New Research Reveals the Hiring Challenges of Small and Mid-sized Companies
Small and mid-sized businesses go through 86 candidates to find one hire, the study finds.
By Andrew R. McIlvaine
It takes small and mid-sized businesses an average of 86 candidates, 15 resume screens, 4.7 onsite interviews and 1.5 offers to secure one hire, according to a year-long study of more than 600 companies around the world by Lever, a San Francisco-based recruiting software firm. The research suggests that small and mid-sized businesses (those with 200 or fewer employees), with their 1 in 86 hire ratio, have a more efficient hiring process than larger companies, considering that a 2016 study from Lever which examined companies of all sizes -- from startups to large enterprises -- showed a hiring ratio of one in 100.
Lever's latest research found the most selective stage in the recruiting process for SMBs is the first one -- the progression from new candidate to screen. Overall, only 17 percent of all candidates get an invite from the company for an initial conversation. Applicants (people submitting their resumes directly) are the least likely to advance, with only 13 percent being selected for a screen. On the flip side, candidates referred to the company have a preliminary conversation 57 percent of the time -- over three times the average. Candidates sent by recruiting agencies are screened even more often (59 percent of the time), implying they are just as attractive as referrals in the early stages. Recruiters conduct screens with sourced candidates (a.k.a. "passive candidates") 21 percent of the time.
The research also found the hiring process isn't complete once an offer is extended, as roughly 30 percent of candidates decline an offer. Engineering (59 percent), product management (63 percent), and business development candidates (63 percent) accept their offers at the lowest rate, while customer success candidates accept their offers at the highest rate (78 percent), followed by design (76 percent), and sales (74 percent).
The study also finds that, once they reach the on-site interview stage, applicants and sourced candidates receive offers at similar rates -- 30 and 31 percent, respectively. A much higher percentage of referrals who come onsite (42 percent) receive an offer, while agency candidates trail behind at only 23 percent.
Applicants have the lowest hire ratio (one in every 128 applicants is hired), but represent 71 percent of the average candidate pool. Conversely, referrals represent 2 percent of the candidate pool but 14 percent of hires.
"Strong, efficient hiring is a true competitive advantage in the SMB market, yet many companies are unsure how to boost efficiency while also decreasing investment," says Sarah Nahm, CEO and co-founder of Lever. "This research shows businesses must simultaneously nurture their networks for referrals, source passive candidates, improve the quality of their incoming applications and have backup offers at the ready. 'The smaller the team, the higher the stakes and the SMBs that apply this mentality to their hiring process will be the ones who succeed."
Lever's report also addressed SMB and start-up hiring by position, and found that sales candidates (25 percent) are most likely to receive a screen, and 44 percent of sales candidates progress from a screen to an on-site interview. Engineering candidates have an above-average chance of securing a preliminary conversation with a company, but face the toughest screen-to-on-site interview process. Account management, business development and operations candidates receive offers after interviewing on-site at the highest rate (32 percent), while product management (26 percent) and design (27 percent) candidates receive offers at the lowest rate.