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Why Recruiting is in the Midst of Transformation

by
Kevin Wheeler
Apr 14, 2010, 4:17 pm ET

This recession is accelerating a trend that was already underway: the tendency of organizations to outsource and decentralize non-core functions. I define core very simply: anything that generates revenue (e.g. the sales team), invents new products or services (e.g., R&D) or deeply touches customers (e.g. consultants, advisors). And, let’s face it, internal recruiting functions are not core.

In a world where work was primarily done physically and where there was no ability to spread information easily or communicate on a global scale, centralization and formal structures brought efficiency, speed, and a better life. Formal organization allowed the consolidation of people, machinery, and money, which led to mass production and lower prices. Societies moved from tutoring a small number of elite children to the creation of formally organized and regulated schools that were designed to educate the masses.

For as long as people have lived together, there has been a tendency to centralize and create hierarchy. We have seen the growth of many huge, centralized systems,  including government, corporations, schools, utilities, health care, the movie industry, the music industry, and so on. In fact, most of us currently work or have worked in one of these organizations, and most of the recruiting practices that we use have evolved and been shaped by the needs of these organizations.

Even in the creative world, formal organization became important for a while. Movie companies could muster the capital and the equipment to produce complex and expensive movies and distribute them to physical movie theaters. Actors were hired by one production company and signed up for life. This changed over 30 years ago for the movie industry, which is an example of how almost all organizations will be structured and staffed in the future.

Decentralization

The Internet has accelerated the movement toward decentralized, distributed systems, particularly when it comes to breaking up the traditional media distribution hierarchies: television networks, movie studios, music producers and distributors, and newspaper empires. All of these have been battered by the more decentralized, multiple-input capabilities of the Internet. Distribution requires no physical movement of stuff, but only the movement of electrons through space. Then need to centralize has been reduced in almost all cases and eliminated in many. Automation has contributed to this as well by making it possible to produce physical things with fewer and fewer people. This means manufacturing has become smaller and more distributed: a product is designed in one place, prototyped in another, and manufactured somewhere else. Marketing is outsourced, as is distribution, sales, and service.

The Shrinking Corporation

This trend is now moving into corporations, which are sensing what E. F. Schumacher said long ago: that small is beautiful. More organizations are trying to stay small or at least “right-sized” for the goals they set out to accomplish. The idea of growth for the sake of growth is dying, and more organizations are discussing how to spin off business units, outsource transactional work, and simplify their core businesses. There is an understanding that centralization reduces creativity and creates barriers to communication. The largest automobile companies are failing, and the outcome will be smaller car producers, perhaps many dozens of them, innovating on a larger scale than ever.

The people who staff these newer firms are less traditional in how they think and tend in most cases to be open to trying new models of employment. This is partly why we are seeing more contingent workers — maybe making up as much as half the workforce within a few years.

Schools

Schools are slowly following this pattern. With the ability to distribute information through the Internet, they are undergoing significant change. School systems are experimenting with virtual classrooms, and fewer are investing in new physical campus buildings. Online tutoring, individualized learning programs, and project-based lessons are becoming more common and are likely to change the way we think about educating people. I don’t see any future in physical classrooms or in most of the pedagogy we have taught teachers.

This means college recruiting will look very different in a few years from today. Articles I have written earlier this year point out some of the changes in college recruiting that are already happening, and others that are on the horizon.

Recruiting

This move to decentralized and smaller organizations means that the structure of recruiting is undergoing change. A few weeks ago I wrote that corporate recruiting was doomed because of this shift, and I underline that this week.

While corporate recruiting won’t disappear, it will morph into a very different function. The evolution may take several years for large multinational firms, but is already reality in many small and start-up firms.

Rather than the large functions that many organizations fund today, the remaining ones will be much smaller and will be staffed with broadly skilled and experienced talent professionals who are comfortable talking with senior management, who can build relationships with recruitment vendors as well as internal managers and candidates, and who can contribute to (or even create) strategic talent plans.

But the bulk of recruiting will be outsourced or insourced to firms who specialize in quickly finding and presenting qualified candidates. And even in these firms the recruiters (if we call them that anymore) will need to be highly skilled in multiple areas. I could imagine a recruiter who focused on sourcing and on managing a community of similar people for a specific client. They might be able to do this for multiple clients, given the evolving technology and skills of both recruiters and younger candidates. Another recruiter might focus on career development, candidate assessment, and coaching in order to fuel the pipeline for a talent community. The competencies involved will include sales, relationship building, technical savvy, business knowledge and skills, sourcing and social media skills, as well as the ability to move between these competencies with ease.

At a high level what is going on is the continuous movement from systems that are formally organized by a management team and where entry is closed and controlled to systems that are self-regulating, open, distributed, and filled with individuals making choices about their roles and outputs. It’s about the rise of collaboration and sharing of ideas in less structured ways. I wrote about this on The Future of Talent website where I also linked to a very interesting video on this topic that you may enjoy watching,  given by Clay Shirky at TED. Clay is the author of “Here Comes Everybody: The Power of Organizing Without Organizations,” as well as many other books and publications on collaboration, organizations and the changes we are all facing.

No matter whether we like this trend, agree with it or embrace it; it seems that nothing will stop us moving in this direction. The only question is: how fast? You should ask yourself if you are getting prepared, building the right skills, and moving into the right place to be.

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.

  1. Geoff Peterson

    You bring up some interesting points in this article Kevin, especially regarding the “shrinking corporation” with more contingent workforces. From where I sit, I have seen a huge shift over the past year towards more contingent work, less hiring for full-time roles in recruiting. I am keeping a very close eye on this trend as it directly effects me.

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  3. Heidi Burkley

    Kevin:

    As always I love your insight. I could not agree with you more that our field is transforming. I’ve attached an interesting thread from ERE several years ago.

    http://community.ere.net/groups/recruiting-leadership-forum/discussions/13395/

    Recruiting/talent mgt/ human capital mgt/ talent acqusition whatever you’d like to call it is about people and being able to effectively manage this valuable resource (talent) to align with business objectives. This this recession has proven that the transactional recruiter is dispensable.

    There’s been this ongoing argument regarding HR and having a “seat at the table” …

    I question and wonder if the real argument should have been “when did we relinquish and give up our seat and what steps do we need to take for a full recovery?

  4. Joshua Letourneau

    Kevin, super article. I agree with the movement toward decentralization – in fact, it’s necessary from a business evolution perspective. As consumer markets continue to further fragment (despite globalization), it’s only natural that organizations should more closely mirror their ‘end-user’ market realities (be it a CPG company, a Professional-Services firm, etc.)

    In fact, the more decentralized an organization is, the more ‘resilient’ it becomes from a network perspective (in regards to the Human Networks that drive how work really gets done, such as innovation, value creation & delivery, etc.). Resiliency is a network characteristic, and speaks to a firm’s ability to repel and withstand random attack (i.e. in terms of Human Capital, this would mean retirement or loss of a key player, etc.)

    Yesterday, I created a video about decentralization as it relates to network resiliency and leadership development. It can be found on my blog here: bit.ly/blLWab

    Last month, I also tried to create a plan to reinvent Toyota’s HR to refocus on these Human Networks that drive how work really gets done – the tough part of this is that I only had 1k words or less to completely reinvent Toyota’s HR & Talent Acquisition from a completely blank slate :) I wasn’t able to elaborate due to the greatly compressed word-limit (i.e. my proposal was too audacious for 1k words), but given your article today, it might be worth a quick read:
    http://bit.ly/9D7uY3

    Thanks for the great work this morning :)

  5. Bill Wager

    Kevin:

    Nice to see that someone here figured out what all these computery things were going to do.

  6. Steve Allard

    Great points Kevin. As we begin to see an increase in hiring, the resurgence of agencies will also follow. From a manager perspective that means many new recruiters coming into the industry. Managers are under increasing workloads with limited resources. Their time is extremely valuable. They should know that not all recruiters are created equal and be armed with some tools to understand how to evaluate their recruiters. I recently posted some thoughts on this for managers at http://tinyurl.com/y7k5kfb

  7. Peter Fowler

    Hi Kevin,

    An excellent article again. We have seen a large increase of interest in our RPO product that we offer through http://www.recradar.com. Currently with over 500 specialist recruitment agencies we get the right candidate for their position.
    The world or out sourcing the hiring of perm and contract staff is well underway.

    Regards,
    Peter

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  10. Melanie Villapando

    Truly enjoyed your article Kevin and agree that your statements are the trend. Since working with a client whose hiring managers are more directed than partnered in their recruiting efforts, it does not make for a transparent or collaborative environment. And they certainly do not like it. This kind of recruiting approach sustainability is questionable as you’ve highlighted. “The Starfish and the Spider” is a decent read supporting the adaptability of open systems and how people within an open system are more willing to contribute. The talent management/recruiting professionals who are able to provide services in this kind of environment will prove to be the most successful. Thanks again for your wonderful insight.

  11. Angela Lazaridis

    Kevin,

    Enjoyed your article once again. I agree that recruiting is in the process of changing and is going to continue to change for some time. 1stGig.com is transforming companies’ college recruiting programs.

  12. Kristen Tom

    Very good observation. I too noticed the shrinking of corporations. Everything is always changing when it comes to recruiting!

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