- Recruiters like anyone else in a business environment have to be concerned with their company’s bottom line.
- In short, if a recruiter accesses new and/or existing talent in an efficient and pointed way that not only best protects a business’s assets, but increases those assets, that recruiter will be regarded as gold to their company.
- To this end, there are 7 actions recruiters can take to improve the overall production of their businesses.
- Keep reading to find out what those 7 actions are.
Recruiting new candidates for open jobs can be a long and very expensive ordeal. Conversely, keeping and supporting current employees can also involve a process that uses up valuable assets such as time and money.
Not only does the action of recruiting entail expenses, but so does the on boarding and training of the new hire, which in some cases has the danger of not working out.
In a recent article ERE Recruiting Intelligence identified 7 strategic actions recruiters can utilize to fortify their recruitment efforts while also making certain that those same efforts do not adversely affect company profits now or in the future.
Revenue-generating Actions
Many talent-acquisition leaders focus on low-business-impact activities like reducing recruiting costs. But such efforts have little strategic impact, because the total cost of operating the recruiting function is typically less than one half of 1 percent of all corporate costs. Instead, the focus of these recruiters should be on increasing corporate revenue, which is a strategic area that all executives watch closely. There are two recruiting focus areas that have the highest impact on revenue.
1) Prioritize hiring in revenue-impact jobs
- A focus on hiring top performers in revenue-generating jobs will immediately increase revenue. Spending the necessary time and resources to hire top salespeople, for example, can yield dramatic results. Top-performing salespeople sell between 4 and 10 times more than the average salesperson.
- Although the revenue impact may be a little more indirect, great hiring in customer-facing and product-design jobs will also eventually increase revenues.
2) A poor candidate experience may cost you customers and revenue
- If a firm has a retail product, as many as 18% of its customers may also be job applicants. So, losing applicants/customers as a result of a poor candidate experience or an insensitive rejection process can cost much more (at one firm it was over $5 million per year in lost customer revenue).
Actions for Increasing Productivity
There are five focus areas within recruiting that can dramatically increase individual worker and team productivity. Since employee costs often reach 60% of total variable corporate costs, increasing the return from this investment will have a significant bottom-line impact.
3) Higher-quality hires are more productive
- With an average turnover rate of 20%, a significant portion of a team is replaced each year with new hires. With so many openings, a focus on using data and machine learning to improve the quality of hire over many key positions will rapidly increase team productivity. Quality of hire is defined as the on-the-job performance of new hires, compared to a standard. Rather than trying to improve quality in every job, start by prioritizing the jobs that have the highest impact on overall corporate productivity. Even a 10% productivity improvement across all key jobs will get everyone’s attention.
- Prioritizing the hiring of more innovators will also dramatically improve productivity and business results. Innovators will likely produce 10 to 25 times the output of an average worker in the same job. Hiring more innovators may indirectly encourage current team members to increase their levels of innovation.
- Several recent studies have shown a high correlation between diversity and improved business results. So, developing a data-driven program to prioritize diversity hiring in customer contact and product development will dramatically improve productivity and business results.
- Prioritizing the hiring of those with rare in-demand technology skills can help a firm grow. Failing to have enough talent in the “must have to grow” areas of robotics, machine learning, quantum computing, cybersecurity, and advanced mathematics will be a major limiting factor. And since developing talent in these areas is risky and time-consuming, most of this developed talent will have to be obtained through recruiting.
- Improve your quality of hire by decreasing your negatives that bring your average down, including the percentage of failed hires. About 46 percent of all new hires fail within 18 months and the “Cost of Miss-Hire Study” revealed that the costs of a mis-hire are 24 times salary. Weak hires also require much more counseling, discipline, and supervisory time.
- Hiring those who fully meet all the job qualifications will reduce new-hire time to productivity. They need no additional training or experience in order to get up to speed.
- Hiring those candidates who have both the required current skills and the soon-to-be-needed “future skills” will reduce the need for future layoffs when the required job skills shift. Hiring individuals that are self-directed learners and that are already developing your firm’s needed “future skills” make it possible to maintain team productivity and innovation over a longer period of time.
- Deliberately targeting and hiring high-impact employees from your competitors will allow you to capture their best practices and new ideas. This will increase your productivity, while simultaneously your competitor’s results will decrease.
4) Hiring faster increases team productivity
- In today’s highly competitive talent marketplace, making fast hiring decisions is more important than it has ever been. Faster hiring means you won’t lose high-quality in-demand candidates who may be gone in a few days. Losing top candidates mean that you will be forced “to settle” for second choice candidates. That will lower team productivity because in some cases, the second-choice candidates will perform 20% less than the No. 1 candidate. Unfortunately, when hiring managers lower the standard even further and settle for “butts in chairs,” the loss in productivity will be even more dramatic.
- Slow hiring means that key unfilled positions are open for dozens of unnecessary days. And with no one in the job, obviously, the work remains undone. The productivity or revenue loss for some jobs may be several thousand dollars for every position vacancy day. And because many time-to-fill days are 33% too long, the lost productivity can be tremendous. The strain of team members having to fill-in for vacant positions may also increase team stress and turnover.
5) Hiring those who stay longer will increase team productivity
- Surveyed executives revealed that between 10 and to 25% of new hires leave within the first six months. Early new-hire turnover dramatically reduces team productivity because the new hire quits before they have peaked. So, they never can reach their maximum productivity levels. Early turnover means that the position will once again be open for more vacancy days. The team must pay the tremendous costs associated with recruiting a replacement in the lost productivity because the new hire may take months to get up to speed.
6) A focus on hiring those with leadership skills
- Having enough leaders within a business unit is critical for growth. Although some may be developed internally, a significant percentage of new hires should have leadership potential. With more leaders, fewer projects will be delayed because of a lack of leadership. And because more team members can get direct leadership guidance, team productivity will increase. A hiring process that selects a larger percentage of new hires that already possess superior leadership skills will allow the business unit to grow faster.
7) Minimize excessive manager time spent on recruiting
- Obviously, a manager’s involvement in recruiting is important (in fact it’s the No. 1 success factor). However, every hour that hiring managers spend unnecessarily on recruiting and hiring, is an hour that they can’t spend on normal business responsibilities. So, it helps team productivity when recruiting fully supports their hiring managers so that they can still produce high-performing hires while keeping their focus on their daily duties.
Converting Recruiting Results into Dollars Makes Executives More Aware
If one of your talent-acquisition goals is to get executives to pay more attention to recruiting, directly impacting revenue and productivity may not be enough.
Because the language of business is dollars, take the next step. Convert the above business impacts into their dollar impact on overall corporate revenue.
For example, revealing that better-quality hiring resulted in new-hire salespeople selling 14% more might get some executive attention.
However, if you reported that 14% resulted in a $1.61 million increase in sales by new hires and that sales growth improved total corporate revenues by over 6%, every executive would notice recruiting’s contribution because anything that impacts 6% of total revenue will be noticed and applauded.
Conclusion
Recruiting must prioritize its efforts to focus its best talent and most of its resources on the approved areas that have the highest bottom-line impacts. Once success metrics are developed in each business impact area, the remaining key to success is just flawless execution and continuous improvement.
