SmartRecruiters Blog

Common Perceptions in Talent Acquisition That Must Change | Part I

I’ve been known to upset the apple cart in meetings from time to time. In fact, one prospective customer of mine recently asked the room “who brought this guy?”

The reason for that reaction is that a core component of my career in customer engagement has been playing the role of devil’s advocate. A challenger, if you will, an idea generator, listener, and collaborator. This mindset and approach commonly creates friction and, to be transparent, has not come without my share of mishaps over the past 20-plus years.

I believe that when something in business, or in life for that matter, does not align with your core values, is fundamentally wrong, or impacts people negatively, then why not challenge the status quo? I am pretty sure that we would all agree that most are comfortable doing this in their private lives with respect to their political views or sports for example, but what about the workplace? 

In my experience, many people in their professional lives will join conversations, listen, and even participate in some way, but not ask why when they hear something that sounds a bit off or maybe is against what they believe. Instinctively, my sense is that they don’t want to put themselves in an awkward position with their peers or leaders. They stay quiet. I speak up.

My recommendation is to always challenge, but be prepared to offer ideas and a solution to your position. Without a solution or recommendation, you truly are just disrupting the flow of a meeting, and that is not productive. When done properly, the worst case scenario is that people or the business go on doing things the way they have done it before. Best case – they move forward, try something new, and get out of their comfort zones. This may be as a result of your ideas, or maybe not, but as long as a positive outcome follows, it doesn’t matter.

So, now that you know a bit more about me and my communication style, here are a few positions on commonly held ideas in my industry that I believe must change, as well as some ideas on how to get there.

1)  Talent Acquisition (TA) Is a Cost Center

It wouldn’t be groundbreaking to argue against this; many thought leaders think this is a misconception. The problem is that not enough people in TA are actually doing something to counteract the perception that the HR/TA function is a cost center.

For example, if you and your company are still running the business through core metrics like Time to Fill and Cost per Hire, you are only perpetuating this problem. These are legacy data points that only speak to the length of time it takes to do your job as a recruiter and how much you’re costing the business to get a new butt in a seat. I hate that term by the way, but to companies running their operations in this manner, that’s the only way of looking at it.

Nothing about either of those outcomes speak to value or revenue. Why is it that we never talk about value or ROI per hire? People create and drive business, not products or services. Never forget that. 

As a sales leader, I know that the average ramp time for an enterprise level account executive in a SaaS sales environment is anywhere from nine to twelve months to achieve full productivity. A typical non ramping quota for someone in this role is 1.2M annually, so 100k per month of bookings capacity.

Here’s where things get interesting. In my experience amazingly talented sales reps ramp faster than those that do not (we can discuss why another day. ) So, if we can agree upon that, our equation suggests we are losing 100k a month of bookings capacity for every month in which a role goes unfilled.

Even if your average productivity rate for sales attainment is 65%, that means we are still missing out on $65k each and every month that role goes unfilled. Even worse, imagine if you fill the role with the wrong person. That hiring decision could set you back for at least a year, which drives further negative consequences for productivity, training costs, replacement time, hiring costs, etc.

Why do people care how much the cost per hire was for the role? Yes, I realize there are budgets and people are seeking efficiency, and I respect that at some level, but isn’t the point to drive revenue, release a new product, or maintain your high level of customer service outcomes?

Regardless of the role you are filling, we should be talking about business outcomes, not just the cost. At my company, we spent that last few years thinking about this issue. As a result, we came up with all sorts of ideas for measuring TA outcomes differently. The real challenge was how to come up with a concept so simple that businesses could embrace it readily at every level.

As with all good methodologies, they require a great name. Hiring Success, we believe, fits the bill as it is focused on outcomes that will propel businesses forward within critical areas most executives and TA leaders care about. Internally at SmartRecruiters, the methodology I am about to share is an integral part of our DNA and how we operate.

The Hiring Success Framework provides a framework for TA teams to deliver successful hires on time and on budget, to be the strategic function that every business needs and relies on. I could write a whole essay on that topic alone. If you want to dive in further, just click here for more reference material. But for today, I will focus on three metrics that we recommend using as part of this framework. Metrics that move the conversation away from cheaper and faster to BETTER.

CEOs and their executive teams inherently understand the importance of great hiring, but they struggle to quantify the specific financial return of incremental spend on recruiting. Fortunately, the metrics & math related to out-hiring the competition are simple to explain and understand. They lie along the familiar frame of cost (Hiring Budget), speed (Hiring Velocity) and quality (Net Hiring Score) to capture the impact of each on the hiring process.

Hiring Budget

An organization’s Hiring Budget includes all recruiting costs such as all Talent Acquisition (TA) employees, program spend, outside recruiters, travel costs of candidates and technology infrastructure, but does not include time spent by interviewers and the hiring team as they engage in the process.

While most organizations measure the cost of recruiting, forward-looking organizations consider their Hiring Budget an investment just like a marketing budget to attract and grow ideal candidates and express the budget relative to the salary of people hired. Therefore, the Hiring Budget is a percentage of the total salary of new employees or New Hire Payroll (NHP).

Hiring Velocity

Hiring Velocity measures one simple thing: the percentage of jobs filled on time. Why is this important? Well, it answers one simple question: Are we able to hire the people we need when we need them? It’s critical for CEOs and their executive teams to know that their decisions and plans can be implemented because they have a TA organization that can mobilize quickly and deliver results. If they can’t, taking too long to hire the right candidates hinders the organization’s ability to grow and meet goals. Hiring Velocity is highly correlated to Business Velocity. 

Net Hiring Score

How do you develop a reliable measure that accounts for the numerous elements that inform your hiring success? We envisioned something like the Net Promoter Score that evaluates consumer loyalty: simple, solid, and straightforward. We created the Net Hiring Score (NHS), which evaluates the quality of each hire based on the following:

  • 90 days in, we ask hiring managers one question: On a scale of 1 to 10, is this person the right fit for the job?
  • 90 days in, we ask new hires one question: On a scale of 1 to 10, is this job the right fit for you?
  • We then average the scores across managers and new hires, subtracting the percentage of detractors from the percentage of advocates.

A score of zero, for example, indicates a company is hiring as many bad organizational fits as good ones, resulting in a net neutral impact on the company. Above zero, a company is coming out in the black with more good hires than bad ones. Below zero, and the company is in the red with bad fits outweighing the good ones.

More food for thought on that here in this LinkedIn article.

For more information on Hiring Success and how to win in the Talent Economy, check out the following resource.

Bob Memmer

Bob runs our corporate sales team at SmartRecruiters. Prior to SmartRecruiters, Bob ran sales and customer success at Captora where he delivered triple digit revenue growth. Before that, Bob was Area Vice President of Sales at Salesforce (NYSE: CRM) where he drove revenue strategy for the commercial sales team within the platform. Bob came to Salesforce with the acquisition of Jigsaw in 2010 (175M) where he joined pre-revenue and delivered several years of triple digit growth as Vice President of Sales. Bob has a BA from Purdue University.

Sarah Wilson

Sarah Wilson is the head of people at SmartRecruiters.