Part I of this series introduced my projections for what will most likely become the 10 most notable trends of 2010 related to the recruiting profession. In short, I foresee:
- Continued churn of labor (simultaneous hiring/layoffs)
- Increased use of contingent labor types
- Increasing demand for proving a business impact in $
- A return of the War for Talent
- Increased growth of direct sourcing initiatives
- Relentless demand for continues innovation (Jugaad)
- Increased visibility of brand-damaging viral messaging by current/former employees
- Accelerated obsolescence of recruiting tools/approaches
- Accelerated obsolescence of apathetic talent
- Increased importance of formal retention efforts
Now, in Part II, I’d like to turn the attention to highlighting why some of these trends will dominate the conversation, and offer some action steps strategic leaders can take.
2010, A Year of Turmoil and Churn in Business and the Economy
The first group of talent acquisition trends will be driven by shifting economic and business cycles. The development of a global economy and the emergence of an expectation among business leaders and customers for continuous, rapid, and dramatic innovation in both products and processes creates a highly volatile business environment in which market conditions can be highly favorable one month and truly dreadful the following month.
Historically, such growth and contraction cycles lasted years, a characteristic that allowed organizations to react and adjust organizational costs over time. However, the contraction in product lifecycles and macro economic cycles combined with relentless demand for innovation require organizations to be much more agile than ever before and react in days versus months/years.
The current reality creates a situation in which some aspects of the organization may be growing while others are contracting. To keep organizational labor costs in check, many organizations will need to adopt labor strategies that promote agility, i.e. increasing usage of contingent labor types. By increasing usage of contingent workers, organizations will be able to rapidly scale up or scale down labor costs as business needs dictate.
Action Steps for the Churn Problem
There are five action steps to building capability for handling churn. They include:
- Crafting an agile recruiting strategy: In order to be successful in an up-and-down world, the talent acquisition function needs to develop a recruiting strategy capable of adapting quickly to changing conditions. An agile strategy must allow for both rapid hiring and labor cost containment. It must allocate resources to longer-term strategic approaches while maximizing the effectiveness of short-term solutions.
- A sophisticated contingent labor strategy: Outsourcing the administration of contingent labor was OK when it represented a relatively minute percentage of the overall workforce and when the vast majority of roles involved contingent labor for static, transactional roles. However, for many organizations today, 1:5 or more workers are contingent and they are doing knowledge work vital to the organization’s success. Ignoring contingent labor is no longer acceptable. Strategic staffing leaders must instead adopt a broad set of approaches that allow them to effectively determine which jobs should involve contingent labor types, and how the organization can maximize the value each contingent resource provides. Processes must be put into place to manage redeployment of contingent labor, knowledge capture and sharing, and development of preferred provider status with top-performing contingent resources.
- Continuous internal movement: Another area that requires new strategies and tools to adapt to volatility is the internal movement process. Rather than relying on slow internal job application/transfer systems, organizations now must develop the capability to rapidly and continually redeploy and internally “guide” employees and contingent workers toward areas of the business where they can have a higher impact and return.
- JIT training may be needed: The fourth action step is to develop just-in-time training processes. This is necessary because in a world of continuous change and innovation, skills and knowledge become obsolete at an alarming rate. When your organization begins large-scale hiring, it will inevitably hire workers who have been underemployed or unemployed for a significant period of time. Unfortunately, this probably also means that the skill-sets and the knowledge of these formerly idle individuals will be painfully out of date. You’ll need a just-in-time process for updating skills rapidly and inexpensively.
- An explode-out-of-the-box plan: In some areas of your business, you might jump from a hiring freeze into a situation of rapid business growth that requires you to ramp-up hiring immediately. It’s impossible to effectively go from a standing start to full speed without a well-thought-out workforce plan and a recruiting plan that allocates the right resources to short-, medium-, and long-term staffing solutions.
“Dollarizing” Your Business Impact Supplants Traditional HR Metrics
The second group of emerging trends focuses on making a convincing argument to executives of the importance of recruiting. Talent acquisition and talent management leaders have struggled with metrics for years. Many corporate executives and managers are still skeptical about the economic value added by many human resource processes.
As a result of the widely recognized and measurable success that has been achieved by other “overhead” functional units, a growing contingent of corporate leaders have lost their tolerance for those that provide only functional metrics. If you want respect, credibility, and increased resources, it’s time to realize that no function is exempt from the new expectation of having to convert all key metrics into their dollar of business or revenue impact. To put it bluntly, if you can’t prove, for example, the added dollar impact of hiring a top performer over an average candidate, you are doomed to face a long future of poor funding and low credibility.
Action Steps for “Dollarizing” The Business Impact of Recruiting
I recommend these three action steps for dollarizing your business impact.
- Demand revenue impacts: The holy grail of CEOs is increasing top line results or revenue. Unfortunately, reporting cost per hire, time to fill, diversity ratios, etc., don’t receive nor do they deserve executive attention because they omit any connection with top organizational goals. The most important action any recruiting leader can take is to work with finance to develop an acceptable framework for converting all metrics reported to executives outside of recruiting into financial impact.
- Learn from others who have made the transition: Many back office functions have garnered more respect in the organization by marketing their impact on the enterprise effectively. Until recruiting leaders can stand up in front of business line leadership and fellow functional leaders and articulate a strong business case using standard business terms for investing in longer-term recruiting solutions, the respect, buy-in, and behavior change needed to support strategic staffing isn’t likely to emerge. Work with the CFO’s office, cost accounting, risk analysis, and supply-chain to identify the techniques that are required in order to convert functional outcomes into business impacts.
- Focus on a few impacts: Rather than bombarding executives with metrics, instead focus on a few. Key impacts that you need to provide include: the ROI of top performers compared to average performers in the same job; the revenue impacts of hiring and retaining innovators; and the performance differential in increased revenue between recruiting external talent compared to talent developed internally. You should also dollarize employee turnover, so that executives immediately see the negative revenue impacts of losing, for example, top performers who go directly to key competitors.
Up next, the final installment of this series will look at a reprisal of the war for talent and the increasing obsolescence of recruiting tools.