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Planning and Defining your hiring Strategy

The most critical decision a company makes about employees is the decision to hire them in the first place. Whether a company succeeds or fails ultimately depends on whether it hired the right people to effectively execute its strategies. In spite of the importance of hiring the right talent, many companies persist in using outmoded hiring processes that have evolved haphazardly over time without serious analysis of how well these processes deliver business results.

There are two fundamental problems with hiring processes that are all too common in todays business world. The first is that most hiring decisions are driven from the bottom up by the needs of individual managers. This approach is suitable for meeting short-term needs, but it is not well-suited for addressing long-term strategic goals, and it makes companies vulnerable to a sudden under-supply of critical talent due to lack of advanced planning.

The second problem, which is related to the first, is that the success of the whole hiring process tends to be measured in terms of administrative efficiency, using metrics such as time-to-hire and cost of hire. As a result, hiring is neither optimized for long-term strategic needs nor for quality of individual hires.

HR organizations can play a major role in aligning the hiring process with strategic business goals and maximizing business execution, but to do so they must themselves become more strategic and consciously design hiring processes that produce the desired results.

This paper poses three questions that can form the basis for planning and defining a winning hiring strategy.

They are qualitative as well as quantitative in nature

1. What types of jobs are we hiring for? (Qualitative)

2. How many people will we need to hire and when will we need them? (Quantitative)

3. What sort of people do we need to hire? What attributes do candidates need to become high performing employees? (Qualitative)

It also addresses problematic issues associated with confusing time-to-hire, time-to-fill and time-to-start.

No single individual or HR department can answer these questions in isolation. They are intended to provide a starting point for a dialog that should include senior management representing operations and finance, as well as HR.

1. What Types of jobs are we hiring for?

The table below provides a description of four broad categories of jobs and discusses how each one might influence recruiting process design. Recruiting for pivotal jobs where small differences in performance have significant business outcomes requires much more aggressive strategies for sourcing and selecting talent. Staffing critical jobs that require specialized skills that are in short supply often emphasize a long-term recruiting process where candidate relationships are developed years in advance of actually hiring candidates into specific jobs. High volume jobs that require filling a large number of positions year after year tend to require highly efficient, repeatable recruiting processes.

In contrast, operational jobs that have sporadic staffing requirements require recruiting processes that can be quickly scaled up or down based on shifting hiring demands. Large organizations may find it necessary to have several distinct recruiting processes to support the variety of jobs they must fill.

Type of Jobs

Examples

Recruiting processes for these type of jobs typically emphasize

Pivotal jobs where small differences in performance significantly impact company profitability

Strategic leadership roles such as CEO or other senior executive

Key operational roles such as manufacturing plant managers or technical experts in software companies

Aggressive strategies for sourcing talent

In-depth processes for screening and selecting the best candidates

Critical jobs that are necessary to maintaining company operations and where there is a significant shortage of talent

Jobs requiring specialized skills such as nurses in healthcare or maintenance specialists in utility companies

Identifying and developing candidates early in their educational career, often years before they are qualified as hires

Creating strong employee value propositions to attract qualified candidates

High volume jobs where the company hires large numbers of employees each year

Hourly, frontline retail jobs

Entry level college graduate jobs such as engineers in a large aerospace company

Efficient, repeatable methods to attract, select, and onboard candidates

Operational jobs that are necessary to maintaining company operations but are not a key source of competitive differentiation for the organization

Shared services jobs such as administration, security, or facilities management

Recruiting processes that can be quickly scaled up or down since the company may only hire for these positions intermittently

2. How many People Will We need to Hire and When Will We need Them?

If a company is trying to staff hard-to-fill jobs with high performing talent, then it is crucial to adopt proactive recruiting strategies to ensure it has access to the talent required to support its business needs (for more discussion of this point see the sidebar, The Difference between Time-to-Hire, Time-to-Fill and Time-to-Start and Why It Matters .) The only way to effectively shift from a reactive to proactive recruiting stance is to make a serious commitment to workforce planning. This means establishing processes where business managers work together to anticipate the companys future staffing needs. At a minimum this involves created structured processes and collecting data to accomplish the following:

Agree on likely business growth scenarios extending at least three years into the future. Looking more than three years out is desirable because the labor market trends that impact recruiting unfold over years, not quarters

Determine what sort of talent will be required to support different business scenarios. This involves analyzing the kinds of jobs required to support various business strategies and determining what skills and experience candidates will need to perform these jobs.

Analyze the skills and experiences of the current workforce and forecast the likelihood of losing employees with particular skill sets due to turnover, retirement, or movement within the organization.

Calculate the gaps between the employees currently in the organization and the ones likely to be needed over the next several years. Use these gaps to guide the development of staffing processes to ensure the company will have the talent it needs when it needs it. This may involve external hiring, internal employee development, succession planning, the use of contingent workers or a mixture of all three. The possibility of addressing workforce deficiencies by increasing the productivity of current employees should also be considered.

Moving to proactive recruiting shifts recruiters from an administrative orientation focused on responding to

hiring managers requests to a strategic orientation that involves actively working with business leaders to figure out what sort of people the company should be hiring and when they will need to be hired. To be effective, staffing departments need to be both reactive and proactive, but it is through being more proactive that staffing has the greatest opportunity to become a true competitive differentiator for business execution.

The Difference between Time-to-Hire, Time-to-Fill and Time-to-Start and Why it matters

Outlining all of the various metrics that are appropriate for measuring the success of recruiting processes as they relate to business execution are beyond the scope of this paper. However, three are so common

and so commonly misunderstood that they deserve attention: time-to-hire, time-to-fill and time-to- start. These metrics, when properly applied, can go beyond measuring efficiency and actually contribute to improving the quality of hires.

Time-to-hire is one of the most frequently used metrics for evaluating recruiting performance, and one of the most poorly understood. Usually measured in days, time-to-hire refers to the total elapsed time required to staff an open position. The first thing to acknowledge about time-to-hire is that it is primarily a measure of process speed, not candidate quality. There is little value in making bad hires quickly.

Time-to-hire also suffers from poor definition. Some organizations measure time-to-hire starting with the initial approval of a requisition, while others do not start measuring time-to-hire until a requisition has been assigned to a recruiter or posted to a career site. Another critical difference in time-to-hire definitions is whether to stop measuring when an offer is secured from an approved candidate or to include time that elapses after the candidate accepts an offer but before they actually start the job. These are in reality two different metrics, more appropriately referred to as time-to-fill and time-to-start.

Time-to-fill reflects the elapsed time between the initial approval or posting of a requisition and the final acceptance of a job offer from an approved candidate.

Time-to-start reflects the elapsed time between the initial approval or posting of a requisition and the actual day when the newly hired candidate begins work in the position.

When these metrics are properly understood and decoupled, they can be adjusted to play a role in the quality of hires. The following case studies illustrate how adjusting time-to-fill and time-to-start can improve a companys ability to execute business goals.

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Increasing time-to-fill to increase the chances of a better candidate applying. Company A was in a business where its ability to hire candidates with certain rare qualifications had a major impact on revenue1. These star candidates generated extraordinary levels of revenue. The company wanted to hire them all the time, but there were rarely enough of them available at any given time to meet operational staffing needs. The company solved this problem by intentionally increasing time-to-fill.

It is important to remember that star candidates are by definition rare, and receiving applications from star candidates is a relatively infrequent event. Companies that focus on minimizing time-to-fill are not as likely to hire many star candidates simply because they do not wait around long enough for a star candidate to apply. Company A determined that if it intentionally waited 5 days before filling positions it would receive an additional $300,000 per year by hiring better quality candidates. Of course these gains had to be offset against costs associated with leaving positions unfilled for five days. But the potential to make $300,000 simply by waiting a few days before making a hiring decision would certainly seem worth exploring to most companies.

Decreasing time-to-start to improve recruiters ability to find better candidates. Company B, a retail operation, wanted to keep time-to-start to less than one day for store managers to avoid disruptions in operations caused by vacancies. The problem was how to achieve this goal without lowering hiring standards to meet aggressive time-to-fill targets. The company solved the problem by decoupling the process used for hiring new store managers from the one used to place them into specific store positions.

It then intentionally over-hired so that within a given region there were always slightly more store managers than store manager positions. After initial on-boarding, newly hired store managers were provided with additional in-store training until a vacancy occurred in their region. They were then transferred into the vacant position immediately.

In addition to increasing operational continuity, these changes have also led to improvements in the process used to hire new store managers. Although recruiters still feel constant pressure to keep the pipeline filled with good candidates and minimize time-to-fill, they are no longer under the gun to staff a specific position in a specific store as fast as possible. Recruiters are able to hire in a more systematic and measured fashion, focusing on candidate quality instead of constantly responding to the hiring crisis of the moment.

These two examples demonstrate that even the most conventional, time-based metrics can be put to use in the service of strategic business objectives with the proper analysis and a little creativity.

3. What Sort of People do We need to Hire to Ensure High Performing Employees?

The ultimate objective of recruiting that is focused on business execution is to hire employees who will deliver higher levels of job performance. To achieve this objective, it is critical to clearly define job performance and understand how it relates to different candidate attributes. What specific business outcomes does the company want to achieve by recruiting new employees? Is the goal to improve employee retention, increase productivity, provide better customer service, achieve higher sales revenue, or to impact some other outcome?

Every staffing process should start by asking hiring managers to clarify the business goals they want to support through hiring new employees. This necessitates making decisions that emphasize certain outcomes over

1 This case study is based on: S. Hunt (2004). Understanding time to hire metrics. Electronic Recruiting Exchange (www.ERE.net)

others, and probably involves trade-offs, because there is no such thing as an ideal candidate. There are of course some candidate attributes that are universally counterproductive, e.g. dishonesty. But in general, attributes that are strengths in some jobs are weaknesses in others. For example, being highly agreeable may be a desirable trait when applied to things like fostering teamwork and getting along with others, but can be a weakness for jobs that require taking a firm stance on an issue or holding others accountable for their behavior. There is a similar trade-of related to salaries vs. competence. Candidates with the strongest levels of

experience and technical capability typically cost the most to employ.

Another common trade-off is productivity versus stability. The most highly productive employees in jobs are often the first to leave to pursue new opportunities2. These employees are usually driven by a desire to move to increasingly challenging positions, tend to have more job opportunities elsewhere, and may quickly tire of jobs after they master them. While there is value in having highly productive, short-time employees, there is also

value in having a stable workforce. The financial value of maximizing productivity vs. maximizing retention varies substantially depending on a companys business model. Discussing the relative value of different business outcomes such as these is an important part of designing a recruiting strategy that will make the most sense and deliver the best results.

Developing a clear understanding of what drives job performance in a certain role can be harder than expected. When managers are asked What makes a great employee?, they tend to answer in vague generalities about passion, dedication and a can do attitude. These characteristics sound good, but they reveal next to nothing about what makes high performing employees noticeably different from average or poor employees.

Fortunately, there are many job analysis techniques available to quickly and accurately define the employee behaviors and characteristics that drive job performance. Job analysis is not an overly complex discipline to master, and there are many books available that cover the different job analysis methods . Any worthwhile job analysis method will require direct involvement from hiring managers, current employees, or other subject

matter experts familiar with the job being staffed. Most methods require subject matter experts to clarify specific tasks performed on the job. Subject matter experts might also be asked to provide examples of things current

or former employees have done on the job that illustrate effective or ineffective behavior.

A well-conducted job analysis provides a clear picture of the functions fulfilled on the job and the employee attributes that are required to perform the job successfully. This includes having clear definitions of the following

6 categories:

Job Title. A job title that external candidates will understand so they can tell whether they are interested in and potentially qualified for the job.

Job Tasks, Responsibilities and Objectives. The goals people in the job are expected to accomplish or the tasks they will need to perform (e.g. maintaining customer service levels, building new products, achieving sales quotas).

Job Requirements. Credentials or licenses candidates must possess to be eligible to hold the job regardless of their other qualifications (e.g. U.S. citizenship, licensed degrees).

Relevant and/or Minimum Qualifications. Skills and experience that candidates are expected to possess to be considered qualified for the position (e.g. years of experience, job-relevant training and coursework).

2 Hom, P.W., & Salamin, A. (2005). In search of the elusive U-shaped performance-tenure relationship: are high performing Swiss bankers more liable to quit? Journal of Applied Psychology, 90, 1204-1216.

Job Competencies. Behaviors people are expected to display on the job (e.g. supporting team members, planning and organizing, thinking analytically).

Conditions of Employment. Things people must accept in order to perform the job (e.g. work hours, job location, physical job requirements/ADA requirements, travel schedule, pay).

Clearly defining these categories will provide clarity and focus for subsequent decisions concerning what sort of candidates to source, how to select among different job applicants, and what actions will be required to

on-board newly hired employees. All of this information can also be used to create more effective performance management and career development processes to maximize the productivity of employees after they are hired.

Summary

There is no one best way to do recruiting. What works extremely well for a regional healthcare organization may be disastrous for a multinational software company. The processes that are appropriate for hiring new college graduates are much different from those used to hire senior executives. But companies that have the most successful recruiting processes do have one thing in common. They have carefully analyzed their processes to make sure that they lead to better candidates and better business results.

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