Talent Acquisition 2008: Survey and Analysis of the Changing Recruiting Landscape

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Talent Acquisition 2008: Survey and Analysis of the Changing Recruiting Landscape

By Sally Millick, SPHR Consulting Director The Newman Group

TALENT ACQUISITION 2008: SURVEY AND ANALYSIS OF THE CHANGING RECRUITING LANDSCAPE

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Background: The Changing Talent Marketplace While recent economic turbulence has changed the global business landscape, the forces that drive talent acquisition remain in place. Companies must continue to rely on talent as a core foundation for growth and productivity. At the same time, the need for advanced, specialized talent and leadership will continue to provide challenges for enterprise recruiting efforts.

The conditions shaping today’s talent acquisition environment are well-known.

The retirement of the U.S. “baby boomer” generation, the globalization of markets and operations across all industries, and the shortage of talent in critical areas such as engineering, healthcare and leadership are all important. The real importance of talent acquisition, and the door-opener for talent management at the proverbial seat at the boardroom table, is the recognition that a business cannot grow without the right talent. Just as importantly, businesses cannot reach the right talent without making a conscious strategic effort to do so.

Today, business leaders understand the strategic significance of talent acquisition.

They are carefully looking at how they are going to fill the gap in skills and company knowledge left by retirees. They are applying new uses of technology for virtual workplace options that can make them more flexible to employees, more attractive to candidates, and open to talent from around the world. They are adopting advanced strategies and tactics to evolve their talent acquisition operations, and they are embracing a range of emerging best-practices, from workforce planning to employment branding. In short, they are recognizing the need to continue to advance their abilities not only in talent acquisition, but also to support retention and employee development.

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The Survey: What’s Shaping Real-world Talent Acquisition Today?

In the real-world business environment, recognizing the need for improvement and acting on it are two different ideas. Resources are tight. Companies must invest in changes needed to compete for talent in the future, but they must also address the immediate needs of the present. So, when it comes to competing for talent, it’s natural that leaders ask, “What are other companies doing?”

How well are organizations doing in relation to their peers? Are they putting next-practice strategies into place, or are they still planning, waiting to do so in the future? What are the priorities?

To shed light on these issues, The Newman Group, in conjunction with the Electronic Recruiting Exchange (ERE) conducted a survey in July 2008 of practitioners and decisionmakers involved in talent acquisition. This is the latest edition of what was formerly known as the “Sourcing and Recruiting Survey” series conducted annually by The Newman Group.

As no function truly stands alone in an integrated environment of talent management, we’ve re-titled the survey to reflect a more holistic and strategic talent acquisition focus taken by most companies today.

We polled approximately 500 staffing professionals in companies ranging from small and medium sized businesses to larger enterprise organizations. Respondents included recruiters, line-level managers, executive decision-makers and consultants. Five main areas were covered in the survey: sourcing, recruiting operations, technology, recruitment strategy, and metrics. In our analysis, we also drew from our experience with clients at The Newman Group.

Not surprisingly, the picture that emerged from their responses is one of progress, not revolution. The issues and drivers are the same each year: people, process and technology.

That is, there is a constant push to become more competitive for talent by driving process improvements and supporting them with expanding technological capabilities. What is changing is the extent to which companies have begun to implement forward-thinking talent acquisition practices. Few are questioning the if’s of strategic talent initiatives, and the focus now seems to be on the how and when of implementation, whether of new systems, revised processes or a combination of both.

The result is an environment drawn between the forward-thinking and status quo. Toward that end, what follows is an analysis of each area covered in the survey, and a comparison of results-driven versus passive approaches that are in practice in each of these areas.

The good news is that innovation continues.

Most organizations are a blend of both characteristics, but understanding where you are today can provide insight on how you may improve your ability to compete for talent in the future.

Sourcing When asked about the most pressing pain point in talent acquisition, the number one answer among respondents was sourcing (See Figure 1).

Lack of available technical skill sets, along with job location (or inability to re-locate) top the list of challenges to sourcing candidates. So where are companies sourcing to be successful in their quest? Not surprisingly, the most effective approach cited by respondents is through employee referrals. Across all respondents, 68 percent rated employee referrals as either

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Effective (38%) or Very Effective (30%), so time spent on marketing and enriching those programs is well spent.

Recently, there has been much industry buzz about companies who are using today’s economic environment to strategically source and hire “A-Players” from competitors. One way to gain exposure to competitors’ employees is through participation in professional organizations, and through online social/business communities. Both of these venues are effective sources according to our respondents.

Once the door has been opened to top talent, from competitors or otherwise, the challenges have just begun. Meeting these individuals is

one thing, turning them into candidates is another. Why would a passive candidate look at the opportunity? If you are reaching out to the candidate, what are the differentiators that your company has to offer? What are the elements in your organization that will move a candidate’s career forward? In many ways, the qualities that make an organization an effective recruiter of passive candidates are the same qualities that make it strong in retaining employees. In this respect, a clear understanding of your Employment Value Proposition (EVP) is essential.

Toward that end, many companies are conducting analyses to identify the unique characteristics that comprise their employment value proposition to their current employees.

Figure 1: Talent Acquisition Pain Points (Ranked Based on Respondent Feedback)

Figure 2: Sourcing Challenges (Respondents Selected “As Many As Applied”)

Candidate Sourcing 43%

Lack of Available Skill Sets 61%

Candidate Qualification and Screening 15%

Job Locations 49%

Requisition Approval and Initiation 14%

Competitive Salary 47%

Interview Setup and Execution 11%

Lack of Direct Labor Pool 28%

Offer/Pre-employment Processes 7%

Company or Industry Reputation 11%

Other 10%

Lack of Recent Graduates 9% Benefits 6%

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They are realizing that it’s not the volume of the candidate pipeline or the speed with which they filter candidates that will determine their success in competing for talent. The key determining factor ultimately lies with their ability to know the candidate. It’s not enough to simply network with potential candidates; recruiters must be armed with succinct information that will appeal to those candidates’ unique values. This is where the concept of EVP applies.

A well-tuned talent acquisition effort will not only help you turn prospects into candidates, but candidates into employees who then stay with the company. An effective employment brand helps make that possible by matching the reality of the company with the expectations of prospective employees.

By aligning EVP attributes with employee expectations, employees become more engaged, more productive, and less likely to leave.

Although a new concept to many organizations, EVP is rapidly becoming an important component of many companies’ talent management strategies. By recognizing that the ‘skills match’ is only half of the candidate evaluation equation, companies are taking the time to identify the other half: that is, the alignment of the candidate’s employment preferences with what the company represents and supports as its EVP.

Another sourcing focus, and one where EVP often comes into play in attracting the right candidates, is campus recruiting. According to survey results, campus hiring has become more competitive, with a majority of respondents (67%) ranking this tactic as an effective approach to sourcing. Again, the question is, “How does a company differentiate itself and entice a new graduate?” The differentiators may be different with the campus population than with the experienced professionals, but in all instances an effective communication of the EVP must be true. A company that misrepresents its EVP in an attempt to attract particular candidates will ultimately pay the price with reduced retention.

For example, two candidates may have similar skill sets. One candidate, however, may place a priority on stability, benefits and established reputation, while another may be driven by opportunity for growth, excitement, risk and the potential for high earnings. Understanding these priorities, and understanding how candidates view your company, can make the difference between a reactive recruiting function and an effective recruiting operation.

Companies are engaging in focused activity to understand their EVP and the values that drive the candidates they seek. They are also looking for a better understanding of how their EVP differs from those of their competitors. After determining what value proposition attributes define a company’s competitive advantage, that company can utilize those attributes to identify the correct matches in the candidates that they hire.

Another area of note on the sourcing front is the use of online databases. Searching online databases was cited as an effective approach by 78 percent of those surveyed. This strong showing came as something of a surprise, simply because such searching requires significant effort from recruiters who are commonly overstretched in their current roles.

Utilizing online databases involves searching, contacting, and selling opportunities to candidates who had not already indicated interest in the company or a particular geographical location.

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One notable passive sourcing practice revealed by the survey is the tactic of posting positions to a number of job boards and waiting for candidates to apply. Although this tactic was ranked as somewhat effective (43%) by respondents, such a ranking seems to fall short of expectations, considering that the approach has traditionally been viewed by hiring managers as the first “real step” in the recruiting process. In the past, it was commonly believed that a job was not advertised properly without such postings; however, as the survey shows, job board postings should not necessarily be the central focus of a sourcing effort.

aren’t attracting as many candidates, yet searching external resume databases is yielding candidates, this highlights the need to reach out to candidates rather than depending on them to find you. The highest quality hires can come from more passive candidates who are making the assumption that you are SOURCING TACTICS searching a Web AND STRATEGIES site’s resume Results Driven database for • Employee referral them. programs (ERP)

While job boards may not be as effective as once believed, they remain a major part of the sourcing landscape, and can provide access to a large volume of candidates. Companies are recognizing that with some effort they can improve the results of their job board postings by simply making their postings more clear.

For example, they are posting jobs with easily recognizable titles, such as “Database Analyst” rather than “Analyst II, IT.” They may also create a company summary paragraph to include in the posting. Anyone looking to improve posting results should also be mindful that the posting clearly conveys responsibilities, qualifications, and future career opportunities. Finally, there is a need to track the effectiveness of these sources, or gain access to recruitment advertising research so that the right sites are selected for posting.

Carefully choosing where you are posting and ensuring clear communications can go a long way toward improving job board effectiveness.

• Networking with The overall professional organizations sourcing picture, (in person and online) the renewed • Campus recruiting emphasis on • Searching online EVP, and the databases continued Passive emphasis on • Depending on job employee board postings referrals as the • Waiting for candidates best source of to find job postings or candidates all advertisements point to the need to replace the more-is-better approach to sourcing with a know-the-candidate-better approach.

Companies are beginning to focus on reaching out to the right candidates with the right message rather than large numbers of candidates in the hopes of filtering down to the high-quality choices. The employee-referred candidate is already known (by the employee).

The company that understands its EVP is giving itself the knowledge to understand who the right candidate is for the company. In both areas, knowing the candidate is a central theme.

The job board issue may not just be a reflection of the medium itself; rather, it underscores the shortcomings associated with the underlying philosophy of passive sourcing. If job postings

The knowledge-based approach to sourcing also includes use of Web 2.0 and social networking to actively reach out and know more people. It is a continuous and proactive

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approach. Recruiters can’t wait for the job to come open to start building a network of candidates. Companies have realized this, and they are actively engaged with a variety of resources to help them build networks of candidates. As in the past, LinkedIn remains a leading resource used by respondents, with 85 percent of respondents using it as a key sourcing tool. Professional networks as well as other Web 2.0 resources such as MySpace and Facebook also play a large part in sourcing activity.

These results underscore the growing emphasis on the need to build networks to source candidates. As with anything that yields higher quality results, building networks requires more time and effort. The results, in terms of improved quality and the ability to reach the right candidates for the job, are worth the effort in a competitive talent environment.

Recruiting Operations When it comes to recruiting operations, an analysis begins with the question of structure.

Are your recruiting processes centralized or decentralized? In previous annual surveys, the general trend has been toward centralization.

Companies that previously relied on disparate

localized processes and resources to find and hire candidates were moving to create consistent, centralized processes utilizing resources and technology available across the enterprise. Centralized talent acquisition helps companies measure, manage, and improve processes across the company. It also affords economies of scale.

In this year’s survey, 43 percent of respondents had a centralized model, but the most interesting trend revealed in the responses is a marked shift toward a hybrid model.

Companies are increasingly moving to centralize processes and technology while accommodating decentralized aspects of the recruiting process in certain areas. The supporting technologies allow configuration to multiple scenarios required by business or regional units—all supported by a central repository for tracking and reporting on hiring activity. In the survey, 38 percent of respondents categorized themselves as “hybrid.” In a later question, 17 percent reported they are moving to that model. This is a forward-thinking approach, as it maintains centralized processes and technologies while enabling the company to tailor delivery to the needs of the business.

RECRUITING OPERATIONS TACTICS AND STRATEGIES Results Driven

Passive

• Tactical—Optimizing recruiter time for recruiting, not administration

• Tactical—Recruiter job postings

• Tactical—Improving hiring manager engagement • Strategic—Balancing need for consistent global processes with localized recruiting needs

• Tactical—Recruiter interview-setup and coordination • Strategic—Static decentralized or centralized structure

One enabler of the hybrid trend is the evolution of technologies for sourcing, managing, and communicating with candidates. Using systems and tools that support and drive the process, hiring managers and HR generalists can take a deeper role in requisition and recruiting activities than ever before.

Many companies have implemented a talent acquisition system and as a result have centralized the staffing function.

For those companies, the question is, “Can the staffing organization now give

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up part of its previous role to concentrate on more productive activities, or will it feel out of control of the process?” Can others take on administrative activities to allow recruiters to focus on their main task of recruiting? Do hiring managers and HR generalists have the time, attention, and interest in recruitment tactics to take ownership of tasks such as inputting the requisition, conducting phone interviews, and updating the status of candidates in the system? How will the change be implemented?

How will training and compliance of hiring managers be sustained? It may make sense as a process improvement, yet the success of this approach will depend on company culture and hiring managers’ time and attention.

Whether or not recruiters can gain more focus remains to be seen, because in most cases they still handle broad responsibilities. In last year’s

survey report we highlighted the fact that the majority of recruiters were managing all aspects of the recruitment process. This year, 85 percent of recruiters in the survey reported managing the entire lifecycle of the requisition, and it is a situation that has a negative impact on recruiting. Valuable recruiter time is not being spent with candidates or hiring managers. Recruiters will give different opinions of whether they want a sourcing specialist on their team, citing the potentially awkward hand-off between the sourcer and the recruiter. However, recruiters spending time posting jobs or scheduling interviews may not be the best allocation of those resources.

Specializing recruiting and administrative functions is somewhat dependent on the size of the overall organization. Smaller companies may not have as many options for offloading

Figure 3: Recruiting Models of Respondents

Figure 4: Who Handles Job Postings?

Centralized 43%

Handled individually by the recruiter 48%

Decentralized 10%

By the recruiter using posting services 23%

Hybrid 38%

By support staff 27%

Outsourced 4%

Don’t know 2%

Don’t Know 5%

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recruiter administrative tasks, but companies can explore this resource allocation as an opportunity to become more aggressive in their search for talent.

Technology When it comes to talent acquisition systems and solutions, the key question driving the competition for talent is, “How well are companies equipped to foster continuous improvement?” There is no single perfect solution for any company, and the assumption that the “right” systems are in place or that there is no need to review performance or consider improvements is misleading. The company that waits until next year to make needed improvements TALENT ACQUISITION runs the risk SYSTEMS AND SOLUTIONS of driving users Results Driven to utilize • Optimizing current workarounds to technology cumbersome • Balancing technology processes. Once capability, new data stops opportunities for making its way improvement and possible process changes into the system, • Continuous review and the path back improvement to optimization grows Passive exponentially • Periodic review and improvement vs. constant longer. optimization • Adherence to old paradigms such as posting and filtering vs. new opportunities such as social networking and active candidate outreach • Lack of integration, allowing disparate systems to remain unconnected

Optimizing current processes and systems is an ongoing process at the most successful recruiting organizations.

They are concerned with making sure their systems are configured to their processes, and they are looking at new functionality offerings as a way to drive further process improvement.

When asked about focusing on improvements in the coming year, 61 percent of respondents indicated that they are considering improvements in recruitment technologies, and 67 percent pointed to career Web site enhancements.

What types of improvements can technology offer? As a simple example, consider the need for hard-copy signatures on some documents, such as offer letters or job applications.

In some cases these documents are sent electronically, printed out for signature, and sent as a PDF or faxed back to the company.

Many entities accept electronic signatures on more sensitive documents (for example, the IRS accepts electronically signed income tax fillings). Some companies continue to resist implementing electronic signatures, causing several extra steps on the part of the candidate and the hiring organization. Some background check vendors are no longer requiring hardcopy signatures for the candidate’s Authorization and Consent form, which has traditionally been treated as a fax-back form.

These are just a few of the potential features that can help organizations streamline their recruiting operations. Today, companies have an opportunity to take a proactive stance in improving their system effectiveness by allowing technology enhancements to lead process change. The key to staying on top of the technology evolution is to review all functionality for potential implementation as it becomes available. An open-minded perspective is important here.

Even if the functionality doesn’t appear to apply, it is important to ask why. Old process

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Figure 5: Talent Acquisition Functions Used Regularly (by Survey Respondents) Leading areas of technology-related planned improvements. Multiple answers possible from respondents.

Searches within the company database 64% Employee referral submittals 63% Reporting of staffing metrics to management 54%

Figure 6: How effective is your talent acquisition system in supporting your hiring requirements?

Very Effective 13% Effective 28% Somewhat Effective 30% Not Effective 10% Don’t know or don’t have system in place 19%

Conceptual search within the database 44% Pre-screening questions for Internet applicants 43% Integrated job posting mechanism to outside career Web sites 46% OFCCP compliance saved search tools 33% Agency/search firm direct submittals 31% Candidate score or ranking based on responses to pre-screening questions 34% Interview scheduling tools 35% Electronic interview feedback capture 24% Ability to allow candidates to check their status 23% Integrated third-party candidate assessment tools 19%

flows and norms can cause organizations to hold back from taking advantage of new features. One example of this is with resume formatting. In many cases, resumes lose their formatting when sent on for review through a talent acquisition system. Hiring managers then ask the recruiters to send formatted copies through email, or worse, print them out and send them through interoffice mail. The right

application of functionality can eliminate this cumbersome and off-system facet of the talent acquisition process. Another example is the outdated requirement of approvals for the requisition or the offer; these requirements in the system can usually be reconfigured to more closely meet a company’s needs.

Despite the opportunities for streamlining processes and continued advances in technology functionality, a certain percentage of survey respondents are not satisfied that their systems are meeting their needs (10 percent claim their systems are not effective, while 30 percent claim that they are only somewhat effective.) Experience shows that, in many cases, such dissatisfaction can be traced to three main causes: a. Process points are not adequately supported by the system

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b. Users of the system have not been trained in how the system can support talent acquisition processes c.

Companies have changed their talent acquisition processes to reflect adoption of what they were told would be an enhancement to their system

Just as companies can unnecessarily Results Driven ignore • Workforce planning opportunities • Workforce planning results for sourcing and hiring for using new forecasts features, they • Recruitment as an can also rush improvement initiative, to adopt not an overhead process innovations that Passive may not suit • Over-focus on reactive their recruiting/empty position organizations. firefighting A danger on • Lack of realistic attrition the technology metrics front is that, • Lack of vision for the future with the external talent marketplace and internal talent needs introduction of new features, organizations are often tempted to allow the technology to force unwieldy process changes.

Each functionality change should be evaluated against specific client needs and workflow; a feature that may seem beneficial at one phase may add steps later in the process. For example, a feature that deposits all candidates who submit resumes into a requisition file or folder in the system can be a big timesaver for recruiters who would otherwise have to search the database for each person who responded to a requisition.

RECRUITMENT STRATEGY

In the experience of one company, turning on this feature was a positive, but it had an unexpected impact on recruiters—they now

had to go back and update the status of all candidates to a requisition before closing that requisition. In this case, planners evaluated the potential payoff in terms of candidate experience as well as recruiter experience, to confirm their solution and, ultimately, leave the feature turned on. The lesson from this experience is that each feature may have a range of positive or negative impacts on various users throughout the process. It is important to consider all of them to make an effective decision regarding features and functionality.

Today’s solutions now afford companies the ability to leverage the high success of Employee Referral Programs (ERP) with supporting technology. Many companies now have moved their referral program online, or at least have jobs listed for employees to view for possible referrals. Traditionally, resumes were passed directly from an employee to a hiring manager or a team lead. The continuation of such a process would effectively bypass the system. The challenge, then, is one of change management. An organization must make it easy for employees and hiring managers to change how they handle referrals—i.e. using the system to transfer resumes and other supporting info.

Within the system, referrals can be timestamped as they come in. The system can accurately capture and track the referring employee information. Another benefit is that the system can take the resume handoff responsibility out of the referring employee’s hands entirely. Instead, the system will invite the referred candidate to apply, even to the point of having the candidate answer prescreening questions. The referring employee gets a confirmation that the submittal was received. Fewer steps means improved ease

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of use, and that translates into the possibility for more employee referrals, a prime source of high-quality candidates.

Although there are many smart options for improving processes and technology, the reality is that many organizations lack a formalized structure for systems review and optimization. This lack of an improvement process is detrimental. Even those organizations that do not rely on an end-to-end talent acquisition system require some level of consistent periodic review.

In this review, it’s important to examine, or reexamine, hiring processes and practices. For each step in the talent acquisition process, such a review should ask, “Does this step add value, or does it detract from the primary goal of hiring excellent candidates? Is there a solid communication and action plan between all parties—candidates, hiring managers, human resources, and recruiters—in identifying, sourcing, and selecting new hires?” Candidates are moving targets, and there is an implied sense of urgency to these activities. Has the company leveraged the technologies that are available? If there is a talent acquisition system in place, there should be a plan for reviewing, assessing, and implementing new features, and turning off features and processes that have become obsolete.

Recruitment Strategy A realistic and detailed talent acquisition strategy can make the difference between a reactive talent operation and one that stays effective even as company goals, market conditions, and the capabilities of competitors change. Companies have long since recognized the need to treat talent acquisition as a critical driver of long-term business success, and so

the link between talent acquisition strategy and core business goals is well known. As with other parts of the talent acquisition process, the challenge lies not with knowing what is right for business, but instead on finding the time and resources to put best-practices into place.

It’s good news that more companies are engaging in workforce planning and feeding that data into recruitment forecasts. Workforce planning has recently gained much press in the discussion of recruitment and retention strategies. It is seen as a way to gain competitive advantage by clarifying and quantifying future talent needs and attrition, and helping to define employee development needs. As the workforce planning concept takes hold with HR and non-HR audiences, there is a need to clarify what workforce planning is, what information and direction the planning

Figure 7: Does Workforce Planning Play a Part in the Development of Your Organization’s Sourcing Strategy?

Yes 54% No 36% Don’t Know 10%

Figure 8: Are Recruiters in Your Organization Notified of Upcoming Hiring Initiatives (as from Workforce Planning Results) Before Receiving a Requisition?

Yes 52% No 40% Don’t know 8%

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will provide, and most centrally, how a company goes about creating a plan.

Although quantifying empty seats and new hire needs based on current conditions may be important, true workforce planning requires another dimension of development. It includes an analysis of business objectives, balances those objectives with current conditions and maps out specific timeframes for meeting the talent needs to support those RECRUITMENT STRATEGY business objectives.

Results Driven Finally, the • Focusing on actionable metrics more effective • Applying metrics to drive workforce improvement planning efforts • Capturing trends provide recruiters Passive with advance • Too many metrics knowledge of • Measuring processes, their hiring not results needs, giving • Over-focus on irrelevant metrics to drive behavior them the opportunity to put that workforce planning data to work through more proactive recruiting. At many companies this is not the case, and the recruiter may actually be the last to know when a hiring need emerges.

This is an immediate disadvantage in terms of sourcing and meeting timeline objectives.

Understanding the importance of the recruiter, companies will increasingly bring the recruiter closer to the workforce planning process.

On a related note, many survey respondents indicated success with sourcing through campus channels. This indicates that their companies had identified their talent needs for the next several years and are reaching out to the campus to begin addressing that need. As

campus recruiting has also become more competitive, companies are finding that longterm relationships with colleges and universities are necessary to cultivate the best graduates.

Overall, the focus on workforce planning and related efforts such as campus recruiting underscore the need for a systematic strategy to maximize proactive recruiting. Toward that end, smart organizations are viewing their hiring as an initiative. It is a single active project, rather than a collection of individual requisitions. Contrast this approach with the status quo and the difference in recruiting effectiveness becomes obvious. Lacking a unified recruiting strategy or planning effort to forecast hiring needs, organizations remain stuck in a reactive firefighting mode when it comes to talent acquisition. They have little grasp of their attrition situation, the future employment marketplace, or how the company’s talent requirements fit within it.

Once again, a deep level of understanding is important here. The recruitment strategy should include the planting of many seeds across the target audience, not simply focus on an open requisition and the need to fill it.

Knowing that even the best workforce planning can be derailed in an uncertain environment, it pays for a company to cultivate candidates with just as much rigor as it applies to cultivating customers.

Metrics The cliché is true: You can’t improve what you can’t measure, and in talent acquisition the right metrics can mean the difference between passive operational functionality and real business impact. Most companies continue to seek better ways of quantifying the business impact of talent acquisition as well as pinpoint

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the areas that represent the greatest opportunities for improvement.

Of all the options we provided, the top metrics reported upon were Open Positions by Recruiter, Aggregate Time-to-Fill, Number of Hires Per Period, and Cost Per Hire. Only a third of respondents differentiate between Time-toFill for professional versus direct labor/ non-exempt positions. In reality, the estimated Time-to-Fill for these groups can vary greatly.

Combining the two provides a result that is inaccurate for both categories, and therefore not actionable. This fact highlights one potential shortcoming in the way many organizations measure the performance of their talent operations—when measures are too broad, the data is not specific enough to provide a clear

Figure 9: Top Recruitment Metrics Used By Respondents Open Requisitions by Recruiter 70% Aggregate Time-to-Fill 69% Number of Hires Per Period 60% Cost Per Hire 57% Functional Time-to-Fill 47% Internal Placement Percentage 47% Offer-to-Accept Ratio 45% Interview-to-Offer Ratio 44% Decline-to-Offer Ratio 35% Diversity 33% Time-to-Fill by Exempt and Non-exempt Requisitions 29%

case for action. Conversely, when considering ways to make a measurement more relevant, one option to explore is breaking that metric down into its components (in this case, time-tofill by profession and time-to-fill by direct labor/non-exempt).

In searching for relevant measures of success, the idea of quality-of-hire immediately comes to mind. After all, quality hires are the end result all organizations seek from their recruiting operations. Unfortunately, measuring quality-of-hire continues to be a challenge. It is a metric that is difficult to capture. The leading components used for quality of hire metrics by survey respondents were Performance Appraisal within First Year, First Year Performance Rating, First Year Retention,

Figure 10: Top Means of Measuring Quality of Hire First Year Retention Rate 36% Performance Appraisal within First Year 35% None 35% Post-hire Manager Feedback 31% First Annual Performance Appraisal 26% Revenue Per Employee 12% Other 5%

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and Post-hire Manager Feedback (See Figure 10). Thirty-five percent of respondents do not have quality-of-hire metrics in place.

Source of hire is another elusive metric. It appears to change as the candidate is asked at different points of the process. This is understandable, as most candidates are led to opportunities for multiple reasons or through multiple methods. For candidates submitting interest through an online system, it is not always easy to answer the simple prescreening question, “How did you hear about us/this position?” The system often presents a dropdown menu of potential sources that can be mind-boggling. Anecdotal evidence points out that many candidates just pick a choice so they can move on. Not surprising given the integrity of the data, only 14 percent of respondents regularly analyzed their hires in light of the sources of those candidates.

A smart approach to metrics is to focus on making them specific and actionable. As companies apply a supply chain model to recruiting, it is desirable to measure time parameters of each phase of the recruiting process for all parties involved: recruiter, hiring manager, and candidate. Specific actions can be taken to address bottlenecks or potential challenges. With technology available today, there is the danger of tracking too many metrics, getting wrapped up at the granular level. Avoiding this requires planners to understand what the metrics are revealing about the organization and the processes.

Do the metrics indicate areas to improve, and will they then effectively measure the improvements? Are they actionable, or retroactive/trend metrics? If a company is trying to capture the reasons why candidates are turning down offers, is anyone looking at that

data and following through to improve the offer/acceptance ratio?

There is a place for retroactive metrics. They are useful for looking at trends and possible causes of recruiting challenges for a given time period. For example, a company may look at the requisition load of recruiters and see how that may correlate to resumes presented or offers accepted. The results may reveal opportunities for improving the “day in the life” of an overburdened recruiter, and they may provide the hard evidence needed to make the case for action, whether that involves expanding resources or re-allocating certain roles and responsibilities.

Sifting the Results: Smart vs.

Not-So-Smart, Real vs. Ideal In sifting through the response data from this year’s respondents, it becomes apparent that companies generally understand the strategic priorities that drive effective talent acquisition.

For the enterprise respondents, the need for effective workforce planning is accepted, as is (generally) the need to have an effective employment brand. It can be noted that in every category, companies continue to engage in activities that are “smart” as well as “not so smart.” In fact, this report was originally prepared to highlight tactics with that designation.

The problem here is that such nomenclature is slightly inaccurate. Companies may have “not so smart practices” in place (i.e. reactive sourcing, lack of workforce planning, no technology improvement process), but that doesn’t mean that they are not smart, or that they don’t understand their needs. Often it is simply a matter of priority. They may not have

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the appropriate means to address those flawed practices at the moment.

This year, we see that companies do recognize the smart “results driven” approaches that can help them compete for critical talent in the future. They understand that the passive approaches to reaching talent are usually relics of the past. The overriding challenge moving forward is for companies to act on that understanding. If a company knows that it needs to mature its workforce planning process, how willing is that company to devote the time and resources to make it happen? Like most aspects of talent management, talent acquisition will evolve within companies when those companies treat it as a priority.

For many organizations, both large enterprises and small and medium businesses alike, talent has already risen to the top of the priority list.

As competition continues to grow, that need for improved talent acquisition operations will only become more pressing, and recruiting will continue to grow smarter. That’s good news for anyone involved in the recruiting process.

Regardless of economic conditions, companies will still need to compete for talent—and smarter recruiting will continue to drive core business success.

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This report was developed by The Newman Group.

The Newman Group, a Futurestep company, provides talent management consulting services for today's Fortune 500 global enterprises, including one out of three Fortune 100 companies and recognized industry leaders such as MetLife, Northrop Grumman, General Motors and McKesson. Our consultants combine next-practice vision, practical solutions and an unparalleled level of commitment and integrity to help our clients translate their talent management strategies into measurable business impact. From workforce planning, to competency management, talent acquisition strategy and execution, and all vital talent-related initiatives, we help you align people, process and technology to achieve talent management success.

To learn more, visit www.tng.futurestep.com 1-877-639-6262 (1-877-NEWMAN2) Email: tng@futurestep.com

www.tng.futurestep.com

www.tng.futurestep.com

1-877-639-6262 (1-877-NEWMAN2)

Email: tng@futurestep.com