Dr John Sullivan Talent Management Thought Leadership
What CEOs Want To Know About Recruiting
When economic conditions get a little tough, it's not uncommon for CEOs and CFOs to dramatically cut the recruiting budget. But instead of just wondering why they always seem to pick on recruiting, you might instead take a step back and try looking at recruiting from their high-level strategic perspective.
This article is comprised of a list of questions derived from numerous independent conversations I've had with senior managers at Fortune 500 firms. The questions that follow might not appear on the surface to be unfair or unrealistic to the casual reader, but what turns these seemingly reasonable questions into "questions from hell" is the fact that almost no recruiting executive I have met can answer even a majority of them, concretely, with data or facts. I attribute this to the fact that HR in general, and recruiting in particular, has traditionally been a "soft discipline," a characteristic that now must change.
Are you a recruiting expert? Can you answer these CEO questions from hell?
Forget all of the certifications, degrees, and "titles" you might have obtained. If you really know the recruiting profession (and your own recruiting department) you should be able to answer each of the questions about recruiting.
Don't be surprised if you find yourself "shocked" by the simplicity of the questions. If just reading the questions alone makes you uncomfortable, then that's a good sign, because that is what this list of questions are designed to do — make you uncomfortable with your present approach! If by chance, you are one of the few who believes that these questions are "unrealistic" or that the answers are "unobtainable," let me assure you that each and every question can be answered.
Here is the list of compelling strategic questions for managers of recruiting, separated into four sections by topic area.
Section 1. Does great recruiting really matter?
1. Do the most profitable firms in your industry have great recruiting functions? In contrast, do the bottom-performing firms have weak recruiting functions? Have the firms that have moved relatively rapidly from the bottom to the top of the industry strengthened their recruiting function as a precursor to their improved success?
Discussion: It's easy to assume that whatever you do in business is important, but it's better to check and find out. It's relatively easy to do a simple correlation between the firms in your industry that have great recruiting functions and their corresponding business success. In most cases, there is a direct connection between excellence in recruiting and business results — but there are exceptions. With this proof in hand, you can show senior management the importance of great recruiting.
2. Does having great people really matter at your firm? As the percentage of top performers in key jobs at a firm increases, does business success improve proportionately? If top performers make a difference, can you demonstrate in dollars the difference in the value of the output of a top performer compared to the output of an average employee (or even a bottom performer) in the same job?
Discussion: What if it made absolutely no difference if a particular firm had a high percentage of great versus average employees, since the firm succeeded primarily because it had a strong brand, good location, or a large market share? Would it make any sense to have strong recruiting, development, or retention programs if that were true? If having top performers doesn't matter, it makes economic sense to aim lower and recruit "butts in chairs."
3. If having great people really matters, can you demonstrate that, of all of the different HR functions, recruiting great people has the highest dollar impact on the business? What is the return on investment (ROI) of recruiting and how does it compare to the ROI of other business and HR functions?
Discussion: What if most of the impact (increased productivity and profits) of having great people comes primarily from great recruiting (as opposed to having effective development, retention, compensation programs)? Wouldn't it then be important to demonstrate to senior managers that recruiting has the highest impact of all HR functions? Comparisons can be made between the different HR functions on either their total dollar impacts or their ROI.
4. Do the most profitable companies in your industry spend the most money on their central recruiting function (as a percentage of overall spending)?
Discussion: If in item #2 you've demonstrated that recruiting has a major business impact, can you also demonstrate that great recruiting comes as a result of having a great centralized employment function? It's important to demonstrate the impact of a well-funded centralized recruiting function because it is possible that great recruiting is a result primarily of efforts by management and employees — and having a well-funded centralized employment function in that case might actually have little impact on business success.
5. Which jobs, when you hire top performers into them, have the highest impact on company profits and success? Which jobs have little increase in business impact when you place top performers in them?
Discussion: Even after you demonstrate that recruiting has a significant business impact, it makes logical sense to go further to identify which particular jobs great recruiting has the very highest impact on. It's possible for a firm's recruiting function to allocate equal effort and resources on recruiting all jobs, when in fact, what should occur is that recruiting should be focusing exclusively on the jobs where great recruiting has the highest economic impact.
6. Does your firm have the "right number" of people? How do you know if you are over- or understaffed in terms of total headcount?
Discussion: Many people in the employment field think their job is to merely respond to requisitions and fill them. Unfortunately, such a narrow view of the employment function in the late 1990s resulted in "over hiring" and then massive layoffs. Strategic employment managers take a broader perspective, and they include workforce planning as an essential element of the employment process. As a result of this broader perspective, they have productivity targets (i.e. a fixed ratio between employee headcount and revenue) that alert managers well before they have excessive headcount.
Section 2. What do you really know about the effectiveness of your employment function?
7. Have the people that you hired this year been more productive on the job (i.e. produced a higher average output or received higher ratings) than the people you hired last year?
Discussion: Can you demonstrate that the recruiting function is constantly improving and continually producing better results? There is no better way to demonstrate continuous improvement in recruiting than to show that the on-the-job performance of new hires is continually improving.
8. What is the cost of a bad hire? What percentage of the people that you hire are mistakes? Is recruiting aware of what happens to them after you complete the hiring process?
Discussion: In addition to not being productive, "bad" new hires can cause significant economic damage to the firm by making errors, offending customers, requiring additional management attention, and slowing up work teams. If recruiting is to become strategic, it is important to realize upfront that a certain percentage of new hires will be bad hires. Great recruiting departments go the next step and calculate the economic impacts of these bad hires. Excellent recruiting systems will have systems to rapidly identify those bad hires as soon as possible. In addition, excellent recruiting systems have feedback loops to ensure that recruiting processes learn as a result of bad-performing hires, early voluntary termination, and those new hires who must be involuntarily terminated.
9. When recruiting fails, what element of the recruiting process is most likely to be the key contributing factor to that failure (e.g. bad sourcing, bad screening, bad assessment, weak "selling/closing")? Who is primarily responsible for most failures, managers or recruiters?
Discussion: Few recruiting managers look at recruiting as a business process. It is rare for recruiting managers to take the time to study other business processes like supply chain, CRM, Six Sigma, and lean manufacturing in order to identify the successful strategies that they used to become corporate heroes and profit centers. What senior recruiting managers should do is utilize the Six Sigma statistical approach to "failure analysis" in order to identify the root causes of recruiting successes and failures. If recruiting managers continue to manage using their gut as opposed to data and facts, it is unlikely that their function will ever have a strategic impact. For these reasons, it's essential to continually assess the overall recruiting process and then utilize that information to improve recruiting processes and shift budgets and time allocations in order to improve the overall success of this business process.
10. Does "slow" hiring negatively impact the firm's profitability, product development or time to market? Does speeding up the time to hire increase or decrease the quality of the hires? If fast hiring means high-impact hiring, what is the dollar cost to your firm of each vacancy in a key position?
Discussion: Many recruiting departments have begun to measure their overall time to fill for all jobs, but few have undertaken the next strategic step, which is to quantify the dollar impact of slow hiring and vacant positions on business results. Recruiting managers should begin early on identifying the number of days that top performers (for key jobs) remain on the market (often as few as 10 days) and then adjust their recruiting time to fill to meet that specific time target. One major firm, in particular, found that the cost of a vacancy in a key position exceeded $7,000 per day.
11. How satisfied are applicants who apply to your firm? How do you measure applicant satisfaction? What is the economic impact of low applicant satisfaction?
Discussion: In many businesses — particularly retail — treating an applicant poorly might be tantamount to losing a future customer. Even in non-retail businesses, treating applicants poorly might result in damage to your firm's valuable product brand. As a result, wise recruiting managers quantify the potential negative economic impacts of offending applicants. They next measure a sample of applicant satisfaction, and then they revise their recruiting processes accordingly, in order to increase applicant satisfaction.
12. What is your external image (i.e. employment brand) as a great place to work among potential applicants in your industry? How does your image compare to that of your competitors, and what is the economic value of maintaining a superior external image?
Discussion: On the business side of the firm, every manager knows the value of having a strong brand. Unfortunately, many recruiting managers ignore or only pay lip service to assessing, building, and maintaining a firm's employment brand. The very best firms like Cisco, GE, SAS, Starbucks, and Southwest Airlines continually build their employment brand because they realize that it is the single most effective tool for building a long-term stream of high quality applicants.
Next week, in Part 2 of this article series, I'll look at recruiting questions from hell related to sourcing and other areas of the employment function.
