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

White paper

Jeremy Paynter and Nick Simcock

April 2012

Creating the people edgeHow to overcome the criticalfactors holding back therecruitment function in yourbusiness

Talent with impact

Talent with impactfuturestep.com

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IntroductionPeople provide the main competitiveadvantage in organisations; forming thelifeblood, driving profit, revenue andgrowth. Yet, even recognising this criticalfactor, there is a dangerous disconnectbetween talent leaders and businessleaders when it comes to measuring thelanguage of success for recruitment.

How do people affect businessperformance and how close is the linkbetween a well aligned recruitmentfunction and business performance?

Futurestep invited a number ofAustralasian business leaders to discuss“how recruitment provides your businesswith competitive advantage” and combinedthe insights with input from 50Australasian talent leaders from a varietyof leading companies.

This whitepaper draws on the findings ofthose discussions and our own expertise toreveal how a disconnect between talentand business leaders can be bridged toprovide companies with, The People Edge.

Nick SimcockManaging DirectorFuturestep New Zealand

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

Talent with impactCopyright©2008. Korn/Ferry International/Futurestep, Inc. All rights reserved.

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The people edge

Business leaders across all industriesagree that having the right people in placewas a fundamental necessity to ensurecompetitive business advantage andsuccess. Brent Waldron, CEO, Carters saidensuring the right people were onboardwas “the single most important part of myjob” and that without the right peoplebusinesses cannot deliver on theirpotential.

Many business leaders agreed that whiletechnology and other efficiencies could beduplicated by competitors, the workforcecould not be replicated. The people factorwas viewed as the biggest lever availableto create competitive advantage.

Driving change

With the right people in place the ability toaffect change quickly and successfully isfar greater. Business leaders sawimplementing change quickly as a keyfactor in times of rapid growth, competitionand economic pressure. “Recruitmentprovides the opportunity to reshape thebusiness over a period of time, to changethe benchmark and expectations ofperformance.” Ian Blair, General ManagerBusiness Banking, Westpac

Driving profit

The majority of business leaders voicedthat talent is a game changer that canmake or break a business. Having thewrong people can affect bottom linedrastically. “Especially in smallerbusinesses, the impact is more dramaticand mistakes become more critical.” MarkHamilton, CEO, Bell Tea & CoffeeCompany

What do talent leaders think?

Talent leaders across all sectors agreedthat employees both directly and indirectlyimpact product delivery, customerexperience, service provision and thereforerevenue potential. Ensuring the rightpeople are hired is critical for maximumprofit return. “People are our point ofdifference so our success is intrinsicallylinked to the acquisition and growth oftalent.” Keith Muirhead, Head ofRecruitment, Air New Zealand

The lifeblood

While not directly questioned in theoriginal research, a significant number ofbusiness leaders also discussed thecultural impact of having the right people.“The right people have a huge culturalinfluence and create positive momentum”Tony Oldham, General Manager Sara LeeNZ Ltd. Having the right people cansignificantly enhance an organisation,creating a culture of success andproductivity, or transformation whereneeded. Of note, Mark Dewdney, CEOLivestock Improvement Corporation saidthe people transformation at LIC over thelast five years was the company’s mostimpactful achievement.

“People are our pointof difference so oursuccess isintrinsically linked tothe acquisition andgrowth of talent.”Keith Muirhead,Head of RecruitmentAir New Zealand



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A dangerous disconnect

Whilst our findings indicate an almostuniversal recognition of the importance ofpeople to business success, there exists amajor disconnect in how business leadersview and define recruitment successcompared to the way talent leaders arebeing measured. The language of successfor business leaders is quality, while talentleaders are being measure on successthrough efficiency measures. The lack of acommon language in this respect willseverely limit your ‘People Edge’.

Business leaders see quality hires drivingbusiness performance and resulting inbusiness success. Quality employeesprovide the ‘people edge’ by enhancingorganisational culture, driving profit,growth and change. Engaged motivatedemployees will act as company brandambassadors, demonstrate significantproductivity impact and save on retention,hiring and training costs. “People canmake the business go gangbusters andgood hires can make or break 100% profitin a week” Rob Kitson, Sales Director,Goodman Fielder Home Ingredients

All business leaders said they were mostinterested in the quality of recruitment(when asked to rank quality, cost and timemeasures). But half of talent leaders felttheir organisation was most interested intime or cost measures.

“People can make thebusiness gogangbusters andgood hires can makeor break 100% profitin a week”Rob Kitson,Sales DirectorGoodman Fielder Home Ingredients



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So. what's missing?

While talent leaders and business leadersrecognise people as the driving forcebehind the success of the business, thereality is that the majority of recruitmentfunctions are still not measuring thequality of hiring decisions.

What recruitment measures do youcurrently use?

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

For those who didn’t currently measurequality factors, the main barriers werelimited time and resource. Other lesserfactors included inadequate technology,perceived lack of appetite for this data andfunctional expertise gaps.

Many Talent leaders felt the current lack ofanalysis of quality of hires measuredthrough employee performance, retention,time to get up to speed in a role couldmean that more readily available efficiency

measures like time and cost of recruitmentwere being over relied on and could becompromising fit and quality of candidates.

Not surprisingly talent leaders across theboard recognized a missing opportunityto integrate workforce planning intobusiness planning. Having effectiveworkforce planning to align sourcing withfuture hiring needs, and integratesuccession and internal moves couldenable the talent acquisition team to leadactivities around the buy and also buildand bounce of talent.

While close to 70% oftalent leadersmeasured time andcost to hire, only 11%measured new hireproductivity and 39%measured new hireperformance.



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A significant impact

With a primary focus on efficiency,Futurestep believes recruitment functionswill be prevented from moving beyondoperational recruitment activities – andunable to provide competitive businessedge through hiring decisions.

By omitting quality measures, recruitmentfunctions are unable to accurately gaugethe impact of their hiring decisions.Businesses will continue to operate withincomplete information and may beunaware of the complete impact (successor failure) employees are having on thebusiness.

If recruitment functions are fully aligned tothe organizations strategy and focus onboth efficiency and effectiveness measurethey will be able to challenge the business,offer expertise on talent decisions, assist indelivering on organisational strategy andensure business priorities are reflected andaligned in all recruitment activities.

A shared language of success

For organisations that believe talent candrive business performance, quality shouldbe the shared language for success and thekey recruitment measurement.



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How to move forward

Operational efficiency in recruitment isexpected. As outlined in Futurestep’s 2010research paper The Evolution of theRecruitment Team , the nature of therecruitment function has evolved and whileefficiency metrics are necessary, a fullyevolved recruitment model must also focusnow on quality measures, measuringoutput and aligning recruitment activitieswith business strategy. “If you get thequality right then the cost and time is justpart of the process” Kevin McKenna,General Manager Roads Australia & NZand Executive Director, Transfield Services

From our research it is clear thattransformation is necessary. Businessesneed to build a framework to ensure ashared language of success, measuringquality and aligning recruitment activitieswith business needs. This will helprecruitment contribute to businessperformance by maximizing hiringopportunities and using the ‘people lever’for a competitive advantage.

Businesses need to be concerned about thelack of measurement, given the correlationbetween people and success. Our researchconsistently shows that people are thesingle most important factor drivingsuccess. This must be demonstratedthrough measuring both the recruitmentfunction process and also the quality of thepeople who join an organisation.

To help maximise the impact of therecruitment function, Futurestep hasoutlined a framework below with three keycomponents that can be used.

1. Implementing qualitymeasurements

Businesses should measure the value ofthe hiring process based on a number ofkey measures, for example:

Performance and productivity

Candidate engagementRetention and turnoverHiring manager satisfaction

By combining these measures with thecost to the business of bringing in talent(cost of hire) and the speed at whichfunctions can discover and recruit thattalent (time to hire), organisations canuncover powerful information about theimpact of each hiring decision.

Recruitment teams will better connect theiractivities with business performance by“developing and implementing robustanalytics and measures that relate to theobjectives in the company strategy and addvalue to the business” Catherine Taylor,Group Manager People & BusinessServices, Kiwibank.

Moving beyond operational recruitmentmetrics and a traditional cost and timefocused mentality to a quality focusedmeasurement system will helporganisations understand their hiringdecisions in more depth. This will providerecruitment teams with the ability to moreclosely align their activities with businesspriorities and future talent needs.

Recruitment teams that can impact qualityin a measurable way will receive morebusiness leaders attention than those thatdon’t. Being able to demonstrate you findand selected the highest quality, mostcapable and best suited talent for theorganization is what is top of mind for forbusiness leaders.

Immediate assessment - job specificskills and capability to exceedperformance6 month assessment - consequentialculture fit and contribution and teaminteraction12 month assessment - ultimatemeasure of impact - recognizingindividual and team contribution andpotential for future

“Developing andimplementing robustanalytics andmeasures that relateto the objectives inthe company strategyand add value to thebusiness”

Catherine Taylor,Group ManagerPeople & Business Services,Kiwibank



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2. Workforce planning

Organisations around the globe are findingthat robust workforce planning processesprovide a competitive advantage. Througha systematic approach, the recruitmentfunction can ensure that its resources arefocused on finding and keeping the righttalent – the talent which has the skills andpotential to provide business advantageboth now and importantly, in the future.

Doug Rippey, Global Practice Leader,Workforce Planning, Futurestep said byaligning the business strategy to aworkforce strategy, an organisation canprovide a workforce plan that integratestalent management areas to provideanswers to questions such as:

Should I promote from within or hireexternally?What are the critical skills and roles Ishould be protecting?What are my tough to find roles where Ishould be focusing recruiting resources?How can I best spend on talentmanagement programmes to ensurebusiness success?

Talent leaders said it was critical for therecruitment function to help lead and buildorganisational capability in workforceplanning across their businesses.

3. Business alignment

Recruitment functions must align theirstrategy, activities and measurementsacross all business functions. Businessleaders surveyed reflected on the hugeimpact that recruitment can have on theirbusiness. Recruitment strategy (as part ofan overall integrated people strategy) mustbe tied to business goals.

In staffing.org’s Corporate RecruitmentRecruiting Report (released 2010) referenceis made to connecting ‘day to day’recruitment activities directly with CEOs’preoccupations and concerns. This isnecessary to ensure the recruitmentfunction is working towards a shared set ofobjectives. Recruitment can impact anorganisation by demonstrating anunderstanding of business direction andstrategy, and providing the talent to meetthe need. “Getting the right people is themost critical component of businessgrowth. We have made the most wins bygetting a line of sight into what thebusiness strategy and growth plans are”Ant Hall, Head of Talent Acquisition,Telecom. Business alignment is critical tosuccess.

Many talent leaders surveyed indicatedtheir biggest successes to date resultedfrom having a clear line of sight intobusiness strategy and growth and theirability to implement activities and recruitaccordingly.

Talent leaders shared a number of waysthey felt recruitment activities could bebetter connected with businessperformance:

Building business partner capability inrecruitment functionContributing to business planningHaving a clearer understanding ofcritical talent gapsDeveloping analytics relating tocompany strategyAligning more closely with other HRfunctions

Only 20% of talentleaders surveyed felttheir currentrecruitmentstrategy was stronglyaligned toorganisationalpriorities



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Summary

A shared language of success acrossbusiness leaders and talent leaders isimperative. This language must be aboutthe quality of hiring decisions, not purelythe process efficiencies of a function. Arecruitment function will significantlycontribute to organisational success andmaximize competitive advantage throughhiring decisions if this common approachis adopted. The key elements that need tobe in place to allow this to happen are:

Quality: Quality should be the keyrecruitment measurement, given theimportant link between peopleperformance and business success. It iscritical to measure success by looking athiring outcomes, rather than purely therecruitment process. Organisations mustaccurately measure beyondhousekeeping metrics of time and costand ensure that the shared language ofsuccess is quality.

Workforce planning: A recruitmentfunction must have integrated businessrelationships to be able to identifyorganisational gaps – the future demand- and also current capability. A line ofsight into future workforce needs iscrucial.

Business alignment: Talent leaders andrecruitment teams must understand theculture, business strategy and levers topull to ensure a business succeeds.They must hold sound industryknowledge and specific knowledge ofthe business they operate in andrepresent. The recruitment functionshould be viewed as a core part ofbusiness to drive growth and profit.Recruitment must be aligned with allbusiness functions.

Through our research, talent leaders andbusiness leaders acknowledge the impactof people in an organisation. The challengeis to move beyond recognition of this fact,and hold the business to account for itshiring decisions. To ensure optimalrecruitment function success, qualitymeasurements must be in place, workforceplanning across the business must bedefined and the recruitment function mustbe truly aligned to the business.

Likewise, given that business leaders placehigh value on bringing talent onboard theymust be prepared to invest in therecruitment function and ensure thefunction is part of the business planningcycle, able to align with strategic goals andgiven access at a decision making level, toensure a common language of success.

Only when organisations begin to actionthis will they be able to fully optimize therecruitment function completely; makingstrong hiring decisions, obtaining staff thatbring impact, be it long-term or immediate,thus taking full advantage of one of thebiggest competitive levers available to abusiness today – people.



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Acknowledgements

We would like to thank the Australasian talent leaders who participated in theonline research and the following business leaders for their participation in thequalitative discussions:

Mark Hamilton, Chief Executive Officer - Bell Tea & Coffee CompanyStephen Mockett, Former Chief Operating Officer - Bank of New ZealandBrent Waldron, Chief Executive - CartersDoug Paulin, General Manager NZ Fish - SealordTony Oldham, General Manager - Sara Lee NZ LtdMark Dewdney, Chief Executive Officer - Livestock Improvement CorporationIan Blair, General Manager Business Banking – WestpacChris Buddle, Country Manager - Simplot New Zealand LtdIan Ward, Board Member Auckland District Health Board, Board Member NZ BloodService, Director C4 Consulting LimitedKatrina Ritchie, Group HR Manager Projects and Planning - FonterraRob Kitson, Sales Director - Goodman Fielder Home IngredientsGeoff Norgate, Managing Director - Vitaco Health (NZ) LtdKevin McKenna, General Manager Roads Australia & NZ, and Executive Director -Transfield ServicesGerard Egerton, Programme Leader Performance & Productivity Improvement -Department of Internal AffairsSteve Donkin, Programme Manager - Department of ConservationTim Deane, Director Global Sales - FonterraMark Powell, Chief Executive Officer - New Zealand Rental GroupJuergen Link, General Manager Engineering & Mainenance - FonterraTania Pauling, Managing Director - Godfrey Hirst, NZ LtdDuncan Rutherford, State Manager - Orrcon SteelPeter Styles, General Manager Business Improvement - Downer EDIRyan Sanders, Sales Manager - OneSteelSimon Hewson, Principle Geotechnical Engineer - KCGMPhil McKenzie, Chief Executive Officer - Widex AustraliaGraham Egli, Director, HSEC Mining & Metallurgy SNC Lavalin



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About Futurestep

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

Futurestep can meet a variety of workforce requirements; from RPO and projectrecruitment, to search and consulting, our services apply a truly world-class capabilityto deliver talent with impact, providing the experience and global reach to identify,attract and retain the people who drive business success. With locations on fourcontinents and a record of success in securing top talent around the world, Futurestepprovides the experience and global reach to identify, attract and retain the people whodrive 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 managementsolutions. Based in Los Angeles, the firm delivers an array of solutions that helpclients to attract, engage, develop, and retain their talent.

Visit www.kornferry.com for more information on the Korn/Ferry International familyof companies, and www.kornferryinstitute.com for thought leadership, intellectualproperty 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, pleasecontact:

Jeremy Paynter, Director Client Solutions, Futurestep New ZealandPhone + 64 9 355 1881 or Cell +64 27 222 [email protected]

Jeremy leads the consulting and solutions practice for Futurestep New Zealand andholds overall responsibility for the delivery of consulting assignments for Futurestep’sclients. Jeremy’s focus is to partner with clients to advise them on how to bestachieve business success through delivering their people strategy. His experienceincludes assessment and design, strategic resourcing, talent management,organisation design, career management and coaching.


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

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