The best CEO’s quickly understand that the #1 contributor to the success of their company is based upon the people that they hire. Yet, the majority of CEOs fail to take a proactive role in hiring, and often pass it off to an HR person who has never been trained properly in recruiting. If you believe the Human Resource Professionals coming out of universities with an MBA in HR, have been properly trained to master the recruiting and hiring process, you would be mistaken.
In fact, in my work in mentoring recruiting rookies (many with MBA’s in HR), you would be surprised how many grad students wanting a job in recruiting have not even had one class explaining the real recruiting process. Universities are only now looking to finally offer accredited courses in recruiting, something that has been long over due for a $130 billion dollar industry that keeps growing!
Recruiting is a $130 Billion dollar industry, yet it still falls off the radar when companies proactively plan their “recruiting budget.” In fact, the majority of companies still grossly underestimate their recruiting budget by 50%. Some recruiting experts, like Jason Collings, CEO of an outsourced recruiting firm in the UK, estimates this number to be as high as 95%. This bleeding of recruiting expenditures often results when CEO’s try to cut costs with band-aid solutions which end up driving costs higher in the long run.
The CEO’s that best understand “The True Cost of Recruiting,” and plan ahead properly in terms of a budget, and a winning strategy, will grow market share the fastest. These enlightened CEOs account for all the time involved from management on each step of the recruiting process, in addition to the “placement fee,” allowing them to better plan and forecast for human capital. Thus making the recruiting process a company asset, instead of a huge, misunderstood expense.
If as a CEO, you feel pain in recruiting and hiring, it’s good to know that other CEOs who have sat where you do know, have found innovative ways to stop the bleeding!
Venture Capitalists seem to understand the true cost of recruiting better than anyone. This is why they often work with leading recruiting firms to help their CEOs follow a process that works.
Since they are investing their money into start-ups and do the due diligence necessary when determining a company’s potential value, they understand human capital trumps dollar capital every time. After all, it’s the best human capital that produces the best dollar capital in the end.
The best CEOs and investors do not simply throw money to an outside agency or have a rotation of cheaper, contracted recruiters. Nor do they simply hire a Human Resource person to be put in charge of something so important as Hiring (considering HR Directors typically have to hire outside recruiters to help them fill the openings.)The smart CEOs work to build a world class recruiting model that can sustain for 1 hire or 1000 hires….a scalable model that’s been proven and works every time.
And how do the CEOs go about doing this? They work with the experts in the recruiting field. Smart CEOs form partnerships with expert recruiting consultants that don’t only focus on short term openings, but instead focus on a long term recruiting plan. They partner with experts in the recruiting industry that have decades of experience in a winning model that works. They invest in proven systems that strive for six-sigma hiring. Recruiting systems and solutions that have effectively helped companies win at hiring better, faster, and for less cost. No longer can CEOs simply find a great recruiter or agency that can simply fill openings at the typical 20-33% fee.
It seems that companies, new and old, are seeking better, improved ways that will help their recruiting efforts be successful. Why do so many try to re-invent the wheel, when proven systems have been found and are at work here and abroad. The smart recruiters and recruiting consultants were introducing video interviewing over a decade ago to their clients. I can speak from experience on how virtual interviewing became a game changer to progressive clients who understood the true value, and how to effectively use it within the recruiting process. Innovative CEOs grabbed hold of this technology over a decade ago to make them better at hiring. Here we are in 2013, and most companies are still not using virtual resumes and interviews to improve their recruiting process. And the few CEOs that have embraced these technologies, are often trying to re-invent the wheel, instead of following a proven system that already has a successful track record.
One of the smartest CEOs I ever consulted for implemented video interviewing back in 2000, which led to significant speeds in hiring and driving down costs. This allowed the sales organization to hire at a rate that outpaced their competitors on a national level. They were able to hire faster, for less money, and attract better people. This company was soon acquired by GE for over $300 Million. Why? Obviously many reasons led to the companies success, yet this CEO will tell you that he always knew the value of recruiting. He also knew the cost of making a bad hire, which he quoted at $100,000.00 back in 2000. Even though recruiting was not his core business, as it was a sales organization, he knew that creating a world class recruiting model that he could scale for the GE and IBM’s of the world would prove invaluable, and differentiate his little company. Anyone can hire a salesperson, but he who can hire the better sales person in a shorter time period, for less money, wins! And he did, win!
If you are a VC or CEO today, I encourage you to work with the experts in the recruiting world. Not just the agencies that will happily bill you 20-33% to use their process (which works some of the time, hurts your cash flow, and is not scalable if you needed 100 new hires tomorrow), but to work with recruiting consultants that will educate you on the recruiting process, and partner with you on implementing a model within your organization that leads to a more effective and less costly solution that is scalable, sustainable, and works every time!