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Recruitment must be a core strategic asset if people are contributors to competitive advantage. Very few businesses today don't depend heavily on having the right people in the right place at the right time. Hiring effectively is often more important than hiring efficiently. Yet most hiring organizations measure themselves on hiring efficiency. Given the daily pressures to meet increasingly demanding hiring needs, it is little wonder that employment departments tend to focus on day-to-day hiring activities. It therefore makes sense that when analysts and consultants offer their services to employment departments they focus on operational inefficiencies: inability to source qualified candidates, decreasing cycle times for requisition approvals and fills, and so on. Employment departments buy the pitch because the results are immediate and tangible. As every part of every organization seeks to squeeze every last ounce of productivity out of every last asset, employment feels that they must do their part by focusing on hiring process efficiency. Unfortunately this focus has a detrimental effect on the hiring departments and the businesses they serve. Hiring effectiveness and hiring efficiency are often mutually exclusive. There are many times when getting the right person later is preferable to getting any person now. The overwhelming focus on hiring process efficiency (and the end-to-end process automation that is its result) is leading executive management to conclude that staffing departments are a tactical cost center rather than a strategic asset to the entire enterprise. This is evident in the increasing move to outsource the entire staffing function. Businesses tend not to outsource core capabilities because doing so puts them at a strategic disadvantage. The Conventional Wisdom Analysts, consultants, and vendors have been selling the same pitch for the last 5 years: All recruitment is a process, and like any process it can be automated end-to-end. The staffing department should be able to automate how it sources prospective employees, the way it determines the level of ability of a prospective employee, even the way the hiring process is completed. Unfortunately for the proponents of this conventional wisdom, the recruitment process deals with a largely intangible unit: an individual's value. If people-centric processes could be automated end-to-end then we wouldn't need teachers, lawyers, or psychiatrists. People cannot be boxed in, confined to simple analysis and automated process control. It is important to remember in any people-centric endeavor that each individual considers him- or herself just that -- a unique entity, with specific value to add to whatever he or she does. When you buy into the conventional wisdom of full automation, you run the risk of never finding out if they are right. In fact, forcing your prospective hires into a one-size-fits-all automation process in the hopes of squeezing the very last nickel of efficiency out of your systems is the best way to ensure that the system wouldn't work. Simply put, the reason that recruiters exist is because they know how to find, analyze, communicate, get insight, cajole, impress, soothe, and close in the people sales game. And it really doesn't matter how efficient your employment system is if all it does well is hire the people that your competitors don't want . . . faster. This is not to imply that technology doesn't have a part in the hiring process. Technology is critical to any employment department's success. In fact, it can be said that employment today is the intersection of people, processes, and technology. The question is not whether technology is appropriate. The question is, "When is technology an appropriate solution? And how do you best determine that?" Effectiveness vs. Efficiency The most significant problem with both the marketing angle of most (though certainly not all) recruitment technology applications and the prognostication of most analysts and consultants is that their efforts focus almost exclusively on efficiency: how to hire more people in less time. The belief is that this will drive down the two most significant measures of recruitment success: time-to-hire and cost-per-hire. Although these two metrics have together been the durable centerpiece of recruitment metrics and analysis, they have remarkably little value. Cost-per-hire has never been shown to proactively encourage any change, largely because it is almost impossible to appropriately load cost on a job-by-job basis. Time-to-hire is an important metric as far as it goes. But it is often applied inappropriately across the entire spectrum of enterprise hiring activity. This is a mistake since effective hiring by definition takes longer. Do you really want the 120-day search for the Ph.D. who will put your biotech company over the top to skew the results of your 30-day placement average for lab techs? The first question that must be asked of any requisition is whether it requires a focus on efficiency or effectiveness. These two metrics are often mutually exclusive: You can either get it fast or get it right, but you can rarely get both at the same time. Efficiency is a measure of speed and cost. Efficiency says "Getting someone in here right away is more important than getting the right person later." Effectiveness is a measure of quality. Effectiveness says the opposite: "Hiring the right person is more important than hiring someone right away." While this is obvious to recruiters, this distinction makes a big difference to the type of systems and process automation you establish. Computers are good at efficiency but often bad at effectiveness. A good rule of thumb is as follows: Employment effectiveness is a human process that can be assisted by technology, whereas employment efficiency is a system/process that is enabled by people. The objectives, means and measurements are different. Deciding between efficiency and effectiveness is often difficult. On its face, it appears that industries that rely on knowledge workers or people with distinct skills are industries that benefit from a focus on effectiveness, whereas high-volume hiring operations for positions with a lot of churn require a focus on efficiency. But, in fact, the analysis must be on a requisition-by-requisition basis, not on a company or industry basis. Some Counterintuitive Examples High-tech firms are usually identified by their need for highly skilled workers, since the creation of intellectual capital is the foundation of their market success. This leads many employment managers for high-tech firms to focus on maximizing per-hire effectiveness. But we have worked with high-tech companies where greater than 80 percent of their open requisitions have been for assembly-line workers on time-critical product lines. Since the tasks that a person will accomplish on the line are easily trainable, the skill-set profile for any hire is simple: "can pick up a screw driver and turn." A hole in the assembly line, however, has a significant impact on the line's productivity. So hiring quickly is much more important than hiring perfect candidates. Our analysis showed that more money would be saved by focusing on high-volume hiring efficiency than on one-off exempt hiring effectiveness through automated process alignment. On the other hand, we have also worked with financial services organizations with a focus on retail sales. The churn in retail banking is tremendous, as annual teller turnover can approach 90 percent. Given the nonexempt requisition loads that individual recruiters tend to handle in these types of organizations, you might expect that their hiring process is focused on efficiency. In fact, our analysis showed that customer contact with tellers was the single largest contributor to customers' brand perceptions. A bad hire in a teller position can have disastrous effects in terms of theft, bad press, and bad customer relations. At the same time, branch managers usually have a high degree of flexibility in scheduling their resources. This meant that an open position can usually be covered effectively in the short term. In this case, hiring effectively is clearly more important than hiring efficiently. The overall financial benefit to the organization is maximized when the hiring processes are highly flexible and specific to recruiter needs. Of course, in any hiring situation there is a range of efficiency vs. effectiveness possibilities. In the banking example the sheer volume of the hiring requirements necessitated a degree of process automation, whereas in the high-tech example some human intervention was necessary to ensure that people actually showed up for work, attended training, and met assembly quotas. But the efficiency vs. effectiveness framework is a useful starting point for determining the real need for and benefits of hiring process automation, as well as for understanding the cost/revenue benefits that can be achieved. Recruiter Focus The effectiveness vs. efficiency framework can also drive different ways of looking at workload distribution inside employment departments. This in turn can help with process automation as recruiters become more adept at using the technology infrastructure specifically intended for their type of recruiting. To this end we talk with our clients about breaking requisition workloads into efficiency and effectiveness buckets and then assigning recruiters based on those buckets. We think the common practice of making recruiters responsible for a single hiring manager's, or department's, needs is a mistake. Recruiter assignments should be based on the requisition types, since they require radically different skill sets. Efficiency-focused requisitions require a process and administration guru. It is a high-powered administrative function. The train must be kept on track. The successful recruiter will be as much a process efficiency expert as a manager of successful information throughput. In comparison, sourcing and closing are not critical skills for efficiency-focused hiring. Effectiveness-focused requisitions must be handled by seasoned professionals with a special understanding of the individual industries and skill sets for which they are hiring. They must be salespeople, psychologists, and communicators. Each hire is a potential one-off. They use the systems to track reporting data, and this reporting focuses on the quality of hires. These types of recruiters will usually not want to give up their stash of data. You are hiring them to bring in good people, not to turn over their "special sauce" to your department. The system you implement must recognize this and support it. The easier it is to track hiring data without interrupting recruiters' workflow, the more effective the system will be. Checklist The following checklist can help you frame your process automation and system discussions given the efficiency vs. effectiveness model:
Conclusion Keeping recruitment a core strategic asset for your organization will benefit you and your organization. The first step toward making this vision a reality is to determine what types of hiring your organization requires and how hiring processes drive organizational success. We have found that the most useful top-end measurement is hiring efficiency vs. hiring effectiveness. Using the efficiency vs. effectiveness framework will enable you to configure hiring systems that best support your organizational objectives and determine the degree of process automation necessary to support your hiring needs. Author Bio Jeff Hunter is a founding partner of Hunter | Morgan Associates. |
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