Brilliant Answers
chapter FOUR Right People: Designing Recruiting and Staffing Processes
Running a successful business depends on having the right people in the right roles to effectively execute its strategies. The most important decision a company makes about its employees is to hire them. Every other action made about employees is a direct result of that initial decision to bring them into the organization.
Despite the strategic importance of hiring, many companies have treated recruiting as a largely administrative process.1 Rather than focusing on the business value associated with hiring, recruiters often focus on increasing the number of job requisitions processed, with little emphasis on how the newly hired people perform after they join the company. As one person put it, “HR departments that focus on number of hires instead of quality of hires might as well measure effectiveness by the kilos of people they've employed.” Fortunately, the growing influence of strategic HR is steadily changing the focus from quantity to quality of hiring. This is the result of several factors:
• Scarcity of skilled talent. Experienced recruiters know there is always a limited supply of qualified high performers available to fill skilled jobs at the salary companies want to pay them. This skill shortage is growing due to the increasing complexity of jobs, decreasing birth rates in many countries, and more intensive competition for talent around the globe.2 Do not be fooled by overall unemployment statistics. There may be more people available in the job market in general, but that does not mean they are people who have the skills and competencies needed to support your company's strategies.
• Cost of labor. As the supply of skilled labor decreases, its cost increases. Companies cannot afford to make hiring mistakes given how much it costs to bring people into the organization. There is also the insidious problem of hiring marginal performers and having them stay. In many countries, it is both difficult and costly to fire someone for underperformance.
• Importance of human capital. The past thirty years have seen a steady shift from a resource-based to a knowledge- and service-based economy. In today's market, competitive advantage depends less on what companies own and more on whom they employ. Your company's ability to hire skilled, high-performing employees simultaneously supports the goals of your business while depriving your competitors of the talent they may need to compete against you.
Recruiting was once seen as a back-office function that was often outsourced as a commodity service. It is now becoming a key differentiator in the emerging war for talent. Winning this war requires rethinking key questions around what makes a good recruiting process.
This chapter is organized into three sections. Section 4.1 discusses fundamental changes in how companies are thinking about recruiting and the growing emphasis on creating more collaborative, quality-focused recruiting processes that balance hiring quality with hiring efficiency. Section 4.2 discusses nine key questions to ask when designing a recruiting process. There is no one best way to do recruiting, but the best recruiting processes all address these questions thoroughly. Section 4.3 discusses different levels of recruiting process maturity that can be used to guide the creation of a long-term road map for achieving recruiting excellence.
4.1 RECRUITING TO SUPPORT BUSINESS EXECUTION
From a strategic perspective, the goal of recruiting is not simply to hire people into the organization. Rather, it is to efficiently place and retain the right people in the right roles to effectively support the company's business strategies. This is a significant change from how some recruiting departments traditionally viewed their role (see the discussion: “From Processing Candidates to Hiring Performers: The Changing Role of Recruiting”). Organizations that approach recruiting with a strategic mindset are distinguished by the emphasis they place on five key topics: quality of hire, quality of sourcing, networking and relationships, hiring manager involvement, and integrated talent management.
FROM PROCESSING CANDIDATES TO HIRING PERFORMERS: THE CHANGING ROLE OF RECRUITING
The past thirty years have seen significant changes in the field of recruiting. Prior to the advent of the Internet, much of what recruiters did was associated with the basic identification and processing of candidates. Recruiting tended to be an administrative function focused on placing want ads, processing and sorting job applications, and setting up candidate interviews. Some companies also tasked recruiters with handling the paperwork for new employees. The Internet freed recruiting departments from much of this administrative burden and allowed them to streamline the recruiting function significantly. But recruiting still tended to be judged on process metrics such as time to fill and number of people hired. Staffing departments were rarely held accountable for the performance of new employees. Nor were they expected to challenge managers on whether it made more sense to fill positions internally or externally.
The growing importance of strategic HR is shifting recruiting from a focus on hiring efficiency to a focus on staffing effectiveness. Recruiting departments are still held accountable for efficiently processing and rapidly placing candidates. But the difference between administrative recruiting departments and strategic ones lies in the ability to fill positions with the best-performing candidates at the lowest cost. This requires recruiters to collaborate with hiring managers to ensure they accurately define job requirements, tapping into the social networks of hiring managers and other employees to find the best candidates, using rigorous candidate selection methods that validly predict future job performance, and extending recruiting beyond the hiring decision to accelerate and track job performance after employees have been hired.
4.1.1 Quality of Hiring Decisions
Even slight improvements in the quality of hiring can have a massive financial impact on organizational performance.3 For example, by changing its hiring methods, a call center company was able to increase retention of call center agents by about one week. This may not seem like a lot, but given the costs of hiring and the fact that the company hired more than one thousand agents every year, this small increase in retention added up to millions of dollars in savings. Quality of hiring can also make or break companies when it comes to staffing critical leadership and technical positions. For example, consider the financial benefits associated with hiring the right merchandise buyers in a retail company or the costs associated with putting the wrong person in charge of quality control in a manufacturing plant.
Strategic HR organizations know the value of the quality of hiring and constantly emphasize it to line-of-business leaders (see “Getting Hiring Managers to Take Recruiting Seriously”). They review every step in the recruiting process based on how it will affect the company's ability to attract and select the best performers. Recruiters are evaluated not just on time to fill positions but on the performance and retention of employees they help bring into the company. A quick way to assess whether an organization has a mind-set based on quality of hiring is to ask recruiters, “How do you know if you effectively filled a position?” A quality-oriented recruiter will focus on measuring how candidates perform after they are hired and will not simply review metrics related to sourcing and screening candidates.
GETTING HIRING MANAGERS TO TAKE RECRUITING SERIOUSLY
You might think that hiring managers would be obsessive about hiring the best employees possible. After all, they are the ones who directly benefit or suffer from a good- or bad-quality hiring decision. However, this is not always true. Many managers only think about recruiting when they have open positions on their teams. And when this happens, they often think about filling the position as fast as possible without thinking too much about whether the person they are hiring is truly the best candidate available. In essence, they view recruiting more as an operational inconvenience than as a valuable opportunity to improve the quality of the people on their teams. These managers often resist investing more time than is absolutely necessary to define job requirements, source and select candidates, and onboard new employees.
The best way to shift hiring managers' mind-sets toward recruiting is to make sure they are fully aware of the costs and benefits associated with hiring decisions. Before beginning the recruiting process, ask managers these questions:
• What is the minimum financial impact this position will have on your department and the company overall? The typical assumption is that employees will contribute revenue to the company that is at least equal to twice their cost in salary and benefits. In other words, we pay people with the assumption that the value they provide to the company is greater than what we pay them. So how much is this position worth? Remember to take into account that we probably expect this person to stay in this position for at least a few years so his or her annual financial contributions will be multiplied by his or her expected tenure.
• What is the maximum financial impact of this position if we hire a top performer? Studies show that top-performing employees often generate three or more times the revenue of average performers. How much financial value would come from hiring the absolutely best candidate into this role?
• What is the cost of poor performance? People sometimes say employees are our most valuable assets, but employees who perform poorly can be an expensive liability. How much damage could realistically be caused by making a poor hiring decision?
• Taking all this into account, how much financial value is associated with this hiring decision? What is the difference in the value of a good decision versus the cost of a poor one? To put this in perspective, think about the last time you invested this much money to purchase equipment, acquire materials, or enter into a service contract agreement with a vendor. How much time did you spend defining the specifications for this investment, reviewing proposals, and making the purchasing decision? Doesn't it make sense to spend an equal amount of time on the recruiting process to ensure you hire the best employee possible?
I have had this sort of discussion with many line-of-business leaders. Almost every conversation ended with leaders expressing a sense of surprise and appreciation about the importance of hiring the best people possible. The exceptions were leaders who already understood that one of the most important business decisions they ever made was deciding who to bring onto their teams. In either case, the result is greater willingness to collaborate with HR departments to build and deploy more effective recruiting processes.
4.1.2 Quality of Sourcing
The quality of the people you hire for a job is constrained by the quality of who applies. The field of candidate sourcing has been radically changed by the Internet. Companies can now easily and quickly source candidates from hundreds of online job sites and social networking systems. Companies with integrated strategic HR technology systems can also source internal candidates by scanning databases of current employees. This ready access to so many candidates is a mixed blessing, however. On the positive side, companies can find qualified candidates for jobs regardless of where they are located around the globe. On the negative side, companies can be inundated with thousands of applications from unqualified candidates.
Sourcing is much less about the number of candidates and much more about their quality. Sourcing has become so important that there is now a specialized field of recruiting marketing that uses sophisticated web tools to attract candidates and rapidly sort through applicants and workforce data to find sources that yield the best candidates with the least cost. The specialized technology and workforce analytics applications associated with recruiting marketing enable companies to find, attract, and engage high-quality candidates with the minimal investment possible.
4.1.3 Relationships and Networking
Recruiters use a variety of methods for finding job candidates, but often they find the best-quality candidates through networking. Networking is particularly valuable when hiring for positions that require specialized experience. These positions tend to be filled by people who have extensive networks of professional colleagues. As one recruiter explained, “When hiring for a skilled position, the ideal candidate is probably a person whom either the hiring manager or one of the manager's colleagues already knows. Hiring managers are rarely more than two degrees of separation from the best candidate.”
Networking is effective for several reasons. First, managers and employees are likely to recommend better-quality candidates since they don't want to work with people whom they view as incompetent or unmotivated. Second, the best candidates tend to be currently employed elsewhere. These so-called passive candidates already have jobs and may not take notice of job postings, but they may respond to an inquiry about a job opportunity from someone they know. A third benefit of networking is that it does not cost a lot of money, unlike job postings, which can be associated with hefty fees.
Strategic HR organizations embrace networking for finding and attracting the best candidates. They invest in tools to help recruiters build and maintain pools of qualified candidates they can leverage for future hiring. They instruct recruiters on how to leverage the networks of line-of-business managers and employees. They also provide employees with tools and rewards that encourage everyone in the organization to play a part in finding high-quality talent. This includes making use of internal and external social networking technology and sites—for example, providing employees with tools that allow them to share job openings with people they may know through public social networking sites such as Facebook or LinkedIn.
4.1.4 Hiring Manager Involvement
A common problem in recruiting is a tendency for hiring managers to distance themselves from the actual recruiting process. Rather than collaborating with recruiters, some hiring managers assume they can give the recruiter a job requisition and that two weeks later they will be presented with the perfect candidate. Strategic HR organizations stress the need to keep hiring managers and other line employees actively engaged throughout the recruiting process. They use collaboration tools that give managers visibility into the types of candidates being sourced and selected. For example, online databases make it easy for recruiters to share potential candidates with hiring managers and allow hiring managers to make comments and suggestions to the recruiters about candidate qualifications. These tools help managers compare candidates, get a sense of the quality in the available talent pool, and exchange thoughts and opinions with other members of the recruiting team. This allows managers and recruiters to jointly determine if they should expand, reduce, or otherwise redefine the scope of the job or candidate search based on the talent available. Emphasis is also placed on using interview processes that allow multiple stakeholders to evaluate candidates (e.g., allowing coworkers to participate in the interview process).
Actively involving hiring managers and other employees in the sourcing and selection process improves the quality of applicants and ensures that line leadership feels a sense of ownership around the final hiring decision. Involving multiple employees in the hiring process also helps with bringing new employees into the organization because they have already met and established a connection with many of their future coworkers. Of course, there is an efficiency trade-off in terms of the time required for more people to participate in the hiring process. But in general, few hiring decisions should be made by a single person acting without involvement from their colleagues.
4.1.5 Integrated Talent Management
Recruiting is something people often think about only when there is a job vacancy in their group. Hiring is thus treated as an isolated event that lives outside the ongoing talent management process. The most effective strategic HR organizations campaign against this limited view of recruiting. They view recruiting not just about filling positions but as a key part of a broader set of strategic HR processes. It is about creating talent flows within the organization through integrating staffing, employee development, succession management, and career planning. Recruiting may not be something that's done every day, but it is something that needs to be kept constantly in mind, especially during times of large-scale company growth or change.
Two concepts are particularly important to consider when viewing recruiting as part of an integrated strategic HR framework:
• Balancing internal versus external hiring. Recruiting activities that are integrated into a broader strategic HR framework actively balance the relative merits of internal versus external hiring. Staffing is used to support internal employee career development and succession management and to bring new talent into the company. Managers and recruiters discuss whether open positions should be used to build the capabilities of existing employees or to bring in new skills from outside.
• Workforce planning and job design. The best time to source talent is before you need it. Recruiters should not passively wait for line managers to come to them with open requisitions and then go out looking for candidates. Strategic HR organizations create ongoing discussions between recruiters and line managers about the company's business strategies and future hiring needs necessary to support them. This includes anticipating the need to fill potential vacancies for existing jobs and forecasting the need to staff new types of jobs to support ongoing business growth.
The five themes of hiring quality, sourcing quality, relationship recruiting, manager involvement, and integrated talent management should be reinforced throughout the design of recruiting processes. Keeping these themes in mind will decrease the risk of creating recruiting processes that may be efficient but provide questionable value when it comes to supporting business execution.
4.2 CRITICAL RECRUITING DESIGN QUESTIONS
There is no one best way to do recruiting. What works extremely well for a regional health care organization may be disastrous for a multinational software company. The processes that are appropriate for hiring new college graduates are much different from those used to hire senior executives. But companies that have the most successful recruiting processes typically have one thing in common: they have carefully thought through the following recruitment design questions:
1. What types of jobs are we hiring for?
2. How many people will we need to hire, and when will we need them?
3. What sort of people do we need to hire? What attributes do candidates need to possess to become effective employees?
4. What roles will hiring managers, recruiters, coworkers, and candidates play in the hiring process?
5. How will we source candidates?
6. How will we select candidates?
7. How will we get newly hired employees up to full productivity?
8. How will we retain employees after they are hired?
9. How will we measure recruiting success and improve our processes over time?
The answers to these questions will vary from organization to organization. But failure to adequately address any of them will almost always result in a flawed recruiting process.
4.2.1 What Types of Jobs Are We Hiring For?
When it comes to recruiting, not all jobs are created equal. The methods needed to effectively fill jobs vary widely depending on the job type. Table 4.1 provides a description of four broad categories of jobs and discusses how each one influences recruiting process design:
• Pivotal jobs are positions where differences in performance have huge impacts on business performance. Recruiting for these jobs places a strong emphasis on hiring the best candidates possible.
• Critical jobs are crucial for business operations and require specialized skills and capabilities. Recruiting for these jobs depends heavily on having effective sourcing strategies.
• High-volume jobs are positions where companies hire hundreds or even thousands of employees a year. These positions require automated recruiting processes that can efficiently source and screen large numbers of candidates without overwhelming recruiters or hiring managers.
• Operational jobs are positions that are necessary to keep the organization running, but that are not particularly pivotal or critical. These tend to be filled intermittently and require recruiting processes that can be quickly scaled up or down based on current hiring needs.
Some jobs cut across several of these categories, and most large organizations have jobs falling into all four categories. What is important is to recognize that the ideal recruiting process will change depending on the type of job. Many companies need several distinct recruiting processes to support the variety of jobs they must fill.
Table 4.1 Job Categories and Related Recruiting Processes
(Hunt 59-70)
Hunt, Steven T. Commonsense Talent Management. Pfeiffer, 2014-02-10. VitalBook file.