A while back, I was asked to give a presentation at Google’s main campus in the heart of the Silicon Valley on the future of corporate recruiting. The audience was a combination of Google recruiting staff and recruiters from other organizations in the community that Google was interested in getting to know better.
Looking back, I realize that there is probably no better place to hold a discussion about the future of recruiting than at the one company that is proving daily that they are dedicated to pursuing a model that is effective first and foremost. While some might argue their approach is inefficient, Google’s powerhouse “recruiting machine” is demonstrating that to truly make evident a value for top talent you might just have to abandon all that you know and experiment.
While Google is by no means the only organization struggling to develop new models of tapping top talent globally, they are one of the most visible companies helping to lead the way in a profession crying out for transformation.
A groundswell of forces is forming that increase the probability of a different future emerging every day. With a downturn in the economies of most developed nations and moderate to significant growth in the economies of developing nations, it is likely more than ever that established recruiting functions will once again suffer funding challenges while upstarts invent new models rendering the remnants of the established functions archaic.
Deep cutbucks in recruiting budgets will all but eliminate opportunities for established functions to experiment and further entrench the myopic process and efficiency focus that renders competitive businesses incapable of competing for top talent. When moderate growth returns, those companies surviving will rebuild their functions, the best opting to adopt practices empowered by current sociological and technological trends. If you’d like to know what that “rebuilt” corporate recruiting function is likely to look like, read on.
The Current Recruiting Model
Few corporate recruiting functions in existence these days have been designed from the ground floor up to leverage aspects of the environment in which they operate. Rather, most evolved piece-meal by benchmarking against other corporate recruiting functions, which were also developed incrementally over time in an ad-hoc manner.
Despite years of criticism, there has been little demand for change from within. Corporate recruiters and managers are so busy on a day-to-day basis that there’s often little time to step back and examine the overall function, or to evaluate other strategic business models that could be successfully applied to corporate recruiting. As a result, even though superior talent-acquisition capabilities are at the top of nearly every executive’s “need list,” most recruiting functions receive weak financial support and relatively low performance ratings from their executives.
Recruiting is not alone in developing under this slow evolution process. Many other “overhead” functions also developed slowly over the years without a grand vision or even a theory to support their development. However, the last decade has brought sweeping innovation to other overhead functions like procurement, inventory management, production, quality control, and customer service. I predict that the next function to make that transition into becoming a business profit center and powerhouse will be corporate recruiting.
Over the last decade, I have had the tremendous opportunity to evaluate the recruiting models of over 100 firms ranging from small upstarts to gigantic global conglomerates. A dramatic transformation must occur if corporate recruiting is to rise to the level of the most impactful people-management function.
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Rather than continuing on a slow evolutionary path, corporate recruiting and talent management must make a dramatic transformation following one of three basic models, including:
- The business “value added” model.
- The sports/entertainment model.
- The open market or “eBay” type model.
Factors That Will Force Recruiting to be Dramatically Different
In addition to the fact that there are now emerging “role model” business functions to copy from that have already made dramatic transformations, there are also a number of business, economic, technological, sociological, and demographic factors emerging that will “force” corporate recruiting to undergo a dramatic change.
Individually, they might not be “news” to most readers, but together they will be a powerful force:
- Globalization. As more firms become truly global in nature, there will be an increasing need to place “work” close to talented workers. With that globalization, recruiting will no longer be focused on a single country. Instead, most firms will need the capability to recruit workers to produce and sell products in numerous countries around the world.
- The value of innovators increases. Because of the high margins associated with innovation and first entry (e.g., the iPod, the iPhone, the Wii), the relative value of “game changers” and talent that can innovate will continue to increase. This increased need for innovators will force organizations to shift away from the current practice of primarily targeting “productive and efficient workers” toward the much harder goal of recruiting and retaining innovators. Instead of filtering out talent that doesn’t fit a mold, organizations will instead seek talent capable of breaking the mold.
- Rapid copying. It’s become a fact of corporate life that successful products are now copied by other firms at an astonishing rate. Unfortunately, as obtaining information from around the globe becomes easier, best practice solutions and business processes will become even harder to keep secret. This rapid copying of people management processes will require every recruiting process in every leading corporation to continually innovate and improve if the firm is to maintain a competitive advantage in talent.
- Remote work. The spread of technology and cheap communications now makes it easier for remote workers to be productive, no matter where they might be located. The spread of remote work means that firms can now recruit workers in literally every country around the world, without the need for physical relocation. Higher fuel prices, political instability, and global warming issues will also force most organizations to come up with new “remote” work options that reduce travel.
- Technology. The growth of business software and metrics scorecards allows every business function to shift toward “data-driven” decision-making.
- Education. The growth of Internet learning, coupled with the strengthening of educational and university systems in many areas around the world, now means that well-educated and well-trained individuals are available in many more countries than ever before. Rather than being concentrated in a few industrialized countries, educated, talented, and skilled workers can now be found in numerous global locations.
- Knowledge work. As more and more corporate work shifts from physical labor toward becoming knowledge-based, it is now becoming possible to shift a larger amount of work to regions where the “talent is” or where it wants to live.
- More substitutes for employees. As technology improves, it becomes easier to replace work done by people with work done by machines and technology. In addition, work that had traditionally been done by “employees” can now be shifted to partners or outsource providers. Some firms like IBM and P&G have even begun to gather product improvement innovation not solely from “employees” but also from customers and vendors.
- The changing workforce. There is little denying that demographic trends (i.e., the aging workforce, declining birthrates) as well as shifting attitudes toward work among new generations will impact future recruiting. Unfortunately, these trends mean that the simple recruiting and retention tools that were previously successful will become less effective as the needs and expectations of those in the workforce change and become more diverse. Diversity hiring and retention targets must be expanded and the definition of diversity will have to adapt to a more global definition that reflects the profile of the firm’s current and potential customers.
- Increased consolidation. Corporate mergers continue to increase, and as a result, the size of corporations will also increase. This results in increased challenges in global branding, recruiting, and retention. Unlike at small firms, larger corporations will also have increased financial and technology resources that will allow for the development of radical new approaches to recruiting and people management.
- Labor costs. As global competition for talent increases, the time it takes for cheap “local” labor rates to increase to match the global wage rate will become shorter and shorter. This will require firms that desire to maintain any labor cost advantage to move their work more often to other regions. A second option is to focus on recruiting a higher quality and more capable worker whenever obtaining lower labor costs becomes an unrealistic alternative.
A Snapshot of the Business ‘Value Added’ Talent Model
I forecast that the recruiting/talent management model that is most likely to emerge (from among the three models) is the business “value added” approach. The basic premise of this model is that recruiting and talent management processes must be developed to “mirror” the highly successful business process models that are already in use in corporations.
Should you think that this business approach is purely theoretical or that it’s not feasible, it’s important to note that a few firms have already made significant efforts toward developing many of the elements of the business “value-added” model:
- Goals. This new business model will shift recruiting goals away from “filling seats” and closing requisitions. Instead, the model will have more strategic goals which will include increased workforce productivity, increased innovation, increasing workforce capabilities, and improving people ROI by prioritizing jobs and placements to maximize the business impact. (Google and Apple have been leaders in this area.)
- Leaders of the function. Because recruiting will become a true “business” function, it must be led by individuals with backgrounds in other successful business functions like supply chain, CRM, product branding, finance, measurement, market research and sales. Their “outside” experience in developing processes that have a demonstrable business impact will allow them to view recruiting and talent management in a new light. In addition, their experience in “risk-taking” functions will allow them to take bolder approaches that can provide a competitive advantage (Cisco, Intuit, and Sun served as role models in this area).
- Talent management processes. In the future, recruiting and talent management processes will be similar to and as a result, will more easily mesh with other business processes. Recruiting processes will be developed from supply chain models (the talent pipeline) and from CRM (the customer relationship “touch point” model applied to both candidates and employees to ensure a great experience). Time-to-market processes will serve as a model (to reduce the “time to fill” for critical jobs and high-demand candidates) as will market research processes (for identifying candidate “job switch” needs and criteria). Service level agreements will be borrowed from vendor management processes to ensure that hiring managers conform to the hiring process and standards. Recruiting metrics will shift from the traditional “transactional” metrics toward business impact metrics where the “value added” impacts of talent management on increasing revenues can be more directly demonstrated (Aimco and FirstMerit Bank set the tone in this area).
- Branding. Much like Google has become a talent magnet by building its employment brand through Internet and media exposure, the business model will focus the largest portion of its resources on ensuring that the most desirable talent around the world view the firm as a place that “someday, they would love to work at” (Google, MGM Grand, Ernst & Young, and Starbucks are role models here).
- A recruiting culture. In a recruiting culture where every employee is a 24/7 talent scout, it partially shifts “ownership” of recruiting to those who are most impacted by a bad hire. As a result, a world-class employee referral program will become the second key linchpin in the business model strategy. The fact that proactive and focused employee referrals generally produce the highest volume of hires, the highest quality hire, no negative diversity impacts, and the longest retention rates are additional reasons to focus on referrals. Employee referrals are also superior to other traditional recruiting “sources” because employee referrals also include a candidate skill assessment and a “cultural fit” assessment component (AmTrust, Edward Jones, Turner Construction, Intel, and Quicken loans are leaders in this area).
- Data-driven decisions. The approach will use models, analytics, and predictive tools to increase workforce productivity and innovation. Yes, it’s true that “human resources” will be managed less like an “art” and instead more objectively, much like other corporate resources. Utilizing data and statistics rather than intuition will allow decisions on sourcing, candidate assessment, and candidate closing to be continually improved. Recruiting will also utilize the Six Sigma model to identify and quantify recruiting and hiring errors.
- Quality of hire. This standard will not be the same corporate-wide but will vary depending on the priority and the business impact of the job. There will also be a focus on identifying the “sources” that produce the best “on the job” performance. Generally, this means a focus on effective sources like event recruiting, contest recruiting, recruiting boomerangs, and having a powerful corporate careers website (leaders in this area include Microsoft, Deloitte, Ernst & Young, Valero Energy, and Aimco).
- Pre-need hiring. This business model will include a proactive component that continuously identifies top talent for key positions, regardless of whether there is a current position opening. Identifying key talent in advance will also allow for long-term “relationship recruiting,” essential when attracting currently employed individuals who are in high demand (professional football and EA set the direction in this area).
- A predictive component. Because all great business processes are forward-looking and attempt to avoid problems, this model requires processes that “warn” managers in advance when hiring and talent management problems will soon negatively impact an individual manager’s business results. In addition, managers will be “alerted” by the recruiting function whenever “sudden” talent opportunities arise either internally or externally (Valero Energy, Intuit, and Aimco are role models in this area).
- The appropriate labor source. Recruiting and talent management will take a broader role in advising senior management on which type of labor is most appropriate for each business situation. Rather than just “hiring employees,” the function will recommend when it is more appropriate to instead use outsourcing, contingent workers, and even when it’s best to replace “employees” with technology (Valero Energy leads the way in this area).
- An expanded role. Rather than limiting the role of the recruiting function to simply recruiting and hiring individuals, the business model requires the recruiting and talent function to broaden its responsibilities. Expanded areas of responsibility would include executive search, workforce planning/forecasting, onboarding, internal placements, and retention for the first six months on the job (Microsoft, WellPoint, First Merit Bank, and Memorial Health are role models here).
- A shift away from finding. In its simplest form, recruiting has four major elements: branding, finding candidates, assessing candidates, and selling candidates. Current recruiting models place a large amount of their resources on “finding” or sourcing potential candidates. However, as a result of the growth of information systems and the Internet, the process of identifying or finding top performers and innovators is becoming increasingly easy. The new model will utilize new and developing information systems including social networks, consumer information, customer information, credit sources, niche job boards, professional association membership lists, and even sales leads to find prospective candidates. Finding individuals around the world will become relatively easy, so the next focus will be on improving candidate assessment (primarily online and /or utilizing simulations) and secondly on the use of market research tools and sales approaches to increase the successful “closing” rate of highly desirable talent (FirstMerit Bank, ANZ Bank, Citigroup, Whirlpool and Microsoft are leaders here).
- Silo integration. Interdependent HR functions like recruiting, relocation, compensation (for offer letters), on-boarding, and retention will be tied together with shared metrics, shared information sources, and interlocking rewards. These and other tools will be utilized to ensure cooperation and a smooth workflow between these often silo’ed units. Individual managers will have their bonus directly tied to talent management results, which would include diversity, retention, developing, and sharing talent as well as new hire quality (Sodexo and Aimco lead the way in this area).
Next week: Part 2 of this series will highlight the “sports/entertainment” and the open market “eBay” talent models.