Re-Energize Recruiting – Reward Managers For Great Hiring Results (Because managers are driven by incentives)

What you measure and reward gets done, so start rewarding managers for great hiring results.

Article Descriptors| Recruiting /Manager Incentives – Benefits – Implementation Tips – 4 Min Read

Managers Are The Biggest Recruiting Roadblock

BCG research found that, of all HR activities, recruiting has the highest impact on corporate revenue and profit. Yet despite its huge impact, only 39% of surveyed companies reward managers for great talent results. This lack of financial incentives contributes to the fact that hiring managers are the #1 roadblock to great hiring. Incentives heavily drive managers, so they are not likely to change their current approach to recruiting until they are measured and rewarded for producing great recruiting results.

“Recruiting is just sales with a crummy budget and no incentives for great results.”

A Snapshot View… The Many Benefits Of Rewarding Managers

Many positive benefits can accrue to a corporation that financially rewards managers for producing great hiring results. Those benefits include:

• Because managers are driven by incentives, rewarding them will get their attention – This is almost universally true for managers at all levels. Over time, I have learned that the most important things in business are always incentivized. So, they frequently interpret the absence of an incentive to mean that executives don’t really care about great hiring.
• Managers will spend more time on hiring – To produce the best recruiting results, individual managers will consciously have to devote a greater portion of their time to each important recruiting element.
• Managers will learn how to hire better-performing new hires – When each new hire’s performance is measured, rewarded, and reported, that increased scrutiny will cause individual managers to focus on quickly identifying best practices that produce better-performing hires (some call it quality of hire).
• Fewer managers will “settle” for butts in chairs hiring – Because the quality of their hiring will now be measured and reviewed by executives, most managers will no longer be willing to reveal to executives that they have settled for “a warm body” hire.
• You will hire much faster – Because more managers will finally realize that faster hiring produces better-performing hires (because you make an offer before your talent competitors). The hiring speed of most managers will improve dramatically. And if you also penalize unnecessary delays, you will see even faster results. For example, a major tech firm once began charging hiring managers for each day that a vacancy remained open. That helped to reduce their “Time To Hire” from over 90 days to less than 20.
• Reporting hiring performance will increase your executive support – Because each manager’s hiring results will now be reported to all executives. Your executives are now more likely to put less emphasis on cutting hiring costs. Instead, they will begin emphasizing the increased business impact of hiring.
• Your volume of hires will increase – Because the volume of hires will also be a manager metric. Managers and recruiters will work closely together to “squeeze out” all of the unnecessary delays and steps that reduce a manager’s hiring volume. Penalizing managers for failing to fill open positions will also increase hiring volume.
• You will hire more diversity candidates – When diversity hiring is measured, rewarded, and reported, managers will have multiple incentives to find the best ways to recruit diverse talent and to reduce discrimination issues.
• Recruiter, manager, and executive stress will be reduced – Because recruiting will be completed faster and with much better results, everyone involved will suffer less stress and anxiety from not resolving their #1 talent management issue.
• This approach will also make managers more interested in new-hire retention – After fighting so hard to land top talent, it’s only natural that hiring managers will place more emphasis on keeping them, especially if you also measure, reward, and report new-hire retention. BTW, the value added by rewarding managers for great recruiting results will end up being several times more than the money spent on rewards.
• Recruiting professionals will experience more cooperation and collaboration – Because recruiters influence a manager’s hiring results, rewarded managers are more likely to cooperate with and respond to corporate recruiters.
• Inputs from managers will improve your TA metrics – Adding rewards will cause your managers to focus more on great hiring. And that “buy-in” will make managers more willing to provide recruiting leaders with helpful feedback on how TA can improve recruiting performance and recruiting metrics.
• These metrics may be the first step in transforming HR into a data-driven function – After HR has successfully made the recruiting function more data-driven, I have found that this first step is often the catalyst for inspiring all other HR functions to speed up their transition to a data-driven decision-making approach.

Implementation Tips

I have advised dozens of corporations in this area. So, if you are seriously considering implementing a program to reward great recruiting, I have several recommendations for you to consider. 

• Start with a business case that’s narrowly targeted at individual hiring managers – If you want to get and keep the attention of hiring managers, it’s essential for your function to develop and distribute a compelling, targeted business case that convinces individual hiring managers of the benefits they will receive from adding rewards and metrics.
• Make recruiting results an important element in every manager’s performance appraisal – If you have a separate performance appraisal process for your managers, make sure that it has a separate item for assessing each manager’s hiring results.
• Also, make great hiring a significant part of each manager’s bonus formula – Ensure that producing above-average hiring results makes up at least 20% of a manager’s bonus formula. But to minimize conflict, be sure to gather a great deal of hiring manager input before you finalize your metrics and rewards. 
• Make it a manager’s promotion criterion – Because the higher up a manager goes in an organization, the impact of their hiring increases proportionally. So, a history of producing above-average hiring results is an absolute requirement before a manager can even be considered for a promotion.
• Reward recruiters – Rewarding individual recruiters for their results also makes sense. In addition to rewarding individual recruiters, rewarding the entire recruiting team in a business unit also makes sense, where most of the group’s managers have exceeded their hiring targets.
• Develop a best practice sharing mechanism – More individual hiring managers will be able to produce above-average results if you develop an effective internal best practice sharing process.
• Convince hiring managers to agree to a service-level agreement – To tie down everyone’s commitment to great hiring, develop service-level agreements between your managers and recruiters that specify what each side must do and by when.
• Consider adding a broader “talent management” reward – Although recruiting clearly has the #1 business impact of all HR functions, it also makes sense to reward managers for producing broader talent management results in other areas of HR. The talent areas that might also be measured and rewarded include employee development, retention, internal movement, team productivity, and innovation.
• Quantify in dollars the business impacts of recruiting – And last, but certainly not least, you can maximize your recruiting impact on your executives by converting your recruiting results into their dollars of business impact. Don’t try to do that on your own. Instead, work with your CFO’s office to estimate the total dollar impact that recruiting had each quarter. By converting your results into dollars, you make it possible for executives to easily compare your recruiting results side-by-side with those produced by other important business functions (i.e., finance, marketing, supply chain).

If you only do one thing – select a single high-volume important job where the new hire’s performance is already quantified (like sales or customer service). Then, the hiring managers will be offered a $100 bonus for each new hire in that job that they will make during the next 30 days. Then, quickly determine if your new hires’ volume and/or quality went up during that 30-day period.

Final Thoughts

The key foundational principle that recruiting leaders must learn is that managers will focus on whatever executives measure and reward. Managers will interpret the absence of incentives as a signal that executives place little value on the results from that area. Managers have the highest impact on recruiting results, so it is unconscionable that recruiting and HR haven’t made individual managers more accountable.

Without this added accountability, I have found that most corporations simply will have no chance of filling their upcoming talent shortages in key areas like AI, quantum computing, robotics, and data security.

Note to the reader

This is the latest in his 25 continuous years of weekly articles on talent. Access those thousands of articles here.
Please spread his ideas by sharing this with your team/network and by posting it on your favorite media.
And, you can subscribe to his weekly talent management articles here or by following him on LinkedIn.