Hiring in an Era of Extreme Competition
Every tech company is struggling to recruit people. It doesn't matter how hot that company is. The reality is, it's a candidate's market right now. Everyone is looking for the secret sauce to win over talent.
The emerging software category of talent intelligence may have a solution. I sat down with Searchlight founder Kerry Wang – after she raised a Series A from Founders Fund, myself and others – to learn how she's helping companies make the right talent decisions, craft more compelling offers, and retain and engage new hires.
What's wrong with the way companies do recruiting?
Unfortunately, most hiring decisions today come down to guesswork, anecdotes, and gut instinct. But instincts aren't panning out. The research shows that 46% of all hires don't work out within 18 months, and of those failed hires, 89 percent fail because of a soft-skills mismatch.
My cofounder Anna and I believe there's a huge talent data problem. If hiring managers and recruiters had the right data, the right people would be in the right roles, which is win-win for everyone. It’s time to inject talent strategy with the same level of rigor as business strategy, resulting in thriving teams and faster net growth in headcount.
"Net growth" reminds me of the metric net dollar retention. Is that an apt analogy?
Exactly. Just like business leaders need to factor in NRR to hit their revenue goals, Heads of Talent need to factor in Net Growth to hit their headcount goals. I first heard about the net growth metric from Michael Kieran at Tray.io, who is a very forward-thinking leader.
Put differently, companies should hire for anniversary date, not just start date. They have to think about hiring and retention at the same time.
What data should companies use to make smart hiring decisions?
Companies need data on candidates’ work behaviors, and then they need to connect that to outcomes (did this candidate perform well and stay for a while?) so that they can measure the quality of hire, understand how they can hire better, and better set new hires up for success.
They need a holistic view of a candidate, going beyond what can be assessed in resumes and interviews. What is the candidate actually going to be like to work with? Are they a self-starter? Are they comfortable with ambiguity? Can they learn fast on the job? We get that data from the people who know the candidate best -- their references, people they have actually worked with. Scientific research has found that what former colleagues see in a candidate is a stronger predictor of performance than what the candidate sees in themself!
Then, we collect and connect outcomes data -- the new hire's performance, alignment, and engagement in their first 90 days. And we use machine learning to identify the predictors of success that distinguish high performers.
We helped one company fix its 40% attrition rate within employees' first six months on the job. Our customer used our data to not only hire people who were more likely to succeed in their organization, but also to inform an onboarding guide and set up their new hires for success. Since then, they've had zero attrition. Across all our customers who’ve used Searchlight for over a year, we see on average 45% improvement in retention and 40% faster hire time.
It's a candidate's market right now. The competition for talent is very high. What do you think that environment implies for how heads of talent should be thinking about their role differently?
McKinsey just released an amazing study, entitled "'Great Attrition' or 'Great Attraction'? The Choice Is Yours." The takeaway is that heads of talent need to understand candidates at a deeper level to attract them to a new company: what would motivate them to take a new job? Turns outs, the most important thing candidates care about is feeling valued and like they belong. If we have real data that shows that a candidate will be a great fit for our company, we can craft a genuine, compelling story for why they should join us.
Companies have to be more thoughtful about how they interact with candidates through their processes, but it's hard to do that at scale. That's why there's a need for better talent intelligence, so we can create better experiences for candidates, new hires, and the teams that hire them. Searchlight is about adding science to the art of hiring so talent leaders can still personalize the candidate and new hire experience, while hitting their headcount goals.
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