This article spells out a road map for dominating recruiting in your industry. Last week’s part one covered the top 20 strategic shifts and elements for building a significant competitive advantage in recruiting. This final part highlights the last two remaining critical success factor (CSF) categories covering actions within the recruiting function that contribute to the development of a culture of continuous improvement and operational changes that support recruiting domination. Within each category, the most impactful factors are listed first.
Roadmap Category 3: Critical Success Factors Related To Ensuring Continuous Improvement
As you follow this roadmap to industry domination in recruiting, it’s important to add process elements that will ensure a steadily higher rate of continuous improvement. The critical success factors that contribute the most to continuous improvement include:
- Mass experimentation and hypothesis testing are primary contributors to domination (not copying) — In my experience, the fastest and most reliable indicator that a TA function (Talent Acquisition) is well on its way to recruiting domination is frequent experimentation. In direct contrast, being happy with “catching up” to top-performing firms may by itself doom your firm to mediocracy. Borrowing will not get you to domination — you must lead by instituting new and better performing programs and actions before others in your industry. Rather than benchmarking, the primary leading indicator is mass experimentation, an approach that has been championed at Amazon and Google. The most common and beneficial form of experimentation is hypothesis testing. You start with a hypothesis about an assumption in recruiting, and then you go out and quickly prove it. For example, you could test the hypotheses that college grades predict on-the-job success or that diverse interviewers hire more diverse candidates. Then, you could use a split sample test, a pilot implementation, or even correlations to prove whether either of these hypotheses was true (or not). Mass experimentation also requires recruiting management to accept a high level of tolerance for risk and to relentlessly find a way around obstacles and resistance factors that block new ideas.
- Assume obsolescence and prove individual program effectiveness — My research reveals that as many as half of all recruiting subprograms fail to have any positive impact on the quality of new-hire or recruiting’s business impact. Under a data-driven recruiting function, it’s best to start with the assumption that all existing recruiting programs or processes eventually stop working. With that assumption of obsolescence, it becomes necessary to periodically verify that literally every key recruiting step, element, or sub-program actually works. When possible, their efficacy should be periodically tested using the split sample control group approach, and even when a program element does work, it should be improved with the use of A/B testing.
- Continually improve by learning from each major hiring success and failure — Under the data-driven model, data is gathered in order to systematically identify every major hiring success and failure for continuous improvement purposes. This systematic “failure analysis” process should identify the root cause factors that led to success or failure. And then, there needs to be a formal continuous improvement process that applies that data to improve the performance of the relevant recruiting approach.
- Formalize best practice sharing for continuous improvement — The cheapest and fastest way to improve recruiting performance is the rapid and widespread internal sharing of best practices. Unfortunately, without a formal acceleration process, the speed and breadth of best practice sharing are almost always extremely limited. That sharing can be sped up by measuring and recognizing those in recruiting that excel at sharing and cooperating. Finally, recruiting leadership should also establish a formal process for developing the firm’s “next practices.”
- Report only strategic metrics to improve continuous improvement — What recruiting leaders measure and report have a critical impact on recruiting results. Reporting too many metrics will only cloud the picture, at least initially, so only the four most strategic metrics should be reported to executives. The first and most impactful metric is the estimated total dollar impact of recruiting on corporate revenue. This is closely followed in importance by what many call “quality of hire” (a better description of the measure is the “on-the-job performance of the new hire”). Report the percentage increase in the performance of new hires in each job family from quarter to quarter, and if you don’t want to measure new-hire performance directly, substitute the percentage of new hires that a manager would choose to rehire after six months on the job. The third strategic metric to report covers mis-hires, which include early regrettable turnover and the percentage of new hires that could only be classified as failures on-the-job. And finally, whenever possible, recruiting should supply hiring managers with forward-looking predictive metrics, so they can prepare for upcoming recruiting problems and opportunities.
- Require a scalable capacity to meet changing business needs — In a volatile world, it’s critical to prepare for the inevitable economic downturn. As part of that planning, recruiting leaders must insist that scalability becomes an essential part of every new and existing recruiting program, where scalability means the ability to quickly adjust hiring volume down to meet the cost-cutting needs of your company’s different business units, facilities, and geographies. Scalability during growth means the ability to add new talent and new skills rapidly so that no business goal is missed because of a talent shortage.
Roadmap Category 4: Critical Success Factors Related To Recruiting Operations
In many cases, critical success factors in the operational and administrative elements of the recruiting function also play a critical role in achieving industry domination. Those recruiting operations and administrative CSF’s include:
- In order to dominate your industry, you must begin by setting domination as a goal — The first step in the roadmap to industry domination is to set domination as the superordinate goal of the function. Internal goal setting is important, but it won’t lead to success unless you also get your COO and your executive committee to also adopt it as a strategic corporate goal. Every manager, employee, and shareholder should know that dominating in recruiting is a primary critical success factor for business success.
- To win a talent war, the composition of your recruiting staff must change — As recruiting shifts to become more businesslike, technology and data-driven, it should be obvious that the skill sets of those that work in talent acquisition will also have to change. The job requirements of future hires in recruiting must include strong business acumen and experience, and a working knowledge of finance, data, and technology. Together these will build credibility with executives and help convince hiring managers to devote more time to recruiting. Also, because direct talent poaching will be involved, recruiters and support staff will need to be extremely aggressive and willing to accept major risks.
- A centralized recruiting function is the best option — in almost all cases in large corporations, dominating recruiting in an industry requires a centralized recruiting function. Centralization is superior when you want to implement technology. It speeds up best practice sharing, collaboration, and innovation, and it is also a superior option when you want to maximize integration, cooperation and the use of data.
- Moving towards the expanded Talent Advisor role — It is inevitable that many elements of recruiting will eventually become automated and have less repetitive work. Recruiters that expect to remain employed at the same firm will need to increase and broaden their capabilities so that they can accept an expanded talent advisor role. In this more strategic and impactful role, Talent Advisors can provide advanced consulting advice not just in recruiting but also in additional talent areas including retention, internal movement, and leader assessment and development.
- Working with HR leaders to secure higher budget resources — When the recruiting function faces reduced funding levels, it will be much more difficult to meet each of the 35+ critical success factors listed in this article. To ensure long-term success, continuously building a compelling business case will be essential. As part of this funding effort, it is critical that recruiting leadership work with HR leadership, the COO and the CFO to ensure that they all fully understand the negative business impacts that will occur when the budget allocation percentage falls below the budget percentages allocated at other top-tier firms in the industry. For example, Google, an acknowledged leader in recruiting, once acknowledged that its recruiting budget was nearly double what you would expect to find at any similar sized firm.
Some Recruiting Factors Have A Lower Impact
When researching the critical success factors that lead to recruiting domination, I discovered that not every factor had a significant impact. For example, I couldn’t find much hard evidence that some common recruiting areas generated any significant business impacts. Those important but generally lower impact factors included legal compliance, cost per hire cost-cutting, affirmative action and ATS technology. Also, I found little evidence that achieving a level of excellence in the candidate experience and in college recruiting would result in a significant ROI.
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If you study the listings of the world’s most valuable companies by market cap value, the most innovative companies or the most desirable companies to work at, you will consistently find one feature in common, and that is that they excel at aggressive recruiting and powerful employer branding. By drilling down to identify the critical success factors that drive industry-leading success at these top firms, I have found that they all follow a consistent set of strategic principles. I hope that I have highlighted to your satisfaction, in this article, a useful list of critical success factors as a roadmap to transformation and eventual industry domination.