Fernandez-Araoz draws from his experience that the best recruiters he has met so far, have a correlation (correlation coefficient) between a candidate's assessment and a candidate's subsequent job performance of 0.7.

To explain: A perfect correlation is 1.0 and a very small correlation coefficient is 0.2.

According to Fernandez-Araoz, most recruiters have a coefficient of 0.3, which represents a very low probability between the assessment and the candidate's performance in the job.

To demonstrate how difficult is to present the correct candidate to the client, the author created an almost perfect artificial recruiter, who is right 90 % of the time. Surprisingly, even this almost vice-God recruiter has an error rate of 50 %, which is the same probability as flipping a coin.

I have illustrated this calculation based on the model of the author of the book.

## Odds of picking a top performer (if you are right 90 % of the time)

** **

**1 2 3**

**The yellow candidates are the top 10 %.**These are the candidates, which should be selected for a specific job.**The blue candidates are all candidates, which do not or only partially fulfill the job criteria**.- If a recruiter is 90 % of the time right, he will choose 9 candidates correctly, which are colored in green, but at the same time he will choose 9 wrong candidates. So the odds here are 50/50.
- In Total, he will have chosen 18 candidates of which only 9 are the top performers. Thus the error-rate is 50 %

## Lessons

The sad part is that it is impossible to achieve a coefficient of 0.9, according to the authors’ long-standing experience in the industry. And it gets even worse, even if you achieve a coefficient of 0.7 your error-rate would still be 79 %!!

This calculation is quite controversial as, of course, every recruitment agency tries to avoid this scenario. The author does also not intend to devalue the work of the recruiters. On the contrary, he gives 2 very good advice how recruitment companies can avoid selecting wrong candidates.

## Create a valuable pool

A recruitment agency should hire above-average recruiters who can evaluate the profile of a candidate correctly. The crucial point is that the recruiters need to make sure that more than 10 % of the selected candidates are «stars». Once a recruitment company can manage to have a pool of above-average candidates, the coefficient rate can be lower, and the company can still satisfy the client. Thus, a recruitment agency should hire the best recruiters available on the market. What does it mean to be a good recruiter? Well, this is another topic.

## Testing the candidates

Once you have hired skilled recruiters, the recruitment process needs to be thoroughly. Recruiters should take their time and test the candidates on every level possible. This must be done as efficiently as possible because the speed means a lot in this business.

## It is the quality and not the quantity that satisfies the client

It is important to always keep in mind that you do not send 18 applicants as shown in the example above, if there is only 1 position to be filled. The goal of outsourced recruiting is to represent the top candidates to the client and not to send him more work to do. If you are a dedicated recruiter, you should be able to send e.g. 5 applicants of which at least 1 applicant is a «top-match»