have found many great candidates on Monster and CareerBuilder and have found less competition for their services than in years past. I think there is a chance that it is becoming an undervalued resource.

Perhaps if you relied on easy-to-reach candidates, you will end up filling more jobs more quickly than your competition (perhaps not too).

Meeting Candidates
I think it's important to meet candidates, but what if it isn't? I wonder if any agencies have run detailed studies to compare the profitability of meeting all of your candidates vs. meeting none of your candidates.

Perhaps sending candidates without meeting them will allow you to react to your clients faster and fill more jobs than your competition (again, perhaps not).

Submitting a lot of Candidates
This is as much a question of approach as results, but is it more effective (i.e. profitable) to submit a lot of candidates and hope that one sticks, or to interview a lot of candidates and only send one or two? Well a lot of it will depend on what your clients' expectations are, but the standard answer is that the latter will be more profitable, but one of the most successful recruiters I've ever known relied on the former.

Perhaps sending a lot of variably qualified candidates will result in more fills than your competition that tries to find just the perfect fit (or not?).

Conclusion
I could go through this all day, but the take home is this: Top billing recruiters do things differently than average recruiters. Average recruiters need to figure out what that is, and emulate it. It might not be something obvious, and it might not work for everybody, but I guarantee that top billers are exploiting some kind of market inefficiency. I would love to be able to break down the numbers of a broad range of recruiters to see what it would teach me, but I don't have the resources. Here's what I would start with:

# of Job Orders
# of Clients
# of MPC Calls
# of Ad Chase Calls
# of Submits
# of Sendouts
# of Placement
# of Types of placement (different jobs)
Geographic distribution of placements
% of contacts that are HR
% of contacts that are Managers
% of placements by source
Some quantification of boolean search skill


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