Creating the people edge: How to overcome the critical factors holding back the recruitment

White paper

Creating the people edge How to overcome the critical factors holding back the recruitment function in your business Jeremy Paynter and Nick Simcock April 2012

Talent with impact

Creating the people edge How to overcome the critical factors holding back the recruitment function in your business

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Introduction People provide the main competitive advantage in organisations; forming the lifeblood, driving profit, revenue and growth. Yet, even recognising this critical factor, there is a dangerous disconnect between talent leaders and business leaders when it comes to measuring the language of success for recruitment.

How do people affect business performance and how close is the link between a well aligned recruitment function and business performance?

Futurestep invited a number of Australasian business leaders to discuss “how recruitment provides your business with competitive advantage� and combined the insights with input from 50 Australasian talent leaders from a variety of leading companies.

This whitepaper draws on the findings of those discussions and our own expertise to reveal how a disconnect between talent and business leaders can be bridged to provide companies with, The People Edge.

Nick Simcock Managing Director Futurestep New Zealand

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Creating the people edge How to overcome the critical factors holding back the recruitment function in your business

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The people edge

“People are our point of difference so our success is intrinsically linked to the acquisition and growth of talent.”

Keith Muirhead, Head of Recruitment Air New Zealand

Business leaders across all industries agree that having the right people in place was a fundamental necessity to ensure competitive business advantage and success. Brent Waldron, CEO, Carters said ensuring the right people were onboard was “the single most important part of my job” and that without the right people businesses cannot deliver on their potential.

Many business leaders agreed that while technology and other efficiencies could be duplicated by competitors, the workforce could not be replicated. The people factor was viewed as the biggest lever available to create competitive advantage.

Driving change With the right people in place the ability to affect change quickly and successfully is far greater. Business leaders saw implementing change quickly as a key factor in times of rapid growth, competition and economic pressure. “Recruitment provides the opportunity to reshape the business over a period of time, to change the benchmark and expectations of performance.” Ian Blair, General Manager Business Banking, Westpac

What do talent leaders think?

Talent leaders across all sectors agreed that employees both directly and indirectly impact product delivery, customer experience, service provision and therefore revenue potential. Ensuring the right people are hired is critical for maximum profit return. “People are our point of difference so our success is intrinsically linked to the acquisition and growth of talent.” Keith Muirhead, Head of Recruitment, Air New Zealand The lifeblood While not directly questioned in the original research, a significant number of business leaders also discussed the cultural impact of having the right people.

“The right people have a huge cultural influence and create positive momentum” Tony Oldham, General Manager Sara Lee NZ Ltd. Having the right people can significantly enhance an organisation, creating a culture of success and productivity, or transformation where needed. Of note, Mark Dewdney, CEO Livestock Improvement Corporation said the people transformation at LIC over the last five years was the company’s most impactful achievement.

Driving profit The majority of business leaders voiced that talent is a game changer that can make or break a business. Having the wrong people can affect bottom line drastically. “Especially in smaller businesses, the impact is more dramatic and mistakes become more critical.” Mark Hamilton, CEO, Bell Tea & Coffee Company

Copyright©2008. Korn/Ferry International/Futurestep, Inc. All rights reserved.

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Creating the people edge How to overcome the critical factors holding back the recruitment function in your business

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A dangerous disconnect

“People can make the business go gangbusters and good hires can make or break 100% profit in a week” Rob Kitson, Sales Director Goodman Fielder Home Ingredients

Whilst our findings indicate an almost universal recognition of the importance of people to business success, there exists a major disconnect in how business leaders view and define recruitment success compared to the way talent leaders are being measured. The language of success for business leaders is quality, while talent leaders are being measure on success through efficiency measures. The lack of a common language in this respect will severely limit your ‘People Edge’.

Business leaders see quality hires driving business performance and resulting in business success. Quality employees provide the ‘people edge’ by enhancing organisational culture, driving profit, growth and change. Engaged motivated employees will act as company brand ambassadors, demonstrate significant productivity impact and save on retention, hiring and training costs. “People can make the business go gangbusters and good hires can make or break 100% profit in a week” Rob Kitson, Sales Director, Goodman Fielder Home Ingredients All business leaders said they were most interested in the quality of recruitment (when asked to rank quality, cost and time measures). But half of talent leaders felt their organisation was most interested in time or cost measures.

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Creating the people edge How to overcome the critical factors holding back the recruitment function in your business

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So. what's missing?

While close to 70% of talent leaders measured time and cost to hire, only 11% measured new hire productivity and 39% measured new hire performance.

While talent leaders and business leaders recognise people as the driving force behind the success of the business, the reality is that the majority of recruitment functions are still not measuring the quality of hiring decisions.

What recruitment measures do you currently use?

While close to 70% of talent leaders measured time and cost to hire, only 11% measured new hire productivity and 39% measured new hire performance.

For those who didn’t currently measure quality factors, the main barriers were limited time and resource. Other lesser factors included inadequate technology, perceived lack of appetite for this data and functional expertise gaps.

Many Talent leaders felt the current lack of analysis of quality of hires measured through employee performance, retention, time to get up to speed in a role could mean that more readily available efficiency

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measures like time and cost of recruitment were being over relied on and could be compromising fit and quality of candidates.

Not surprisingly talent leaders across the board recognized a missing opportunity to integrate workforce planning into business planning. Having effective workforce planning to align sourcing with future hiring needs, and integrate succession and internal moves could enable the talent acquisition team to lead activities around the buy and also build and bounce of talent.

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Creating the people edge How to overcome the critical factors holding back the recruitment function in your business

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A significant impact With a primary focus on efficiency, Futurestep believes recruitment functions will be prevented from moving beyond operational recruitment activities – and unable to provide competitive business edge through hiring decisions.

By omitting quality measures, recruitment functions are unable to accurately gauge the impact of their hiring decisions.

Businesses will continue to operate with incomplete information and may be unaware of the complete impact (success or failure) employees are having on the business.

If recruitment functions are fully aligned to the organizations strategy and focus on both efficiency and effectiveness measure they will be able to challenge the business, offer expertise on talent decisions, assist in delivering on organisational strategy and ensure business priorities are reflected and aligned in all recruitment activities.

A shared language of success For organisations that believe talent can drive business performance, quality should be the shared language for success and the key recruitment measurement.

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Creating the people edge How to overcome the critical factors holding back the recruitment function in your business

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How to move forward Performance and productivity

“Developing and implementing robust analytics and measures that relate to the objectives in the company strategy and add value to the business” Catherine Taylor, Group Manager People & Business Services, Kiwibank

Operational efficiency in recruitment is expected. As outlined in Futurestep’s 2010 research paper The Evolution of the Recruitment Team , the nature of the recruitment function has evolved and while efficiency metrics are necessary, a fully evolved recruitment model must also focus now on quality measures, measuring output and aligning recruitment activities with business strategy. “If you get the quality right then the cost and time is just part of the process” Kevin McKenna, General Manager Roads Australia & NZ and Executive Director, Transfield Services From our research it is clear that transformation is necessary. Businesses need to build a framework to ensure a shared language of success, measuring quality and aligning recruitment activities with business needs. This will help recruitment contribute to business performance by maximizing hiring opportunities and using the ‘people lever’ for a competitive advantage.

Businesses need to be concerned about the lack of measurement, given the correlation between people and success. Our research consistently shows that people are the single most important factor driving success. This must be demonstrated through measuring both the recruitment function process and also the quality of the people who join an organisation.

To help maximise the impact of the recruitment function, Futurestep has outlined a framework below with three key components that can be used.

1. Implementing quality measurements Businesses should measure the value of the hiring process based on a number of key measures, for example:

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Immediate assessment - job specific skills and capability to exceed performance 6 month assessment - consequential culture fit and contribution and team interaction 12 month assessment - ultimate measure of impact - recognizing individual and team contribution and potential for future Candidate engagement Retention and turnover Hiring manager satisfaction By combining these measures with the cost to the business of bringing in talent (cost of hire) and the speed at which functions can discover and recruit that talent (time to hire), organisations can uncover powerful information about the impact of each hiring decision.

Recruitment teams will better connect their activities with business performance by “developing and implementing robust analytics and measures that relate to the objectives in the company strategy and add value to the business” Catherine Taylor, Group Manager People & Business Services, Kiwibank.

Moving beyond operational recruitment metrics and a traditional cost and time focused mentality to a quality focused measurement system will help organisations understand their hiring decisions in more depth. This will provide recruitment teams with the ability to more closely align their activities with business priorities and future talent needs.

Recruitment teams that can impact quality in a measurable way will receive more business leaders attention than those that don’t. Being able to demonstrate you find and selected the highest quality, most capable and best suited talent for the organization is what is top of mind for for business leaders.

Talent with impact

Creating the people edge How to overcome the critical factors holding back the recruitment function in your business

Only 20% of talent leaders surveyed felt their current recruitment strategy was strongly aligned to organisational priorities

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2. Workforce planning

3. Business alignment

Organisations around the globe are finding that robust workforce planning processes provide a competitive advantage. Through a systematic approach, the recruitment function can ensure that its resources are focused on finding and keeping the right talent – the talent which has the skills and potential to provide business advantage both now and importantly, in the future.

Recruitment functions must align their strategy, activities and measurements across all business functions. Business leaders surveyed reflected on the huge impact that recruitment can have on their business. Recruitment strategy (as part of an overall integrated people strategy) must be tied to business goals.

Doug Rippey, Global Practice Leader, Workforce Planning, Futurestep said by aligning the business strategy to a workforce strategy, an organisation can provide a workforce plan that integrates talent management areas to provide answers to questions such as: Should I promote from within or hire externally?

What are the critical skills and roles I should be protecting?

What are my tough to find roles where I should be focusing recruiting resources?

How can I best spend on talent management programmes to ensure business success?

Talent leaders said it was critical for the recruitment function to help lead and build organisational capability in workforce planning across their businesses.

In staffing.org’s Corporate Recruitment Recruiting Report (released 2010) reference is made to connecting ‘day to day’ recruitment activities directly with CEOs’ preoccupations and concerns. This is necessary to ensure the recruitment function is working towards a shared set of objectives. Recruitment can impact an organisation by demonstrating an understanding of business direction and strategy, and providing the talent to meet the need. “Getting the right people is the most critical component of business growth. We have made the most wins by getting a line of sight into what the business strategy and growth plans are” Ant Hall, Head of Talent Acquisition, Telecom. Business alignment is critical to success.

Many talent leaders surveyed indicated their biggest successes to date resulted from having a clear line of sight into business strategy and growth and their ability to implement activities and recruit accordingly.

Talent leaders shared a number of ways they felt recruitment activities could be better connected with business performance: Building business partner capability in recruitment function Contributing to business planning Having a clearer understanding of critical talent gaps Developing analytics relating to company strategy Aligning more closely with other HR functions

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Talent with impact

Creating the people edge How to overcome the critical factors holding back the recruitment function in your business

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Summary A shared language of success across business leaders and talent leaders is imperative. This language must be about the quality of hiring decisions, not purely the process efficiencies of a function. A recruitment function will significantly contribute to organisational success and maximize competitive advantage through hiring decisions if this common approach is adopted. The key elements that need to be in place to allow this to happen are: Quality: Quality should be the key recruitment measurement, given the important link between people performance and business success. It is critical to measure success by looking at hiring outcomes, rather than purely the recruitment process. Organisations must accurately measure beyond housekeeping metrics of time and cost and ensure that the shared language of success is quality.

Workforce planning: A recruitment function must have integrated business relationships to be able to identify organisational gaps – the future demand - and also current capability. A line of sight into future workforce needs is crucial.

Through our research, talent leaders and business leaders acknowledge the impact of people in an organisation. The challenge is to move beyond recognition of this fact, and hold the business to account for its hiring decisions. To ensure optimal recruitment function success, quality measurements must be in place, workforce planning across the business must be defined and the recruitment function must be truly aligned to the business.

Likewise, given that business leaders place high value on bringing talent onboard they must be prepared to invest in the recruitment function and ensure the function is part of the business planning cycle, able to align with strategic goals and given access at a decision making level, to ensure a common language of success.

Only when organisations begin to action this will they be able to fully optimize the recruitment function completely; making strong hiring decisions, obtaining staff that bring impact, be it long-term or immediate, thus taking full advantage of one of the biggest competitive levers available to a business today – people.

Business alignment: Talent leaders and recruitment teams must understand the culture, business strategy and levers to pull to ensure a business succeeds.

They must hold sound industry knowledge and specific knowledge of the business they operate in and represent. The recruitment function should be viewed as a core part of business to drive growth and profit.

Recruitment must be aligned with all business functions.

CopyrightŠ2008. Korn/Ferry International/Futurestep, Inc. All rights reserved.

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Creating the people edge How to overcome the critical factors holding back the recruitment function in your business

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Acknowledgements We would like to thank the Australasian talent leaders who participated in the online research and the following business leaders for their participation in the qualitative discussions: Mark Hamilton, Chief Executive Officer - Bell Tea & Coffee Company Stephen Mockett, Former Chief Operating Officer - Bank of New Zealand Brent Waldron, Chief Executive - Carters Doug Paulin, General Manager NZ Fish - Sealord Tony Oldham, General Manager - Sara Lee NZ Ltd Mark Dewdney, Chief Executive Officer - Livestock Improvement Corporation Ian Blair, General Manager Business Banking – Westpac Chris Buddle, Country Manager - Simplot New Zealand Ltd Ian Ward, Board Member Auckland District Health Board, Board Member NZ Blood Service, Director C4 Consulting Limited Katrina Ritchie, Group HR Manager Projects and Planning - Fonterra Rob Kitson, Sales Director - Goodman Fielder Home Ingredients Geoff Norgate, Managing Director - Vitaco Health (NZ) Ltd Kevin McKenna, General Manager Roads Australia & NZ, and Executive Director Transfield Services Gerard Egerton, Programme Leader Performance & Productivity Improvement Department of Internal Affairs Steve Donkin, Programme Manager - Department of Conservation Tim Deane, Director Global Sales - Fonterra Mark Powell, Chief Executive Officer - New Zealand Rental Group Juergen Link, General Manager Engineering & Mainenance - Fonterra Tania Pauling, Managing Director - Godfrey Hirst, NZ Ltd Duncan Rutherford, State Manager - Orrcon Steel Peter Styles, General Manager Business Improvement - Downer EDI Ryan Sanders, Sales Manager - OneSteel Simon Hewson, Principle Geotechnical Engineer - KCGM Phil McKenzie, Chief Executive Officer - Widex Australia Graham Egli, Director, HSEC Mining & Metallurgy SNC Lavalin

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Creating the people edge How to overcome the critical factors holding back the recruitment function in your business

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About Futurestep Futurestep is the global industry leader in high-impact recruitment solutions; offering fully customized, flexible services to help organizations meet their talent and recruitment needs.

Futurestep can meet a variety of workforce requirements; from RPO and project recruitment, to search and consulting, our services apply a truly world-class capability to deliver talent with impact, providing the experience and global reach to identify, attract and retain the people who drive business success. With locations on four continents and a record of success in securing top talent around the world, Futurestep provides the experience and global reach to identify, attract and retain the people who drive business success.

To learn more, visit www.futurestep.com

About Korn/Ferry International Korn/Ferry International, with a presence throughout the Americas, Asia Pacific, Europe, the Middle East and Africa, is a premier global provider of talent management solutions. Based in Los Angeles, the firm delivers an array of solutions that help clients to attract, engage, develop, and retain their talent.

Visit www.kornferry.com for more information on the Korn/Ferry International family of companies, and www.kornferryinstitute.com for thought leadership, intellectual property and research.

Local expertise For further information on the research and information included in this whitepaper, or to find out how Futurestep can help you address your critical talent needs, please contact: Jeremy Paynter, Director Client Solutions, Futurestep New Zealand Phone + 64 9 355 1881 or Cell +64 27 222 1157 Jeremy.paynter@futurestep.com Jeremy leads the consulting and solutions practice for Futurestep New Zealand and holds overall responsibility for the delivery of consulting assignments for Futurestep’s clients. Jeremy’s focus is to partner with clients to advise them on how to best achieve business success through delivering their people strategy. His experience includes assessment and design, strategic resourcing, talent management, organisation design, career management and coaching.

CopyrightŠ2008. Korn/Ferry International/Futurestep, Inc. All rights reserved.

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