The biggest mistake founders make when scaling up recruiting
My company Dover is building a recruiting orchestration platform to help companies find and hire the best talent. Over the past two years, I’ve helped 100+ founders and hiring managers understand how to run a data-driven recruiting process and get the results they want.
This post is about the single most common mistake I’ve seen founders make when scaling up recruiting: misunderstanding how the shape of the candidate funnel will differ across candidate sources. Comparing candidate sources purely on time-to-hire or cost-per-hire is easy, but it’s often an oversimplification that can lead to inefficiencies in your interview process and misguided expectations about your candidate pipeline.
What is a candidate source?
A candidate source is any pool of candidates that you can get into your interview process.
Some examples of candidate sources:
- job applicants from a job posting on Indeed
- an employee’s network
- candidates introduced to you by a contingency recruiter
- …and so on
Candidate sources generally fall into one of three channels:
- referrals (network-based)
- inbound (candidates find you)
- outbound (you find the candidates)
When making the first one or two hires at your company, founders should focus on a single candidate source: the founders’ personal network. Early on, the main thing your company has is the founding team itself––your network will have the candidates that know you best, and therefore trust you most.
Once you start to scale and have some more resources to devote to hiring, you will need to start expanding to more candidate sources.
The candidate pool from each candidate source will be slightly different. Some candidate sources contain primarily active candidates (job applicants) while some are mostly passive (LinkedIn). Some are prequalified with a phone screen (contingency recruiters) while others are not.
Founders often make an apples-to-apples comparison between candidate sources without taking into account the inherent differences between them and how those will affect their hiring outcomes. Ignoring the differences between candidate sources leads to problems across your entire recruiting process, such as increasing your time to hire, wasting your team’s time, and missing out on the best candidates.
Every candidate source has tradeoffs
Below are a few common mistakes I’ve seen dozens of companies make when evaluating which candidate sources to invest in.
Candidate Source: LinkedIn Job Posting
Summary: A job posted to LinkedIn will have a lot of applicants, but very few will be qualified for a phone screen.
Posting a job to LinkedIn will give you a rush of dopamine (by design), as you’ll usually see dozens of applications within hours of posting. But most candidates applying on LinkedIn are poor fits––most companies have a ~1-3% interview rate from this applicant pool.
Moreover, it might feel like there are endless candidates and that you’ve found a scalable hiring strategy. However, LinkedIn intentionally advertises your job in front of the most active candidates first, so there is a steep drop-off in the number of applicants after the first few days of posting the job.
Candidate Source: AngelList outreach
Summary: Reaching out to candidates on AngelList leads to high response rates to your messages, but low candidate depth.
AngelList does a great job of attracting people who want to work at a startup. Candidates sign up because they are excited to chat with startups that might not be super well-known. After a few hours of outbound on the platform, you’ll likely get a solid number of first phone calls scheduled.
But as you’re scaling up hiring, you’ll quickly go through the top candidates on the platform. You’ll have to reach out to either less active candidates or less qualified candidates, increasing the number of hours you’ll need to put in to make a hire.
Candidate Source: Triplebyte
Summary: Managed agencies like Triplebyte will often have high candidate quality, but low offer-to-hire conversion.
Triplebyte vets engineering candidates with a thorough technical interview before allowing them to join the platform. Companies using Triplebyte will often see an increase in candidate quality, as a lot higher percentage of Triplebyte candidates will pass your technical bar and your onsite.
However, companies like Triplebyte often appeal to candidates who want to run a competitive interview process with many companies at once. Since candidates get a fast-track to onsites, candidates do a lot more interviews and get more offers. This inherently reduces the offer-to-hire conversion for companies on the platform (e.g. if the average Triplebyte candidate gets 5 offers, then the average company using Triplebyte will have a 20% offer-to-hire conversion).
Since larger companies like Facebook use Triplebyte, smaller startups without a lot of publicity might find it harder to compete for candidates, especially when it comes to compensation. The risk with this particular candidate funnel shape is that your team will spend a lot of time on onsites for candidates that may not end up closing.
Candidate Source: LinkedIn outreach
Summary: Sending outbound emails to passive candidates will yield the highest candidate quality and depth, but requires a large time commitment to execute.
Outbound recruiting gives you the largest possible candidate pool: everyone. If your startup can get people excited in just a few sentences, then outbound may be a good fit for you. Typically, outbound is the most time-consuming of the three recruiting channels, so you’ll have to dedicate a lot more time to it (unless you’re using Dover).
The downside with outbound is that sometimes candidates are open to chatting on the phone just to network with you, and aren’t actually ready to switch jobs. Passive candidates may also have less urgency throughout the interview process, slowing down the time-to-hire.
Candidate Source: Employee referrals
Summary: Employee referrals will have high candidate quality and response rates but very limited depth.
Your employees know your company and your culture best. They can make the best recommendations on who in their network could be a good fit for your company. But these candidates often aren’t actively looking, and there are some diversity risks through scaling up a recruiting strategy entirely through referrals.
Cover all your bases
As you can start to see, each candidate source has many tradeoffs that need to be considered when building up a comprehensive recruiting strategy. You must evaluate each candidate source on a few different dimensions to make sure you’re using the combination that’s right given your stage of company, your desired workload, and your candidate bar.
Here are the most important variables to keep an eye on for each recruiting channel:
- Cost — how much do you spend per applicant, phone screen, and hire?
- Workload — how much time is spent per week to get a candidate to convert (i.e. get to a phone screen)? Also, who is doing the work (a founder, a hiring manager, or recruiter)?
- Depth — how many good first phone screens per week you can get?
- Latency — how long does it take you to make the hire?
- Funnel conversion — what percentage of candidates make it past the each stage in the process (phone screen, technical assessment, onsite, offer)? How does your funnel compare to benchmarks?
These role-specific variables will also have an effect on which channels you should ultimately decide to use:
- Role type — hiring an engineer (hard market) will take longer than hiring an account executive (softer market)
- Geography — hiring remotely will give you more depth than restricting candidates to one city
- Channel source type — inbound channels will deliver a higher volume of candidates, but a lower signal-to-noise ratio
Taking a multi-pronged approach and utilizing all candidate sources will make your recruiting faster, more effective, and more affordable.
Max Kolysh is the founder and CEO of Dover. Dover is the first recruiting orchestration platform, making it easy for you to cover all your bases when it comes to candidate sources.