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Strategic Importance
(November 23, 2004)

Strategic Importance of The Hire

The single most important variable affecting the value of a Resume is the strategic importance of the job for which the Resume is being reviewed. Although it is an imperfect analogue, the single best measure of strategic importance is the salary offered for the position being filled. Typically, companies are willing to compensate their employees (or the brokers of those employees) at a rate that is in proportion to the importance of the slot.

Salary is determined by a range of factors including relative shortage or surplus of the specialty in a regional labor market. The degree to which a company is willing to meet or exceed current median salaries for a position indicates its relative value to the company. Typically, hard to fill positions are outsourced to a specialty organization (search firm) where fees ranging from 15% to 30% of the first year's salary (including options and bonuses) are the norm.

Therefore, the first (and largest) component of a Résumé's value can be measured in terms of the degree to which a company is likely to use a search firm to fill the slot.

We maintain that there are five degrees of strategic importance for which the following values can be assigned (Extremely Low, Low, Moderate, High and Very High). Assuming a normal distribution of the relationship between a company's willingness to use a search firm and strategic importance, we have assigned a total fee value for each value on the spectrum of strategic Importance.

Figure 1. Distribution of Costs in the Recruiting Process
(as a percentage of first year's salary)

Strategic Importance Hiring Fee (Total) Negotiate/ Place Screening CandidateID/
Very High 20% 9% 6% 5%
High 16% 7% 5% 4%
Moderate 12% 5% 4% 3%
Low 8% 3% 3% 2%
Extremely Low 4% 1% 2% 1%

In addition, the value delivered by a search firm can be roughly translated into three separate components: Candidate Identification, Screening and Negotiation-Placement.

Candidate Identification includes all of the activities a firm engages in to produce a database of Resumes regardless of their relevance

Candidate Screening includes the activities involved in selecting from a database of generic Resumes to a subset that is relevant for a specific placement. It can also include a range of screening activities that include background and reference checks.

Negotiation and Placement includes all of the activities involved with preparing candidates for interview through placement of a final candidate in a job.

We have arranged the distribution of costs in this matrix to indicate the relative likelihood that a task will be outsourced. It is neither interesting nor profitable for a company to outsource placements below the midpoint in the scale. Typically, 40 candidate Resumes are collected for each placement resulting in the following matrix of Resume Value. The matrix indicates the base from which a Résumé's value can be further calculated. The matrix is best understood as a sort of 'base price' that requires further analysis. Additional markups are needed to account for opportunity cost (tactical imprecate), general availability of the Resumes in the pool, the value of this type of information in other settings and the synergy that each Resume contributes to a Resume pool.

Figure 2. Basic Dollar Value of a Resume Given Salary and Strategic Import
  Importance   $ $ $ $ $
  Very High     $70     $60     $50     $40     $30  
  High     $56     $48     $40     $32     $24  
  Moderate     $42   $36   $30   $24   $18
  Low     $28     $24     $20     $16     $12  
  Extremely Low     $14     $12     $10     $ 8     $ 6  

Additional Topics:

  • Opportunity Cost (Tactical Importance)    
  • Access To The Resume
  • - John Sumser

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    Materials written by John Sumser © TwoColorHat. All Rights Reserved.
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