The Cost of Delay

Mar 11, 2002

Discussions about the choice of an enterprise-wide staffing management solution have increasingly included the calculation of return on investment, or ROI. Assessment of ROI on a system implementation reflects favorably on the HR staff. It shows that the recruiters and other key HR stakeholders who comprise the selection committee realize the importance of carefully evaluating each strategic business decision. They understand, like members of all other departments in the company, the need to carefully analyze the expenses they authorize. They are thinking in business terms, and recognize that the solution they choose will have a direct effect on the achievement of corporate-wide goals including bottom-line results. They make the translation from the reduction in administrative effort, the decrease in hiring cycle time, and the benefits of process improvement into tangible payoffs. Take Action In some cases, though, the choice and implementation of a new staffing management system may be perceived as optional. In those corporate HR departments, inaction, procrastination, and delay are acceptable business practice. There is a lack of awareness that standing still is unacceptable in the competitive world of business; that companies thrive from acting, getting feedback, learning and adapting; and that continuous improvement is not just a theory applicable to manufacturing. They are not only missing the opportunity to realize the ROI of a new system – their inaction or delay is actually costing their company real dollars! Postponing action may seem to be a passive, no-risk approach. But when a company postpones the implementation of a staffing management solution, it is actively risking corporate assets. The competition is moving forward. The company may lose top recruiters who are demoralized by the lack of leading technology and vision. Dissatisfied hiring managers may perceive their HR department and recruiters as ineffective, old-school-technology laggards. The erosion of competitive advantage also extends to the loss of outstanding candidates due to the cumbersome existing recruiting process. In addition, direct costs for advertising, use of third-party recruiters, resume scanning, and processing will remain high. Make the Case So what are the economics of delay? What is the downstream cost of not implementing? In a sense, the cost of delay is the flipside of the ROI calculation. Every month you wait costs the enterprise the value of the delayed benefits for that month. Multiply by 12, and adjust for the cost of capital, and you can estimate your annual cost of delay. The numbers may be staggering, and will certainly go a long way towards convincing any skeptics that deferring a staffing management solution implementation is an expensive decision. In other words, inaction is a costly action. Some selection committees find themselves blocked. They’ve done a thorough evaluation and have chosen the best solution for their company, yet cannot get approval from the final decision maker. In that case, it’s important to understand the source of the resistance. Is there lack of buy-in? Is the ROI calculation and business case sufficient and clear? Are the cost/benefit factors well outlined? Are organizational power shifts in play? Is there fear of failure or apprehension about the success of a large project? Communicate the Benefits…and the Costs To obtain full buy-in and approval, it’s important to present the staffing management business case in language each audience responds well to. Recruiters will focus on tactical considerations, their current pain points. How will implementing this system improve their daily work? Illustrations of recruiting metrics and budgets, recruiter productivity and cycle times will resonate well with mid-level management. For C-level executives, talk in terms of the ROI of a skilled workforce and other top-level/bottom-line payoffs. Make the case that excellence in the hiring and deployment of human capital assets is key to corporate success and tied to the goal of the chosen solution. Articulate the ROI of your staffing management solution choice…and communicate the cost of delaying its implementation. At best, ROI analysis is considered as a key component of the selection process, not merely as an afterthought. It is an integral aspect of the overall business case – applicable to all levels of the organization. The cost of delaying the choice and implementation of a staffing management solution should be a significant consideration in the strategic assessment of your company’s staffing management future.