How Should John Respond?

Tom Snyder, the tough-nosed director of operations at Great Company, had a big decision to make.

Like so many other executives faced with poor sales and a slow economy, Tom had to reduce staff or find some other way to reduce costs. The CEO was a traditional guy and assumed that the first cuts should come from administrative areas — particularly human resources. But he left the final decision up to Tom.

Tom has already decided to reduce the number of human resource generalists and to find an outsource provider for payroll, benefits administration, and some other similar functions. But those changes were not enough. He needed to find additional savings and recruiting was the most expensive function that remained.

Tom realized that recruiting was an essential function and even in tough times, they needed to recruit certain key people and replace those who decided to leave. He respected the head of recruiting and wanted to ensure that he stayed with the company. But he was also a good businessman and he wasn’t certain they really needed the number of recruiters they had, given the lower levels of hiring. He was also thinking about outsourcing the function — or parts of it — to reduce costs.

Great Company was located in a coastal area with 4,000 employees globally — most of them in this location. It produced medical devices that were fairly recession-proof, but growth had slowed tremendously. The CEO wanted to trim costs and improve efficiency, but he wanted to emerge from the slow economy ready to grow immediately.

John Tully, the Director of Recruiting, led a team of 15 people. Four sourced candidates and maintained the CRM tools and communication processes, another four were administrative and scheduled interviews and did reporting and other tasks, and the remainder were general recruiters with a broad range of skills. John was an exceptional contributor. Tom had praised him at a recent communication meeting in a rousing speech about how HR could actually deliver if they had more people like John on board.

Tom was somewhat upset that events had led to this.

The staff of 15 handled all the requisitions for the company worldwide. Their cost per hire was steady and reasonable. They recruited internally for every position first and then went to the outside. Normally they filled about 20% of all requisitions with internal transfers or promotions. They had developed a successful referral program. Their success in better dealing with internal candidates and in engaging the employees in recruiting had led to higher employee engagement scores.

John had changed everything over the 18 months he had been at the company. His very first act had been to develop a reasonably good recruiting site. He had involved the internal marketing folks who were amazed that he had asked them to help on an HR project. Together with some of these marketing experts, John had laid out a campaign to improve candidate awareness of the company. John had also developed a candidate relationship management tool that allowed recruiters to communicate with potential candidates as well as screen them more thoroughly.

In his 18 months, he had taken a very inefficient function and turned it into a team that was respected throughout the company. He had added automation, built a strong sourcing capability, and trained the recruiters to be better at candidate relationship development.

Tom realized that it would be hard to maintain that level of involvement if they outsourced the recruiting function, but he was looking at perhaps keeping one recruiter to look internally and outsource the remainder.

After spending days agonizing over what to do, Tom decided to involve John in his decision. He laid out the problem and candidly shared the issues and solutions he was considering. And then he asked John to come back to him with his recommendations on how he should proceed within a week.

My questions to you: What should John recommend? What are his options and why would one be better than the other?