Lever Study Shows 1 in 100 Candidates Is Hired

Employee referrals are the most efficient source of hire

By Roy Maurer Oct 27, 2016
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Employers are hiring about one in every 100 candidates, with applicants being the biggest source of hire, followed by sourced candidates and employee referrals, according to new research.

Applicants make up half of eventual hires, sourcing leads to about one-third of hires and 16 percent of referrals are hired. Another 3 percent come from agencies.

But, notably, the most efficient source of hire is employee referrals—1 in 16 are hired.

[SHRM Members-only Toolkit: Employee Referral Policy]

This is followed by those placed by an agency (1 in 22 are hired), those proactively sourced (1 in 72 are hired) and finally, those who apply through the company's careers site or in response to job postings (1 in 152 are hired).

The survey report from Lever, an applicant tracking and sourcing system based in San Francisco, aggregated data from over 4 million candidates, tens of thousands of hires, and approximately 1,000 employers, from August 2015 to July 2016.

The study examined various talent acquisition metrics, including hiring ratios, the average time to hire and the average number of stages in the hiring process.

"Today, employers are dealing with an opportunistic workforce, by which I mean [the numbers of] employees who are passively open to opportunities far outweigh active applicants, average tenures are decreasing and the importance of retention is increasing," said Leela Srinivasan, chief marketing officer at Lever. To meet that trend and grow their workforce with the best talent, companies need to adopt more proactive sourcing and candidate-nurturing strategies, she said.

Sourced candidates made up the second most common origin of hire across every company size, suggesting that candidate sourcing is gaining traction as a recruiting strategy.

Additional highlights from the report include:

*Company size impacts the candidate-to-hire ratio. Companies with less than 100 employees have a candidate-to-hire ratio of 1 in every 94 candidates, whereas employers with more than 1,000 employees typically have to evaluate 129 candidates before they make a hire. "As companies grow and become better known, they receive more applicants and their efficiency decreases," Srinivasan said. "They have to sort through more candidates to make one hire."

*Source-of-hire varies significantly by role. Operations and customer service hires were the most likely to have applied (64 percent). Engineers were the least likely to be applicants, with only 38 percent of these hires having applied for the job. They were the most likely to have been placed via an agency (5 percent). Of all the jobs looked at in the survey, recruiters were the most likely to be sourced (39 percent) and the least likely to be referred (13 percent). Account managers were the most likely to be referred (26 percent).

*The average organization has nine hiring process stages, with four stages being the least amount reported and 27 stages the most. Stages commonly include "newly sourced lead," "new applicant," "screening call," "onsite interview," "background check" and "offer." Some companies "get more granular and add stages for the exact status of a candidate or next step that needs to be taken, like 'onsite interview needed,' 'onsite requested' and 'onsite,' " Srinivasan said.

*The average candidate goes through four interviews and spends three hours and 44 minutes interviewing. Not surprisingly, companies spend the longest amount of time interviewing technical candidates (between four and six hours). Jobs that had the lowest candidate-to-hire ratios typically had the fewest interviews.

*The median time-to-hire is 34 days. For companies with over 1,000 employees, the median time-to-hire is 41 days. "Larger companies take longer to hire, which gives smaller companies a distinct advantage in creating a positive candidate experience," Srinivasan said.

*Recruiters mark almost half of all candidates (45 percent) as underqualified. Sourced candidates were the least likely to be underqualified (22 percent), while applicants were the most likely to not meet qualifications (52 percent). Thirty percent of employee referrals were considered underqualified.

The number of unqualified sourced candidates is "quite high, considering teams have control over who they source," Srinivasan said. "This could be due to opportunistic sourcing of candidates with sparsely populated social profiles who turn out not to have the desired skills and experiences after all."

She encouraged recruiters and sourcers to research candidates from multiple angles. "Instead of relying solely on a skeleton profile on LinkedIn, search for the same candidate across the blogosphere, on other social platforms, on sites like Quora, anywhere they may give more clues to their skills, passions and areas of expertise."

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