Methodology

Late in December 2007, emails were sent to individuals known to CareerXroads principals,
Gerry Crispin and Mark Mehler, at more than 200 different companies. All recipients had
corporate staffing responsibilities or direct access to the company’s staffing leader. Reminders
were sent after one week intervals during January 2008. Additional efforts to reach a broader
audience were made but the majority of respondents were similar to previous years. The Survey
was closed January 30, 2008.

Results from 49 large corporations having “hard data” are included here. It is worth noting that a
significant portion of the respondents expressed concern about the quality of the data in their
systems.

Respondent Profile

Mostly Exempt: Approximately 60% of all the external hires reported in the study were for
exempt-level employees.

We did not breakout SOH differences between exempt or non-exempt employees but
strongly encourage this line of analysis internally. As shown in the bottom two distribution
points of Table 1, the SOH data for nearly one of every three respondents was 90-100%
exempt employees

Table 1: Distribution of SOH - Exempt vs. Non-exempt

All Full Time: We did not collect or include SOH data for contract, part-time or contingent hires.
Few firms track SOH data for this category of employee (and many Staffing functions do not
have responsibility for their hire). Three of four respondents, as seen in Table 2, employ 10% or
more contract, contingent or P/T employees in their workforce.

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Given the continuing growth, staffing leaders would be well advised to understand the
demographics of this group – especially since “Temp-to-perm” as a SOH for F/T hires is on
the rise.

Table 2: Distribution of Contract, Contingent or P/T

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 The reason why corporate staffing functions are not paying much attention to SOH in
this area is shown in Table 3. A typical comment to this question was: “We have
dedicated sourcers targeting specific areas where the vendor struggles. Otherwise, we
stay out of this area as much as possible.”

Table 3: Staffing Involvement with Hiring Non-F/T Workers

Some Gaps in Responsibilities: The typical company staffing leader is not always responsible
for all the F/T hiring that goes on around them.
Table 4: Respondent Responsibilities for F/T
We asked respondents to select which of
several choices best described their situation.
A third of the respondents have gaps in their
hiring responsibilities.

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Limited Outsourcing: We wanted to get at whether the “gaps” might be due to outsourcing.
Draw your own conclusions, but we believe large firms are less likely than ever to outsource all
staffing to another firm.

Table 5: Respondent Involvement in RPO

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Results: 2007 Sources of Hire
Internal Movement

The # 1 Source of Hire is still the one right under our nose. Company employees are the most
likely source for filling open positions. Of the 303,000 positions that were filled and could be
identified as either Internal or External fills, three out of every 10 positions were filled as a result
of internal mobility (see Table 6).

The long term trend for competitive companies is to calibrate their succession, bidding and
internal development programs with their business plans.

Table 6: Internal vs. External Positions Filled 2007-2003

Table 7: Distribution of
Internal Movement
Internal Movement is Proof of Development
Many competitive corporations aspire to fill 40-50% of
their core openings through internal movement in order
to ensure strong retention levels for their highest
performers. As shown in Table 7, 15 respondents filled
40% or more of their openings with their current
employees.

While high levels of internal movement can (like

referrals) pose challenges for firms with insufficient
diversity or those suffering from a lack of innovation,
generally the higher the number of positions filled
internally the better.

We regularly review 1,000 or more organization staffing

pages each year and we are amazed that we have failed
to uncover a single firm that transparently shares their
internal movement figures on their website to bolster
their claims of employee development.

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External Sources of Hire

While we continue to refine what we ask employers about their sources of hire, it is clear that
Referrals (28.15%) play the largest role followed by Online Job Boards (25.68%), Walk-ins
(.81%) and Open Houses (.66%) bring up the rear. (See Figure 1).

Recent Trends (Table 8) show some growth in areas like Direct Sourcing and long term declines
[perhaps connected] in Print.

What is not evident at this level of analysis is that for a specific specialty, level or
geography, a SOH that appears very limited may, in fact, be dominant: Agencies for the C-
level; Walk-ins and Print for hourly workers being hired in a rural plant and so on. As we’ll
see later, the category “Other” is difficult to reduce much further and Job Boards may not be
all they seem to be.

Figure 1: External Sources of Hire 2007

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 Table 8: Sources of Hire 2007-2005 (Recent Trends)

Additional Observations about Each Source of Hire

Referrals (28.2%) Table 9: Distribution of Referral Hires

Despite the reliance on referrals
as a basic source of quality
hires, they are too often taken for
granted.

In study after study, 98% of firms

both large and small use
referrals, but the range, even in
our narrow selection of highly
competitive firms, is very wide
(See Table 9).

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Our survey respondents pointed out that 80-90% of their referral hires in 2007 came from
employees and 10-20% were referrals from other sources e.g. vendors, suppliers, alumni,
“friends”, etc. (see Table 10). We know of one large firm (not in our study) who hires 25% of all
their management from alumni referrals.

Table 11: Contribution of Non-Employee Referrals

The most compelling data, however, is when companies supply the number of total referrals it
took to make all those referral hires. The efficiency or yield of the referral process is clearly
second to none (See Figure 2).

Figure 2: Yield – “How Many Referrals to Make One Hire?”

Good or bad, we advise jobseekers to never apply to a company without first

networking to an employee in that firm for a referral. The difference in probability of
getting “up to bat” is too large to ignore.

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The growth of referral technologies, the explosion of social networks and applications to
enhance communication and tracking of referrals is continuing unabated. Lagging,
however, is the ability to measure the quality of the referral relationship.

When employees refer someone they are not (necessarily) recommending them, yet most
referral programs fail to distinguish between the two. Learning whether the referral
relationship is social, casual or something else that might include a previously shared work
connection may become important as this category grows…and it will grow. In the future
emphasis must be placed on differentiating the referrals that lead to better performance,
faster on-boarding and increased retention. A separate CareerXroads Colloquium member
survey of referral practices during 2006 and again in 2007 indicated that the yield shown
above is extraordinary and scalable for most positions.

Job Boards (25.7%)

A few survey participants have eliminated the “company website” from their list of sources for
2007. They accept the notion that the company website is a destination – not a source. That’s
the good news. The challenge is that 54.4% of the hires in this category are attributed to the
company site as shown in Figure 3.
Figure 3: Breakdown of Job Boards as SOH
Customers buying products online might
be tempted to cross to the company
website’s jobs pages. Job seekers might
just know that they want to work for a
specific company and go directly to their
site. These are behaviors that should be
measured as a customer conversion or
even branding but not as a catch-all
category labeled “Company Website.”

We applaud some companies’ efforts to

eliminate a job seeker’s ability to self-
report that their originating source is the
“Company Website.” Realistically, we
don’t expect to live long enough to see its
demise.

We are seeing some squeezing on niche sites but it would be wrong to conclude they are
losing ground. In fact, if companies are becoming more targeted in their approach, they
seem to be using the niche sites more effectively. Remember we are counting hires here
and it is to be expected that a specialty site like Medzilla or a specific location emphasis like
Jobing in Phoenix, etc. would only represent a very small proportion of the total hires of the
national firms that are our respondent base. It is worth noting that Careerbuilder, with all
their hype, still hasn’t made up ground in the hires reported versus Monster.

The numbers for Monster, CareerBuilder and Hotjobs in Figure 3 are slightly inflated as a result
of including only firms that reported they had contracts with Monster, CareerBuilder or HotJobs
as shown in Table 12. Had we included firms that did not have contracts, their respective hires
would have been lower.

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On the other hand, most respondent firms’ contracts are for both posting and resume
access yet few tracked or attributed hires from the resume databases to Monster et al.
Instead, they were often included in Direct Sourcing. Most of the attributed hires shown are
from postings. (Isn’t number crunching a wonderful art?)

Table 12: Contracts with Major Sites

We also asked this year about the demise of America’s Job Bank. The answers as shown in
Table 13 are self evident. Most firms say they rely on support from Direct Employers.

Table 13: Response to AJB Disappearing in 2007

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Finally, an open-ended question asking about the names of the top “Niche” sites and the hires
attributed to each (see Table 14), produced dozens of mentions. One stood out from both
frequency of listing and the number of hires attributed to it: CraigsList.

Table 14: “List up to 3 niche sites you get the most hires from
AND, if you can, indicate how many hires from each.”

Other (12.6%)
“Other” is the catchall, miscellaneous category and we estimate that at least half of this data is
simply “no information” about SOH. A blank field.

As shown in Table 15, in some cases the problem is exacerbated because hundreds of
applicants choose “other” without being forced to give an explanation (or, having their
SOH data added when they are hired). Either way, it impacts the accuracy of the
information about the staffing supply chain.

Table 15: Comments about the “All Other” category

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Direct Sourcing (9.4%)
Internal sourcing efforts by employers include just about every proactive strategy to collect leads
and contact individuals who have not actively responded to advertising. We asked about these
practices with follow-up questions and were essentially told that internal efforts are still heavily
oriented toward database mining (see Table 16).

Direct Sourcing is still evolving as these comments from respondents attest:

 “Currently our ATS search algorithm is unreliable and ineffective and we have
shifted our internal database from being a first choice in direct sourcing to second
choice behind purchased databases.”

 “We prefer Email marketing to targeted lists.”

 “Direct sourcing efforts aren't specifically tracked.”

 “Company tends to rely on vendors for cold calling due to its conservative position
on the practice.”

 “In limited cases we have partnered with third-party vendors to provide sourcing
support.”

 “We have a dedicated sourcing team that supports corporate roles.”

 “Networking, referrals from hiring managers are followed up as a priority.”

Table 16: Direct Sourcing Approaches

From other client-based, mini-benchmarking surveys we conducted during 2007, we do

see increased success with specialized online search techniques to identify and profile
prospects. However, the numbers derived from these techniques, tools and applications
are still limited and most of the corporate investment – especially in the more hyped
technologies such as Facebook, MySpace, 2nd Life etc – are branding in nature and not
directly attributable as sources of hire.

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What is very clear is that more and more firms are developing sourcing teams (see Table
17). The use of search engine optimization and search engine advertising as tools to
research and build prospect lists, to develop high-volume, extensive contact capabilities
and more that has been primarily the strategy of agency professionals, is rapidly being
adopted by corporate staffing departments.

We also believe that the growth of thousands of closed social networks (closed except to
professional society or college alumni memberships) will explode in the next 18 months
and offer corporations direct access to millions of professionals with relative ease.

Table 17: Growth of a Sourcer Class

Rehires or “Boomerangs” (4.8%)

Technology and changing attitudes about former employees have combined to create new ways
to develop and maintain relationships with alumni. Website content specifically designed to keep
in touch with former employees seems to be bearing fruit.

We believe smaller, lesser-known firms will probably not tap Alumni as readily as larger
firms but the emergence of social network applications targeting specific types of affinity
groups i.e. corporate alumni, college alumni, etc. are bound to add to referral numbers as
well. Some of the numbers reported by firms pioneering this area are staggering.

Staffing functions should brainstorm with their HR Colleagues the following question:
“What ‘touchpoints’ could we install beginning with the day a valued employee resigns
until the day he or she returns (say three years). Draw a timeline, identify a champion for
each. Determine the cost for investment and assume in three years that re-hires of former
employees at least doubles. Assess the added value of their outside experience and the
ability to get up to speed and perform faster in your ROI.”

Media/Print (4.6%)
Hires attributed to print sources are down significantly in 2007 from 2006 (6.9%), returning to
2005 numbers. Despite the fact that the heydays of print classifieds are gone forever, we
believe (and wrote in our New Year predictions) that newspapers represent great
investments…for innovative online businesses.

Giving the devil its due, there is plenty of reason to conclude that the increasing
convergence of job boards aligned visibly with print partners may cloud this category’s
true influence. But, we still think the floor for print (under the present owners) is lower –
maybe 3-4%

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College (3.8%)
The bulk of college hires are from on-campus programs targeting specific colleges. We asked
what proportion of college hires are not connected to their campus programs and the results are
shown in Table 18. The fact that nearly a third of the companies responding to the survey
(31.8%) get at least 10% of their hires from outside their college programs is significant. We
believe over time a virtual set of initiatives will expand college hiring for competitive firms
beyond their current “targeted college” strategy and we wanted to try and get a baseline.

Table 18: Proportion of College Hires Outside

Campus Programs

It may not look like college is a strong component of our respondent group but, in the US,
college hires might very well be the equivalent of the miner’s “canary in the cage.” The
health of our entire employment structure might well depend on the viability of having
sufficient college graduates – engineering and sciences, accounting and MBAs. Without
them multi-nationals are more likely to move even larger segments of their workforce
overseas. The competition for top talent has never been more fierce and 2008 may be a
watershed. Adding pressure is the fact that critical college degree programs have high
percentages of foreign born nationals and, with the US immigration policies in disarray,
firms are becoming increasingly frustrated. (See www.NACEweb.org for much more on
college hiring.)

3rd Party/ Agency (3.3%)

3rd party placement/agency hires have declined. We believe the traditional agency model (a
given % of a F/T hire’s compensation) is essentially a pure commodity and being squeezed from
several directions. Non-traditional agencies are experimenting with various RPO models,
offering extensive candidate care services as added value, or joining large affinity networks of
agencies to leverage capabilities and manage splits.

Many companies are finding they don’t need everything a traditional agency offers and can find
individuals to do specialized research such as name generation or they can hire contractors for

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short term-assignments via networking. Such new models supporting corporate staffing
functions are exploding and some of them are not tracked as SOH by internal staffing
organizations or are simply folded into Direct Sourcing. Small firms with 50-500 employees will
continue to be the sweet-spot for Agencies. C-level Search will not change but their numbers
are finite and the pressure of search firms to find line extensions for mid-market executives will
be the battleground as corporations gear up their own sourcing efforts.

Temp-to-hire (3.0%)
Temp-to-hire and Contract-to-Hire are increasingly important sources as contingent workers
make up a larger and larger segment of the workforce. “Firewalls” between employers and the
suppliers of contingent workers often have barriers that prevent this category from becoming
much larger. It is a missed opportunity.

Career Fairs (2.3%)

According to some sources Career Fairs are staging a comeback. We don’t buy it. Many
companies no longer accept paper resumes at these events thus complicating the way they are
seen by employers and attendees. New formats with extensive online components are being
offered but may be limited to special situations.

Search Engine Advertising (1.2%)

Small numbers with high potential. We continue to feel that the advantages of various
advertising and optimization methods with search engines will drive targeted professionals to
develop relationships but measuring its impact as a source will be difficult at best.

Walk-ins (.8%)
Walk-ins may be under-represented in this survey because retail and plant employees are often
tracked and recorded locally. Walk-ins are also among many traditional sources replaced by
kiosks in malls and the web for consistency.

Open Houses (.7%)

We had thought that asking about open houses might fill some gaps. We thought wrong. Open
houses, unlike Career Fairs are usually a means to attract large numbers of prospects to
company facilities. A useful tool but clearly applied in small doses.

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Recommendations: Changing the Model, One Hire at a Time
Our recommendations are essentially unchanged from last year. For the first time in seven
years, the responses to our final survey question: “How many hires will you make next year
(2008) as compared to last year (2007)?” changed substantially. More firms (34%) predicted
they would have fewer hires in 2008 than those that predicted a greater number of hires (22%).
44% said they would hire the same number. The average difference was about 10% fewer hires
expected. Perhaps that will free up some time to improve SOH collection methods. We can only
hope.

Report and analyze SOH…at least yearly

Think Yield. Test for performance differences. Invest in it.

What are the “cuts” of your data that show a difference in Source of Hire: C-Level, Exempt vs.
Non-exempt, Clinical Research vs. Marketing, etc.? Is there a SOH that is more efficient, less
costly? Are there differences in retention, performance, training time, or other quality variables?

Just about everyone has an employee referral program. Too often it is evaluated on the basis of
how much money and time it takes to administer, rather than the value it delivers. Just imagine
if every 3rd referral in a critical, high-volume job family was a quality hire who, on average, came
“up-to-speed” in their job 10 days faster and stayed one year longer. Wouldn’t you want to scale
this source of hire from 30% to 40%?

Define SOH Carefully

Referrals come in all flavors. So do college hires. They all do.

Are employee referrals the only kind or can you build a channel of referrals from customer,
vendors, suppliers, former employees and more? Do you only count college hires as those from
your target colleges, intern programs, MBAs etc.? We see many disconnects in definitions that
tell only a part of the picture.

Confirm Self-Report

Prove it to yourself. Table 19: “How do you collect SOH data?”

As shown in Table 19, 88% of our survey

respondents use self-report, pull-down menus on
their online application form. Several published
experiments with self-report approaches have
demonstrated high error rates. We believe self
reporting can be much more accurate with careful
design. Multiple sources can and should be used to
confirm data and increase confidence that your data
is accurate. For example, automated tracking of the
IP addresses where a candidate originated from can
be used to confirm self-report.

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We also believe that survey instruments, properly designed, can be easily deployed with new
hires to map the way a company finds, targets, contacts and engages their candidates. And with
hires, as opposed to candidates and applicants, it is essential that information on all the factors
that influenced their decision to apply be extracted during onboarding.

Track and Collect SOH for Every Hire

“Just don’t know” doesn’t cut it.

Approximately one of every 10 firms can account for every hire…at least the ones for which they
are responsible. Unfortunately, that is only half the problem since 50% of the firms do not have
responsibility for some of the hires in their company (class, location, level, etc.). The staffing
function must be disciplined enough to collect all the data to ensure the picture they are creating
about talent acquisition is complete. Maybe six sigma is unreachable but one sigma is
unacceptable…and we’re nowhere near that level. The supply chain isn’t a just a visual concept
it’s a process that requires disciplined measurement

Diversity

There is no silver bullet.

We think it is particularly useful to examine diversity hiring practices and sources (see Table
20). While specific hire data was not available we asked staffing leaders to speculate. It would
be good to compare their actual results with their perceptions. During 2006 and 2007 we
conducted several diversity mini-surveys for CareerXroads Colloquium members to better
understand specific diversity practices. Table 20 offers some insights. For example, few firms
have dedicated diversity recruiters. Those that do perceive that they are getting good value.

Table 20: Diversity Sources of Hire?

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Research How Multiple Sources Interact

Bet you can’t have just one!

It is highly unlikely that a single source of hire exists in every case. Your branding activities may
have increased your awareness among top candidates. A unique connection to a neighbor, a
link to a website or some other variable at work might have also contributed to converting a
previously passive prospect into an active candidate. Which one SOH would you choose? Why
do you limit all your candidates to one choice? Why indeed.

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About CareerXroads: The Staffing Strategy Connection

Gerry Crispin and Mark Mehler are committed to writing, researching and sharing their
adventures, opinions and data about evolving staffing models with members of the HR
profession, CareerXroads Colloquium members, clients and friends. Passionate about how
firms design and build staffing processes, the technology to enhance them and the systems to
manage them, Gerry and Mark strive to observe and influence new and evolving models that
aspire to world-class, measurable standards and satisfy every stakeholder.

We want to know more about the ‘playing fields’ where candidates and employers meet and
they are more than a little curious about how they treat one another: specifically how Job
Seekers ‘game’ their next career move while Employers tout their latest opportunities.

We are always on the lookout for stories about staffing challenges, benchmarks, and results as
well as the people who live the stories they tell. You can reach us at 732-821-6652 or
mmc@careerXroads.com

For more on CareerXroads and CareerXroads Colloquium go to http://www.careerxroads.com

or http://www.careerxroads.com/colloquium/colloquium.asp

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CareerXroads 7th Annual Source of Hire Study:
What 2007 Results Mean For Your 2008 Plans

By Gerry Crispin and Mark Mehler

www.careerxroads.com
mmc@careerxroads.com
732-821-6652
Forward: Authors’ Notes
Study Goals

This public report, CareerXroads’ (CXR) 7th Source of Hire (SOH) study in as many years, is a
detailed description of how one group of corporations fill their [US] open positions or, more
accurately, what some corporate staffing functions are able to measure and report as the
sources of their hires for the openings they fill.

We are indebted to each one of our survey respondents for their willingness to “open their
books,” voice their concerns and trust that the information they share will be helpful to their
colleagues. Thank you.

Study Restrictions

Timing
We limit our collection period to the month of January 2008. We want to better understand the
difficulty firms face in gathering data from their systems. At the same time we believe that
organizations that can quickly and accurately collect, organize and analyze their SOH data gain
a competitive edge in improving their future recruiting effectiveness.

We invited our contacts in more than 200 large [5000+], high-profile, name-brand firms to
participate in our study by supplying us with their source of hire data. 59 firms responded by
January 30, 2008. 10 submissions were eliminated because of our company size restrictions or
because their data was incomplete.

Transparent and Anonymous

As with all our work, we seek to stimulate discussion about staffing issues rather than
encourage blind acceptance of data at face value – ours included. We are often publicly critical
of surveys conducted by others and would be remiss if we were any less critical of our own
work. This survey is less about benchmarks and more about SOH practices. We used an online
survey instrument that required individuals supplying the data to provide contact information and
subsequently challenged some of our respondents to explain their data and, indeed, had many
follow up conversations during the short collection and analysis period.

On the other hand, complete transparency has potential consequences and, while study
authors, Gerry Crispin and Mark Mehler, are aware of the companies and the individuals in each
company who responded, the names of the companies who participated in this study will not be
disclosed. We can tell you they represent a cross-section of highly recognizable retail,
technology, transportation, manufacturing, pharmaceutical and finance firms. Many respondents
could accurately be described as industry leaders.

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 Your Talent Supply Chain is only as good as your weakest link

Executive Summary
The CareerXroads Annual Source of Hire Survey is a snapshot of how large, highly-competitive,
high-profile firms maintain and track their SOH data.

Two Major Supply-Chain Challenges are Embedded in the Staffing Process

Data integrity
Obtaining reliable and valid information about the source of any hire has been a continuing
concern of staffing leaders for many years. Very few companies are confident that their own
SOH information is either accurate or complete. Occasionally they blame their Applicant
Tracking Systems (ATS) although these and other technologies are, at most, contributing
factors. Poor design and configuration of application self-report fields, acceptance of missing
data, lack of integration with multiple methods of confirmation, etc. are historically standard
problems.

The real culprit however is that most firms do not pay serious attention to SOH data as a
potential impact on the corporate bottom line. This, coupled with a lack of discipline by recruiters
and their leaders in providing training and enforcement of good data collection protocols, all but
guarantees questionable results.

Our survey is not intended to be representative about how all companies find all employees or,
even whether any one method is better, more efficient or valuable simply because it is more
frequently used. We’re especially critical of studies implying that one source is inherently better
than another based on the collection of flawed data. The truth is that (1) claims of more efficient,
more productive methods are relevant only when applied to a specific combination of job family,
location, level and specialty levels; (2) all methods of collecting SOH information force a single
SOH choice despite the fact that research shows that multiple sources influence a hire to move
through a recruiting pipeline and (3) at least 6% of the SOH data are missing in almost every
firm – no company we know of currently requires SOH choices in their application process and
via other confirming collection methods to ensure every hire has SOH data associated with it
before a requisition is closed.

Access
Recruiters’ access to SOH data for recent/similar hires [sorted by job title, job family] in real-time
is not improving. A business opportunity to push data down to the level it can be used most
effectively goes unfilled. We are not talking about capability here. We are talking about actually
doing it.

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If staffing professionals have any hope of improving their investment decisions [or credibility
with colleagues knowledgeable in supply-chain analysis for that matter], then improving the
collection, analysis and dissemination of SOH data is a must. This, coupled with workforce
data about the supply side pools of talent, will redefine recruiting in competitive corporations
sooner or later. We’re just surprised how long “later” is turning out to be.

 49 firms completed our survey and met our requirements.

 These firms have 1,010,000 employees; and,
 Their staffing functions filled 303,000 openings during 2007.

Key findings for 2007 include

 Internal Transfers and Promotions constitute 30.0% of all the positions a company fills. 15
firms are at or approaching 50%. We note that no firm markets the specific details of this fact
openly to their prospects as proof of their value proposition to develop their employees. This
is a missed opportunity.

 Referrals (employee, alumni, vendor, etc.) make up 28.7% of all external hires and are
arguably the number one external source. (Employee referrals make up between 80-90% of
the hires attributed to this category. Alumni and other types of referrals appear to be growing
rapidly). The efficiency of referrals i.e. “every third referral turns into a hire” is one of the
single most important characteristics of US hiring practices…and not leveraged as well as it
might be

 Hires attributed to Job Boards (including the Company site as a job board) represent 25.7%
of external hires.

 Hires attributed to the Company Website are suspect (we maintain that the company
website is a destination not a source). If one of every eight external hires that are tagged
with the company site as a source were to describe how they got to the website, then other
sources might be significantly elevated.

 There is no silver bullet for diversity hires. Affinity groups, employee referrals and dedicated
recruiters are considered the most productive means to reach diversity candidates.

 The most visible trend in 2007 was the growth of Direct Sourcing (and a related reduction in
agency hires).

 For the first time in seven years of conducting this survey, more firms are predicting that
they will make fewer hires in 2008 than 2007.

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