How Candidate Abuse Is Costing
Your Firm Millions of Dollars in Revenue
By
Dr. John Sullivan |
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ABOUT THE AUTHOR
Dr. John Sullivan, Chief
Executive Officer, is renowned
the world over as a provocateur
and strategist in the field of
human resources and talent
management. For more than 30
years he has offered his
critique and insight to
professionals seeking to develop
a true competitive advantage for
their organization through
strategic talent management
planning and practices. As an
author, corporate advisor,
public speaker, and educator,
Dr. Sullivan has established a
body of work including numerous
books and more than 700 articles
that serve as a key resource for
functional leaders and line
managers when developing and
implementing best practices. In
addition, his thought leadership
has been featured in The Wall
Street Journal, Fortune
Magazine, Fast Company Magazine,
Business 2.0, The Economist, The
New York Times, HR Magazine, and
Workforce Management Magazine.
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A reporter from the Wall Street Journal
once asked me what I thought was the greatest secret
in recruiting. Such a broad question would usually
cause one to ponder, but my immediate response was
that abusive hiring processes cost organizations
millions of dollars by turning possible customers
into lifelong "haters."
For decades it has been accepted that god-awful
treatment of candidates is normal, and that since it
is widespread, it's OK. How anyone in recruiting
cannot connect that a poor candidate experience is
similar to a poor customer experience and assume
that there is a significant negative impact is
disturbing. Anyone with a basic knowledge of
customer relationship management knows that there is
a well-documented correlation between customer
satisfaction (with their treatment and the products
purchased) and customer retention, i.e. their
willingness to buy from the organization again.
Organizations like the Ritz-Carlton and Wal-Mart
have elevated monitoring guest satisfaction to a
science and know the exact dollar cost of obtaining
a customer, upsetting a customer, and losing a
lifelong customer. While such evaluation is common
in sales and customer support functions, it is
nearly unheard of in HR functions, which often
interact with a significant volume of potential
customers in any given year. The impact of a poor
"candidate experience" is uncalculated, unreported,
and not discussed, making it quite possibly one of
the largest "hidden costs" facing modern
organizations.
The Current Process Is Abusive
Given that median job tenure is approximately 3.9
years, it's highly probable that the vast majority
of you reading this article suffered through an
interview process in recent years or have a close
friend of family member that did. As professionals
in recruiting, we know the process sucks; the volume
of evidence indicating so is overwhelming.
Staffing.org has for many years reported that more
than 70% of applicants find the process distasteful.
In most organizations little or no thought has been
given to how the candidate experiences the process.
Instead, the design is solely based on
administrative need. Many organizations treat
candidates more like prisoners or detainees than
customers.
Applicants voluntarily come to your company wanting
to help. They spend dozens of unpaid hours preparing
for your process. Many of them may in fact be paying
customers. Unfortunately they are all too frequently
met with web pages that offer up generic content and
are black holes when it comes to advancing their
objectives. If they advance, candidates will also
likely undergo a painful drawn-out application
process, interviews scheduled at the most
inconvenient times, and ultimately be dropped from
consideration with little or no honest feedback
about why.
I estimate that the average professional
candidate voluntarily spends more than $1,000 worth
of their own time and money in preparing for and
participating in an organization's hiring process.
Given that level of investment, they deserve to be
treated like good customers.
You might be harboring thoughts that your
organization doesn't sell to the public. Therefore
your organization is exempt from the hidden costs of
candidate abuse. But you would be wrong. The
potential impact in B2B organizations is even larger
than B2C organizations because the average
transaction value is much larger. While applicants
may not make purchasing decisions, they certainly
can influence them.
Assessing the Hiring Process Using a Standard
Customer Service Template
There are dozens of easy to identify faults
associated with most hiring processes. As a customer
of products and services yourself, finding them
shouldn't be that hard, particularly if you involve
a diverse group of reviewers, since your perception
may not trigger all of them. Some of the major
faults that would never be tolerated in a customer
service process include:
- Difficulty initiating the process and lack
of feedback that the application was successful
- Ignoring or losing a majority of the
applications
- Long, drawn-out assessment cycles (three
months on average)
- Processes executed for appearances' sake
only, i.e. a selection was made prior to the
process even starting
- Little or no honest feedback throughout the
process
- No easy way to make inquiries, i.e. one-way
communications only
- Inconsistent treatment across jobs and
business units
The Top 20 Results of a Poor "Candidate
Experience"
If you are going to estimate the dollar loss in
revenue resulting from a poor candidate experience,
don't do it on your own. Form a cross-functional
team involving representatives from finance,
customer service, marketing, cost accounting, and
risk assessment. Use the following list of potential
impacts I have observed as a starting point.
Remember that being treated poorly during the hiring
process which often ends up in being rejected will
not result in a mild disappointment, but rather
unhappiness bordering on anger. Individuals who once
championed your organization will likely become
activists against your organization for at least two
years and maybe a lifetime. (Note: the estimated
potential losses are general benchmarks, based on my
experience. The actual numbers need to be calculated
at individual organizations.)
Direct Sales Impacts
Lost sales to the public — current customers
who are treated poorly will probably never buy your
product again. In the future, unhappy applicants
will likely remember and avoid your products and
services for years. They will also likely tell
family and friends (social networks) about their
negative experience and encourage them to avoid your
products also. If you can correlate your customer
list with your applicant list, you can gauge the
potential impact. (Estimated potential loss, 1% of
sales.)
Weakened product brand image — if your
company's brand image and/or its corporate values
espouse courtesy, responsiveness, transparency, or
honesty, it will be quickly tarnished if applicants
experience something completely different. With the
advance of social networks, and rating sites like
glassdoor.com, candidate perceptions about
dishonesty in your positioning can spread quickly.
(Estimated potential loss, .002% of sales).
Lost B2B sales — your decreased employer
brand image may cause some B2B customers to shop
elsewhere. In addition, some of the individuals who
you anger and don't hire will get a job within your
industry or region. Some of them will immediately or
eventually be in a position of power where they can
decide to buy products and services. Just like
corporate alumni who fondly remember your firm, they
can influence business-to-business sales. A
percentage of those individuals will unfortunately
negatively remember how you treated them, and that
will influence their decision to become a supplier
to your firm or to purchase products and services
from your firm (Estimated potential loss, .001% of
sales).
Future Recruiting and Retention Impacts
Higher offer rejection rates — because the #1
reason why people turn down job offers is the way
that they were treated during the hiring process,
your firm will lose some high-quality hires. This
will delay the filling of positions or it will
result in having to accept second-level candidates
(Estimated potential loss, 15% higher offer
rejection rate).
Employer brand image damage — it has become a
reality that "others" now own your employer brand
image. If you treat candidates poorly, they can now
easily and rapidly spread rumors, stories, and
recommendations against working at your firm to
complete strangers on social networks. Not only will
your positive employer brand image deteriorate, but
you may also develop a separate and more harmful
"negative brand image." Expect applications of all
kinds to drop off and a significantly higher
candidate loss rate among the so called "passives"
who already have a job (Estimated potential loss, a
20% reduction in applicant volume, quality, new-hire
quality, and new-hire productivity).
Reduced employee referrals — the most
powerful of all recruiting tools will likely
decrease by as much as a third as employees hear how
the highly regarded colleagues that they refer are
treated (Estimated potential loss, 33% of current
employee referrals).
Top performer mid-process dropouts — the slow
and unfriendly hiring process will have its greatest
impact on those who are highest in demand, including
top performers, innovators, and game-changers. They
will judge the firm's overall innovativeness by the
innovation they find in the hiring process. Even if
they start the process, these individuals are the
ones who are most likely to drop out immediately
after they learn through experience that everyone
undergoes the same hiring process throughout the
organization and that their hiring process was not
specifically designed for the unique needs of top
performers and innovators. (Estimated potential
loss, 40% of top performer applicants will not
finish the process).
A loss of return candidates — finalists who
would have been hired if a super-strong candidate
wasn't in the final candidate mix the first time
will likely never reapply. "Soon to be qualified"
candidates who were rejected merely because they did
not have quite enough experience will certainly not
reapply later. (Estimated potential loss, 50% of the
total candidates who would have reapplied).
Higher website drop rates — your careers web
page and its application process are part of the
candidate experience, so if it's slow and tedious,
it must be included in the overall assessment of how
weak your candidate experience is. However, if the
word spreads that the rest of your candidate
experience (after the application is completed) is
even more painful, this will result in fewer webpage
visits and more "abandoned" applications (Estimated
potential loss, 15% of the total candidates who
would have completed an application).
Loss of a competitive advantage — because top
candidates have multiple job choices, they likely
will not consider an abusive process and they are
always among the first to drop out of a simply
candidate-unfriendly process. Losing top candidates
not only affects your firm's future productivity and
increased innovation, but it may also boost it
across the street at your competitor, if they end up
accepting a job there (Estimated potential loss,
.005% of sales).
The loss due to candidates' word-of-mouth —
friends, family, and colleagues of a poorly treated
candidate will almost certainly hear of their bad
experience. Because of their close relationship,
they are even more likely not to apply for position
at your firm in deference to their colleague's
negative recommendation (Estimated potential loss,
1% of the total candidates who would have
reapplied).
More hiring mistakes - because confused, tired, and
frustrated applicants just don't perform as well
during interviews, the hiring decisions will be less
accurate because you're not seeing the "best"
performance of the candidate (Estimated potential
loss, a 10% increase in the number of top candidates
who will be rejected by mistake, because they
underperformed during the interview process).
Managers and recruiters will aim lower —
because individual hiring managers and recruiters
won't really know that the reason that they are not
getting quality candidates is a poorly designed
hiring experience, they may jump to conclusions.
They might conclude that "there are just no quality
candidates out there" or that "there's something
wrong with their jobs or firm." Both assumptions
might cause them to mistakenly recruit and accept
lower quality candidates and hires (Estimated
potential loss, 10% lower quality candidates are
hired).
Decreased retention rates — because your
current employees will find themselves working
alongside weaker new-hire replacements, they will
have less reason to stay. In addition, hearing
friends and colleagues badmouth their firm because
of its abuses hiring process will also reduce their
loyalty. Some new hires may take the job because
they need it but decide the minute that they accept
that they will continue looking, and leave at the
first opportunity. (Estimated potential loss, an
increase of 1% in overall turnover rates).
Loss of quality recruiters — recruiters will
be frustrated with having to operate under this slow
and unresponsive process and the results that it
produces. The power of the relationships that your
top recruiters built up with candidates will be lost
the minute that the candidate experiences the
abusive process. Together they will make it more
difficult to attract and retain top quality
recruiters (Estimated potential loss, 25% of the
firm's top recruiters).
New hires will unfortunately copy —
individuals who are hired under the poor candidate
experience will unfortunately learn it and use it
when they hire individuals. This will result in an
even more widespread adoption of the unfriendly
process (Estimated potential loss, a 5% reduction in
the quality of new hires).
Fewer global hires — a fragmented process may
confuse some candidates who are already unfamiliar
with Western hiring processes. If the process is
weak enough, it may actually insult or offend some
candidates from some cultures (Estimated potential
loss, 5% of global candidates who would have
completed the hiring process).
Loss of career counselor referrals — as
career counselors, especially those at universities,
get feedback about the negative treatment at your
firm, they will spread the word to other counselors
and to their clients. This will make it unlikely
that they will ever refer future candidates
(Estimated potential loss, 35% of the total
candidates who career counselors refer.)
Other Potential Costs Associated With the Bad
Candidate Experience
Legal issues — having a confusing experience
that doesn't consider individual candidate needs
might result in an adverse impact among certain
protected groups. In addition, merely having a
process that everyone complains about might lead
some to "add" legal and EEOC complaints on top of
their HR process complaints.
Loss of recruiting budget — although it's
not a direct revenue impact, when executives hear
that you are abusing their customers and applicants,
they're likely to cut your recruiting budget even
further. They might even demand that the process be
outsourced to firms that better understand and
appreciate the candidate experience. It may also put
some recruiting leaders' jobs on the line.
Final Thoughts
As you can see from this list of factors, treating
applicants poorly can have direct and measurable
impacts on sales, productivity, employee retention,
and future recruiting. Most corporations don't know
the real costs of having a bad candidate experience
because they don't have metrics to measure the pain
points nor do most conduct periodic surveys to
identify the frustration levels of those who never
apply, those who drop out of the hiring process, and
those who reject your offers. Mystery shoppers need
to periodically test the system, and both recruiters
and hiring managers need to be directly measured and
rewarded for providing a positive candidate
experience. There's really no excuse for not
improving the process. It really doesn't cost much
more to treat candidates the "right way." Customer
relationship management tools and technologies are
abundant and most are easy to adapt to recruiting.
The key lesson to learn from this article is that
the cost of waiting to fix issues until recruiters
have more time and budget may be millions of
dollars.
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