“Our people are our organization’s most valuable asset.” How many times have you heard an executive utter that line? Perhaps (gasp!) you’ve even said it yourself.
The vast majority of business leaders today preach the importance of human capital in achieving competitive advantage. But are we really convinced? If people are an organization’s most valuable asset, why is it that HR and talent acquisition—functions that deal with the very business of people—are typically slow to innovate and resistant to change?
All too often we see other functions in business moving speedily into new technology and practices, while HR and talent acquisition lag behind. If we truly believe people are our single most important asset, shouldn’t we be innovating and investing more in talent acquisition, the right skills and the right technology to ensure we are hiring the right people to begin with?
More importantly, how does this dissonance between what we say and what we do affect the bottom line?
The Recruiting Revolution
In decades past, the role of HR was much more tactical in nature: they were the team responsible for coordinating new hire paperwork, benefits and payroll. For this reason, HR and talent acquisition have not traditionally been associated with financial business impact in the same way that other functions like sales or operations might be. Unfortunately, the perception that HR is a cost center still permeates the C-suite today. And in organizations that are relying on the same talent processes as they were years ago, that perception is likely a reality.
Today, recruiting has evolved into a function that requires a much more proactive, strategic approach, and the capabilities of your talent acquisition team affect your entire organization.
Recruiting has evolved into a function that requires a much more proactive, strategic approachClick to tweet
Your recruiters are responsible for filling every vacant, revenue-generating position. Their job, by its very nature, has a huge bottom-line impact.
Talent acquisition shouldn’t be an afterthought, but instead should be the foundation upon which you build your business. “Business-integrated HR organizations” realize more than twice the revenue per employee than do companies that view HR as a primarily transactional function, and companies with highly effective talent management strategies experience 41 percent lower turnover among high-performing employees.
The Cost—and Consequences—of a Status Quo Talent Strategy
Just as the roles of HR and talent acquisition have changed, so too has the talent landscape. It’s why a recent Deloitte survey found that 60 percent of companies are currently updating and revamping their talent sourcing strategy, and another 27 percent are considering changes. And forget about the War for Talent, it’s now about the Fight for Fit. Sure, the old way of recruiting may have gotten applicants in the door, but were those applicants really the best–fit people?
The U.S. spends $105 billion a year correcting problems associated with poor hiring decisions. Turnover costs 150 percent of the salary of the employee who needs to be replaced, and for a high-level or highly specialized employee, that figure jumps to a whopping 400 percent. Now here’s the kicker: as much as 80 percent of employee turnover is due to bad hiring decisions. That means you can reduce your turnover costs—which could easily be millions of dollars annually—by 80 percent through a more effective approach to talent acquisition.
Quality of hire is critical, but so is the time to hire. Letting a position go unfilled can cost $7,000 per day—that’s $210,000 for every month the role remains vacant! Based on The Iron Triangle concept of project management (or my colleague Tracey Parsons, who is a huge advocate of this idea), there’s a saying that goes something like, “Fast, good or cheap. Pick two.” Yet business leaders today expect all three. They want recruiters to hire the best talent quickly—but without investing money or resources in new approaches, tools or technologies.
We can’t continue to recruit the way we always have. We’re stuck in an endless cycle of trying to attract the 12 percent of actively-looking job seekers with jobs alone, disqualifying them or sending them into the black hole of the ATS, then going back out to the SAME people. As Albert Einstein said, “The definition of insanity is doing the same thing over and over again, but expecting different results.” Every day, business and talent acquisition leaders should be challenging the status quo and asking themselves this: What can we do differently today, tomorrow, next month and next year to hire better, faster and smarter? Because the truth is this: For every day that you fail to improve and advance your talent acquisition strategy, you are actually losing money … and your competitive advantage.
What can we do differently today, tomorrow & next year to hire better, faster & smarter?Click to tweet
The Path Forward
In 2017, companies are expected to spend over $35 billion on CRM software to engage their prospects and customers more effectively. Business leaders are clearly sold on the value of innovation when it comes to building customer relationships. Yet when it comes to building candidate relationships, many organizations are still using the same outdated recruiting technology and processes they had in place 20 years ago. Or, even more likely, they aren’t even thinking about building relationships. Instead, they are continuously paying more money to job boards and relying on the ATS as the talent acquisition technology benchmark (but—SURPRISE—it’s not built for acquisition or communication, it’s built for compliance).
A study by Bersin found that organizations with mature talent acquisition strategies, on average, perform 30 percent better than peers on business outcomes, including the ability to meet or exceed customer expectations, create new products and services faster than competitors, and meet or exceed financial targets. The numbers are proof that investing in your talent acquisition strategy simply makes good business sense.
Despite this consistent correlation between strong talent acquisition and positive bottom line, many organizations still suffer from self-inflicted inaction when it comes to rethinking their talent acquisition strategy and investments.
The path forward means forgetting the excuses: “it’s not the right time,” “we’re changing ATSes,” “we don’t have the budget” and the rest of the long laundry list. It means thinking ahead and taking risks. It means feeling empowered to make a change and investing in something groundbreaking. It means understanding that in the 21st century, without the right technology at your side, your innovation and advantage is at stake.
I think it’s time we really mean it when we say, “Our people are our organization’s most valuable asset.” And that means putting action and vision behind the statement.