• 
• Training
• Consulting
• Resources
• Events
• About Us
• Store

• » Articles
• › The Official Rules for Hiring Top Talent
• › Newsletters

Fixing Corporate Recruiting

By Bryan Johanson, September 14, 2007

Last week I met with a Director of Recruiting from a major Fortune 200 company in the Midwest. In a recent meeting with one of her top corporate executives, the executive made the comment that he finally considered the recruiting department "fixed." The Recruiting Director was so taken back by the comment that she didn't really know how to respond. She was genuinely troubled by his comment. What does he mean by "fixed"? Perhaps it was a backhanded compliment or maybe he meant "fixed" in the sense that he's crossed it off his to-do list—he's no longer worried about it. Perhaps he believes that because they recently installed a new ATS system, added two or three additional recruiters, and restructured their sourcing department, he doesn't really need to worry about it any more.

Read more articles by this author.

Related Topics:

Networking, Newsletter, Recruiter Training, Recruiting, Sourcing

Related Articles:

What is Your Recruiting Strategy?

Is Your Recruiting Department behind the Eight Ball?

Adler's Wild and Crazy Economic Recovery Plan

Of all the words I would use to describe corporate recruiting departments, "fixed" isn't even close to the top of the list. How about words like dynamic, ever changing, shifting, competitive, urgent, vital, and challenging? I've been working with the Adler Group for close to eight years now. Nothing about recruiting is "fixed." It's always a moving target. Sourcing strategies that worked last year don't work as well today. Recruiters must constantly improve their skills if they are to attract and source top candidates. This executive's comment reveals his complete and total lack of understanding of the recruiting challenges facing his company.

Most recruiters and managers agree that hiring great employees is getting harder, not easier. CEOs and corporate executives of high performing companies will never take recruiting and talent acquisition off their "to-do" of high priorities. Those who do put their future and their company's future at risk. Why does the C suite spend so much time talking about the impact of people on the organization, yet continually fail to regularly invest over the long run in the core competency of recruiting. Years ago there was a formal poll of CEOs in mid-size and smaller size organizations. They were asked what their biggest challenges where. 87% identified hiring the right people as either the number one or number two priority on their list. However, less than 10% of these same CEOs when pressed to identify any significant actions they had taken to improve their managers' or recruiters' ability to identify and attract top talent could name significant action or investment. It's just lip service.

Perhaps executives fail to understand the needs of the recruiters because we have not clearly articulated the problem in terms they understand: $$$ and the bottom line impact of poor hiring decisions. Here are a few clear cut examples:

1. Recruiting is directly related to revenue! A few years ago Lou was invited to train the recruiting team for a very prestigious consulting company. The training was a bit of a reward for a job well done. This particular recruiting team (50+ strong) had really pulled out all the stops. They made hundreds more placements that year than the previous year. They were recognized for their great achievements with a day of training with The Adler Group. This was a good group of recruiters. As I spoke to the group's leaders I realized just how big of an impact they had had on the company in that past year. In the consulting world, revenue is directly tied to the number and sophistication of the consultants on staff to deliver projects. This organization's ability to attract, recruit, and retain top consulting talent was the single biggest bottleneck to corporate growth. Every placement translated into 1 million to 1.5 million dollars in additional consulting revenue. Now, as Paul Harvey used to say, "Here's the rest of the story" . . . While they filled more positions than ever before, they also left on the table over 500 positions unfilled that year. These were positions that were already approved by management, presumably because they had consulting work to keep these individuals productive. These unfilled positions represented well over 500 million dollars of additional revenue that the company could not realize because these positions were not able to be filled. That's a huge bottom line impact.
2. Cost of temporary workers: A healthcare company saved millions of dollars by improving their recruiting process. How? By improving their time to hire, they were able to avoid hiring temporary labor that was required to meet state mandated service standards. Temporary labor was costing almost double what a full-time employee would cost and it was difficult to find. By starting the recruiting process earlier and streamline their approach, they not only reduced turnover by over 25%, they also filled positions must faster. The results were tens of millions of dollars in salaries that didn't have to be paid as well as a higher quality workforce.
3. Turnover cost in the millions: First year turnover is especially damaging. Overall turnover can be attributed to a number of factors, but first year turnover is most closely linked to bad hiring practices. In some organizations this can be quite high. In lost revenue and opportunity it can result in millions of dollars per year per person depending on the position. I once consulted with an organization that had 30% annual turnover in their sales ranks. Interestingly, they thought this was just typical for their particular industry. They were growing their sales organization at an annual rate of 10% a year. That means that approximately 35% of their sales people were brand new each year (by the way, their competitors had turnover in their sales organizations of only 12-15%). 30% turnover was a huge drag on their team. Customers wondered why their sales staff was always changing; they weren't able to build long-term customer partnerships. The cost of this turnover was millions of dollars in revenue every year.

Your organization may have a harder time showing a direct link between recruiting and revenue, but the relationship is there nonetheless. If recruiting organizations are going to get the resources and respect they deserve, it's going to take recruiting leaders who understand how to translate their needs into real bottom line impacts. We've got to get better at making the case that corporate recruiting needs more than a short term fix. It's not just about investments in technology; it's about investments in recruiting capability and in cultural change. Until recruiting takes its rightful place as an on-going high priority for both C level and mid level executives, it's not ever going to be really fixed.

Happy Recruiting.