Business of Recruitment

Businesses of all sizes need to have dogged focus on revenue generation and business growth. They also need to perform certain non-revenue generating activities, like recruitment. If non-revenue generating activities are not performed well, business growth can be hampered in the long run. Hence, resources available to businesses have to be judicially divided between revenue generating and non-revenue generating activities. It is a thin line. SME’s in particular struggle to manage both, because, they do not have the luxury of a plethora of resources available at their disposal. So, in their dogged quest of revenue generation and business growth, the non-revenue generating activities tend to take a back seat in most SME’s.  Larger businesses; because of the multitude of resources available at their disposal; have the bandwidth to equally focus on and manage both. Larger businesses clearly hold the advantage here. Let’s take a practical example of managing recruitment activities, to validate the above theory and talk about solutions to this disadvantage that SME’s are faced with.

Recruitment is a non-revenue generating activity that needs to be performed well. Every business understands the repercussions of a bad hire. Successful recruitment requires diligent performance of a set of activities. These activities are not complex by any stretch of imagination:

• Tapping into multiple candidate sources. This is similar to marketing. Just like an experienced marketer; who taps into multiple sources for ideal results; for successful recruitment too businesses need to tap into multiple candidate sources. Sourcing is a time consuming activity.
• An effective screening process. Without effective screening the businesses will waste precious time interviewing unfit candidates. Screening is another time consuming activity.
• Employer branding and candidate communication. Businesses need to be constantly in touch with candidates and find ways to project and employer brand in order to stand out from the crowd. This is yet another time consuming activity.

There are no short-cuts to the above set of activities. Whenever a business intends to hire, all of the above have to be carried out diligently.

Traditional methods of managing recruitment

Traditionally, businesses have performed recruitment activities through an in-house team. This team manages most openings. Overflows or niche hires are passed down to recruitment consultants. Large cash reserves and frequent hiring needs justify the need of a dedicated recruitment team, in large businesses.

Should an SME cultivate an in-house team? Maintaining an in-house team comes with the baggage of fixed costs, whether the business is hiring or not. The volume of hires is significantly lesser in SME’s. They do not have large enough cash reserves to sustain the in-house team during periods of no hires. But, there are SME’s who do cultivate in-house teams. They do so at the risk of slashing profit margins.

Those SME’s who choose not to cultivate an in-house team, either make their HR generalists and hiring managers multi-task or majorly depend on recruitment consultants. Making HR generalists and hiring managers perform recruitment activities, in addition to their full-time job, usually results in process failure that can have serious consequences. Because recruitment in itself is a time consuming full-time job, it is logically not possible for the HR generalist and hiring manager to perform the recruitment activities, discussed above, with entirety and diligence. On the other hand, depending on recruitment consultants for majority of their hiring needs results in ballooning costs sooner, than later, and the SME is forced to cut down on using recruitment consultants.

For an SME, choosing whether to cultivate an in-house team or not, is a double edged sword. It is nothing more than choosing between lesser of the two evils.

What other alternatives available to an SME?

There has been a flurry of RPO’s, in the past 5 years or so. Outsourcing recruitment is a beautiful concept for businesses, especially SME’s. It allows businesses to have their own recruitment team, without taking on any permanent liabilities. Isn’t that an attractive proposition? RPO’s in India have successfully been able to win business from the west because of the significant cost advantage they provide to businesses in developed economies. Unfortunately, these RPO’s have not structured themselves to suit businesses located in India. Furthermore, they are especially not viable to growing SME’s in India. They come with a huge fixed cost baggage. Even though, RPO’s promise to give SME’s their own recruitment team at zero permanent liability, the existence of a fixed cost is an SME killer. SME’s do not hire all the time.

What better options are available to SME’s?

Although old generation of RPO’s have not structured themselves suitablly for SME’s in India, I will still stick with what I mentioned above: “Outsourcing recruitment is a beautiful concept for businesses, especially SME’s.” Because, there is an emerging trend of new generation RPO’s developing a *transaction based model. Transaction based RPO’s is what SME’s need. They are an ideal solution for SME’s to manage recruitment; own recruitment team, zero permanent liability and zero fixed cost! Currently, there are not many RPO’s of this type, but, once an SME is able to find one it will be a breath of fresh air for SME owners and senior management. Transaction based RPO’s will give them the following advantages:

• Their own recruitment department that guarantees results through a ‘contractual guarantee’.
• No fixed costs. Although they have their own recruitment department, they will not be charged for it when they are not hiring.
• Transaction based RPO’s cost up to 100% lower than other methods of managing recruitment.
• The limited resources will be consumed by one less non-revenue generating activity. They can invest more in their business giving them an opportunity to grow faster.
• Their recruitment activities will be performed by experts, giving them a level playing field amongst the biggies in the hunt for talent.

*I will be covering transaction based RPO’s in a future blog, as it is a separate topic in itself. In the meantime, if you are keen to know more about it, feel free to contact me. I am open to dialogue with anyone out there.

Happy New Year everyone! Wish all of you a prosperous 2011.

 While I was researching to find a topic for our next blog post, I interacted with many corporate recruitment experts. I asked all of them one question – “What key issues related to recruitment strategies and/or processes did your organization face, in 2010?”. I received varied responses, but a strikingly common topic that came up while discussing with each of these experts was –  ”using social media in recruitment”. Social media is the latest buzzword that has also captured the minds of experts in the recruitment industry. I am not going to discuss the various social media tools available. There are many many tools/sites out there that everyone knows about by now. No point discussing that over and over again. Let’s discuss the results social media recruitment has produced.

The general consensus is that social media recruitment has not produced results consistently enough. Generally, LinkedIn and Twitter have only proven reliable, at times, for mid-senior level hires. Facebook has largely remained untapped. I am not sure about a global consensus, but this holds true for India. I am sure corporate recruiters in India will relate to it. Even though social media recruitment carries so many expectations, why has it not lived up to those expectations?

What makes or breaks social media recruitment, is whether the strategy in place is “social” in nature or not. Any strategy that is not “social” will not produce consistent results on the social media platform. This is where most organizations have struggled :-

They utilize social media, only for advertising their job ads. Organizations usually have a Twitter profile, Facebook fan page, LinkedIn group and a LinkedIn company profile. Their recruitment teams also have profiles on LinkedIn, Twitter and Facebook. Open positions are posted as status updates on all these profiles and to relevant groups too. This strategy consumes a lot of time but produces only one off successes. It’s not consistent. Gradually, realization that this strategy is not producing results proportionate to the amount of time invested in it, sets in. The initial enthusiasm begins to slowly fizzle out, as other sources produce better results compared to social media. Doesn’t this sound familiar?

What can be a more effective approach to social media recruitment?

The above strategy has not worked, because it is not “social” in nature. A different strategy needs to be adopted for social media. The good news is that we don’t have to look around too much to find new one. There already is a weapon in our armory that is “social” in nature. I am hinting at “Employee Referrals”. “Employee Referrals” are so much more “social” compared to advertising job ads on social networking sites, so, it should produce better and consistent results on the social media platform.

Every organization has; structured/unstructured or paid/unpaid; employee referral programs. All that needs to be done is to align it to social media. Social media will multiply the number of referrals and referrals will help produce consistent results from social media; a win-win situation! There are a number of paid and free tools available that can do wonders – encourage employees to refer, help them to spread the word within their network, keep them notified open positions, track “who referred which candidate” and lots more.

In short, this is my message – “To get consistent and better results from social media, rather than advertising job openings there, infuse social media into your employee referral programs”

I participate regularly in discussions on LinkedIn. What pinches me is that the above question surfaces every couple of months. There always seems to be a disconnect between HR and business. Why? For me, the answer to this question revolves around “metrics”. Let me explain what exactly do I mean by that.

Firstly, I do believe that HR professionals add serious value to organizations. Most modern businesses too understand the value that HR drives through an organization. The reason for this disconnect is that the language that HR speak is very different from the “business language” that rest of the organization is used to. This “business language” is the language of “metrics”. Everything in an organization revolves around metrics. It is only through the language of metrics that organizations understand “Where they stand?”, “Where do they need to improve”, “Who is adding value and who is not?”. Now, the HR community in general has been metric averse for a long time (thankfully this is changing now in bigger companies). Such metric averse HR functions still exists in most SME’s / SMB’s. As soon HR learn, develop and start talking the language of metrics, it will become much easier for them to showcase their performance and highlight the value they add to their organizations.

How does one inculcate this language of metrics into HR?

The key here is:

1) Understand your organization’s business and

2) Develop metrics that link the work you do to the factors that affect your business.

It’s that simple. But, the difficult part here; where most organizations struggle; is to create an environment where HR, from the ground level up, are encouraged to understand the business that the organization is in, so that, once these HR become managers they will know what metrics to develop in order to link performance to factors that affect business.