KJ

The Human ROI: Why Cold Recruiting is Failing Your Business

TLDR;

  • Trust is built through human connection, not AI-filtered resumes.
  • "Cold Calling" has an abysmal success rate in venture capital, a reality that mirrors our tech recruiting failures.
  • Moving toward "Warm Recruiting" reduces turnover and increases employee loyalty.
  • We must realign incentives—rewarding longevity over quantity to build stable teams.

I recently had the opportunity to listen to an interview with a seasoned venture capitalist, and one point struck me with incredible clarity: "Cold Calling" almost always fails.

In that world, if an entrepreneur simply submits a pitch deck or business plan without a warm introduction, it is almost universally ignored. The rationale is simple: if you didn't put in the effort to find a warm connection for monetary assistance, what is the likelihood you will actually connect with your customers?

This resonated deeply. We are struggling with this exact same pattern in tech recruiting. We’ve been trained to "cold call" on LinkedIn, "perfect" our resumes to bypass impersonal AI filters, and blast applications to hundreds of businesses. It’s a numbers game that treats people like leads in a low-conversion sales funnel, hoping for that 1% callback.

It's time for a fundamental shift.

The Incentives We Ignore

Think back to the pre-COVID era. User groups and local meetups were filled with active recruiters. Tech demand was high, and while turnover was also high, there was at least a sense of community presence.

Fast-forward to today. I attend dozens of professional groups every month, and the number of recruiters engaging in person? Zero. Occasionally you’ll see them at large conferences, but the interaction often ends with, "Just submit through our website!"

We are inadvertently incentivizing the wrong behaviors:

  • Quantity Over Quality: Recruiters often receive bonuses based on the volume of candidates rather than the fit or longevity.
  • Automation Addiction: AI matching has become a crutch, making it easier to stay home than to build a relationship.

When we prioritize the "easy" path of automation, we lose the human element that keeps a business healthy.

The Power of Warm Connections

"Warm Recruiting" is about building a relationship before a contract. It's having the conversation, reviewing a résumé together over coffee, and identifying potential "flags" or areas for growth before someone enters the pipeline.

Small businesses, in particular, find significantly more success when they see the individual as a human first, rather than a cog in the machine. When a recommendation comes from a trusted friend or a face-to-face meeting, a baseline of trust is established instantly.

This human-first approach leads to:

  • Higher Quality: You know their goals and purposes, ensuring they align with the company's mission.
  • Lower Risk: Trust reduces the "guessing game" of behavioral fit.
  • Increased Loyalty: Employees are more likely to stay when they feel they were hired for who they are, not just what they can code.

Restructuring Incentives for Longevity

The biggest lever for change is, of course, the financial incentive. If we want recruiters and hiring managers to care about quality, we must pay for it. A simple yet effective change is to deliver bonuses over time based on the longevity of the employee.

Consider a standard $5,000 recruitment bonus. Instead of a lump sum at the 90-day mark (a common trigger for "quick-turnover" churn), what if it was delivered over two years?

  • The Quick Turn: One recruit per month who only lasts three months might seem like a win in a volume-based system. But if that bonus is tied to longevity (e.g., $200/month), that recruiter only sees a small return.
  • The Strategic Win: A recruiter who places one person a month who lasts for years builds a "rolling bonus." By the end of year two, they could be seeing $4,000+ a month in recurring bonuses simply for having built high-quality, long-lasting connections.

Now, we have a recruiter whose goals are perfectly aligned with the health of the business.

Summary

We need to take a collective step back from the "cold recruiting" machine. It has created a cycle of disloyal employees, unnecessary bloat, and the "job hopping" culture that makes long-term planning impossible for leadership.

As you look at your own hiring process, ask yourself: Are we building a database, or are we building a community? If you can't honestly tell a recruit that they are joining a culture that values them as a person, perhaps it’s time to rethink the incentives that brought them through the door.