Rearranging the boxes on the organizational chart is not only as common as white bread, but it is also indicative of the need to have a big view of things — a strategy — as an anchor for the changes. Answering how things are organized, deciding who reports to who, and deciding who has responsibility for specific things are fundamental management duties. As you plan your recruiting strategy for the coming year, you may want to think about these issues in some depth. Before anything else, your recruiting function must be responsive to its stakeholders, which most likely includes the hiring manager, management in general, your fellow recruiters, HR management, and perhaps even candidates. Your prime stakeholders should be the focus of all your recruiting efforts. After all, any structure you put in place should be designed to provide your stakeholders with the best possible service, in the easiest way, at the fastest pace, and at the lowest price. Over the past few months I have fielded many inquires as to what is the best way to organize the recruiting function. Here are a few thoughts from years of dealing with this issue. I hope they help guide your own the thinking process.
The Central Approach
The benefits of centralized reporting are two: consistent procedures and processes and lack of duplication of effort (usually). Those who head up recruiting functions like a centralized structure because it simplifies and speeds up decision making. The downside is that decisions are only as good as the leader. Many key stakeholders may be left out of decisions and are not represented. Slower execution may result because of many chiefs and too few recruiters. Hiring managers tend to get upset over what they may perceive as high cost recruiting or recruiting that is not accountable. When (and if) this happens, the recruiting function responds by spending precious time defending itself and proving how good it is.
All of this detracts from the goal of finding and recruiting great people quickly. However, in a small company with a single division or product, or in a medium-sized company without complexity, I would recommend a centralized function, with the recruiters being physically located close to the hiring managers. This promotes communication and builds rapport. The recruiters should also be focused on working with one or two managers, or with a specific group of managers, so they can get to know and understand the competencies required in that area. With dotted-line reporting to a central organization, which recruits for the corporate positions and provides some economy of scale, this method works well. But in large companies with complex structures or many product groups or divisions, using a different structure will prove more effective.
While organizing centrally is the most common organizing method, companies often swing between a central and a decentralized approach over and over, trying each approach for a while and then switching back. They do so because neither is a complete solution and rarely does structure alone make the real difference in how effective a recruiting function is. Rather it is the combination of strategy, skilled people, and an effective structure that really make a difference.
The Decentralized Approach
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A decentralized function is very responsive to hiring managers because the recruiters report directly to them or are in the same business unit. The recruiters are focused and often well respected by the managers they work with. However, decentralized functions sometimes have little insight on how the company as a whole is doing in regard to minority hiring or efficient recruiting methods, and can’t leverage scale to achieve cost reductions. Budgets are so decentralized that it is tough to get agreement from everyone on purchasing important software or other tools to aid in the recruiting cycle. In fact, decentralized organizations rarely have good applicant tracking systems or good data about past efforts. Time and money are spent ineffectively, but local folks are happy. Recruiter skills upgrading is neglected and no one really knows if a particular recruiter is good or not. Metrics are not consolidated or even tracked, in many cases. Of all the methods, the decentralized approach has the most potential downside. So how else can a function be organized? Is there a better way?
The Hybrid Approach
Long advocated by management theorists like Charles Handy, and exemplified most clearly by our own United States, a hybrid (or federal-style) approach to organizing works extremely well. In this approach, the various business units have their own recruiting functions and recruiters. These recruiters work directly for the product groups, but these product groups agree to allow a strong central recruiting function to exist and provide several services in common. This central group, analogous to how the federal government of the U.S. is organized, develops an overall strategy for recruiting, writes procedures for everyone to follow, tracks legal compliance, educates and supports individual recruiters, and collects and reports metrics to the corporation’s management team. Of course, they do all of this with the help of the people in the businesses, and this is how it differs from the decentralized approach. In the federal model, the groups come together and agree on what the central function should do because it makes sense. For example, it makes sense to have a single software system for recruiting. This can best be purchased and maintained centrally, but used in a decentralized manner. It makes sense to consolidate metrics, so the central group does this.
But whatever is done is by permission and with the consensus of the divisions. This is very different from other approaches. The beauty of this method is that the hiring managers remain in charge and have a great deal of control over the recruiting done in their function. Recruiters still get functional development and education and can vie for promotions and transfers internally. The company gets the benefit of consistently applied procedures. A central budget also allows the purchase of common systems. While there is no perfect way to organize, the federal model works better than any other that I have seen for large complex organizations where control of local resources is valued.