Tuesday, June 26, 2012

Hiring People is not a Formula 1

Hiring decisions are made slowly. Only a few companies will use speed to their advantage. Ability to make the call allows those companies to spot talent and get it, when the opportunity arises.

With an average time to hire of 60 days, majority of companies really take their time with the recruitment process. There are many reasons why hiring cycle is long:
1.      Candidates must observe their notice period with their current employer.
2.      The candidate requirements evolve as the interview process starts, so that search criteria change and the process extends.
3.      A long-term vacancy causes hiring manager to reorganize the work so that s/he is no longer so committed to fill the vacancy and more picky about the new hire.
4.      HR and hiring manager hope that tomorrow will bring even a more perfect match between the vacancy and the candidate.
5.      Companies do not have a clear picture about vacancy costs. Not only in Dollars, but also in terms of team morale, job stretch and amount of overtime (and corresponding burn-out risk).
6.      Companies cannot set the right recruitment strategy for particular type of vacancy. They usually try least expensive recruitment channels, employee referrals and job ads. Only with rising desperation, companies engage with recruitment agencies, but even then they are concerned about the recruitment costs and tend to be not very committed to the candidates presented by external recruiters, often in connection with point 3.
7.      Companies stick rigidly to the budgets. They make a big issue over the difference between the budget and the salary expectations of the candidate. Sometimes, the deals are broken over 5K on an annual basis in the salary range of 60K. As the result, the vacancy remains vacant for another 4-8 weeks, hiring managers frustrated, HR busy with a rising frustration levels as well and finally applicants suspicious why they see the same job ad for weeks.
8.      The drive to save recruitment costs at the expense of productivity and ability to execute the business strategy is an overwhelming and recurring issue. Finance does not see through, HR cannot make a business case, time passes.
9.      The decision makers are unable to make the call. They have no stamina or no confidence, call it what you want, they’re simply indecisive and that’s bad for recruitment.

For SMEs speed can be a recruiting advantage. However, even so it is good for HR not to act on the decisions made immediately. Two lessons, I learned a few years ago.

First, it is good for the hiring manager and HR to sleep over a hiring decision. This happened to me twice and it should not happen the third time. When the hiring managers say “Please issue an offer”, it is good to wait one day to do it. On those two particular occasions, the hiring manager came to me the next day with a question, whether the offer has been made, because he no longer wants to hire the candidate. Since the offer was send, I could either withdraw the offer right away or maneuver the offer negotiation process in a way that the candidate did not accept it.

Second, it is also good that the candidate sleeps over the job interview held. Since good candidates do have more then only one option, it is good to give them time to reflect on the job role, the company and the interview itself. Making an offer to the candidate shortly after the interview was for many overwhelming. They later reveled that they would expect it on the third day or so.

Tuesday, June 12, 2012

Hiring Funnel and its controlling potential

Metrics and KPIs are used in order to improve performance. When applying hiring funnel and reporting input metrics, HR intends to improve their performance as well, particularly measured in terms of the final outcome. It means that quantity and quality of new hires must be achieved.

Questions remain, however, how the particular input recruiting metrics must change in order to achieve higher level of performance by HR department. Then eventually, HR must move from the historically determined target ratios to performance standards leading the department to the desired quantity and quality of new hires.

Let’s look at the example again; I reviewed in the previous post on that subject. Based on the historical ratios to meet the quantity target, HR needed to interview 18 candidates and receive 4.8 applications per day (or 144 applications in total during a month) in order to hire 3 sales persons.

Assuming that high potential sellers are less likely to change jobs frequently and apply for jobs more often, the ratios should decrease in order to increase quality of hires. So HR needs to receive more applications and interview more candidates in order to hire the high performers.

With the chunk rate of 30% after first month of hiring sales people, standard ratios should be set 1/3 above the historical values.

Hires-to-interview ratio moves from historical 1/6 to 1/8, so that HR should interview 8 (6 plus 1/3 of 6) instead of 6 candidates. As a result HR must interview 24 candidates in order to hire 3 of them and no one drops after first month.

Interview-to-candidates ratio of 1/8 moves to 1/10.6, so that HR needs to receive a total of 255 applications, or an average of 8.5 applications per day.

When planning the recruitment activities and efforts targeted at motivating more job seekers to apply, HR need to remember the general job seekers behavior and job posting nature. The former suggests that job seekers rest on weekends and public holidays and get mostly active on Monday and Tuesday with their application efforts, when they realize this week is going to be as every other week. The latter implies that job ads must be refreshed and posted frequently, as a two-week old job ad does not bring as many applications as a new one, because it does not show up in the top of the search results.