Service Level Agreements: An Introduction

Last week I conducted one of my frequent informal surveys of ERE readers to see how many of you are using service level agreements (SLAs) with your managers. I also wanted to see what they contained and how they were arrived at. I received survey responses from many of you, but need some more time to follow up and probe a bit more deeply into many of them. If you missed the survey last week and would like to complete it, please see last week’s article. I will give you a summary of the responses next week. This week I will provide some basic definitions and thoughts about SLAs. The first question that I usually get asked is, why would anyone want to have an SLA in the first place? Many people believe that an SLA will hold them to requirements that are impossible to meet or would require them to perform at superhuman levels. I believe this is a mistaken concept. If you negotiate the SLA, which is a given, you should be able to arrive at numbers and quality definitions that are reasonable and achievable. Others believe in being self-driven and in creating their own goals and requirements for recruiters. They do not seek out the hiring manager’s approval. Many of these recruiting functions are successful and do collect metrics and other information that shows how well they are doing. The primary problem with this approach is that the hiring managers may not know how what or how well the recruiters are performing. A hiring manager will only follow his or her own experience. I received one response from last week’s survey that seems to echo this belief and the consequence of it: “We do not use SLAs, pay internal recruiter incentives or use a quality metric for new hires. On the other hand, we do set goals, measure and report TTS [time to source], RFT [?], source of hires, CPH [cost per hire], and Staffing Efficiency ? among other things. I admit, we still do not have a widespread understanding by top management of the shareholder value of great hiring.” While I intend to follow up with this respondent to probe a bit more deeply into how the recruiting function is structured, it is probable that one of the reasons top management has little appreciation for the value of the recruiting function is because it does not have service level agreements or quality metrics. Service level agreements (SLAs) are very simple in concept: they are agreements between a recruiter and a hiring manager on numbers and often on the quality of the people to be hired. They are developed before the hiring starts and may also contain incentives for the recruiters. They are almost always negotiated, rather than simply imposed by the hiring manager, department management, or the recruiting manager. Third-party recruiting agencies have used them for years, although they are called contracts or letters of understanding and have some legal clout. The benefits of using a SLA are many, including:

  1. They clarify roles and responsibilities by detailing what each person in the relationship is going to do, at what level of response, and with what quality. For example, an SLA might say that the recruiter will present a candidate who meets the minimum requirements for the job (attached to the SLA) 48 hours after receiving a completed requisition. The hiring manager might be required by the SLA to provide feedback on the candidate’s resume within 24 hours and make an interview decision within 48 hours. No more than four candidates who meet the requirements will be sought. Etc., etc., etc.
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  3. They spell out numbers and help to determine staffing levels. However, they should not be rigid documents that cannot be changed. Collectively across a department, they give a recruiting director a good picture of the overall level of planned hiring and, therefore, a sense of the number of recruiters who will be needed. And, in my experience, they are often as useful for the hiring manager as they are for the recruiters, as they force her to thoroughly think about the number of people and the skills she really needs. The discussion that the recruiter and the hiring manager have around these issues may be more important than the final document.
  4. They guide the planning and sourcing efforts of a recruiting department and help it to be seen as the talent agency it should be. By knowing where growth will occur and what types of people hiring managers are looking for, a recruiting manager can focus sourcing efforts and competitive intelligence activities to get the most for the money and time spent. For example, one client collected and analyzed the SLAs from across the company and saw a clear trend toward hiring project managers. In partnership with the corporate university, they proposed instituting an intensive training program for current employees to become project managers. This was highly successful and led to many promotions, a reduction in recruiting costs and signing bonuses, and helped alleviate some planned layoffs. Only a handful of senior-level project manager had to be recruited.
  5. They outline customer satisfaction. If the agreements are properly negotiated, they, in effect, contain the ingredients of satisfaction. A recruiter and manager who have decided what success and quality look like will most likely find that they can quickly determine if things have worked well or not and where improvements need to happen.
  6. They can be used as a way to compensate and manage recruiters. When a portion of pay is based on meeting the goals of the SLA, the day-to-day management of recruiters becomes one of coaching them to success rather than that of monitoring activity. Recruiters who excel can earn large salaries. This requires the recruiters to focus on developing skills that lead to the accomplishments their hiring managers desire.

I am a strong believer in setting up internal agreements and understandings between line and service functions. By doing this, each side gets a better understanding of the other side’s capabilities and needs. The process of negotiating the agreements is a time when both sides learn from each other and build trust, which is the essential ingredient in long term success. Next week I will provide more insight from those who responded to last week’s survey, and I will provide some sample bits from any SLAs that are submitted to me.

Kevin Wheeler is a globally known speaker, author, futurist, and consultant in talent management, human capital acquisition and learning & development. He has founded a number of organizations including the Future of Talent Institute, Global Learning Resources, Inc. and the Australasian Talent Conference, Ltd. He hosts Future of Talent Retreats in the U.S., Europe, and Australia. He writes frequently on LinkedIn, is a columnist for ERE.net, keynotes, and speaks at conferences and events globally, and advises firms on talent strategy. He has authored two books and hundreds of articles and white papers. He has a new book on recruiting that will be out in late summer of 2016. Prior to his current work, he had a 20+year corporate career in several San Francisco area tech and financial service firms. He has also been on the faculty of San Francisco State University and the University of San Francisco. He can be reached at kwheeler@futureoftalent.org.

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