This is the first in a 3-part blog series encapsulating the fractured nature of IT Recruiting in general and IT Staffing in particular. Part I illustrates the disconnects that leads to entirely avoidable inefficiency, turnover and poor profitability by IT Staffing firms.
By Mark Knowlton
There are few industries that have been set up to struggle so predictably and needlessly like IT Staffing.
The IT Staffing business has evolved from 1960 into the multi-billion dollar industry it is today. Statista says global revenue in 2023 for all staffing is over $590 Billion and that IT Staffing in the US is over $100 Billion.
Topline revenue is massive, but no one seems to dig into the source of their historic 4-5% profit margins. The only major industries that have profit margins on par with IT Staffing are Retail (2-5%), Transportation/Logistics (3-6%) and Manufacturing (4-8%), but they all have massive fixed costs of physical goods. IT Staffing is a service offering, so contrasting the two groups is like comparing an SUV to a skateboard.
Staffing’s ascension post WWII
Staffing became an embedded pulse-like entity in the US economy that helped fuel the explosive growth following WWII. Firms like H.L. Yoh (1940), Kelly Services (1946), Robert Half and Manpower (both 1948) stepped into the vacuum to supply clerical, banking/insurance, accounting, construction and warehouse employment. A resume had deadbolt accuracy when connecting candidates and jobs:
• A construction project manager who builds automotive manufacturing facilities
• A cost accountant for the Textile industry
• A business loan specialist for ship building
Candidates qualified for positions like those had resumes that were bolted to the job description. It took zero training to see the obvious fits. Enter software programming as companies started using computers to run their operations. The binary connector between job descriptions and resumes became a spider web. The complexity of matching resumes and jobs went up by orders of magnitude.
IT jobs complexity muddies the match
The HR Tech space has introduced incredible innovation in products for sourcing, job posting and candidate tracking, but the methodology never changed: Match resume buzzwords to keywords in job descriptions. Programming languages and Internet protocols can mean 10 different things in as many job descriptions at different companies.
Qualifying a candidate for a software engineer role must be based on their ability to produce a deliverable for that job. Looking for ‘Python’, ‘Microservices’ or ‘API’ on a resume does nothing to establish competency. Sure, easier said than done. I am not trying to trivialize the technical challenge of doing a legitimate pre-screen before a developer gets invited to an on-site interview.
It is incumbent on the Recruiter to qualify the candidates they represent, even when dealing with deeply technical ones. Recruiters are not technical, but you still should find some way to validate a person’s technical qualifications and submit them in a timely fashion. Unfortunately, there are lazy legacy attitudes on both sides of the fence when it comes to using buzzwords as a litmus test for ‘fit’.
Buzzwords become misdirection
I got into Staffing in 1996 and knew nothing about technology, just like my colleagues. My manager had an axiom when a recruiter was on the fence about sending a resume: “Let the manager decide.” I have no doubt he learned that from a boss who was taught the same sentiment from the person who trained him. Technical managers play a role in this theater as well. I was consulting at a major global software company and one manager in particular once described his outlook on reviewing candidates: “All resumes will be buzzword-compliant.”
Staffing recruiters are managed by their KPIs, but Corporate TA recruiters also have to answer for how many candidates they have submitted. They may have direct manager access, but they face pressure to cover all of the positions on their plate. This extant pressure has created the practices lampooned as “spray and pray” and “throw it against the wall and see if it sticks” when it comes to IT Recruiters trying to fill roles. Corporate recruiters don’t have the same intensity of scrutiny on KPIs as Staffing recruiters do, but they want to skate through their weekly updates by saying that they “covered” all of their positions with at least one submittal.
Quarter Century quandary
The TechServe Alliance is a leading research firm focusing on IT and Engineering recruiting and they have been publishing detailed operational reports on the industry for 25 years. One of the key KPIs they track is the submittal-to-start, which tells you how many candidates it took to fill a role. They have historically reported that member firms will need to make 12 submittals to get one hire. That means an 8% hit rate. How many other occupations can you list where a 92% failure rate is the accepted norm?
It is like having a Tuesday in IT Staffing. Having an 8% success rate on submittals means that 92% of the effort they expended on making submittals has gone to waste. In any given year, the TechServe Alliance will tell you that more than half of the people at IT Staffing firms are not generating enough revenue to pay for themselves. When an owner makes an offer to a new employee, they know there is a 67% chance that person will be out of the industry in 4 years.
A major reason for this is that Recruiters are relying exclusively on the resume to make the argument for their candidate. We will give an in-depth analysis of the other side of that coin in the second segment of this series.
Sometimes a staffing firm might pay one of their trusted consultants to do a pre-screening interview, but those instances are rare, they will be inconsistent by default and the practice doesn’t scale. Staffing firms complain that they don’t get ‘manager contact’ because of giant VMS programs, but it is largely an empty lament. When they do get to spend time with a manager, they will likely fall back on chasing buzzwords, ‘What (skills) are you looking for .., what are the nice to haves …. If they don’t have Docker, would you accept Kubernetes?’
I recently had a conversation with a seasoned staffing sales manager who told me that a recent job was well-scoped because he took it himself. He listed his questions, which were seeking skill sets. Ibid.
WORK on job Intake call
I created a methodology called WORK that was designed to extract deliverables during the job intake call. It gives the recruiters a template to write better job descriptions for postings. Candidates care about what they are building and the type of problem they are solving. SO many job descriptions are antiseptic lists of responsibilities and types of experience that don’t provide candidates with the “what’s in it for them” material.
WORK isn’t an actual acronym, but its letters provide an easy-to-remember blueprint for the questions you should ask in a job intake call. It will also give you at least one qualification question that will tell the manager if your candidate has the knowledge to produce a critical deliverable for the role.
There are three W’s in WORK, followed by the remaining anchor letters:
(W): What are you building and what business problem will it solve?
This will be the anchor for the job description, which often reads like rote exercises to just check a box. Capturing a detailed illustration about what they will be building and the problem it solves will attract more candidates.
(W) What deliverable will you ask this candidate to hit in their first 90-120 days?
Every submittal is a request for the manager’s time, so show them that you respect it by helping give them evidence of your candidate’s worthiness to be considered.
(W) What question can we ask a candidate that will resolutely validate that they have the knowledge and experience to produce this work artifact?
This gives you material to ask a legitimate technical qualification question to prove who is worth sending to the manager. Think about how much more your candidate will stand out to the manager if they are reading an explanation for how someone would build a solution they need.
(O) What OBJECTIVE are you targeting on this project and what business outcome are you expecting?
When candidates ask to read the job description, this is the kind of substance they are seeking. Again, think about how much you want candidates to respond to your job description.
(R) Name the technical REQUIREMENTS this candidate must bring to this project
Now we finally get to the technical stack, but you should never let the manager lead you down the path of buzzwords. Make the manager tell you how each of the technical pieces fit into the project and the role the technology is playing.
(K) What KEY attributes or competencies would separate two equally qualified candidates?
Also ask them what kind of candidate/persona will NOT be a good fit for the environment and why. “Hey, we have a dynamic environment and requirements can change on a dime; if a candidate is going to lose it because we change course by 45 degrees, they will hate it ...
Ultimately, IT Staffing firms need to be more focused on understanding how to qualify candidates. The technical buzzwords are unavoidable, but they are a starting point, not an end game.
Mark Knowlton is the CEO and Founder of TechScreen, the world’s only interview platform that uses AI to score and summarize a live verbal interview on the fly.