Right Recruiting is unique in two ways. Our clients include multi-billion dollar companies and small, 20 person businesses. On top of that, we have 4 decades of recruitment experience, starting from the days when resumes were mailed with a real stamp. If we haven’t seen it all, we’ve seen most of it.
Today, many companies are in a quiet crisis because of headwinds, really storm winds, that make hiring a challenge now. That acts as a brake on growth. Some owners/executives realize this and some don’t. It takes awhile for the frustration of having open positions to reach the top. There are always excuses for a job that has been open for months, quarters or years. But excuses often hide the strategic reality and costs from executives. This is especially true when a blame game erupts between internal stakeholders. Strategies that worked 5 years ago do not work now. Why? Because 5 years ago you could cherry pick from a market still recovering from the recession. Those cherries have all been picked. Your company often regularly reevaluates strategies and vendors in other areas. You should also do it in recruiting.
In this White Paper, we will give you 4 recruitment models to consider for your firm along with pros and cons for each. We will also explain ways to maximize them for your particular organization. But, let’s start with two facts.
- The employment rate is below 4%, well below 4% when you consider the professional workforce. In some states it is in the 2% range.
- People assume that information will flow to them. Tech has changed the way people receive market information. They don’t scan want ads because they know the job opportunity will come to them.
I will use the phrase HR (human resources) often. Some small companies do not yet have a formal HR function. If that applies to you, substitute the owner/CEO for HR. In small companies, the owner also wears the HR hat, as well as a dozen other hats.
In our discussion of the 4 recruitment models I will start with one, I think, is outdated. Let’s get to that first.
Old School Model
In this model the basic recruitment tactic is to have HR run ads and select people to interview from the ad response. The process has not changed since Guttenberg’s printing press. The response is evaluated. Some people are contacted with some screening questions. Interviews are held and an offer is extended. The ads continue to run for months, or years, until the job is filled.
This is a not a reliable plan for today. Here is why:
- Your success depends on something out of your control. Someone has to see your ad and then respond. If your ad is on the wrong website or written poorly, it is literally invisible. Your response is random. We haven’t run an ad for 3 years and the quality of our candidates and success has increased since then.
- People hate to answer ads. They see ads as a sign of desperation by an employer. They complain that they never hear back. They complain of an impersonal process. A bad experience is shared on social media, limiting your candidate pool even further. Right or wrongl, people want to be courted. If 50% of your candidate pool doesn’t look at ads, then only a small percentage of 50% of your potential candidates end up hearing about your opening.
- Ads create a slow interview process. Waiting for response, screening, first interview, second interview, etc. Candidates drop out, lose interest or take other jobs. The last man/woman left is often the person no one else wants to hire. Not a good talent acquisition approach.
- Yes, sometimes it works. But sometimes people win the lottery. Does that make a weekly ticket purchase a retirement plan?
- You are putting a lot of pressure on your HR Generalist/Business Partner. It becomes his or her responsibility to fill jobs with outdated tools. Recruiting has become a separate part of HR, just like payroll and benefits. Benefits management and payroll are often handled by outsourced firms and managed by HR. These are tactical roles that get in the way of high level HR strategic services. Don’t let recruitment be another distraction to an overworked HR person.
- This model has one thing going for it though. It’s cheap.
Outsourced Recruitment
This model is usually found in smaller growing firms or in highly decentralized companies. HR serves as a Project Manager and selects/approves recruitment vendors. HR may or may not have day-to-day responsibilities in each specific project. For example, we just finished a project for a Product Development Manager. HR contacted us, we met with the VP Marketing and all subsequent contact was with him.
In this model, the employer has made a conscious decision to outsource to save internal labor and technology costs and sometimes to get better, cheaper service as well. It’s the same thought process that leads to accounting, legal, benefits, manufacturing etc. being outsourced. It’s a strategic decision about where to focus resources. It is not an insult to your existing HR people. It is a new resource for them.
For this model to be successful you need one thing- an HR person who will invest time in vendor selection. Vendors should be interviewed and selected carefully, just like other service. Be careful not to fall prey to choosing vendors based on luck. Sometimes a vendor may look like a hero by making one placement. You may assume competence when, in truth, the vendor just got lucky by sending a resume that landed on their desk at a fortunate time. That success was not duplicable. At the beginning of each project, spend as much time as possible educating the vendor about the specific project and your company and, in return, learn their process. Expect them to provide updates on projects weekly.
Decide whether you want one vendor to handle all disciplines/locations or multiple vendors in each area. Properly managed, this strategy can be a large cost savings to you. You can get discounts for volume and consistent work. Lastly, educate and engage your managers. Regular updates and conference calls between HR, manager and vendors should all be a part of your process. An aloof or distant manager can make is tough for the vendor.
The best way to visualize this model is that you rent the vendor for a project and they give you a group dedicated to the effort. The vendor provides a research team and a call center to identify and make initial candidate contact. They also supply a vetting process that will funnel appropriate and interested candidates to you.
Internal Recruitment – Lite
This is a hybrid model that is slowly falling out of favor. It usually is composed of a small Talent Acquisition component embedded into a larger HR function. There is usually a manager/recruiter and zero to a handful of recruiters or contractors. Here are some of the issues and some suggestions to make it work:
- People are more selective now about being reached through social media. They are bombarded with messages from potential employers. This model is only as good as the person contacting the candidate for the first time. Many of these departments are staffed with contractors or trainees and that first call/contact may not be as polished as you hope. Someone on a 3-month contract does not have much invested in your project. A 25-year-old trainee may stumble when asked questions by a 45-year-old candidate for a Director of Operations job. Your prospective candidate does not care that your recruiter knows Taleo well. The candidate wants a reason to quit their god job and work for you. The quality of the person on the phone is important to them.
- It’s more expensive than you think. Contract recruiters get $50/hour or more and entry level recruiters get $50,000/year or more plus benefits. You need software, licenses and technology too. Your Talent Acquisition Manager and a 4-person team can cost you almost $700,000/yr. Every year. That could be thirty-five $20,000 agency fees with no fixed costs to an employer
- Your team can get overwhelmed easily, especially if you have lots of jobs in lots of disciplines in lots of locations. Speed matters in recruitment. Speed in research, initial contact and processing candidates. As a point of contrast, we have a 10 person call center team that can contact 200 people on each project within two days. That includes the research time as well.
- However, if your recruitment needs are all similar, this model can work well. It is good for “pipeline” needs. An example of this might be a large restaurant chain that needs managers and trainees with similar characteristics in multiple locations. In those situations, you can create a simple script and template that can make a recruitment team of junior people effective and productive.
- Some companies try a hybrid in which they use an internal team and bring in external recruitment firms to augment them on specific projects. This can be very effective but needs to be managed well. Sometimes the internal recruiters see the external resource as a threat and either overtly or subtly sabotage the effort. It’s human nature but this is destructive to both parties. Boundaries and trust need to be established for the hybrid to work well. If you can do that, this model can be a great tool for mid-sized firms.
- This model has been hurt by something I mentioned earlier. A department started in 2012 or earlier had good initial success because it was a weaker labor market. Now, to get the same results it needs more resources, either internal or external, to function as well. The same size department has a tougher time identifying candidates and more of a workload of their shoulders now.
- You are competing with Internal Recruitment- Heavy- see below
Internal Recruitment – Heavy
This is for large companies and if you are using Internal Recruitment-Lite, this is your competition for candidates. In this model, recruitment is really a stand-alone large function with it’s own gazillion dollar budget and resources. Very large resources indeed. Advertising itself is a 6-7 figure line item and there are recruiters spread through the globe, hundreds of them. This model works for Merck, GE and other large firms because of two things:
- They already are known to the candidate. They have an established brand as a business. That makes their ads sometimes work when most ads don’t. Plus, they can overspend to saturate a location.
- They have enough staff to mange the process.
- Even if they don’t process the response quickly, most large company have less intense needs. There is an existing structure that can move things forward around an open position. Mid-sized and smaller firms don’t have the luxury of time.
This model works for companies that have both infinite resources and time. The danger to this model is that you may think you are employing Internal Recruitment-Heavy but are really employing Internal Recruitment- Lite. You check all the boxes-
A Talent Acquisition Team – check
Applicant Tracking Software – check
Advertising Support – check
Social Media Presence – check
You do all the right things but you don’t do enough of them. A Kia has an engine, 4 wheels and everything else a Ferrari has. That doesn’t mean it will get to a finish line first. Your budget may lack one or two zeroes in it compared to your competition.
A company like Merck has success with this model because when anyone in the world hears about Merck, they already know about Merck, it’s industry and products. There is no introduction needed. That may not be true with you. A $500,000,000 firm in Indianapolis that sells into an industrial market may not even be known by most people in Indianapolis, much less nationally or globally. The billions that Merck has spent over decades in brand advertising supports their recruitment effort. That is a significant component of Internal Recruitment- Heavy and one never mentioned by the people who sell you all the software and tools you use in Internal Recruitment- Lite.
Lastly, I know that I have a vested interest in this discussion. I own Right Recruiting. Over almost 40 years, I have probably personally filled more openings in more industries and in more disciplines than anyone else in my industry. Of course, I want your business if you are an employer.
At the end of the day, no matter what your decision on recruitment methodology, it should be an informed decision that includes the complexity of the market as it exists now. There are two things I will tell you about recruitment and then wish you well:
- Recruitment is hard. It is all about people. People are, well, murky. No two people have the same decision making process or value systems. Employment is tied to income and income is tied to ego. An understanding of candidate psychology is crucial to success. That is why recruitment will never be successfully automated by AI.
- Today’s tight labor pool is not going away. This is not a blip due to a hot economy. This is a structural issue based upon a mismatch between educational outcomes and commercial needs. You need a plan. Hoping for a recession so that people get laid off is not a plan.
Thanks again. Cheers.
