The Business case for a Recruitment Audit?

By Mike Palmer

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Having been involved in recruitment, whether on the corporate, the vendor side as a Recruitment Process Outsourcing (RPO) provider or as a consultant, I have seen a broad spectrum of internal recruitment functions. Whether it has been a Fortune 500 Company or a small, growing business, it’s interesting how these functions have followed similar evolutionary processes to become what they are today.  Challenges that face the small organization also face larger organizations. Small company recruiting challenges grow and amplify into large company challenges.

Recently I met with a small technology company’s head of Operations who has become frustrated with their organization’s ability to identify, prioritize, engage and hire staff to both maintain and grow their business in a cost effective manner. This company has just 250 employees, and over 30 active (and aging) job openings. Last year they hired just over 60 employees, mostly replacing turnover, unable to grow their business substantially due to recruiting’s inability to keep up to the curve. Their spend for the year was almost $1 Million, rough cost per hire of $16,000. To most of us in recruiting, this metric alone might prove an indicator that something’s amiss with the recruiting function.

The organization that supports recruiting, HR, has two people dedicated to the recruitment function; one senior recruiter, one recruiting coordinator/junior recruiter. At first blush, it would seem that the team is appropriately staffed to hire at the existing volume. Some of the roles, roughly 10% are very challenging to identify and engage talent, 20% are entry level support and administrative roles and the remaining 70%, though not easy to recruit for, are roles that should be filled at a cost per hire that is 25% of the company’s average. So, what’s gone awry?

A high-level breakdown of spend:

Salaries, including benefits:    $190,000

Recruiting Technology:            $25,000

Advertising & Social Media:     $60,000

Candidate Travel & Misc:         $45,000

Staffing Agencies (Perm):       $660,000

Total:                                      $980,000

Yes, the staffing agency usage is high, though not altogether uncommon for smaller organizations that are experiencing challenges in their recruitment functions. High agency usage is often a symptom of other issues. Upon conducting a full audit of the recruitment function we discovered some very significant shortfalls in their overall process, recruitment team accountability, and the deployment of their technology. There were many areas that we identified in our full report, however here are some highlights of the audit:

Process:

  • The recruiting process that is in place today is fragmented and varies across individual Hiring Managers and Recruiters leading to substantial candidate confusion. It has not been documented, socialized or effectively communicated with the Hiring Manager community. Key elements of a best practice process, for example conducting a thorough position intake at the beginning of the recruiting process, are neither articulated nor executed and accountability seems to be commonly shared with HR or missing altogether – leading to confusion or evasiveness in ownership.
  • Hiring Managers are not financially accountable to any spend in recruitment and have unfettered freedom to engage agencies. Usage of third-party staffing agencies affects the Human Resources budget.
  • There are few controls around cost control, no approvals required to engage agencies.
  • Recruiters spend the majority of their time screening and scheduling agency candidates brought in through the process. Little, if any time or energy is spent identify and engaging potential talent.

Employment Brand

  • Though this is not a large company, many technology candidates in the local market know this company and their products and services well. A quick review of Glassdoor.com would indicate that there has been some significant brand damage. A few quotes from this site:
    • “WTF, really???  8 separate interviews?”
    • “I interviewed with [company] three times and never heard from them again. Would it really be that difficult to let me know that they decided to hire someone else?”
    • “I went for a couple of interviews and neither the recruiter nor the manager seemed all that excited about the company or the position.”

Technology

  • The organization has deployed an Applicant Tracking System (ATS), however it is used primarily for resume storage.
  • Key functionality, that is available in the system has not been set up and is not being utilized.
    • Auto-reply – to acknowledge candidate’s resume being received.
    • Pre-application screening questions – could alleviate many unqualified candidates getting into the process.
    • Candidate workflow – all the candidate and hiring manager communication can be managed within the system, however it is all handled through an e-mail client.

It is clear that there are many things that would help improve this organization’s recruiting process, the candidate/hiring manager experience and the fiscal control. Our immediate recommendation was to design, document and communicate a consistent hiring process (with collaboration from the hiring managers). Knowing what we want the process to look like (to serve both the candidates and the organization), we can develop plans to address training and coaching the recruiters and hiring managers, address the process tools and gaps and align the technology to serve the aforementioned people and process.

Recruiting is the lifeblood for organizations, and in recent years, as new employee tenure has declined; it is critical to be purposeful, effective, and efficient with your recruitment function. Most organizations evolve the function in their early years, hiring a recruiter, then a second, then a manager, and the growth continues without an objective review of the processes and the impact those processes are having on your ability to hire the best.

Regardless of your company's size or industry, you can develop your employment brand, your reach and your recruitment function's impact. A recruitment audit can help you see your choke points as well as identify high impact adjustments that will move your recruitment function forward to be more  effective, drive candidate and hiring manager engagement and reduce agency spend.

The first step to improvement is knowing where we are. The second step is creating a vision to where we want to be. Once we know the starting and end points, the road is far easier to build, the destination that much more attainable and the likelihood of success far more likely.  

Mario Testino, the Peruvian photographer, summed it up like this; "My favourite words are possibilities, opportunities and curiosity. I think if you are curious, you create opportunities, and then if you open the doors, you create possibilities".

 

About the Author:
Michael helps organizations align and optimize their talent acquisition with their overarching business objectives. This includes conducting recruitment audits, implementing processes, systems, tools and teams in order to attract, screen, recruit, select, and onboard engaged employees. Follow him on twitter @hireinsite

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