Most staffing operations are swimming in data but starving for insight. They track placements, maybe margins, and call it a day, while having little idea which candidate sources produce long-term value or which workers actually drive profitable growth.
In this episode of Avionté: Digital Edge, host Chris Ryan sits down with Dan Mori, President of Staffing Mastery and Staffing Dashboard, to break down four analytics use cases that directly connect talent data to revenue — not just activity — translating analytics into practical actions staffing leaders can execute to drive more ROI from their talent database.
From measuring the lifetime value of talent to identifying which recruiting channels deserve more investment, to understanding which talent sources drive better results, and more, this episode helps agencies make smarter investments, improve both customer and recruiter success, and stop guessing while revenue slips through the cracks.
This is a partial transcript of the full conversation. Listen to the podcast episode for the complete discussion.
Chris Ryan:
Dan Mori wears a lot of hats: CEO, coach, sales expert, and entrepreneur. But whatever the role, he’s a consistent and forceful voice for this industry.
What I appreciate about Dan is that he never lets theory get too far from practice. He’ll go deep on analytics and business strategy, but he always brings it back to execution. What do you actually do on Monday morning?
Dan, welcome to Digital Edge.
Dan Mori:
Chris, it’s great to be back. I appreciate you inviting me to chat today, and I’m really excited about this topic because it connects what we do in this industry to the money.
Chris Ryan:
Okay, well, I have to ask you about that. So, we know that you’re the architect, or one of the architects, certainly of Staffing Sales Summit, and you’ve built your reputation around revenue growth and sales strategy, and winning new business.
But now you want to talk about talent, analytics, talent lifetime value, and source of talent ROI. So, Dan, we need to know, have you given up on sales and revenue growth?
Dan Mori:
Oh man. No, absolutely not. I still am very much sales and revenue growth driven. That’s really why I do all that I do. But let’s be honest, the number one thing that any agency can do, Chris, to improve sales is have a great product and deliver a high-quality service.
And really, what I think we’re going to talk about today is how an agency knows where their highest quality value is that they can offer to their clients? So, I think if you get today right, sales becomes a whole lot easier.
Chris Ryan:
So, are you telling me that talent economics is actually measuring the strength of your product? You can actually drive sales growth from it?
Dan Mori:
100%. Absolutely.
If you think about it in the most fundamental building blocks, the talent that we place is the value that we provide for our clients. The better the value, the more money that our clients are going to pay us for it, and the more money we make. So, the more that we know the economics of talent, the more value we can deliver to our clients and the more we can grow our revenue.
So, they’re 100% connected.
Chris Ryan:
Okay, so let’s get into this. Let’s look at four use cases that actually connect talent data to revenue growth.
Let’s start with something that sounds obvious, but almost nobody measures: the lifetime value of talent. And, at the outset, I want to say we talk about treating candidates like human beings, and we should, but there’s also a business reality.
You need systems that optimize the monetization of your candidate pool. So, as a staffing owner or an expert in the people business, how do you reconcile these two things?
Dan Mori:
First, I appreciate that you called out the need to treat our candidates like human beings.
This is very much a human-driven industry, and the agencies that recognize that their candidates are people and really build those relationships in a human-centric way, far outpace the others. So, we should always treat our candidates like humans. And nothing that we say after this is meant to objectify or take away from that sentiment.
But you are right, Chris. There is a business reality that we have to focus on. We are in business to make money, and with no money, there’s no mission. So, how I reconcile those two things is I look at the talent that’s in my database or in my talent pipeline that I’m bringing into my database on a regular basis as the value.
Obviously, that’s the raw materials that I have to work with and identify who the best candidates are that I can place at my clients. But that’s really where the value comes from. So, I have to realize what is the most efficient way to find the most valuable talent in my database and in my talent pipeline, so I can get it in front of my client faster than my competitors.
And if I have those systems in place, and I know what the highest value talent is, I’m going to be better at that. And that, again, will help me grow my revenue and margins.
Chris Ryan:
So, is this any different than a football team that’s figuring out its pipeline of talent, or a baseball team that has double-A and single-A minor league teams, and they’re constantly bringing the talent in?
Dan Mori:
I don’t think so. In fact, I’m a huge fan of Moneyball. I love that movie. I love the storyline. I like the concepts behind it. So, I don’t think it’s that much different.
If you really understand your talent, and more importantly, if you understand which type of your talent generates the highest return, I think that you can scale your agency faster because you’re making more money or a higher return per placement than other agencies. And that’s going to give you the fuel to grow your agency, just like growing a successful sports team.
So, I think it’s very similar, Chris.
Chris Ryan:
Okay. Well, let’s walk through this.
I’m running a staffing firm, and I take the trouble of calculating the lifetime value by candidate or by candidate segment. So, I have this information. What decisions do that unlock? What can I do with those numbers that I couldn’t do before?
Dan Mori:
So, there’s a lot you can do if you understand the lifetime value of the candidate.
Now, just for the audience’s sake here, I want to break this in. The lifetime value, as we’re talking about today, is really about how much gross margin a candidate generates for you over the candidate’s lifetime. This is whether it’s one placement, one assignment, or if you’re a redeployment agency where you might send them out on multiple contracts.
If you have a candidate at your disposal, and they’re going to work for you and generate margin, that creates the lifetime value of that candidate. So, if you understand two things, and we’re going to go deep into a couple of these, but we’ll start with the first one, which is the segment. How did you get that candidate into your database?
If I were to ask you the simple question, Chris, if you have pipeline source A and pipeline source B, and you know that pipeline source A generates a higher value candidate that’s going to produce more lifetime value, wouldn’t you want to know that?
Chris Ryan:
That does make sense. But now I’m curious: if you can do this analysis for W2 staffing, maybe you can do it for certain kinds of project-based work or a statement of work?
But what happens when you’re doing attempt to hire work, or a different business model? Does that capture lifetime value by design?
Dan Mori:
It does, and I think those are just two different business models. If you are the agency that really focuses on temp-to-hire, where your candidates are getting converted at your clients, I think you need to understand what your lifetime value is, and that it is inherently capped.
This will help you understand that, if your lifetime value is lower because of your business model, you’re going to have to be a little bit tighter in your sourcing spend and the amount of money you’re willing to spend to get that candidate into your talent pool.
You’re going to have to have tight control over how much money you’re willing to spend to vet that candidate and get them through the recruiting process and placed in there, including all the money you’re spending on your recruiting team to nurture those relationships.
So, knowing what that lifetime value is gives you better guardrails to spend wisely, so you can maximize the ROI. And then on the flip side, if you are an agency where you actually focus on bringing talent in, and you place them on contract after contract, and you have great redeployment rates, your lifetime value is going to be higher.
What’s really cool is you don’t always have to reinvest in sourcing costs because they’re already there. But this will let you know that maybe you’ve got a little bit more budget to nurture those relationships or invest in tools that will help you cultivate and build a highly-engaged database that you can continue to redeploy.
So, regardless of your business model, if you understand the lifetime value of talent, it’s going to help you understand your expense guardrails. So, you’re putting yourself in a position to optimize your ROI.
Chris Ryan:
So, you might choose to spend less on certain job boards if you discover they’re producing a lot of candidates, but those candidates don’t generate a lot of ROI. Or the customer satisfaction strategy with that talent is lower. Is that right?
Dan Mori:
Oh, 100%. And I’m glad you called that out, because, obviously, we’ve had a lot of conversations.
You know my feelings about job boards in this industry; I think they’re a necessary evil. But if you measure the lifetime value of candidates down to the job board source, or all your various sourcing sources, or where you get your talent from, and you also can tie it to customer satisfaction metrics, you’re going to know which candidate source provides the best value to your client.
And any smart business owner, if you know which candidate source provides the most value to your client, is going to invest more in that source and less in the others. So, it will actually help you optimize your candidate sourcing strategy as well, which trust me, your recruiters will appreciate.
Chris Ryan:
So, does that help with pricing as well? Can you go to an employer and say, “You know what? We have provably better talent than anyone else. Here’s some data to show that, but we’re going to charge you a little bit more for that quality of service.”
Dan Mori:
So, I’m going to go a little bit contrarian here because I think it gives an agency options. In our industry, there are a lot of different business models. There are a lot of different go-to-market strategies.
Some try to be the low-cost provider. Some try to be the high-quality premium provider. Regardless of which way you want to price your services, knowing this information is going to help you deliver on that more.
And here’s what I mean by that. If you want to be the lowest price staffing agency out there, and that’s your business model, or that’s your strategy, you need to know much value each candidate generates. Now, you can get more precise in what you’re willing to invest and only be investing resources in the best producing candidate sources, or job boards, or whatever, and limit how much money you’re spending, which is going to preserve as much margin as possible.
Because again, if you want to be the lowest-price competitor out there, you got to be really good at controlling your expenses, and make sure you preserve margin to run your business.
On the flip side, if you’re going to say, “Hey, I want to be a premium, and I want to charge more.” Now, what you do is you use the quality metrics, that quality data, the customer satisfaction data, and then you can have that conversation with your customer and say, “The reason that I charge this amount is because we deliver this premium value.”
And then you can use those metrics to justify the price. So, regardless of which way you want to go, these metrics will support pricing models.
Chris Ryan:
So, what I hear you saying is that knowing the lifetime value of your talent doesn’t necessarily change your business model. It doesn’t change the way you sell, but it does give you a lot more confidence to support the way you sell.
So, you can do what you do best. Only you have better information, and you have a competitive edge over other agencies.
Dan Mori:
So, it will slightly change the way that you sell and not in a material business model way, but in a polished way, a more confident way, because you’re going to know what you’re selling and why you’re selling.
And you’re going to know a tighter band of pricing range that you can actually negotiate within to make sure that the economics of the agencies are going to be supported. So, I think it’s actually going to give you better confidence to sell your service versus just reacting to the market and what market pricing is.
Because a lot of times salespeople get crushed because the buyer will say, “Hey, your competitor down the street is offering it for 20 something percent or 30 something percent,” or something ludicrous. And the salesperson doesn’t really know where to go. They don’t know the underpinned economics of why their price is what it is, and they don’t have the performance data to back it up.
So, knowing that information does give the salesperson the confidence to justify their prices and hold firm, so they don’t cave under that sort of market pressure or buyer pressure.
Chris Ryan:
Got it. Okay, Dan, so we’ve talked about the lifetime value of talent. Can we make this a little bit more concrete? If I’m a staffing agency and I’m trying to get at this, what kinds of reports are going to help me to understand talent, lifetime value, and actually put it to work to drive growth or to define my business?
Dan Mori:
Yeah, I think that’s an important question for our listeners out here. So, let me just tell you what I do, because this is the way it’s going to be as most real-world as possible. So, when I want to understand the lifetime value of the talent in my database, there are a couple of different reports that I’m going to review to get this number.
The first one I’m always going to pull is GM by candidate. I’m going to see the gross margin by the actual candidate name, and which candidates produce what gross margin. That’s going to be great, because you can do that for any period of time for as long as you’ve had the data in your system.
So, that’s going to be a really good one. I also like to add in the candidate assignment history, because now I can start to see the lifetime value, subdivided per assignment. And once I understand those two reports, I can get a really good example of redeployment rates, like we’ve talked about, and I can also get a good example of how much ROI I got per assignment.
And what’s really cool, that you and I have talked about other times, is that you can start to see the ROI per assignment go up on the redeployed assignments, once you cover the cost of recruiting through your first assignment. And that’s really an important one. So, that’s physically how I go and pull the reports to get the lifetime value and value per assignment.
Chris Ryan:
Got it. So, let’s talk a little bit more about sources of talent. I’ve heard you say on more than one occasion that many employers are asking, “Why do I need you? I can go to the same job boards that a staffing agency can go to.”
And yet you’ve also said that most agencies fill 70% of their assignments from job boards. And you’ve even said job boards are the fast food of talent sourcing, and they’re convenient but not necessarily good for you.
So, make the case a little further. And you know what? If they’re not going to job boards, where will we find the people?
Dan Mori:
So, there’s a lot to unpack here. And you’re right, I do believe job boards are still a necessary part of the candidate sourcing model. They’re a necessary evil.
But I want to be very, very clear. Job boards are comprised of the most active job seekers on the market, meaning that when you, as an agency, bring them into your database, it’s not only your database they’re going into. They’re going to be the most highly competed for candidate out there because they’re going to be in everybody’s database – your competition and your client’s databases.
And if you’re only relying on job boards, then your client is right. What do they need you for? So, you have to be aware of that. And then the downstream effect of that is, when you place these candidates, they’re still likely getting calls and job opportunities from all these other databases that they ended up in, or all these other applications that they applied to.
Oh, and by the way, when you put them in your database, the resume is still sitting on the job board. So, they’re still going to be getting more offers and things like that, and that’s why these candidates are the least likely to complete their assignment. They’re the most likely to turn over quicker.
The data supports this. This is not just Dan riffing here. The data will show you that candidates sourced from job boards have the higher turnover rates, and the lower assignment duration rates. And I think that’s actually fueling some of the quality issues that we have, especially when you look at the data that came out – I think it was last year. Within the last 12 to 18 months, it was shown that 70% of assignments came from job boards sourced within 30 days.
So, you have to be aware of that, and make sure that you’re not concentrating fully on your job boards, fueling your database. So, you have to look at other sources. My favorite source overall, for many reasons, is referrals. I’ve seen this time and time again, if you ever go and have an amazing experience anywhere, and you ask the person, “Hey, how’d you get this job?” Odds are somebody referred them into that job.
They fill positions quicker; they generate more lifetime value. As clients, they’re more likely to convert. Their assignments are longer. So, I really think that the employee referral is an under-tapped gold mine as far as candidate sourcing.
Chris Ryan:
Yeah. Interesting. Sometimes I think, if you’re a staffing agency and you’re talking to somebody from a job board, you could be plan B or plan C or plan D on that job seeker’s goal. It sounds a little bit like dating, ironically, where with a referral, you’re much more likely to be plan A.
One of the things that’s interesting about referrals though is everybody says, “Oh, I love referrals. Referrals are good.” Like, duh. But then, when you talk to agencies, you often see that they don’t go out of their way to build an organization that is good at generating referrals.
Talk to us a little bit about that.
Dan Mori:
Yeah, I see it the same way, and I’m just going to be point-blank and blunt. The agencies that don’t go out of their way to build out strong employee-referral talent pipelines are avoiding it because it’s harder. It’s not as convenient as posting your job on a job board.
When you think about the fact that there are tools now, I know Avionté has these, that you can take the job description right out of the software, push it right to a bunch of job boards. Like that is so easy. That’s an amazing automation. It’s so streamlined, and people flow in, and it’s like, Oh, that’s great, right? Easy.
And we’re a society based on convenience. Employee referrals. It’s not quite that easy. So, first and foremost, you’ve got to be referable, right? So, you actually have to put in a culture in your organization that treats the candidates like human beings, like you and I talked about at the top of the show here, that makes your organization want to be referable, and where there’s some emotional equity where that’s like, “Hey, you know what? Yeah, I went through them. I got a job. I’m willing to refer this agency to my friends and family, right?”
So, you got to be referable, and that’s a whole culture thing. And that’s its own effort. And then, after that, you have to have a well-designed program.
How are you actually going to create this program that monetizes employee referrals? How are you going to decide what your economics are so you’re not overspending on referral fees, but you’re not underspending to where it’s no longer attractive to fund that funnel?
And that’s where knowing the economics will help you decide how much you can actually do. Building the program is another thing. And then, probably the hardest part that I’ve seen agencies that get that far is the automation of it.
You have to have some tool to supercharge this entire process. But you don’t want to automate too early. If you don’t have a good program in place, automation will fail you. So, you have to build it in that kind of three-part order: become referable, build a solid program, and then automate it. And because that takes work, people avoid it. That’s a shame because when you start to avoid that, you’re literally cutting off the most valuable candidate source that you can possibly get.
Chris Ryan:
So, let’s talk a little bit more about measurement in this process, because presumably, these are three important steps, but without metrics, you don’t really know how well you’re doing. So, if I’m measuring a source of talent’s ROI correctly, what exactly should I be tracking?
And I’ll throw you a little curveball here. A lot of staffing agencies that I see, when they’re trying to measure the ROI of a source of talent, often have way too many categories. A staffing agency owner will say, “I want to have five different kinds of referrals.” And they may split out every single job board.
So, literally, you can have a hodgepodge of different categories. How many different categories should you be tracking, and what would you typically recommend for a staffing agency?
Dan Mori:
So, as far as how I set mine up, what I like to do is I look at broad categories, and then I will subcategorize if there’s enough substance beneath it.
So, employee referrals is one category that I want to measure ROI against. Job boards is one category that I want to measure ROI against. However, there are multiple job boards out there. I know most people rely on Indeed. And then maybe do a lesser extent, ZipRecruiter.
And then if you get into your niche verticals, you might use things like Dice or other platforms. So, I do actually like to subcategorize those ones out within the job boards. And I think the job boards do a nice job of presenting you with the data to be able to do this, paired with your ATS data. So that’s another one.
One that I really like that I don’t even want to go into today, because it’s even more work than the employee referrals, is actually website traffic. There’s a lot of things that we can learn from the e-commerce industry to basically be able to drive ads, to get people to come directly to our website and circumvent job boards or circumvent these other areas, and then be able to use website development to bring them into an application funnel.
So, that’s another category that I would definitely like to look at. However, those are my categories. But the ROI piece, what I look at is this. I would love to be able to have a great metric that puts all the OPEX into recruiting and sourcing. I think that gets too convoluted, and it’s too complex.
So, what I say is: how much are you directly spending in this entire channel? So, how much did you directly spend on all of your employee referrals? On all of your referral bonuses?
If you have an automation tool out there, what are you paying for that? And then just divide that into the total gross margin generated from that source. Same thing with job boards. If you’re looking at Indeed, and you spent $3 a candidate, and you brought in a hundred thousand candidates, and it costs you $300,000, how much gross margin did you generate from candidates placed specifically from Indeed, divided across that 300,000?
So, that’s how I like to measure it, and I like to put it all into one nice dashboard that will just show me where I am getting the best ROI on those candidates. And then I also like to merit against the lifetime value piece, so you can see that.
Chris Ryan:
Yeah. So, any thoughts about the process of measuring redeployment? Because one of the aspects of redeployment, which is so interesting, is that sometimes recruiters will hoard their own talent.
Where other companies, essentially, will mine their existing talent database extremely effectively. Some might even have talent marketplaces or use mobile tools. Something near and dear to what we do at Avionté. Any thoughts around the analytics based on redeployment?
Dan Mori:
Yeah, first and foremost, I will say that if you’re an agency out there, and you’ve not even really looked at your redeployment rates or how to optimize redeployment, you definitely should.
This is an area where most agencies are leaving money and talent on the table. So, I would definitely look at that. If you are primarily in a business model where you are doing temp-to-hire conversions, and your talent is placed one time, and it gets converted in, then maybe redeployment is going to be incredibly low.
But you should still track it because you might get into a situation where there’s a client that only wants contract labor, and you happen to have that labor in your database, So it might open up sort of a different business channel.
So, you should be tracking it. And what I love about the redeployment rate is that it actually tells you something; it tells you how engaged your database is, and it also tells you how likely your recruiters are to go to your database first, versus just posting on a job board, bringing in new talent, and placing the freshest talent. So, I think tracking redeployment rates is powerful. It’s just something that should be measured.
Chris Ryan:
Got it. So, let’s talk a little bit now about another case study that you talked about with us earlier, which is role and skill profitability. Which roles and skills actually make money? And, why is this hard for most staffing agencies?
Dan Mori:
So, the number one reason that it’s hard for most staffing agencies to quantify the value down to a gross margin level, to a role, or a skill, is a lack of data. Maybe they don’t have good data in their system; maybe it’s not set up right. Or it could be a data fluency issue. That’s the number one reason.
The good news is that’s completely outside of a system not supporting it. It’s within their control, right? Data fluency can be learned. These things can get set up. So, if you get this into place, you’re going to be able to do something that I absolutely love, love, love.
The second reason, and I’m going to tell you the love thing in a second, but the second reason that agencies don’t do this is because they look at it backwards. They look at order fulfillment, almost like a restaurant. And I’m not trying to say salespeople or recruiters are order-takers, but just bear with me on this one.
We get an order, and then they start looking through their database for the people who fill the job criteria, and they try to come up with the best match possible. That’s the way that most agencies have done this for the existence of the industry.
However, if you think about the restaurant, they don’t actually do that. A restaurant will tell you all of the ingredients that they have available, packaged nicely in meals on a menu, and you pick from that.
Then you send that order back, and then they fulfill exactly what you were asking for. So, I like that analogy because we as staffing agencies, if we know which ingredients the talent, or the skills, that produce the best value are, we can offer that to our clients very specifically and say, “Hey, we do really well with civil engineers,” or “We do really well with CAD designers,” or whatever it might be.
If you know that, then you can actually go out and sell that, get more of those orders, and bring more of those orders back to your recruiters. And now you’re not trying to fill any order with the needle in the haystack that might be in your database. You’re going to be filling orders that are going to match the talent in your database.
Chris Ryan:
It almost sounds like, if you understand gross margin by role or skill, you have a better opportunity to understand which customers you should actually be selling to. You would develop a better client profile. Is that your thought?
Dan Mori:
It is 100% my thought, and that is something I’ve been teaching on a lot this past year: is how do you actually create that ideal client profile, and then what is your unique value proposition?
Because those two things have to be uniquely aligned in order to really convey that value and be able to communicate it. So, if you truly look at who my ideal client profile is, go look at the clients right now today that you have the best success with – success meaning the highest relevant satisfaction, the highest level of gross margin per fill, all of those things, and say, “Okay, what’s unique about them?”
You’re going to be able to drill that down into what roles am I filling that’s producing this success? What skills do they have in those roles that produce the value there? If you look at that, that will start to shape your unique value proposition and help you know the value of your database. And then you can point your salespeople to go get those clients that need people like this, that need these roles, or need people with these skills.
So, if you can understand the gross margin per role, or even better, the gross margin by skillset, that’s going to better shape your entire UVP messaging, your sales process, and it’s going to set your recruiters up for an easier fill.
Chris Ryan:
Okay. And you said the word UVP. Define it for us.
Dan Mori:
I appreciate you calling me out on my Army-style acronyms. So, UVP, Unique Value Proposition – this is the value that you offer to your clients, or more specifically, this is the value that your clients pay you for, that is unique to you. And that’s why I also talk about building out a strong database that is not going to be easily reachable or replicated anywhere else, because that means it’s unique to you, and it’s going to be more valuable to your clients.
So, UVP is the value that you offer to your clients.
Chris Ryan:
So, starting from the top, and let’s make this really concrete. If I’m an agency owner, and I understand which field roles are most profitable, what do I do differently?
And I think what you’ve said is you use that information to define your most profitable clients and targets to better target your sales and revenue efforts, and to more sharply create a unique value proposition or UVP for your agency.
Is that what you’re saying?
Dan Mori:
Yeah, it’s worth repeating in my own words, even though you said it so beautifully. If you truly understand the most valuable candidates in your database based on the roles that they fill or the skills that they have, you’ll be able to better point your salespeople to go get more clients that need those roles and those skill sets – that are going to be more likely to pay you for them, creating better economics.
And then what also happens is it gives direction to your recruiting team to say, “Hey, go recruit more people who are in these roles or possess these skills.” And it creates this flywheel effect, where now we’re actually addressing the market based on our strength, based on the value that we provide to the market – not just reacting to the demands of the market and trying to figure it out on the backend through sourcing, through job boards.
So, it gives us direction and purpose. And trust me, if you keep doing this, it will strengthen the flywheel. Your database gets more concentrated, your value metrics go up, your sales will go up, and your revenue and margins will grow.
Chris Ryan:
So, let’s talk a little bit more about what you call automated performance feedback loops. This is something that you’ve been experimenting with for a while, and you ran a system called Progressive Staffing that collected 30-, 60-, and 90-day performance data. Then you tied it back to candidate selection criteria. And then you used that data to improve future placements.
So, tell us a little bit more about this.
Dan Mori:
So, we had a client very early on in my staffing journey that we would send amazing candidates to, and the client would be like, they’re not great candidates. And we’d be like, what are you talking about? They hit all the criteria; they do all this.
And we got in a little bit of a mental battle, this argument with a client trying to tell them why they were wrong, that the candidates we were sending were better for them than the candidates that they wanted, which is ludicrous when I hear those words coming out of my mouth, that I was arguing with the client about what they wanted.
That being said, we decided to put it to a test. We’re going to test an array of candidates, and then we’re going to place them, and we’re going to track how well they do for 30, 60, 90 days, and which ones you actually hire on. Because if they’re performing better at 30, 60, 90, and they’re getting hired on, spoiler alert, that’s what the client actually wants.
So, we did this, and we went in with the assumption – I’m going to jump into a warehouse example here, to make it real – it was a picker packer role, and we went in with the assumption that somebody that would score a perfect score in the quickest amount of time on this picker packer assessment test would be the best candidate.
That’s what we were sending before. And the test, if I remember, I think the best scores would be a hundred percent in six minutes. If you could do that, amazing!
So, we would send this, and we tracked this for 30, 60, and 90. We actually ran this program for six months as a beta just to collect all the feedback.
And what we learned is that the people who scored 100% in six minutes were not the best candidates. They became bored and frustrated because they were so good at their job that they looked down on others, adopting a “why aren’t you as good as I am at this job” attitude.
What we found is that the people who actually scored a 97 in the 7-11 minute range tended to be the best candidates at 30, 60, 90 days, and at conversion. And once we did the post-placement audit to determine why, it’s because the people who didn’t score perfectly on the assessment had this innate sense that they had room for improvement.
So, they were more open to constructive feedback. In that time range, we realized that they were actually taking a little bit more time to be deliberate and intentional with data-specific or detail-oriented positions. So, they had more care to it. They weren’t just blowing through it, relying purely on talent, and they ended up being the best candidates.
And as we dialed that in, our placements got better and better and better. Our headcount grew at that client and we scaled.
Chris Ryan:
Interesting. So, there’s a lot that an industrial psychologist could unpack here, but, in the picker packer test, it sounds like somebody who could score a hundred percent might not have been as high on conscientiousness in a Big Five survey, for example.
What it says to me is that maybe the initial test was partly flawed, but the only way you would know is if you went through a 30, 60, 90-day evaluation process to revalidate your job criteria.
Dan Mori:
That’s exactly it. You’ve got to basically test your assumptions on the backend, verify the results, and then keep doing what’s working really well and stop doing what’s not.
Chris Ryan:
So, the system you developed, you also told me you scrapped because it was kind of a pain. I mean, it was a little too manual; you couldn’t really scale it. But, in the age of AI on automation, could it be brought back? I mean, what would it look like today if you were to do that?
Dan Mori:
You’re right. We did because it was very manually intensive. It just did not scale across all of our clients. It slowed us down, so we did have to stop, even though the results were good. It just was slow, and we wanted to grow fast. In the look of AI and automation, I think this could actually be brought back in a major way.
It’s been on our roadmap for a little while. It doesn’t hit the top three priorities, but we keep discussing it, saying, “Hey, the tools are out there now with the different automations.” But I do know of a company in the Pacific Northwest that’s actually doing this. They’ve built this out now.
I guess they’re packaging it as a performance management tool to say, “Hey, you’re going to give us this feedback. Here’s how you’re going to do it. And then every time you give us this feedback, it sharpens our candidate profile that we send to you.” And the client loved it. They thought that, “Hey, this is a unique value to you. We’ve never heard this from other agencies.”
And they’re actually doing it, and they are using it. They’re an Avionté customer, so they’re using the tools that they have at their disposal to be able to do this, to track placement data at 30, 60, and 90, and conversions based on the input criteria of the job.
And their placements are growing, so it is possible to do this today.
Chris Ryan:
Yeah. So, a feedback loop, just like everything else, is potentially a tool to grow revenue. It almost sounds like, when you build analytics and insight into the product you’re delivering, it becomes an important part of your sales toolkit and the way you approach growing revenue.
Dan Mori:
Absolutely, and I don’t know who, if it was Drucker or who coined this term back in the day – you probably know this – this is more of your world, but it’s the voice of the customer. That’s really what you’re doing. The number one reason that businesses fail is that people build something that customers don’t want.
And if we keep doing the thing that I was doing initially, arguing with clients about what they should want, businesses will continue to struggle or eventually go out of business. But if you keep asking the customer what they want from an agency and they keep getting their feedback in a way that is not invasive, it’s not going to slow anything down; it’s not disruptive to the process, and it’s additive, then you’re going to be able to continually refine the value that you give to your clients, and you will retain your clients more.
Chris Ryan:
So, I have to push back on you a little bit there. We want to say, the customer is always right and never argue with the customer, but some percentage of staffing agencies have customers who want high-quality talent at no cost or at low cost.
Or they have expectations that the cost of their workforce should look much the way it did 10 years ago. So, when you think about the ROI of talent, which is something that we have talked about, there are some employers who are asking for a lot of volume.
And as an agency, you might want to serve them. But there’s very little profitability in the placements. How do you discuss that with a customer? What do you say? You can’t tell them they’re wrong, but what do you tell them?
Dan Mori:
I love that question. So, what I tell them, when I’m faced with a situation where a client is telling me they have high-quality expectations, low pricing expectations, and they want me to act fast, too. They want the talent they want, and they probably are going to say, “Hey, be competitive in your pricing.” I’m going to let them know that those things don’t really coexist.
I’m going to let them know that we are excellent at what we do, and I’m going to communicate very clearly on what I’m great at. And if I’m great at providing highly skilled, high-quality talent to my clients, I’m going to let them know that and say, “Hey, this is what it is, but this is the cost to get this talent. If you’re looking toward low-budget talent or discounted talent, there are agencies out there that are more affordable, but they’re going to provide you liquidation-level talent because of how they’re set up.
And I just try to create a clear distinction between what a quality agency is and charges, and what a low, discount budget agency charges, and what they’re going to get for it. And I’ve got a secret sauce behind it. If you’re curious.
Chris Ryan:
Well, you know, I’m curious. Dare I ask?
Dan Mori:
It’s pretty simple. One of the first things I do when I hire salespeople, or when I take on clients, and I’m training them on how to understand the economics of this, is I teach them the correlation between gross margin or gross profit and markup. And I compare it against talent availability.
So, I use this example. If you have two different warehouses, both the same. They both need the same exact type of worker. They pay the same exact price, the whole nine – 40 hours a week. All that’s the same.
However, one warehouse says we want 20 people from you, and the other warehouse says we want 11. And the warehouse that wants 20, nearly twice the volume, they say, “Because we’re volume, we’re going to ask for you to discount your prices. And we want a 35% markup.”
Most agencies be like, you know what, that’s volume. I’m going to make it up on volume. I’m going to do that. But the other warehouse, warehouse B, that only needs 11 people, they’re not a volume shop.
So, they say, “Hey, I’m willing to pay 50%.” So, these two examples right here, Chris, which warehouse do you think produces more gross margin per week in those two – one with 20 employees out working, or one with 11?
Chris Ryan:
I guess the point is that 11 high-quality people at the right margin is going to earn you a lot more money, because in the long run, you’re probably going to keep that customer for a lot longer, and you’re going to keep that talent for a lot longer.
Dan Mori:
You’re exactly right. The warehouse with 11 people will generate more gross margin because it’s a higher markup. Even though 50 to 35 sounds stark, it will actually produce significantly more, almost two X gross margin.
Now, I’ll ask a recruiter, will you have an easier time filling a 20-person order or an 11-person order? They’re going to say, “Well, 11,” right? So now think about this. I have a warehouse that’s willing to pay me more for my service because they value me as a partner. They’re giving me a smaller headcount order that’s going to be easier to fill.
I got a better chance of going 11 out of 11 on this. If I only go 11 out of 11 on the other one, on a 20-person order, I’m going to have a pretty upset customer. So, now I have poor satisfaction and a low margin, which is poor ROI. That’s bad business.
So, because I understand the economics of it, going into it, when a customer asks me for high- quality and high-volume, and low pricing, I understand the math, and I understand that it doesn’t work. I know what the definition of good for my agency is, and I’m comfortable walking away.
Chris Ryan:
Okay, Dan, so we’re coming to the end of our segment. We’ve covered a lot of ground: talent lifetime value, source of talent ROI, role profitability, and performance feedback loops. If someone’s listening and they say, “Where do I start?”
Make this concrete for me. What do you say?
Dan Mori:
So, I’m going to pretend as if someone’s saying, “Where do I start?”
I’m going to pretend they don’t have any of this. So, do not try to boil the ocean. You’ll get overwhelmed.
I would start by creating a segment of where my candidates are coming from. Just try to get a source code in there, so you can see if these candidates come from a job board or if these candidates come from employee referrals.
Just start there, and then pull a gross margin report and see, by source, how much gross margin you are generating per source. If you start there, you’re going to have a pretty good understanding of, maybe not lifetime value, unless you have good historic data, but you’ll have an understanding of the value of talent per source.
And that’s going to inform you in a lot of ways. I think that’s probably the best place to start, which is understanding how much value you’re getting out of each one of your candidate sources.
Chris Ryan:
Got it. Final question for you. What separates the agencies that actually implement and go through with these neat programs, versus those who say, “Oh, sounds great.” But nothing ever changes.
Dan Mori:
Boy, that’s a great question. In my experience and observation, the agencies that are separated between the ones that actually implement this stuff, and they try to get better, they kind of kaizen continuous improvement, versus the ones that are okay with mediocracy or stagnation, is the conviction and clarity of the leader of the organization.
If the leader understands that, for them to stay relevant, they have to keep evolving, and they have to keep developing and equipping their people with better tools to support human workflows. And they actually stay on that, and they continually are curious about their business, and they keep wanting to reinvent themselves, but not just the Baskin-Robbins, the “what’s the new flavor of the month?”
But they say, “Hey, this is what I’m going to do to be valuable for our agency to provide value to our clients.” I think if they connect those dots and they stay committed to that process, and they see it through, those are the ones that continually grow. And I think that becomes part of their DNA as an agency, and they just keep moving forward.
Dan Mori
President at Staffing Mastery
Dan Mori is a staffing industry veteran who has dedicated 16 years of his life to building successful recruiting agencies. Dan Mori is a name that has become synonymous with strategic leadership, business development, and an unrelenting passion for systems, data analytics, and dashboards.
Christopher Ryan
Senior Advisor, Market & Industry Relations at Avionté
Christopher Ryan leads the Strategy and Marketing functions for Avionté. He brings more than three decades of consulting, thought leadership, and corporate experience in Human Capital Management.
Modern technology has revolutionized the way we live, work, and play. It’s also what’s fueling the gig economy which has dramatically changed employment practices. So, what does that mean for staffing and contingent work? In our Avionté Digital Edge podcast series, we will speak directly with industry experts to explore topics and trends related to the digital transformation of staffing and temporary employment in the US workforce.
