28th August 2022

Active Vs. Passive: Which candidates produce the best hires?


Candidate motivations and the quality of hires

In the current climate where talent is in short supply, some candidates with in-demand skills are behaving in a mercenary fashion to maximise their reward packages. Governments are calling for a responsible approach as wage inflation has implications for individual businesses, as well as the economy at large.

There is a lot of pressure on agencies to fill the candidate pipes to keep potential new hires flowing; when talent is sorely needed to help clients achieve targets for growth, government pleas are likely to fall on deaf ears.

Appointing a candidate that prioritises a good reward package does not necessarily make for a bad hire. However, the motivations of candidates are important and it is well worth recruitment practitioners revisiting this topic to avoid losing sight of how this may affect the quality of their hires.

In categorising candidates and deciding whether a candidate negotiating hard for a better rewards deal is going to be a good hire, one important distinction is to identify whether they are active or passive job seekers.

Relative costs and better hires

The ultimate determinant of the quality of a hire is down to the value that each candidate brings to the employer, and that is something that is only proven over time. However, in the equation, it is essential to factor in the costs associated with making each hire.

While chasing passive candidates is not quite a zero-sum game, it is definitely one that reduces ROI in the short term. A disproportionate amount of recruitment budgets goes on head-hunters chasing passive candidates, but on average only about 10% of positions are filled with individually targeted people. Over the longer term, should a passive candidate generate significant value then the ROI increases.

Measuring ROI over the short term, it is far more cost-effective for agencies to push alerts or advertise jobs to active candidates and pursue referrals. However, there is some feeling that active candidates may not make the best hires. They are likely to be more unsettled and less loyal, compared to passive candidates, because they are looking for the next career step. It is interesting to note active job searching by candidates is declining in Australia.

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Recruitment agencies face many challenges. However, back office efficiency is not one of them when you partner with ETZ. We make sure that your back office processes are efficient and optimised.

ETZ’s leading timesheet, invoicing and payment solution, streamlines the back office processing of your recruitment agency. Our complementary solutions, ETZ Comply for onboarding and document management, and Caspian for business intelligence give agencies further capability to streamline and uncover opportunities.

ETZ is the RecTech partner of choice, helping agencies to navigate the pitfalls and obtain excellent value from technology. To find out more, call us on +61 (0) 405 458 821 or book a demo.

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