A Think Piece: Why Is Recruiting So Low on the Corporate Power Scale?

scaleThis is one of a series of what I call “think-pieces.” Instead of casual reading, these articles are intended to stimulate some in-depth thinking and to pose some strategic questions that recruiting leaders should ponder. The questions raised here are, at least in part, designed to make you uncomfortable” with your current approach to recruiting.

It’s December 2009 and it’s the end of the “decade from hell” during which the recruiting and talent management function endured some ugly times. Rather than bemoaning what happened, why not take a few minutes or so and rethink your approach to recruiting. The topic for this particular think-piece is corporate power and why recruiting seems to have so little of it.

Thought-provoking question #1 — Is it true that on the corporate “power scale,” recruiting falls well below where it deserves to be?

My basic premise is that when it comes to power and recognition, the recruiting function should be one of the most important business functions, ranked right up there in importance with finance, product development, and sales, but for some reason, it is funded poorly and often underappreciated.

Fortunately there are a few exceptions; a few stark examples of situations where recruiting is so important that it is classified as a mission-critical business function. Two industries where recruiting is certainly “king” include both college/professional sports and the entertainment industry. It’s obvious to everyone in these industries that if you attract a major recruit like A-Rod, LeBron, or George Clooney, you haven’t just recruited a good employee, but instead you’ve changed the revenue stream of the company for a significant period of time. As a result, sports teams and entertainment moguls put huge resources into recruiting. In direct contrast to corporate recruiting, when their teams or studios are doing poorly, they put even more effort and resources into recruiting top talent.

The point that I want you ponder is that in the corporate world, there’s something in the way that we currently conduct recruiting that puts us well down on the mission-critical scale, in spite of our actual impact on corporate performance. If you agree with this premise, below you will find some points that might explain our relatively weak position in the corporate world.

Thought provoking question #2 — What are the top 10 characteristics that make functions powerful in the corporate world?

It’s possible for a business function to go from powerless to mission-critical merely by changing the way it acts. Supply chain is certainly a great example of that dramatic transition. For years it was known as purchasing, inventory, and transportation and under that overhead approach, the three functions received little attention, recognition, or resources. However, once it began to use technology, metrics, and to demonstrate its dollar impact on corporate revenues, it became a corporate darling and rose to the top of the power scale. The question is, “are there common factors that cause the most powerful corporate functions to receive the lion’s share of corporate resources?” I recommend that you come up with your own list of these “power factors” within your organization. But I am providing you with a list of the top 10 critical “power factors” that I have found to be consistent differentiators between the powerful and the underfunded.

  1. Focus on revenue impacts: Process results are reported in dollars, demonstrating their impact on revenue.
  2. Show impact on strategic goals: Process goals and results are unambiguously linked directly to strategic business goals.
  3. Competitive advantage: Results are directly compared to the results of competitor firms, in order to ensure that your firm retains a competitive advantage.
  4. Prioritize: They prioritize their efforts and focus on creating strategic impacts.
  5. Proactive: They seek out opportunities rather than waiting and reacting.
  6. Metrics: The functions are managed and decisions are made based on numbers and strategic metrics.
  7. Manager’s reward: Their results are an important component of executive bonus formulas.
  8. Innovation: Their rate of innovation is among the highest in the corporation.
  9. Technology focused: They use the latest technology.
  10. Reporting: Their actions and their results are reported as an integral part of the standard business and financial reports are read by executives.

Thought provoking question #3 — Does our current conservative approach to recruiting essentially doom us to a weak power status, or are there actions that can be taken to increase our status?

Below you will find a few recommended actions and some thought-provoking questions for each of these 10 power factors.

You must demonstrate revenue impacts: is there any doubt in your mind that recruiting a key innovator, a top salesperson, or a great branding person directly increases corporate revenue? Incidentally, is this impact not just for one year but for many years as the new hire stays with the organization? If we can agree that there is a major business impact as a result of strategic hiring, what exactly is preventing you from working the CFO’s office to convert the impact of recruiting into dollars? Why doesn’t your team calculate the difference in performance between a great and a mediocre hire in the same position, in order to make the business case that demonstrates the tremendous revenue lost as a result of weak hiring processes. Have you calculated the correlation between excellence in hiring and improved workforce productivity and business results?

Tying recruiting goals to business goals is essential: most recruiting functions rely on tactical goals like reducing cost per hire and monitoring the number of positions filled. Does it make sense that such narrow and functional goals would appear insignificant to senior executives? Their goals are to increase sales, improve market share, increase customer satisfaction, and to innovate in the product area. Does it make sense to work with the people who set the overall strategic business goals to ensure that everyone sees the direct connection between what recruiting does and those goals? What is keeping you from converting your goals, so that they directly match those of the business? For example, let’s look at the business goal of increasing sales. Is it possible to demonstrate how great hiring in the sales function can directly increase sales? Well, if that’s possible, why not change your recruiting goal so that the strategic impact is clearer? Does the goal of “hire 75 people” resonate the same to senior executives as this goal: “increase sales performance by 12% by hiring 17 top-performing salespeople away from key competitors”?

Focus on beating your competitors: it’s no secret that most recruiting functions are inward-focused, while most executives are laser-focused on aggressively crushing their competitors. Would your power position improve if you demonstrated to executives how you were also extremely competitive and as a result, you directly monitored and then aggressively countered the recruiting strategies and actions of your major competitors? What are the barriers that are preventing you from demonstrating that your company’s sales, product development, and innovation rates are measurably superior to your competitors’ because your recruiting practices are superior to your competitors’? Why don’t you conduct a competitive analysis on a regular basis to see where what you do is inferior to what they do? And shifting back to the sales example, why haven’t you demonstrated how aggressive recruiting on your part can hurt the sales of your competitors? Do you purposely target the best salespeople at your competitors? In head-to-head competition over top sales candidates, what percentage do you win?

Prioritize and focus on high-impact areas: just like sports teams, all powerful functions prioritize their customers and their services in order to put their limited resources to where they can have the most business impact. Football teams focus on hiring quarterbacks, and movie producers focus on landing one or two marquee stars. In direct contrast, most recruiting functions treat all positions and hiring managers the same. They process requisitions based solely on the date of the requisition. Executives already prioritize products and business units; what is preventing you from doing the same? Would you gain more respect and increase your business impact if you instead identified the most critical business units and jobs? If you focused your hiring on revenue-generating positions, would you increase revenue? Does it really make sense to put your best recruiters on low-impact jobs and commodity business units?

Shift from reactive to proactive: most recruiting efforts can only be classified as reactive, meaning that you react only when a recruiting requisition opens up. But wouldn’t your power position improve if you shifted to the more desirable proactive mode? What if you shifted recruiting to a continuous “pre-need” mode, where you proactively seek out available talent rather than hoping that it might be conveniently available at the exact time when you have a position open? If you understand the superior approach of a we-find-them capability compared to posting jobs and hoping that the best will find you, have you considered a most-wanted list where you continually target top industry people throughout the year and react quickly when they are available? What’s keeping you from alerting your managers when top talent becomes available? Maybe you should study and learn from sports teams, where they purposely increase their focus on recruiting when performance is down?

Metrics: not a single one of the most powerful business functions make decisions based on emotions or past practice. From finance, to IT, to marketing and supply chain, they all rely heavily on “decision metrics” to continually improve. Most recruiting departments failed to generate a single metric in important areas such as:

What is your continuous improvement rate in recruiting?

What is your failure rate in hiring?

What are the critical success factors in world-class recruiting?

As a result, maybe the time has come to stop listening to HR metrics people (who almost universally “don’t get it”) and instead to begin to talk to business metrics experts. Why is it that it after all the work you’ve put into designing metrics, no one pays attention to them — because they’re all historic and they don’t help with actual daily decision-making?

Managers need to be rewarded for great hiring: like it or not, managers have learned over time to laser-focus on the things that are measured, reported, and rewarded. Even though HR controls compensation and performance appraisals, most managers are not rewarded significantly for great people-management. If people are your “most important asset,” why aren’t managers measured and rewarded for effectively using that asset? Yes it’s a tough battle, but if promotions, raises, and bonuses were tied directly to people results, wouldn’t managers then come to you for help in improving these areas?

Innovation must permeate the function: the most powerful functions innovate continually and at an amazing rate. Rather than waiting for funding before they innovate, they instead innovate first in order to get more funding and recognition. Is it true that within HR, cutting costs and avoiding errors is more beneficial to your career than risk-taking and industry-leading innovation? Is using Facebook really innovation? What is the rate of innovation within recruiting? When was the last time that a business function came to recruiting in order to learn about effective innovation processes? Are you guaranteeing continuous innovation by recruiting continuous learners on your recruiting staff, and do you have formal processes for identifying the “next practices” in talent management before everyone else adopts them?

Being technology-driven is essential: the most powerful functions love technology because technology is essential for speed, globalization, innovation, and improved decision-making. Do your recruiters misuse or avoid technology because they are too closely tied to tradition? Does buying an ATS system and using only a few of the features qualify as being technology-driven? Why don’t you use technology in interviewing, assessment, employer branding, and onboarding? Does your technology allow you to do 100% remote hiring, or can you prove that your technology increases the quality of your hires?

Your results must be reported to all: visibility is essential for obtaining and maintaining power. If recruiting results are reported only to HR, your results, no matter how spectacular they may be, are likely to remain a well-kept secret. Have you worked with the CIO and the CFO to ensure that your results are embedded in standard financial reports? Are managers with poor recruiting results embarrassed to see their name at the bottom of a ranked performance list? Can your executives and managers see each month how excellent recruiting results correlate directly with excellent business results? When recently hired individuals are recognized for outstanding business accomplishments, do you step forward and remind everyone that it was your process that made it all possible? Finally, what actions must you take in order to ensure that recruiting metrics receive the same visibility and recognition as inventory, time to market, and market share metrics?

Some Final Questions To Ponder

If your brain isn’t already spinning with thoughts, ideas, and questions, here are some additional questions to further stimulate your thinking.

  • Do you vary your recruiting approach and strategy between different business units that are in completely different growth modes stages in their business cycle?
  • Do you have a plan that would allow you to dominate your industry in talent management?
  • Do you let individual hiring managers use their short-term perspective to decide what competencies your organization will have? Or instead, do you make an effort to educate senior managers about the future competencies that are needed throughout the corporation?
  • Does your lack of integration make the hiring process a hodgepodge of disconnected events, rather than a seamless process?
  • Why is the only “solution” that you offer hiring new employees? Why not offer options including substituting technology for people, hiring contingent workers, and getting ideas from non-employees through contests?
  • Have you quantified the negative impact on product sales from mistreating applicants who may also be current or future customers? Does your candidate experience equal your customer experience on the product side?
  • Have you analyzed why within HR, OD, leadership development, and succession planning received more emphasis and recognition than recruiting?
  • Do you even have a forecasting capability within recruiting? Do you have a plan for when the economy suddenly improves? Is your recruiting process agile, so that you can meet the diverse recruiting needs of the different regions around the world?
  • Do you identify and track the many bad and negative things that appear in social networks and on the Internet about what it’s like to work at your firm? Have you demonstrated the impact that a great employer brand has on your firm’s stock price?

Final Thoughts

The key success measure of any “think piece” is that it makes you uncomfortable with the status quo. This particular article focused on the disparity between the power that we should have compared to how little power we do have, and it should have encouraged you to think about action steps for recruiting to gain its rightful place among the corporate power elite. Maybe action steps on how to improve your relative power should be a topic at your monthly or annual meeting. Finally, you should also notice that the approach that I’m recommending is based not on whining or demanding recognition but instead on how to act differently in order to influence senior management. The goal is for them to finally recognize what we already know, that nothing improves the performance of an organization faster than hiring a significant number of top-performing innovators into key positions!

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