Fast forwarding to 2010, I now clearly understand why very little progress has been made in the direction you have so eloquently articulated in your piece. This is a mandate which must come directly from the shareholders and all other stakeholders via their organization’s Board of Directors. Until that happens, articles such as yours will only fall on deaf ears, do not more than preach to the choir, and serve no real, meaningful purpose.

Therefore, in order for recruiters to have a real, meaningful, significant, recognizable, and acknowledged impact in their organization, I propose the formation of a SIG (special interest group) or committee–made up of individuals representing not only our industry but also the various stakeholders who stand to benefit from this innovative approach to recruitment–to effectively LOBBY to all stakeholders (i.e.,Chairman of the Board, Search Committee of the Board of Directors, Heads of Human Resources, Corporate Governance Associations, etc.) for the paradigm shift in attitude we seek from our peers and colleagues.

Bottom line: Since we’re asking for a radical transformation in attitude toward the recruiting industry, we must, therefore, also be willing to endorse a radical and innovative approach to getting our message out in order to get the sort of effect and result we all seek.

As I said earlier, anything short of that is the equivalent of preaching to the choir.

Keep up the good work!

Happy Y2.01K Everybody,

Keith “Don’t Call Me ‘Jargon-Spewing’” Halperin

Let me first say, I believe there are a number progressive companies and HR programs that have engaged their workforce, created collaborative cultures, and have become strategic partners with labor by creating true value from their human capital – and it shows and the organizations are true competitive leaders in the global market and will continue to be. These progressive companies are ‘human capital centric’ meaning they are relying on finding, engaging, and retaining their human capital for their success and creation of their competitive advantage. Proof they are human capital centric is that their business strategy, structure, goals, actions, decisions and priorities are tied to human capital management practices. These companies are respected by both capital (investors & stockholders) and labor. I believe you will find, in these progressive companies, the value of their recruiting department is equal to the relationship with the value the company places on its human capital.

But, the vast majority of US companies still have the old capital mindset where labor is not an asset but rather a liability and expense. I can detect an old capital mindset organization in a minute by their websites, job descriptions, leadership style, compensation, benefit packages and corporate culture. The result of this old capital style mindset where labor is not really valued in spite of the mantra “people are our most important asset” is that it does not see or utilize labor as a true valued asset.

In unprogressive companies, recruiting – like HR is not a strategic partner or valued advisor. HR is relegated to the role of a mere agent for capital. There is no seat at the table for mere agents – others make the big decisions for HR (and their recruiting department) to execute. Like HR’s transactional role, recruiting is merely transactional instead of being seen as transformational.

I am thrilled to think we are on the cusp of a wonderful time in history, where global competition, limited resources, need for skilled labor and an upward evolution toward higher value products and services will force capital to finally value one of its most expensive resources – its workers. Once human capital is valued, recruiting will increase in value respectively. When the bell rings and “Corporate Recruiters” get in the ring with “The War for Talent”, let’s hope corporate recruiting departments are up to the challenge levied upon by corporate capital. It’s going to be a dog fight against the “The War for Talent”. If Corporate recruiting faints, there will be many RPO’s who are ready and able to ready to jump in the ring and do the job. Are you ready corporate recruiting?

Modeling potential ROI from better hiring is actually really easy. Check out these free ROI calculators:
http://www.previsor.com/resources/calculator

You can calculate both the $$ savings resulting from reduced turnover as well as the $$ gains from better employee performance. The latter draws upon the decades of research discussed above.

Hints: Use conservative (i.e., believable to your CFO) estimates to build a defensible business case for new programs. Also, try varying your estimates for one field/assumption while holding the other fields constant to see the specific dollar impact of that variable and really hone your strategy.

Will it lead to change?. Try this metric. {NComments + NRetweets} for this article / <NComments + NRetweets) the most recent article on how use Social Networking to become a hero. To the extent that the resulting index breaks 1.0, change has a chance. To the extent that it falls below 1, it is business as usual. My subjective 90% confidence interval for the index runs from .05-.3. Yours?

In the article, you join Lou Adler in calling for a greater role for financial metrics as one vehicle for raising the perceived value of recruiting, and rightly so. However, like Lou, (and everyone else I have encountered in the recruiting space) you remain blissfully unaware of the science of recruiting. There is one, you know. Drs. Charles Handler and Wendell Williams represent that voice on ERE, but even they fear to tread into the science of the recruiting utility equation. It is somewhat analogous to working on thermoneulcear fusion while ignoring the formula e=mc**2.

The utility equation was introduced in the late 40s by Hubert Brogden in an article titled “The Dollar Criterion”. It was refined in the 60s in a widely cited book by Chronbach and Gleser titled: “Psychological Tests and Personnel Decisions”. The utility equation puts into the metric that matters (dollars) the increased value created by making N Hires that stay Y years of average tenure with a decision accuracy of R (correlation between the candidate score pre-hire and the candidate’s performance once hired), a sourcing power of S (derived from the number of candidates per person hired) and the difference in the dollar value (DV) of the performance of a top third vs. average vs. bottom third candidate, if hired and put on the job. After all that, you subtract the costs of making selection decisions(SC), since the cost of hiring randomly is assumed to be 0. So in the shorthand of equations, it is: Utility in Dollars= (N x T x R x S x DV) – SC.

While it is beyond me to do it cold turkey, it has been algebraeically proven (sources available on request). Like Einstein’s powerful little formula that equates matter and energy, it is precise and complete. It includes the influences of sourcing and retention as well as the critical influence of selection decision accuracy. While the earlier work described above applies to comparing just one selection method to random selection, more recent work by DeCorte, Lievens, and Sackett (2006) have extended utility computation to the common reality of multiple steps in a selection process.

So we can know the metrics that matter when it comes to recruiting. And they are often uncomfortably large (meaning $10s and even $100s of millions) when staffing hundreds of professionals or thousands of entry-level hourly positions a year. For professionals, it happens all the time in healthcare, public sector, and high tech. For hourly, it happens all the time in the restaurant, retail, shipping, manufacturing, healthcare and financial sectors. Well, maybe not so much in the financial sector these days.

And today’s labor market ups the ante, with hundreds of respondents showing up to a job posting and online assessments advancing to the point where lower costs and higher decision accuracy delivers a one-two-three punch when added in with today’s high sourcing power. Sure there are a lot of desparate pretenders in the response avalanche, but that is the value of a low cost, valid, online screen. The response avalanche doesn’t need to paralyze hiring managers into hiring from their friends, relatives and hundreds of close personal friends on Facebook (real life story). They can actually post the opening, deploy valid online screening assessments, and let the utility equation show them all the dollars they are handing their companies by sending the top scores to on-site behavioral interviews.

It isn’t rocket science but it is people science. And you can try this at the office. Just ask.

Until we can develop the right metrics to show that we are a profit center and be willing to be measured and rewarded to those standards we are an expense to be managed.

While I wholly embrace Dr. Sullivan’s questions, in my opinion if we can’t show financial impact the rest is mute.

As a thought, how about defining cost per vacancy for starters. For each day that a position is unfilled what is the cost? This is a very difficult question to answer for many positions however to get the ball rolling the sales context might be easiest.

Most VPs of Sales can show you lost revenue in accounts won by competitors or no growth due to a vacant sales position in a market. Every day that position stays open the Sales Manager’s heartburn gets worse in terms of leakage and lack of growth. Ask her to annualize these figures and back into a daily value, I am sure you will get a prompt response. You can then show that filling the position under the company average will save / produce revenue. By the way, just for kickers you can then throw in the Kevin Youkilis (nod to Money Ball and recruiting metrics from Sullivan 2005) difference between an “A” player and a “B” player and show exponential growth.

One might say that it is time to fill and subsequently cost per hire that is being measured, however those are meaningless metrics without the context of cost per vacancy. To use Dr. Sullivan’s example it is like measuring inventory and transportation time…meaningless until you understand and calculate their impact on the manufacturing process.

I would argue that every position has a cost per vacancy…if it doesn’t…well then it is not needed. I also know that this is not an easy number to derive mathematically…transformation is never easy.