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Dealing with Darwin

By Bryan Johanson, October 25, 2006

I recently picked up a book entitled Dealing with Darwin - How Great companies Innovate at Every Phase of Their Evolution. The book was recommended to me by John Ganley, former director of recruiting for Quest Software who was recently promoted to Vice President of Human Resources at Quest. This is another Geoffrey Moore book which focuses primarily on high tech companies; however, its lesson can be applied widely across any type of organization and functional group in any size organization. The basic premise of the book is that in order to thrive, companies must innovate. Change is of course inevitable; all innovation is not equal, nor does it provide the same level of benefits to a company or organization. Appropriate innovation is dependent on the product lifecycle, the market, and the customers who are being served.

I've been thinking about how to apply Geoffrey's theory of positive innovation to the recruiting function. As I look out over our client base, I see companies trying all types of new (and not so new) approaches to recruiting. Some are outsourcing all their recruiting to RPOs while others have decided to bring recruiting back in house. There are those who are centralizing their sourcing while keeping their interviewing and assessment decentralized. All of these can be viable approaches; the trick is knowing when to apply which strategy for maximum benefit. All of these companies think they are innovating. However, only a few will actually achieve what they set out to do.

Is there really one right approach to recruiting? Or rather, does the ultimate structure and success of a recruiting team vary dramatically based on similar variables outlined in Geoffrey Moore's theory of innovation?

We have one client in the energy industry. For more than 20 years their recruiting function has remained dormant. The typical manager hired only one or two people a year primarily to replace retirees. Growth was stagnating. The need for new people was nearly non-existent. Then, a few years ago that all changed. The price of oil skyrocketed. The need for new drilling and exploration became a critical imperative. Hiring managers - who two or three years ago were only hiring a couple of people - now had to hire 100 to 150. Not only were they unprepared for this type of hyper growth, they had let their internal recruiting capability languish. They had virtually no recruiting expertise left. The company had just a few HR generalists, who also recruited in their spare time, and were mostly administrators. They now find themselves in the difficult position of building a centralized recruiting organization from scratch with limited systems, questionable recruiting talent, and no technology. Had they anticipated the change in the market they may have been better prepared. They didn't. They failed to improve their recruiting capabilities and system, even when key leaders in the organization forecasted that was on the horizon. In this case, HR was the last to respond. Now all their competitors are in a race for the same limited talent pool and their key focus is implementing technology to "bring them into the 21^st century".

Another example, a large financial institution has decided to outsource their entire active candidate sourcing. They've hired an agency to post all their ads, handle all employee referrals, and screen candidates. Basically, this relieves their managers from the burden of recruiting using the internet. This is a large undertaking. In the past this was a completely decentralized function. Each manager would handle their own job postings, screen their own candidates and make their own hiring decisions. 30% of a manager's time was spent on recruiting. The centralized HR team wants these managers to shift their approach to relationship recruiting and target more passive candidates - the ones that you can't find on a job board. The challenge is that for the last ten years they've only used the internet to recruit. These managers haven't got a clue how to make this work.

Both of these companies want to take their recruiting functions to the "next level". They are both trying to innovate; will these approaches actually produce better talent, smarter employees, stronger leaders, and better hiring decisions? If implemented correctly these changes might produce some of the desired results, but not the entire result needed. Most likely there will be a gap between some result and an excellent result. At The Adler Group, what we find more often are companies making sweeping changes only to find minimal impact to recruiting and bottom-line. Why, because they ignore the fundamentals.

These are three common mistakes companies make when reinventing their recruiting functions:

#1. Invest heavily in technology - before understanding what drives a successful hiring process. Many companies believe that recruiting innovation means implementing technology (ATS systems, internet sourcing tools, etc.). While these tools can be valuable, most companies end up disappointed in the results because they failed to use these tools to implement proven best practices. They simply automated their already flawed approaches to hiring. The result is a faster better way to hire average talent.

#2. Outsourcing without demanding process improvement. Outsourcing is fundamentally a make or buy decision. On paper outsourcing looks very attractive economically. However, there is a tremendous amount of work to ensure that the outsource partner fully understands the nature of the business, the nature of the jobs they are recruiting for, and the depth of integration with the organization needed to be successful. When set up appropriately, outsourcing can produce solid results; unfortunately most companies miss the boat. Often, the underlying principles of great recruiting are ignored; and even worse, it is assumed that the outsource partner is already using best practices. I can nearly guarantee to the financial institution - in my example above - that if their outsource partner uses a similar approach to internet sourcing, as their managers, they will see limited benefits.

#3. Centralizing the recruiting function. Centralization is another reoccurring structural innovation in many recruiting organizations. As organizations grow and recruiting becomes distributed across the enterprise, HR tends to lose control of the recruiting function. Individual managers hire third party recruiters at great cost and there is little visibility into the hiring needs of the whole organization. The solution - develop a centralized recruiting or sourcing team to become the focal point for all hiring. Centralization provides some key benefits, but many companies without vision find that this approach can quickly backfire if it is built upon a foundation of HR generalists - who often have limited recruiting skills and even more limited recruitment knowledge. I'll go even further to say, there is usually a huge gap between generalists' limited skills and recruiting knowledge.

In all these approaches recruiting leaders pitch these changes as important innovations to the recruiting process; they expect and communicate to their company leadership that these are necessary changes that will lead to dramatic improvements in the hiring process. The point here is that innovation without real attention to the core recruitment processes, throughout the entire system, is wasted effort. If the fundamentals aren't in place, then these new structures will eventually fail. Is your company engaged in any of these common mistakes? Does your company's recruitment processes focus on the fundamentals? Can everyone on the hiring team, from HR to managers, communicate the fundamentals of recruiting top talent?

As Darwin discovered, it really is a jungle out there and only the fittest will survive. Recruiting innovation is essential for survival, especially as we dive headlong into the significant talent shortage that's projected to last for the next 18 years. Only the right innovation, at the right time, built upon a solid foundation of key recruiting principles will produce the right results. That's why we created the Performance-based Hiring^SM system. It's a proven field-tested process that changes the rules. We've refined and tested for best practices over many years. And as we say, "It's a simple and scalable hiring process that line managers will willingly use." Performance-based Hiring gives leading-edge companies the opportunity to make hiring top people a systematic business process.