- Second best in anything means only one thing; not the best.
- And in recruiting, settling for second best can be a huge mistake.
- Why? Because you didn’t pick “The Best.”
What comes to mind when you hear the words “second best?”
Runner up? First loser? Almost made it?
While a person can come up with a whole bunch of explanations and identifiers for those who “also ran,” when everything is said and done, there can only be one number one. They are the winner. They are the best.
When an employer, business owner or hiring manager has a position to fill, they should instinctually try to hire the best candidate they face during the interview process, i.e. the winner, the number one.
Nonetheless, there are cases in which second best candidates have been hired, and that hiring has invariably led to a huge mistake that many companies will regret from here onward into the future.
With that outlined, ERE Recruiting Intelligence breaks down the financial and performance costs to a company when they hire the second best candidate for an open position and not the first.
Settling for Second.
“Settling for” a second-choice candidate means that you’re not hiring the best. This is obvious, and we all know it to be true. But a wider implication is how hiring #2 can affect a business.
For example, few know that by hiring a second-choice candidate can mean suffering a 20 percent performance drop off.
This performance loss is better understood when the percent is converted into dollars.
For example, according to ERE, a 20 percent drop off from a top salesperson who would make $500,000 in sales is a whopping $100,000 loss each year. That $100,000 loss makes worrying about the average cost per hire of $4,129 seem almost silly (the CPH recruiting metric, surprisingly, gets more attention).
The Numerous Measurable Benefits From Hiring the #1 Candidate
Note down how many performance areas in your company that are positively impacted when you don’t have to “settle for No. 2,” and you will be far ahead in the recruiting game.
In addition to that, the many benefits that make the No. 1 candidate a superior choice include:
- Superior on-the-job performance differential in which the typical differential advantage for No. 1 can range from 15 percent up to 33 percent. And, when an innovator is the No. 1 candidate and No. 2 is not, the performance differential can, according to the ERE article, rise as high as triple digits. Of course these performance and capability losses over hundreds of hires at your firm means the loss of millions. If the lost No. 1 candidate was seeking a revenue-generating position, the dollar loss will be immediately visible.
- Increase chances for a new leader — many times leadership potential is a key differential between No. 1 and No. 2 candidates. Assume that the loss of the top candidate will mean fewer future leaders for the firm. In addition, a No. 2 new hire will likely have a lower career trajectory with shorter retention and fewer promotions.
- They will support your culture — many times cultural fit is also a key differentiator between the top two candidates. Hiring the No. 1 candidate means that they will likely strengthen and reinforce your corporate culture for years.
- They get up to speed faster — because they have superior qualifications, the top candidate will likely get up to speed and reach their expected productivity levels much faster. In addition, they are likely to make fewer errors and to cause fewer negative customer impacts.
- Increased team learning — the No. 1 candidate likely has advanced knowledge, new ideas, and best practices that they can share. If they are hired, the rest of the team will benefit by directly learning from them if they serve as a role model.
- Freeing up a manager’s time — when the No. 2 is the new hire, they will likely require more training, coaching, and a great deal of the manager’s time. In contrast, the No. 1 candidate will likely be a self-starter with initiative and drive.
- They will attract others — hiring a truly exceptional No. 1 candidate who is well known throughout the industry will help draw other top talent to your firm, something a No. 2 could never do.
- No. 1 is lost to your competitor — in many cases the “lost” No. 1 candidate will go to a competitor (you can find out on LinkedIn). Your firm will lose while a competitor gains.
- Negative consequences if No. 2 finds out — that they weren’t the first choice. Be prepared for offer turndowns, early turnover, or simply a loss in motivation.
If recruiting leaders want to be strategic, they must ask themselves this question for each key job: “What will the dollar loss and the percent drop off in on-the-job performance be if we have to settle for our second-choice candidate?”
The Top 10 Actions to Ensure That You Land Your No. 1 Candidate
As a recruiting leader, even at a medium-size company, once you realize that settling for the No. 2 candidate is literally costing you tens of millions of dollars each year in lower new-hire performance, your first action should be to share those quantified impacts with executives and hiring managers.
Then, once it is established that your company is losing this much money due to inadequate hiring practices, take proactive steps to ensure that only in rare cases do you lose your No. 1 candidate. Additional action steps should include:
- Begin calculating the performance drop off — if you have ever hired both the No. 1 and the No. 2 candidates simultaneously for a job whose performance is quantified (like in sales), go back and calculate the percentage of performance differential during their first year between the first- and second-ranked hires.
- Show managers the real cost of settling for “butts in chairs” — you can’t expect managers to act differently until they understand how losing a No. 1 candidate directly hurts their business results. So, work with the CFO’s office to help quantify the performance loss to a team when a manager settles for a No. 2 or lower candidate. Find a way to remind them of this loss whenever they open a requisition.
- Identify where top candidates drop out — identify your “number ones” that dropped out of your recruiting process before an offer was made. Note on a recruiting step process map where each one dropped out. Obviously, you will want to strengthen how you treat your number one’s during those critical dropout steps.
- Identify why top candidates dropped out — once you have identified the No. 1 candidates who dropped out early over the last year, call or survey at least a sample of your No. 1 dropouts. Ask them to rank their top three reasons for dropping out. Use this information to reduce those primary causes.
- Verify the real reasons why top finalists said no to your offer — because they don’t want to burn bridges. Often finalists are not 100 percent honest on the day that they provide their reasons for turning down your offer.
- Speed up your hiring process — almost universally the primary reason why firms lose their No. 1 candidate is because of their painfully slow hiring decisions. Top candidates have multiple choices. They will inevitably take a “bird in hand” offer rather than waiting for yours. Many top candidates may be gone within 10 days. You can bet that “you’ve already lost your top pick” if it takes more than a month to hire someone.”
- Shift to a data-driven process — because the competition for top talent is so intense, both your selling and offer processes should be as data-driven as possible. Start by asking top candidates to list their job-acceptance criteria (what they need before they can say yes) and any deal-breaker factors. Sculpt your selling plan and your offer to meet them.
- Improve the candidate experience — start out by making sure that everyone involved in the hiring process understands that top candidates often have egos, so they need to be treated right. For example, don’t keep secrets. Let them know that they are a top pick.
- Make tracking No. 1 candidate losses a standard practice — make it a standard practice to track the percentage of No. 1 candidates that were not hired and the estimated dollar loss to the firm. Also, use candidate and finalist feedback to continually improve your hiring and offer process.
- When your No. 1 is also an innovator, treat them as special — because the performance value produced by an innovator may be 10 to 25 times higher than average hire. Calculate and widely report the costs of losing one to a competitor. When you have a No. 1 candidate who is clearly an innovator, tailor your candidate experience so that they feel welcomed and needed.
Settling for your #2 candidate can undoubtedly have dire consequences to your business, your business’s culture and most importantly, your bottom line.
Analyze the minuses – because there are no pluses to hiring the second best – to see exactly what you stand to lose by not hiring the top candidate.
The results will be enough to shock you into never making such a huge recruiting mistake again.