In 1995 I decided that I had had enough of the administration game. I wanted to make money. More importantly, my wife wanted me to make money. I felt it would be nice to measure my success in easy terms, like dollars and cents, and not in “client satisfaction” and “atta boys”. So I decided to get into big ticket enterprise software sales. Software sales is a lot like recruiting. You have prospects (candidates), you have your “target number” (openings), and you try to figure out which prospects, given the right message and attention, will lead to making your number. Selling big software packages is tough. In order to close the deal you have to make a lot of pitches (sound familiar?), and when the deal goes critical you start burning a lot of company resources to make presentations and get the deal closed. There is a lot of inherent risk for any vendor in the sales process, because a salesperson can chew up a lot of the company’s resources trying to close a deal. This could be time better spent on other activities, like going to Hawaii or buying that new Mercedes. Yet in all my time selling software and enterprise services (about 10 years worth) I never once got a “sales requisition.” Not once. I never had the CFO call me up and tell me that the only way that I could start prospecting for my next customer was if I got a piece of paper with an “ideal sale description.” And yet there was at least as much on the line with a large multi-million dollar enterprise software deal as there is in the hiring of a junior programmer. Now that I am working inside a corporate staffing organization, I frequently end up asking myself, what good is a requisition? And the answer I arrive at increasingly is: not much. A Brief History of Requisitions In today’s dynamic staffing environment, requisitions are a dinosaur that should be at the front of the extinction express lane. At a time when internal staffing organizations are in need of ever more advanced tools to attract and close the best possible talent for their companies, the entire hiring process gets structured around an ancient relic of the days when human beings were just “cogs in a larger wheel.” Requisitions were created for two purposes: cost control and risk management. They don’t help recruiters hire more effectively or find the best candidates. They don’t help recruiters get better insight into their client’s business. To the point, requisitions are designed to ensure that those free-wheeling, devil-may-care nuts in staffing don’t go hiring a bunch a new CEOs, bankrupting the company in the process. There was a time when the use of requisitions made more sense. After all, if people are your number one liability, you definitely want to put big hurdles between the desperate flake searching for a job and the golden key to the executive washroom. In this scenario, a recruiter is nothing more than a frustrated social worker, secretly planning to save the world one ex-welfare recipient at a time. Only the wise hand of capital control can prevent every mental patient in the big house down the lane from ending up on the payroll. Thus the requisition was 1950s management’s way of saying, “Thou shalt not do anything risky, like talking to people before you actually need to hire someone.” Some further history may be instructive. Requisitions are a relatively recent phenomenon. They arose from the concept of the job order. A job order is like a purchase order, without the extra five letters to make it as important. The job order tells the outside recruiting firm that if they provide bodies that meet a certain specification (i.e “must be able to fog mirror”) then the company will agree to pay them. After this had gone on for a while people started thinking, “Hey, why pay the big bucks for an outside company when we could pay less and get the same result?” This thinking begat the corporate recruiting position. This in turn lead the finance department (as the protector of corporate capital) to have a collective coronary, as the cost and risk control mechanism of a job order would obviously not work with an internal corporate recruiting department. And so the “let’s control the risk of the corporate recruiter the way we control the risk of the outside firm” notion was born ó and we have been recruiting with requisitions ever since. Why Are Requisitions Used in Recruiting, But Not in Sales? A requisition is supposed to be an authorization (only once approved!) to the recruiter that they can now officially start their engines. It is the green flag of the recruiting race. But good recruiters fill their pipelines long before the approved req ever comes down from on high. At best, a requisition is a green flag to involve internal resources in the further exploration of the opportunity. At its worst, a requisition can be a serious distraction. But if recruiting is a sales function as is frequently argued, then we must ask some questions: Why isn’t there a requisition in software sales? Or any other complex sale? Why doesn’t the CFO issue a “sales requisition”? Any complex sale involves lots of internal company resources. Even in companies that interview a candidate 20 times, the relative cost of the interview process still pales in comparison to the cost closing a multi-million dollar software sale. If the requisition is the best way to control cost and risk, then why not use it in any “sales” situation where cost and risk are part of the process? There is no “sales requisition” outside of recruiting because of a fundamental belief most executives subscribe to: When you are closing deals, the customer is in the driver’s seat, but when you are closing candidates, the company is in the driver’s seat. In other words, candidates need jobs more than prospects need software (or services, or whatever you are selling). Which translates into: candidates are expensive and risky, and customers are not. (I am not saying that every company that uses requisitions believes this. I am saying that this is the fundamental assumption behind the creation of the concept of a requisition.) One would have to agree with that statement ó if there were only one employer in the universe for any particular sort of opening, and if there were vendors as numerous as the stars available for any prospective sales situation. But of course, it is usually exactly the opposite. In fact, the more talented the candidate, the more opportunities she has to take her services to the highest bidder, whereas large enterprise software companies will cut their prices all day long to win a deal. Enterprise software is increasingly a commodity, while talent is increasingly expensive and valued. If this is true, then perhaps sales management should start issuing requisitions with the exact deal properties listed. In that, way salespeople will stop wasting their time chasing deals that don’t help the company achieve the margins and market penetration needed to milk every last cent out of an increasingly commoditized market. This is not to say that there should not be financial controls on decisions that affect how people spend money. In sales, you have ongoing executive review of the deal pipeline to make sure that salespeople are not signing the company up for something that won’t yield expected returns. In recruiting, we call that kind of overview “offer approval.” All offer letters (and, by extension, the verbal extension of offer letters) should be reviewed by the finance department prior to delivery to ensure that the original budget assumptions are not invalidated, challenged, or changed. Top-tier talent executives view their number one responsibility as the ongoing management of talent resources (as opposed to finance’s focus on managing capital resources) and therefore constantly review recruiting pipelines for fit to specification. In a well-run recruiting shop, it is much more difficult for a recruiter to burn company resources than it is for a salesperson inside a well-run sales organization. So there are plenty of checks and balances on recruiters in a well-run recruiting department to make sure that someone isn’t hiring their best friend into a new “CMO” position (chief massage operator) with big bucks to boot. Yet requisitions are still almost universally used, even in leading-edge recruiting organizations. Even here at Electronic Arts, which was one of the first adopters of the talent pool concept and has sourced ahead of demand as a standard business practice since its inception over 20 years ago, we use requisitions as our final hiring control. But my experience has been that pioneering recruiting organizations use requisitions in spite of their effects, not because of them. Recruiting organizations often have to use a tool to initiate conversations with hiring authorities, track hiring activities for EEO/OFCCP purposes, or ensure that the needs of the hiring manager are validated. And the requisition is the most commonly acceptable, tried-and-true tool to tackle those all-pervading problems. But just like the proverb of a carpenter who has to use a hammer for every need, even to drive in screws, requisitions get used to deal with problems they were not designed for. Unfortunately, this leads many organizations to spend as much time trying to figure out how to deal with requisitions as they do solving the most important problems every recruiting organization faces: how to attract and close on talent that will extend your organization’s competitive advantage in its marketplace. In my next article, we will review the specific standard uses of requisitions, possible alternatives, and what this means for the staffing organization and its clients.
Subscribe to the ERE Daily for all the latest recruiting news.
This article is provided for informational purposes only and is not intended to offer specific legal advice. You should consult your legal counsel regarding any threatened or pending litigation.