Making Money V
(January 21, 2003) - We get amazing material from our
readers. Today's column is a copy of a note sent by Don Ramer, CEO of
RecruitUSA. Don is one of the key survivors of the last couple of years and is
more focused on the potential of proactive recruiting than most. Here's what he
has to say about Creating Capital Through Cycle Time Reduction:
the ways that staffing executives and their recruiters can create capital and
achieve alignment with strategic corporate objectives is by reducing average
time-to-hire. "Time-to-hire" is
the number of days elapsed from the approval of an employment requisition to the
acceptance of an offer of employment by the selected candidate.
business case works like this: in a given company where the average return per
employee is $200,000 per year, and the average time-to-hire is 180 days, lost
productivity costs of $100,000 can be associated with every approved
requisition. If this is established
as the organization's baseline performance metric, then every 30-day reduction
in average time-to-hire (cycle time) yields a return to the bottom-line of
approximately $16,665 per position filled.
So cutting the cycle time in half would bring the return from streamlined
employment operations to $50,000 per position filled!
an environment where an average of 50 positions are filled each month, a
streamlined staffing team could report a revenue contribution of $2,500,000 per
month, amounting to $30,000,000 on an annualized basis. In most complex
organizations gains like these can be achieved by adjusting the perspective of
the stakeholders. In other words,
creating pools of capital through recruiting operations usually requires a
change in the ways the players think about the process.
average time-to-hire appears to be a simple measure of operational
effectiveness, how it is applied is a key indicator of the quality and depth of
thought the staffing executive has devoted to aligning recruiting strategy,
tactics and operations with the strategic, tactical, and operational elements of
a window into CEO thinking on the subject read Louis Gerstner's "Who Says
Elephants Can't Dance?" in which he chronicles the rollout of the services
business at IBM and writes "We had to bet that we could build the
recruitment, training, compensation, and HR processes to bring in 1,000 or more
people a month‑even though we'd never attempted anything remotely close
to that. In fact in the mid-to late
1990's, when services was consistently growing 20-plus-percent a quarter, we
knew we could do even better if we had more people. But we capped our hiring at about these levels simply because
we thought we'd over extend our ability to hire and train qualified people."
He adds, "I've said repeatedly that this is the kind of capability
you can't simply acquire. The bet you're really making is on your own commitment to
invest both the years and the capital, then build the experience and discipline
it takes to succeed." In
other words, the results don't flow from acquiring a system; they come from
tenacious dedication to achieving strategic linkage and tactical alignment in
recruiting through continuous improvement in policy, procedure, systems,
practices, and programs.
we glean from Mr. Gerstner's comments is that from his point of view cycle
time in recruitment is not merely an indicator of operational performance.
From at least one CEO's perspective it is a key measurement of the
capacity to execute against an aggressive growth strategy.
This linkage is so profound that recruitment performance is an element in
defining the upward limits of the potential return from the strategic initiative
and all its corresponding investments. We
believe senior executives will universally hold Mr. Gerstner's view of
recruiting (as a strategic differentiator) when corporate America begins to hear
the ticking of the Attrition Bomb.
How much capital did the recruiters at
IBM create through their performance in executing against the CEO's vision?
How much reengineering would be required for your staffing team to hire
an additional 1,000 people per month from a standing start?
Do your hiring processes allow for the scale that may be required to
exploit a new market opportunity?
how does one go about reducing cycle time in recruiting?
procedurally proactive. This
could include something as simple as approving requisitions earlier in order
to match the current cycle time. If
it takes an average of 90 days to fill positions given your current
practices, start by opening the hiring process 104 days prior to the optimal
start date (to allow time for the candidate to give notice).
While you will feel the workload crunch during the first phase, your
hiring managers will be delighted with your "just-in-time" performance
against hiring requirements. Since
you'll be accelerating cash flow for the company, you might frame an
argument for contract recruiting support to get you through the crunch.
the process. If you
currently advertise through newspapers as your first line of attack for
recruiting, use Internet media by posting jobs to the web before you
resort to the higher-cost, more time-intensive, traditional media.
If you currently use a paper-based resume scanning and applicant
tracking system, require that your recruiters give priority attention to
email from candidates rather than waiting for resumes from the scanning
shop. These are quick fixes
that can buy you some time (and some make money for the company) while you
prepare for the hard work.
The real pay-off comes from
mobilizing all the resources of the company and creating pools of qualified
candidates to meet the anticipated needs of the organization.
This requires alignment of the strategic, tactical and operating
objectives of the staffing group with those of the business.
The company's policies, procedures, systems, practices and programs
must be made congruent with the strategic, tactical and operating objectives
established by the leadership if they are to produce optimal results.
on the key vectors of organizational impact as the change from reactive to
proactive hiring unfolds. Employ
rigorous benchmarking of quality, time, cost, efficiency, value, synergy and
corporate culture in staffing operations against best practices (and
competitors). Making these kind of
organizational changes will consume significant internal resources (time, money,
thought and cooperation). What
makes these changes desirable is the strategic leverage effective electronic
recruiting can give modern corporations.
one reads Mr. Gerstner, there can be no doubt about the straight-line
correspondence between effective recruiting and capital creation in the minds of
senior executives who create capital through people everyday.
When you stop to think about this business at the most basic level, the
reason for-profit enterprises hire people is to make money for the company.
When generalized in this way, the linkage between capital creation and
staffing becomes transparent. Recruiting
is about finding the people who make money for our companies. Therefore money is made when recruiting is done well and
money is lost when recruiting is done inefficiently.
media and technology can deliver the capacity Staffing Executives need to reduce
cycle time and accelerate cash flow. Making
the most of these tools and building a business case senior management will
understand and financially support requires process leaders and product
champions. Innovative vendors can
provide technology and thought leadership but realization of the potential of
these contributions is entrusted to visionary customers who individually effect change in their organizations and thereby shape the evolving marketplace
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