In this continuing series of articles entitled “You Can’t Be Strategic Until …” I highlight the strategic actions that talent-management leaders should take to increase their measurable strategic business impact on their firms. In this case, the needed strategic action is for HR executives to find a way to reward managers for great hiring results directly.
As a result of research by the Boston Consulting Group, we now know the critical importance of recruiting. The research revealed that of all major HR functions, recruiting has the highest impact on corporate revenue and profits. We also know from sales and executive compensation the effectiveness and the impact of measuring, reporting, and providing significant economic bonuses for reaching important results. Yet even though at almost every corporation, managers are solely responsible for hiring, it is extremely rare in the corporate world to directly provide a bonus to individual managers for great hiring. In fact, in the sole research that I have been able to find on rewarding managers (in this case, for rewarding broad people management results), The Conference Board revealed that …
Only 39 percent of surveyed companies reward managers based on people measures
And, obviously hiring managers themselves have a significant impact on recruiting success. We know that because Bersin by Deloitte reports that talent acquisition’s “strong relationships with hiring managers is the No. 1 contributing factor to TA performance.”
The Benefits From Rewarding Managers for Great Hiring Results
There are many positive benefits that can accrue to a corporation that financially rewards managers for producing great hiring results. The most significant benefits include:
- Managers will focus on hiring — The father of management Peter Drucker put it succinctly: “What gets measured gets managed.” And because managers regularly report that they’re too busy to hire, measuring and rewarding recruiting will increase both the priority and the number of hours that they spend in this critical
- Rewarding and reporting great hiring reveals executive interest — when the metrics covering the hiring results of each individual managers are periodically reported directly to executives, it sends a message that your executives care about hiring. And placing a significant economic reward on hiring further reminds managers of executive interest.
- The right rewards reveal that the quality of hire matters — when a manager’s measures and rewards cover their quality of hire (i.e., the on-the-job performance and retention of new-hires), it encourages managers to focus on hiring quality, as opposed to just costs.
- Talent-acquisition professionals will get more cooperation — when individual managers place a higher priority on recruiting, they are more likely to be cooperative and responsive to corporate recruiters. And the data shows that the stronger the relationship with TA, the better the hiring results, because hiring managers are responsible for a significant portion of hiring delays. A higher level of cooperation will also cut delays and increase the speed of hiring, which is critical in today’s extremely competitive talent marketplace.
Action Steps for Rewarding Managers for Great Hiring
As someone who has advised firms in this area, I have several recommendations for you if your corporation is considering rewarding great recruiting. They include:
- Start with the business case — HR shouldn’t try to implement this alone. Instead, involve others by building the business case while working with the CFO’s office before you present anything to corporate executives. In your business case, show that the added focus on hiring won’t take managers away from other critical operational duties.
- Make it part of a manager’s standard performance appraisal — if you have a separate performance appraisal process for managers. Make sure that new-hire quality (i.e., new-hire performance, new-hire retention, and new-hire diversity) and filling positions on time are part of the appraisal criteria.
- Include great hiring as a significant part of their bonus formula — before you include it in the management bonus formula, work with a sample of hiring managers to make sure that the hiring measures and the measurement process are reasonable, and that they can’t be easily gamed. Successfully hiring quality mission-critical innovators, machine learning professionals, cybersecurity experts, and data scientists should also receive an added reward.
- Make it one of the criteria for promotion — because the higher up you go in the organization, the more important hiring becomes. Make it the responsibility of any manager who applies for a promotion to provide their own portfolio of clear evidence that they excel at hiring.
- Consider a broader people-management reward — although recruiting has the No. 1 business impact of all HR functions, it may also make sense to reward broader areas of people-management results. So, in addition to recruiting, also consider rewarding individual managers for excellent employee development, essential employee retention, and team productivity and innovation.
- Also, reward recruiters — reward individual recruiters and the entire recruiting team for a business unit when its managers exceed their hiring targets.
Many of those in HR are known for their immense faith in their employees. Although, in strategic areas, faith is just not enough. And when it comes to the high-impact area of hiring, HR needs to add some formal accountability and significant rewards to ensure that the firm maximizes its people management results. Despite the talent shortage, the most impactful place to start is rewarding hiring managers for successfully recruiting top performers and innovators and for filling key positions fast.
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Originally posted 09/10/2018 at ERE Daily.