Recruiting Belongs Under Finance

There was a blog posting by David Lynn recently here on ERE that asked where recruiting belonged: under HR?

I could feel the blood rushing into my fingers as I answered: “I have strong feelings about this. It belongs under finance with a leg into biz dev and mergers & acquisitions as well.”

And it does.

Here’s why:

Recruiting is such a vital function in an organization because it touches every person in that organization. Not every department can be said to do this. We all know a company is as good as its people.

Recruiting belongs under finance because it is basically a competitive intelligence function.

Yes, recruiting involves talking to people in the outside world, and if you’re doing it right you’re gathering intelligence along the way. I suspect applications like salesforce.com could be very useful in these maneuvers, but I am talking out of school because I am not using it (yet). But any application that could capture (and distribute) the notes, thoughts, and facts that any contributor in the company enters regarding a particular candidate would be wildly useful as an “M&A” tool.

“He said money seems tight around his company and he’s worried moving forward about the viability of his position.”

If I was working as an M&A professional (and I have) I would look at that and think, “Hmmm…I wonder if they’re having cash-flow problems.”

I’d then take a look at the company in question (if it was a competitor and I was tasked with finding objects to buy) and do a preliminary inquiry into the company’s possible availability.

“Hello Mrs. CFO. This is Maureen Sharib. I am with XYZ and our desire to grow is why I am calling you. Could we maybe have a conversation around a possible partnership between our two companies?”

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Putting it like that belies the fact that I know they’re having cash-flow problems, or at least something is going on inside her company that is making their employees think so. A gentle knock on her door but an opening for discussion, nevertheless.

I’d approach finance first because, after all, this is the drive engine of the company. She’s going to be consulted anyway in an event like this, so why not include her from the get-go and make friends early? Let it be her idea taking it to her boss.

Reporting up through finance makes sense for business development as well.

“He’s frustrated with the technology inside his company. Doesn’t feel they’re keeping up.”

Wow. If I was working in business development and had something I could sell to this company, I’d sit up straight and immediately pull Hoover’s up for contact information, and then I’d call.

“Hello, Purchasing. This is Maureen Sharib and I have a technology product that could change your employees’ attitudes towards their jobs.”

Let Purchasing walk with the glory. You just made a sale.

This isn’t brain surgery and appears to me to be common sense. What does it appear to you as?

Maureen Sharib has been a “Socratic sourcer” her entire sourcing career; from the moment she first picked up the faxed list of Silicon Valley high-tech companies that was her target list to “phone source” in 1996 to today she has instinctively followed this method of investigative sourcing using (mostly) the telephone.  She is a proponent of sourcing as a synonym for success and envisions the craft moving away from a dangerously drudgery-paced life-form existence to an exciting investigative/competitive place within organizations where practitioners co-exist within a framework of market research, human resources, and C-level future planning. She owns the phone sourcing and competitive intelligence firm TechTrak.com, Inc. You can contact her at Maureen at techtrak.com or call her at (513) 646-7306.  If she’s not on the phone she’ll pick up!

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48 Comments on “Recruiting Belongs Under Finance

  1. “She’s going to be consulted anyway in an event like this, so why not include her from the get-go and make friends early?”

    Even more, she’s going to be the one driving the imprint of recruiting on the balance sheet. So you made “deep” cuts in your recruiting function, reducing the overall budget by 15%? If the CFO then says, “reduce it by 5% more” and you’re sitting in HR as a remote cost center without a direct relationship with the financial gatekeeper, you have about as much chance to negotiate this as a Republican negotiating with Democrats over national health care.

    Work hard to develop your relationship with your gatekeeper and you stand a better chance of making things happen…

  2. I understand your rational and linkage from a Sourcing perspective but I don’t agree. My opinion is it is crucial for Recruiting to be a significant component of an organization’s entire Talent Management function linked to Development, Performance Management, Succession Planning, etc. Talent Management (along with the Recruitment components including Soucing) should sit within a progressive and integrated Human Resouce function.

  3. Todd, you make a statement but it is one without a rationale. If you’re speaking about a “progressive and integrated Human Resouce function” wherein the people within the function have a working mantra to translate their “HR tasks” into firm financial numbers then I agree.

    How many in recruiting do you believe truly know how to read and understand financial reports and the company’s balance sheet and can let the numbers on these reports guide their activities?

  4. Very interesting post… and a topic that lives ‘in the background’ in many organizations. I lived an analogous situation in several past lives. It went like this: “Does Nurse Recruiting belong in the Nursing Department or in HR?” My answer: Neither.

    Where recruiting belongs is NOT inside the organization where politics, power grabs, and personalities wreak havoc on placements. Will these games still be played? Yes. Will the recruiters still be annoyed? Yes – but they won’t be annoyed ad infinitum. They will only be annoyed for a limited period of time by specific, identifiable individuals whom they can choose not to work with. When the vacancy rate in that specific area climbs, provide these quantifiable reasons (basic recruiting metrics) to the CFO and watch what happens to the annoying person.

    Essentially I agree with Steve but I prefer to let the market determine how deep to cut the recruiting budget, not the gatekeeper motivated solely by demands for ‘budget cuts’ and incentivized by hourly wages.

  5. Present them to their competitors HR Departments! I’m certain they could make a good financial case for their own hiring…

  6. Steve, I definitely agree that an effective HR oganization is determined through measuremnt via analytics and KPI’s which in turn are linked to the business and finance strategy.

    It doesn’t change my opinion however in that very few CFO’s I have met have knowledge or interest in workforce planning and in turn translating plans into resourcing requirements. Headcounts and budgets….yes, requirements…no.

    Why would you want them to manage the function outside of the points stated around the financial intelligence gained?

    In my experience, Recruiters I have worked with often had much more competitive intelligence (including financial) on companies conidered potential skill targets then their peers sitting in Finance.

  7. Todd…

    “It doesn’t change my opinion however in that very few CFO’s I have met have knowledge or interest in workforce planning and in turn translating plans into resourcing requirements.”

    Agree in total.

    But neither do most in HR (very long discussion for later). I’m presently part of a new SHRM Workforce Planning Taskforce whose goal is to define WFP standards for HR. The underlying message is that HR doesn’t do this well; metrics are an equally fuzzy area.

    My preference is for finance to set the table by defining in their terms what metrics they use to measure and track the health and wellness of the company and then work with critical functions to develop procedures and metrics that are mapped to these functions. For instance, with knowledge of these financial metrics, recruiting works with the CFO office to recruiterize these financial metrics.

    Having competitive intelligence and knowing what to do with them are two sides of a very large ocean…

  8. Personally, I’m not a strong proponent of Talent Acquisition reporting to Finance; perhaps Sales & Marketing is a better argument. However, that doesn’t discount the fact that Talent Acquisition should have an extremely strong relationship with the CFO.

    I am still shocked at the number of organizations looking to implement “Sourcing Programs” that have little to no knowledge, let alone understanding, of how their organization creates value. I concur with Steve that the ability to read financial statements is important (that’s an understatement), but what blows me away is how people are hired into a Recruiting capacity who have little to no concern about share price or, at a minimum, value creation. Because of this, the value of Strategic Sourcing programs is tied to a reduction in time-to-fill, or reduction in cost-per-hire, all of which are backward-looking metrics. To truly mimic the Finance function’s outlook, we need to be able to look forward and make predictions about the value we’re creating. It’s precisely in this arena that we don’t have a body of work to draw from . . . and frankly, most of us are probably too busy than to chase down a PhD in Industrial/Organizational Psychology; an area of study whereby we’d at least be able to justify larger-scale studies.

    And let me be clear: This is a systemic problem. The easiest way for a ‘Recruiter’ to be passed over by a ‘Recruiting Manager’ (and in some cases, a Director of Talent Acquisition) is to have earned an MBA . . . and/or spent a day in a business unit itself!

    In terms of the author’s notes on sharing information, this comes down to a question of how knowledge is shared . . . which is a challenge among a true multinational corporation. Knowledge Management is more than a buzz-phrase, especially with the growing Boomer demographic having to retire at some point. The bigger issue, however, is the perceived value that is being shared by Recruiting in the first place.

    By building stronger relationships with the CFO, there is likely to be a positive effect in regards to the perceived value of intel you’re attempting to share in the first place.

    P.S. If you do have a shot to dialogue with your CFO, don’t talk ROI. Talk EVA. That means you’re attempting to account for the Cost-of-Capital, which will go a long way.

  9. Having led corporate recruiting functions for mult billion dollar companies I can tell you this is a subject I have often considered. I’m not sure the function should sit in Finance but am sure it does not belong in HR. If HR functions migrated fully to Talent Management departments this may work depending on how Talent Management is defined and structured. Other options would be Strategy, Marketing, Operations, Sales even possibly Procurement. Good Recruiters typically share more competency sets with Ops, Marketing or sales than HR. Exceptional Recruiters can fit into Strategy groups well. The appropriate department would be dependent largely on the type of company. Good post Maureen.

  10. Here’s an interesting concept – why have a separate Finance Department and HR Department? I once worked for an organization that had a “Resource Management” Department that lumped the Finance and HR functions together under one manager. There was much more fluidity of workflow, and the right hand always knew what the left hand was doing in regards to recruiting, salary adjustments, etc. In some organization, this makes great sense, and it worked well in that situation.

  11. I like the idea of Resource Management. Recruiting does have sales, negotiating, competitive intelligence, branding (marketing), etc.. skills. However, Recruiting is the first leg of the a person entering into the organization’s employee lifecycle which is still HR. Recruiters need to understand the company’s financials to better “sell” the company to top talent, but they need to also understand the interworkings of the organization and the management team that has a need for a new person. My experience has been that recruiting works well in organizations where it reports to a strategic point i.e. CEO, SVP etc.. as part of the overall HR/Talent Management Strategy.

  12. John, from my experiences having also led recruiting functions in complex orgs, recruiting stays in HR because that’s all most understand; after all, they “love” people. Finance and its scope is anathema to most in HR.

    Where one reports has more to do with how it is valued than what it does. Value means its impact can be measured according to well-established standards; we simply do no have this as yet in recruiting let alone HR.

    Recently SHRM has recognized the problem which is why they’ve established new Workforce Planning and Recruiting Metrics Committees to establish standards (I’m on the WFP Committee). The desired outcome are professional standards that will help raise the bar of recruiting within HR…we’ll see.

    The interesting part of this convo is that its all opinion; where’s the analysis?

  13. Mary’s idea is interesting. The thought of Recruiting reporting into Finance, a group that traditionally understands so little about the intelligent acquisition of talent frightens me.

  14. Howard, I don’t disagree that the Finance function has any level of expertise when it comes to recruiting talent. However, and this is a big ‘However’, I can’t fault a business function whose main priority lies in driving organizational and shareholder value — That’s why the business exists in the first place.

    So when it comes to ‘pecking order’ per se’, Finance is at the top of the line. Yes, there is the issue of corporate social responsibility, but at the end of the day, corporations exist to create shareholder value.

    From where I stand, Finance lacks respect for Talent Acquisition (more specifically, HR as a whole) due to what is perceived as an extreme lack of business acumen and predominantly reactive thought processes. On the other hand, HR and Talent Acquisition fear Finance being involved in any Talent decision making because “they don’t understand how to recruit people.”

    Here’s a prime example: How many people with either an MBA, or any business unit experience, are ever hired as Recruiters? The true answer is “hardly any”. If you have an MBA or any business experience outside of HR, you’re labeled as “too business minded for HR”. The result? The same problems perpetuating on and on. All this talk about “new blood in HR” is comical because if the same paradigms exist, “new blood” only really means, “young HR Pros that think the same as the Old HR Guard.” And so the same old cycle goes around and around.

    Until this fear and resistance is decompressed (between HR and other business functions), and moreover, until each group is willing to blur their “lines in the sand”, we’ll still be talking about these same issues in 2015.

    The only thing our industry can truly control is our own actions, so instead of hopping onto some negative groupthink about the other business functions, we should be the “better group” and extend an olive branch of cooperation and mutual respect. It might just be extended back to us 🙂

  15. Maybe I look at this differently, but I think that HR is what belongs under finance. Specifically the administrative side (payroll, benefits, generalist support). Recruiting is not HR, rather a strategic function under the umbrella of talent management. HR is an operational cost, however talent management provides ROI to the organization. Once talent management can separate itself from HR, it should be able to stand on its own with a seat at the executive table.

  16. Hi Josh. Lovely to hear from you; even when you are wrong:)

    I do not see finance as “driving organizational and shareholder value.” Not even close! Finance people are simply there to carry out the philosophical and operational aspects of the CEO’s values in terms of driving the organization.

    Look at a great company like Apple. Think Finance runs Apple? No way! Now lets look at GM under the direction of Roger Smith. He had finance cut to the bone and include noting of value in any of its cars. Even the top of the line Cadillac was laughable junk.

    Pick ANY great company, give finance the opportunity to influence what money is spent on goods or services and wait 2 years. They will disappear. Hold the new Blackberry Tour in your hand and feel the curve; the quality. Think finance can’t cut the cost by 50%? Can you even imagine the result?

  17. If you resist reading what you disagree with, how will you ever acquire deeper insights into what you believe? The things most worth reading are precisely those that challenge our convictions. ~ Author Unknown

  18. Interesting..I’ve never worked for a company who had competitive intelligence as a function of Finance. It’s always been in Marketing, since that information is critical to the sales organization (as well as product marketing among others). Does anyone else have thoughts around that?

  19. Stephanie:
    If you go back email thread – I suggested Sales.
    The comments about recruiters have been insulting. You would think that most recruiters are uneducated and cretons.

  20. HI Bob,

    Sorry if I wasn’t clear – I was referring to competitive intelligence function being in finance vs marketing, which is taking the thread in another direction (sorry, perhaps not the best idea.)

    I went back thru the thread and other than a few remarks about MBA’s, I didn’t see anything that I thought was insulting. I don’t have an MBA, so it didn’t bother me at all. What are you referring to?

  21. Bob, I believe most of the educated recruiters might spell the word, “cretins”… a “creton” is a pork spread containing onions and spices.

    Howard – and I owe you phone calls for the next decade or so – it’s not finance that influences shareholder value, it’s primarily the institutional investors and it is this group that drives much of organizational behavior. With finance being on the frontline facing Wall Street, personally I’ve like to be there too. Can I be there while serving under HR?

    Let me also note that we’ve spoken for years about how intelligent recruiting and HR do not belong together – to Josh’s point about so few in recruiting possessing an MBA, fear will cause many in HR to make interesting decisions…

    Finance peeps are not automatons who think balance sheet and nothing else; one reason why I am a proponent for placing recruiting under either the CFO or COO is that I’ve worked with these people for over two decades. Knowing how the financial, organizational and operational people think and function allows someone to more accurately opine about function and structure (again, Howard, we’ve spoken about this for years).

    While the finance function may not have expertise about recruiting – they do know something about hiring, right? – neither does the knowledge possessed by HR about recruiting blow most of us away.

    How many recruiters out there – or Bob’s in sales and marketing – have actually spoken to a CFO about recruiting and it’s elements (strategic planning, organizational impact, procedures, systems, metrics)? You’ve undoubtedly had this conversation amongst yourselves and HR, but what about finance?

  22. Stephanie:
    This is the statement that most offended:
    ‘How many in recruiting do you believe truly know how to read and understand financial reports and the company’s balance sheet and can let the numbers on these reports guide their activities?’
    Brought to you by the same person that is a qualified google and wikipedia expert on spelling.
    Thanks,

  23. “a pork spread containing onions and spices” indeed 😉

    Steve you are sui generis. What a GREAT thread. It may not be as quant oriented as you would wish, but how can you beat “Having led corporate recruiting functions for mult billion dollar companies I can tell you this is a subject I have often considered” as validation for the concept ?

    I personally think that recruiting belongs to Operations and should be part of the COO portfolio along with most development, forecasting, and succession activities. I think that much of what remains from ‘HR’ should belong to Corporate Governance and that “HR” should go away.

    The digitization of the employee file and now more and more of the interaction between corporation and employee seems to sort of remove the need for much of the traditional seperate HR function…..

    Steve, by what analytical method would you evaluate these kinds of organizational changes ? You would need model organizations actually doing it, with some state information available before, during, and after…..

  24. Bob,

    One of my cousins lives outside Toronto, the other outside Quebec; why wouldn’t I know certain Canadian foods?

    As far as my statement, it isn’t pejorative at all; I certainly didn’t write it allthewhile wondering if Bob would think I was referring to him. I have a long history here on ERE discussing how much finance recruiters should know as well as discussing what they do know.

    Since you were offended by my statement I’d like to know why.

    Thanks Bob.

  25. Steve:
    You said Recruiters, not Finance Recruiters.
    I was offended, because I feel that to be a great recruiter, you must do the complete job and be ready for any and all questions, comments, or concerns from Candidates. Knowing a company’s financial stability and strategic direction is crucial. My recruiting experience has been at the ‘specialized individual contributor’ to Board Member.

  26. I admit I thought it was myself that was considered to make some comments that might be considered ‘offensive’ in some way. Of course, it’s never the goal to offend anyone . . . but sometimes the easiest way to get a conversation going is to ruffle a feather or two, even if you don’t mean to. Some of us, myself included, write in such a way that can be seen as ‘pointing’ or overly satirical, but I don’t think any of us ever set out to harm in any way.

    Steve certainly doesn’t need me to defend him, not by any means as he can handle himself. I will say, however, that I don’t think it was ever his intent to offend.

    And if some of us are offended, the best question is “Why?” Bob, the truth is that most leaders in the HR Community will dump big-time $$$ into the “latest and greatest tools” (aka ‘silver bullets that don’t quite ever seem to do what they’re marketed to do’), and they’ll pay $25k to $50k+ for a direct-hire placement (in addition to $100/hr+ for consulting services that may yield zero benefit), but they won’t spend a dime (or allocate a man-hour) to increase not only business acumen, but moreover, enhance relationships with the other business functions.

    So I say we dust ourselves off, develop some thicker skin, have a group hug . . . and then get down to discussing what we really need to discuss. We need an intervention! Maybe this is a new business opportunity – we’ll call it ‘Recruiter Rehab’ 🙂

    Ultimately, the topic here is something that has been discussed for quite a while. Frankly, it’s the focus of the Academic community (and yeah, I know that Academia driving progress such as this presents some issues of its own!) 🙂

    At the end of the day, the point is this: * There has to be a better way. * And the truth be told, the ‘better way’ will come from a cross-functional effort (i.e. multiple business units collaborating), not the current silos (aka ‘machine-gun bunkers’) and coinciding groupthink-negativa we so often see today.

  27. I think that this discussion has taking on a life of its own. Maybe this group should be limited to recruiters with ‘more than 10 years in the business’.
    Can I pinch Steve during the group hug?
    Joshua, another shortsighted HR move is limiting their recruiting staff to under 35 years old (arbitrary number,but you get my point). As a manager (Sales or Recruiting), I loved when my employees beat me in revenue, placements, or income. How many HR Exec’s would say that.
    Steve, I’ll still hug you!

  28. Stocks climb ahead of earnings; Dow nears 10,000
    Sept 12, 2009 NEW YORK — Stocks are extending recent gains at the start of a busy week of earnings, nudging the Dow Jones industrial average closer to 10,000.
    Major market indicators rose moderately early Monday, including the Dow, which rose as much as 67 points to hit a 2009 high of 9,932. That’s just 68 points shy of 10,000, a level not seen in a year.
    http://tinyurl.com/yklknyz

  29. Consider what might happen if internal recruiting were considered as a consulting group with direct report to the CEO or the COO and a dotted line function to all departments. Recruiting operated in the same manner as outside consultants. ie; if sales are faltering dedicated recruiters were assigned to work consultatively with the C executive over sales. Focused on a revamp of the sales team. Having reached a point where results were changing the recruiting team moved to another area etc. etc.

    Backfills and going forward new recruits fit the new more workable profile. Recruiting focus moves to the next area where improvement is needed. As recruiters (over the age of pick a number but focus on business experience not just gathering bodies to look like the bodies who came before)become a part of the trouble shooting team, they report to the CEO/COO where there may be able to point out problems with existing managers as opposed to line employees.

    If any of that explains using a recruiting team as troubleshooting, problem solvers instead of “go find me three more”. How might that work in your opinion?

  30. Sandra, the model you describe would absolutely, positively, attract Executive Recruiters to internal positions. And I just don’t mean any Third-Party Recruiter – I mean great ones (considering the compensation was worth the move, of course).

    Further, the model you describe would lend to consultants coming in that don’t follow a lock-step, non-malleable process . . . but approach each problem with a blank slate and critical thinking skills. Sure, best practices are nice (and valuable in certain situations), but sometimes lend to a lack of innovation.

    Your notion of ‘projects’ is one I’ve also endorsed for quite a while. Why? Because ‘projects’ are viewed in mutually exclusive fashion. Each would have its own financial metrics, such as IRR, etc. In addition, any investments (direct mail, social media, mixers, etc.) would be viewed exclusive to a given project at hand . . . and this would enable greater levity in when and where you could spend to see the project through to completion. Each investment would be tied to individual project results, not overall ‘reduction in CpH’, ‘reduction in TTF’, etc.

    Marketing already does this. A new customer acquisition program is viewed in mutually exclusive fashion . . . just as the project regarding a “revamp of the sales team” could from a Recruiting perspective.

    I’ve contended for quite a while that the way to earning a “voice at the table” (not just a “seat”) is through portfolio theory, or ‘project theory’ if you will. When you look at marketing or finance or recruiting from a portfolio perspective, the entire conversation changes (particularly with Executives who live portfolio theory and finance-speak).

  31. That was my thought Josh, i have, believe it or not always wondered why it was necessary for companies to use TPR’s. Understand that i have always been thrilled that they did and still do. Having given all of that a lot of thought i filtered it down to two things.

    1. A lot of companies don’t know what recruiting really is so they put a bunch of young kids with no business experience in recruiting. Bright young kids, college educated but zero life experience. There is no way that they can interview a C level executive, a doctor, a scientist, an engineer, an Oracle architect or anybody much above a new grad or an admn with any credibility or know the difference between a good one and a bad one. And the killer is that they can’t do anything but deliver a stack or resumes to a hiring manager and do what a young recruiter has to do, drag their toe in the dirt and wait for the HM to tell them who to set up interviews with or whom to throw out with trash. They have no credibility to be able to discuss the people, the team fit, the evaluation of the candidate to help the hiring manager or any way assist the HM in making a good hire. It’s not their fault. They haven’t been around the block enough to be able to even think about the big picture and how it should be to hit the bottom line.

    2. Because recruiters for the most part are lower paid, inexperienced and down the food chain in the reporting structure even the ones with some savvy and experience do not understand how to see the big picture and sell the HM on what he really needs. Not just sell a candidate because the candidate came across on the phone like good time Charlie personality boy. Or if they do, they live in fear of stepping over the line, risking their job or getting their hands slapped by an HM for venturing where they should not tred. All due i think to companies not hiring expereienced recruiters and paying them what good recruiters make in the exact role i have described..troubleshooters.

    It’s always made me wonder why a company can see the value in the internal audit group SOX or financial, reporting to the board so they can be independent and make independent evaluations but when it comes to the people assets independence goes out the window due to job protection etc.

    I doubt my pipedream will ever happen but i would sure like to see what would happen if somebody tried it. I would like to play on that team without risk of losing a client or losing a job just to see if i really am good enough to be an overall influencer who has the ability to impact improvement and the bottom line over a period of time. That would seem to take care of the debate about making recruiters accountable for retention and all that other raging disagreement.

    I have had opportunities to come in as an outside consultant to build or rebuild a sales team, an accounting deaprtment, a whole company from the president down when the ex pres left and took the sales team, office team and everybody but one delivery guy and the pres and his son. It was wild, fun and it worked. One experienced recruiter can do it in a matter of weeks if they don’t have to worry about stepping on toes or losing their job.

    Wonder why companies can’t see that? Is it money or fear of rocking the boat or the old “this is the way we have always done it”?

  32. “Why couldn’t it happen?” “Why couldn’t happen.” “Why couldn’t it happen!”
    Until we have the right base built as a profession we will not be able to advance our industry goals. If we layed the right foundation anything would be possible. I will do more than discuss this issue in the upcoming months.

  33. Sandra one big reason firms use TPR’s is to avoid direct mutual poaching-it saves everyone face and helps mediate conflict when there is a third party, with the not minor benefit of subtly working as cartels in terms of compensation and talent pool inclusion.

    While your idea of recruiters as business problem solvers no doubt has lots of good applications, I think that a large proportion of business challenges are not directly solvable (on a practical basis) by wholesale turn over of staff.

    Getting recruiting out of HR would be the biggest step in ages to advance the role….

  34. Sure Martin, that’s a given. We do a lot of intel gathering and fading of heat. I was being a bit cavalier with that statement.

    Although most upgrades of departments or sales groups are not done in wholesale turnover. It would makes sense to me that if the department was struggling or sales were not where they should be or overall the company wanted to improve the quality and productivity that recruiters working as part of a management team could be very effective in evaluating the current contributors who were successful, why and the ones who were not , why and being part of the evaluation team to develop not just a hire to replace the lowest man on the totem pole or putting out fires with individual positions then run to put out another fire.

    I am working on some things like that too John. Making some pitches now to clients. The other thing i think, here goes a giant debate, is that one has to be a generalist with some expertise in serveral verticles to make this concept work. Or come in with a team of several experts to pull it together.

  35. Sandra as the Official Beadle of the Recruiting Blogosphere it’s only too easy for me to veer into ticky-tacky territory- of course you know why TPR’s have a business model that works.

    Your concept of recruiter as evaluator is perfectly sound, so long as the conditions support whatever level of real expertise a recruiter has to offer about a given role, but also recognizing that there is a certain gulf between getting a job and working a job; what is valuable in one theater may not apply so much to the other. Recruiters may be inescapably biased toward the getting a job attributes….

  36. Sandra, in my experience, your model works considering the company is ‘small enough’ that you’re not making a presentation like this to HR or Talent Acquisition. You’ll have better luck with a CFO or Exec/Mg Director wearing multiple hats. I’ve pulled this off with companies less than 350 employees, but have never done so above 350. I just chalked it up to ‘lessons learned’ 🙂

    Here are my thoughts as to why:

    1. With the avg tenure of a Recruiting Pro being 12 – 18 months per gig, many are interested in short-term results, not long-term results (i.e. shareholder value creation). This is a reason I’d love to see TA Pros working contracts like athletes do. This way, the contract could be long enough to ensure focus on the right things . . . not just putting fires out. IT Pros working SAP or Oracle projects already do this – there are set deliverables and milestones in place . . . and then a spiff or contract bonus at the end of the contract period.

    2. Competitiveness. If presenting to TA or HR, you could be seen as trying to replace or supplant their department. Certainly, this is not the case . . . and the only way I’ve seen this go over successfully is to take on a slate of roles and offer a significant discount from the average 25% fee. If there is economic justification (meaning short-term justification, such as reducing search fees), they’ll talk. But once you start talking long-term value creation, things start going over like a lead balloon. It is perceived as “sales-y”, and this is personally why I believe that there are firms out there succeeding with the following model:

    Slate of Positions = Min of 5
    Average Fee = 5% to 7% (depending on slate quantity and avg salary)
    Up-Front Project ‘Co-Tainer’ = 25% of total project value

    For example:

    5 positions at an avg salary of $100k and avg fee of 7% = $7,000 per placement = $35,000 total project value

    Up-front ‘Co-Tainer’ = 25% of total value project value = $8,750

    You might ask why any Exec Recruiter in their right mind would fill 5 positions for the same receivable they could receive with about 1 and a half, and that would be a good question!

    My guess is this: It’s easier to build a business valuation (and consequently sell your firm) through a recurring revenue model as opposed to a one-off pay-per-placement model. Competition is limited so you’re locking in a true partnership . . . but there are challenges as well.

    Ok, back to work 🙂

  37. Hi Maureen. Guild-“An association of persons of the same trade or pursuits, formed to protect the mutual interests and maintain standards.”
    I have been considering starting the “Recruiter Guild” for several years now. Trepidation and money have held me back. We have recently started production of the site. My trepidation has subsided as I believe it is the right thing to do…money is still tough.
    The Guild will be a proactive advocate and lobbyist on issues like making recruiting its own function no longer reporting to Human Resources. The Guild will need to determine what those reporting options could look like. The Guild will also advocate working as a body to raise and define standards as a profession. These along with many other items will be addressed. The Guild will not be open to Human Resource professionals joining. This is not out of malice but rather necessity for the evolution of our industry.
    My stance is a very unpopular voice to some but rest assured it is because of my love of the recruiting craft and not to disparage another’s profession. If the Guild causes innovative agitation in HR ranks I would be pleased. It is about applying our collective gifts in a positive actionable way for the profession we have all embraced. If we don’t take action will we be having this same conversation five years from now?

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