This piece originally appeared at First Round Review.
Eric Feng made a lot happen at Hulu in just three years. As the first senior executive the company hired, he played a pivotal role in the development of Hulu.com, the desktop app, distribution, and advertising. He served as spokesperson and even coded a large part of the site’s front-end himself. And it paid off—Hulu rose to become the number two video site on the internet, drawing 43 million unique viewers a month. But one accomplishment made all of this possible: He hired extremely well.
By the time he left the company, he’d recruited and led an 80-person technology organization that spanned engineering, product management, design, and operations. And now, as CTO at Flipboard, he’s growing yet another rocket ship team, applying many of the tactics he learned, especially this one:
You have to be as data-driven about your hiring as you are about your product. Do you take candidate close rates as seriously as your daily active user figures? Can your hiring managers not just tell you that hiring is going well, but use numbers to tell you why?
“As W. Edwards Demming—often considered the world’s first data scientist—said, ‘You can’t manage what you don’t measure,’” Feng shares. At First Round’s recent CTO Summit, he outlined the strategies he uses to crunch recruiting numbers, derive meaningful lessons, and put them to good use. Along the way, he provided a number of tips and actions companies can take to get world-class talent in the door.
The first formula you’ll need is an easy one. When you’re considering target numbers for each stage of your hiring funnel, just divide by four. Like many hiring managers, Feng identifies four key stages in the recruiting lifecycle:
When you think about how many people you need to hire, just do some quick division (or multiplication, that is, depending on which end you’re starting at). Say you’re looking for a single engineer, your hiring funnel should look something like this:
- If you source 64 candidates…
- 16 should make it to your screening process.
- four should be put through the hiring process.
- one should get the offer (and be overwhelmingly likely to take the job).
Of course, this is just an approximate guideline. But it helps. “When you understand how the buckets flow and roughly how many people you should have at each stage, you can fine-tune places that are really imbalanced,” Feng says. “For example, if you’re trying to hire one person, you shouldn’t start with one person at the top of the funnel. That’s not going to work. I can promise you that.”
Comparing your numbers against the divide by four benchmark—actually doing that math—can help you spot where your process may be breaking down or running ineffectively.
At each stage, it’s not enough to hope that the numbers line up. Below are key strategies every startup can implement to ensure that recruiting leads to the best possible hires.
SOURCING: From 64 to 16
Before you can move forward, you need to find enough candidates that meet your needs. And the most important thing leaders can do to source smarter is diversify. That is, you should be finding roughly equal numbers of candidates through the big three recruiting channels: outbound, inbound, and referrals. When one source dramatically outpaces the others, companies get tripped up, Feng says, so you want to capture data on each.
“Take referrals but don’t focus on only referrals. If you do that, you don’t get enough diversity in your candidate pool. And referrals eventually start to wind down as you tap out your networks.” Building a sustainable pipeline of prospective hires—one that will continue to meet your hiring needs as your company grows—depends on cultivating a strong command over each of these sources of candidates:
Referrals (a.k.a. the most popular channel):
“The biggest misstep I see with how companies implement referral programs is that they say, ‘Okay, we’re really going to put a focus on referrals, so we’re going to throw down a referral bonus. That’s it.’” Cash incentives are great, but Feng cautions that a successful referral strategy takes more than a bonus. In fact, your own team is the main audience you should be marketing open positions to, constantly.
“At Flipboard, it’s part of our onboarding process. During that first week, new employees sit down with the recruiting team, and we talk about the referral program,” Feng says. While they’re together, new employees are even asked to do a quick pass of their LinkedIn and Facebook networks to jog their memory of any candidates they might know and recommend.
Emphasizing referrals shouldn’t stop there. “Highlight open positions during weekly huddles or all-hands meetings, like, ‘Hey, the data science team has two open reqs, and they’re looking for people with this kind of experience.’ That goes a long way.”
Feng goes as far as to hold regular referral events at Flipboard, making mining top candidates as simple as getting the team in one room with a few pizzas and their laptops. “Hiring managers come in and share their open positions. Then we have everyone sit down and go through LinkedIn, Facebook, Twitter, GitHub—anywhere they might know people—and build a list out of those referrals.”
Positive reinforcement is incredibly powerful when it comes to motivating people to refer.
During a referral’s first week on the job, during our all-hands, we will not only welcome the new person, we will recognize how that person came in. We give the referrer their bonus on the spot.
That’s a very public, rewarding reminder of the mutual benefits of referral hiring. People will keep it top of mind after seeing something like that.
The secret to a strong outbound sourcing program, Feng says, is looking in unexpected places. “A lot of people just start at LinkedIn, and that’s it. They’re done. That doesn’t work. You have to have a very diverse index of places that you’re constantly combing for candidates.”
First there are the tried and true: Facebook, GitHub, Stack Overflow. Feng also advises startups to look at the latest new marketplaces—places like Whitetruffle, Hired.com, Geeklist, and HackerRankX—which can be particularly valuable for finding more junior hires.
Recruiting agencies are also still an important way to supplement efforts at the top of your hiring funnel. “As long as you leverage them for what they do best, agencies can serve a really valuable purpose in terms of helping you surface an array of candidates to pull from. I find agencies are really great for senior hires,” Feng says.
“It doesn’t matter if you’re a tiny company or Google, you should have a good flow of people applying for your jobs proactively,” Feng says. And whether you’re marketing your product or your open reqs, your secret weapon is the same: Good storytelling.
More and more companies are deviating from traditional job descriptions with requirements and qualifications to provide a more holistic account of their company and how the role their seeking is pivotal. Medium is a prime example, with job posts that aim to give viewers a real sense of what life is like at the company and what they could anticipate if they joined. Flipboard takes this creativity one step further, creating custom pages for each functional area that include quotes from high-ranking employees in that area, and links to what other members of the team have been sharing on the Flipboard product.
Even if you’ve penned the most compelling job description the recruiting world has ever seen, it’s not enough to post it to your website and walk away. “You’ve got to get the word out. You have to get that story out in as many places as possible, wherever your target candidates are conducting their search. About 40% of job applicants use social networks that aren’t Facebook and LinkedIn.”
You know that your startup is an exciting, fast-paced place to work, so make sure your job postings aren’t inadvertently telling an inaccurate story. Don’t let your job posts go stale. After about 16 weeks, you’ll see a drop-off in inbound interest. If you’ve passed that point, just pull the post down, freshen it up, wait a week, and repost it.
Once you have interested parties sending in their materials, you need to make a commitment to engage quickly and keep them interested in you. “Don’t forget that sourcing is also selling. For each channel you use to source candidates, you need to use different strategies to sell them when you reach out.”
For candidates coming through referrals: You need to leverage your referring employee. “You should say, ‘Hey, Susan went to school with you. You think very highly of Susan. She thinks very highly of you. We should talk,’” Feng says. Your referral loses impact if you simply turn it into a cold call. “You have an unfair advantage because of that connection. Make sure you use it.”
For outbound candidates: When you contact prospective candidates, Feng says it’s imperative to be bold and not shy away from stating your purpose outright. “LinkedIn published a really interesting stat: Only 25% of the workforce is actively looking at any given time, but 85% is willing to talk.” Odds are good that the candidate you’ve spotted will welcome your email.
That said, you don’t want to be careless. “You’ve got to be a human. Maybe you’re going to use mail merge. You’re going to do a lot of automation. You’re going to copy and paste. But try your best to come out of it still sounding like a human, because that’s the number one filter for candidates,” Feng says. Personalize your outreach wherever possible, and speak to the motivation of that particular candidate. Keep it short. The longer it is, the more desperate you can look, and the more power you give up.
For inbound candidates: “When you get resumes or emails about jobs, you should have a 100% response rate. You really should. There’s no excuse when somebody takes the time to reach out to your company for not taking the time to respond,” Feng says. Your messages can be very simple, just a couple of lines even. But if recruiting is sales, then your response rates should be as consistent as your sales reps.’
“If a customer of yours were to complain, if they were to email you directly about a bug, you’d probably respond. Similarly, when somebody is so interested in your company that they want to work for you, you should treat them with that same level of respect.” Remember that the world is small, word gets around. You want everyone to have high opinions of you and hear high opinions of you.
SCREENING: From 16 to four
At this point, your sourcing efforts have yielded a strong crop of prospective employees (about 24% of all the candidates you sourced). Now it’s time to evaluate those top 16 engaged candidates and select the best four to interview. This vital step between sourcing and interviewing is where companies’ hiring processes have the most room for improvement.
“I’m an engineer. I love applying technology. Screening is where I’ve seen the most opportunity to mix in technology to actually make big changes, big improvements, in your overall lifecycle,” Feng says. “It all starts with data.”
For starters, if you’re not using an applicant tracking system, you should be. “Studies have shown that you can actually improve your efficiency by at least 50% through an applicant tracking system.” And there are plenty to choose from. Find whichever one works best for your hiring needs. The point is that once you have this software in place, you’ll also have a data layer for your recruiting efforts.
You can’t really figure out where in the process you’re breaking down—Am I being successful? Am I not?—without data.
You need a way to store and pull regularly from this data. Feng recommends that companies start by tracking four key hiring metrics:
- All open positions
- All the candidate information you get
- Full engagement history with that candidate
- Any feedback that you have about that candidate
“If you store those four things in a database somewhere, at that point you’ll have the raw ingredients to be able to figure out how you’re performing,” he says.
Technology can do more than help you analyze your screening—it can actually help you perform your screening, too. Phone screens and email conversations are the norm, but, as Feng points out, words and the way they’re spoken actually represent less than 50% of what a candidate is communicating. Think body language, face expressions, etc.
“Video screening is a really efficient way to get far more signal about a candidate, and that signal can allow you to make better decisions.” Since 2011, the use of video interviewing has risen 49%, Feng notes, with six in 10 HR managers now using it to interview candidates.
For engineering hiring, coding challenges are another powerful way to leverage technology to quickly and measurably learn a lot about a candidate during the screen—as Feng puts it, to extract more signal—with minimal effort on your part. “At Flipboard, we built the site challenge.flipboard.com, where we post engineering problems. A large percentage of our candidates take this challenge, and it provides a ton of interesting data,” Feng says.
To get the most out of this exercise, he suggests a few dos and don’ts:
Do: Build your own coding challenge. “You can use third-party services, and there are a bunch of them, but it’s actually fun to build your own.” At Flipboard, it’s even become part of staff morale building. “We have our engineers take our tests, which is a lot of fun and gives us a lot of good info on whether it’s hard enough or not.”
Don’t: Get fancy. “You don’t have to A/B test your challenge. You don’t have to have 7 different challenges for each position.” That will end up being a waste of time. The ROI is low.
Do: Keep it really open-ended. “It’s not important that the challenge be just for a specific coding language or domain.” A general challenge is the most efficient and repeatable process, so go ahead and let each candidate work in whatever way they’re most comfortable.
Remember, the goal here is to start a conversation as much as it is to screen for skills. Armed with new insight into each candidate, you can dig right into every phone screen or interview. “We simply ask candidates about the challenge,” Feng says. “’Why did you decide to use this language? Why did you decide to implement it this way?’” The way someone speaks about the actions they just took usually provides enough to suss out the high performers who are also good communicators.
INTERVIEWING: From four to one
By the time you get to in-person, onsite interviews, you’re dealing with the very top of your candidate pool—and you’re still going to eliminate 75% of them.
“I find that the interview stage is actually one of the most controversial in the whole recruiting lifecycle, because we’re implying that you should have a 25% success rate—which is a pretty high failure rate,” Feng says. Given that it’s also the most expensive stage of that lifecycle—you’re committing your time, and likely a lot of your team’s, and possibly paying for flights, hotels, dinners, and more—that failure rate might sound like a pretty steep cost.
But Feng insists that it’s entirely worthwhile. “When you’re conducting an interview, there are really four main things you’re trying to do: Evaluate skills and mutually assess fit, of course. But you also need to build internal alignment; you need your team to feel confident that they’ve made a good hire. And, finally, you have an opportunity to build brand.”
Notably, You can accomplish the latter two of those four things whether you hire a candidate or not. Most companies don’t even think of hiring as a chance to strengthen their brand or their existing team. There’s a lot to capitalize on.
Companies may also not think about what happens to the 75% after they leave the interview, and that’s a mistake. For one, after days and weeks spent deeply engaging with your company, they’re perfectly poised to become brand ambassadors—or not.
“Candidates are going to tell people about your company. They can say good things or they can say bad things. The whole process with them is an opportunity for you to actually create an evangelist, to create somebody that’s going to be spreading your message for the rest the world, which is very powerful,” Feng says.
Candidates are potential customers, too. How you treat them during the recruiting process will have a bearing on whether they go on to use your product or not. “Make sure that you’re thinking about the brand-building experience. Don’t think of interviewing as a waste of time or a fool’s errand if you don’t end up hiring that person,” Feng says. It’s possible to create a positive outcome no matter what.
Stacking it all together
Once you intimately understand your recruiting lifecycle—broken down into stages, complete with target numbers at each stage—you can better understand how your organization is performing. Beyond that, you can focus on changing, fixing, and experimenting with your process at the points where it’s underperforming, Feng says.
Did you end up interviewing 30 candidates and wasting a lot of time? Or did you interview just one person—and, if so, was that because you didn’t have enough people in the funnel, or because you screened out way too many? “Understanding how the process works by looking at numbers can really help you see clearly where the inefficiencies are and get them out of your system.”