Over the past four years, my organization has designed and implemented a high-performing executive recruiting function that has exceeded national benchmarks. We’ve had setbacks along the way but have learned that it’s more about the journey, not the destination.
This article describes some of the reasons why companies, especially in healthcare, should use in-house resources to fill more executive positions and how to build the capability from scratch.
Reasons for Bringing Executive Recruiting In-house
According to a survey published by Hunt Scanlon Media in 2016, a clear majority of corporations will continue to use in-house recruiters as opposed to external search firms to fill executive positions. The survey respondents indicated a 35 percent increase in using in-house recruiting teams. Within 10 years, 75 percent of all executive roles will be handled in-house.
To save time in the search process and to recruit higher quality talent, Time Warner fills most of its executive roles and rarely relies on search firms. It is not alone. Fortune 500 companies such as Microsoft, Starbucks, Amazon, Expedia, Coca-Cola, and Nike made the transition several years ago.
It’s not as prevalent in healthcare. But there are numerous benefits. the average executive search firm fee in healthcare ranges from $100,000-150,000 and in some cases can be much higher depending on the role. Today, healthcare in-house recruitment teams often have highly skilled, technology-savvy people who are able to use the Internet to find executives via their professional profiles and social media presence. Effective in-house recruiters will easily cultivate relationships with high-quality executive talent, as well as study the business needs to assess the cultural fit of those executives. These technology and relationship-building skills will lead the recruitment team to a greater ability for consultation and acquiring top talent that will stay and add value.
How to Build In-house Capability
We used the following high-level roadmap to establish and optimize the capability in house to achieve success.
Gather voice of the customer feedback
We captured initial feedback from hiring executives and candidates that helped us build a world-class in-house executive recruiting function. This activity is a proactive and ongoing process that facilitates the gathering of changing customer requirements. Additionally, we knew the insights would enable us to develop a portfolio of recruitment services that could meet stakeholder expectations.
Create the plan
Start by developing a project plan. Examples of what my team used are included below:
(a) The problem that you are trying to solve. In our case, we used (1) improve the quality of hire, (2) reduce search cycle times, and (3) decrease costly search fees,
(b) Proposed solution — Develop and implement in-house executive recruiting capability,
(c) Scope of services — Full-cycle in-house executive search,
(d) Risks/constraints — Budget,
(e) Success measures — Improve candidate quality as assessed through survey questions; achieve a cycle time of 100 days or less; decrease annual search fees to less than $2.5 million; and increase customer satisfaction to 4.0/5.0 on a Likert scale,
(f) Leadership support — Identify and confirm executive sponsorship. Their engagement during and after the project is essential to success, and
(g) Benchmark — Identify best-practice organizations with high-performing corporate executive recruiting teams. Include top-performing external retained search firms and professional associations. Through our research, we learned that successful companies built a consistent but flexible executive recruiting process when searches were handled by the in-house team, and more importantly, developed a methodical plan when initially designing the function that aligned our structure, processes, rewards, and talent with the organization’s strategy.
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Determine the business model
Next, we determined the:
- (a) Purpose — Including the reason the department exists and the value it will provide to customers,
- (b) Scope — Define which customers will be supported and services to offer,
- (c) Vision — Setting goals and specific focus, and
- (e) Strategy — Describe tactics that will be used to achieve objectives.
Obtain additional feedback (we included candidates and hiring executives again) to ensure it’s clear what they value most so that a product or service is developed that they will appreciate. As an example:
- Provide an executive search process that is standardized, more predictable, and consistent that mirrors service received from external executive search firms
- Serve as consultative trusted advisors who have a deep understanding of the culture and business units of the company
- Reduce the time to fill without sacrificing candidate quality
- Decrease the reliance on using executive search firms and reduce the placement costs ( about $150,000 per outside search firm search).
Define the operating model
We clarify the future work that will be performed and what differentiating capabilities are required for success. Executive recruiters were interviewed to map out the current state process. We identified waste in process inconsistencies and non-value-added steps. We brought the executive recruiters together for in-person meetings to review and discuss the current state process maps. We identified a value-added future state process that would enable us to realize our vision and achieve our goals. We created a playbook that contained step-by-step instructions with links to resource tools, templates, checklists, and tips to cover each major phase and activity of the executive search process. Lastly, we designed systems to measure our key performance indicators.
Design the structure
Next we determined how the work would be structured, and distributed to the team. While being mindful of the differentiating capabilities needed for success, we identified job descriptions and role clarity for team members. Our team used the “Talent Advisor” model through the Corporate Executive Board as the guideline. We also established governance to clarify how decisions would be made. and determined monetary and non-monetary incentives that would serve to motivate specified team member behaviors and outcomes.
Finalize and implement the plan
We developed an implementation plan prior to launch which helped clarify expectations. A huge focus of the implementation plan was stakeholder communication. We trained team members and equipped them with talking points about how the change would positively impact team members and customers. As an example, in support of the focus on communication, recruiter performance goals included requirements to cultivate relationships with candidates and hiring executives. After we launched, we tracked our progress, monitored results, and continually obtained customer feedback to identify strengths and opportunities (credit to Providence St. Joseph Health, Organization Strategy and Design Playbook).
After using this approach and working diligently for several years, we’ve achieved a world-class in-house executive recruiting function. In 2017, the team successfully completed 88 executive searches, representing 92 percent of all executive positions filled. This is remarkable considering the results in 2012 were the opposite. On average, these hires were made in half the time relative to those filled by external search firms, at a fraction of the cost. We’ve projected saving the organization approximately $7 million per year in agency fees. Additionally, my team’s executive retention rates are much higher than those positions filled by external search firms. Customer-satisfaction scores continue to improve annually and we finished 2017 strong at 4.5/5.0 on a Likert scale.
We are convinced the results were highly reliant on our willingness to focus on the voice of the customer and continually incorporate their feedback into a well-designed plan. We also aligned our structure, processes, rewards, and talent with the organization’s strategy and the desire to exceed stakeholder’s expectations.