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Demonstrating to CEOs How Recruiting Can Directly Increase Revenues


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Presentation for the ERE Expo 2012 Fall, presented by John Sullivan

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Demonstrating to CEOs How Recruiting Can Directly Increase Revenues

  1. 1. This new HR program will make you $100 million… do you care what it’s called? 1
  2. 2. I was happy with our HR approach,but now, “I want that one” CEO of General Mills 2
  3. 3. DEMONSTRATING TOCEO’S HOW RECRUITING CAN DIRECTLY INCREASE REVENUES Shifting to a focused recruiting strategy ERE.Net Fall, 2012 ©Dr John Sullivan 3
  4. 4. 3 simple goals for today• To stimulate your thinking… (to get you to begin questioning your current “treat them all equal” approach to recruiting)• To show you how to become a corporate hero• To answer your questions 4
  5. 5. Let’s start with a question What do executives care most about? They often say that “employees are their most important asset” But have you ever considered the possibility… that they are not being 100% honest? > 5
  6. 6. ContinuedIt’s time to shift to another premiseAnd that premise is that…executives actually care only abouta few things that are known as“business results”These “business results” appear in…the 10k , the annual report and inexecutive bonus criteria> 6
  7. 7. Here is a list of business results or impactsBusiness results/ impacts These are not bus. results 1.Revenue / Sales 1. Cost per hire 2.Profit 2. Offer acceptance rate 3.Stock price 3. Time to fill 4.Profit margin 4. Interview to hire ratio 5.Customer satisfaction 5. Candidate experience 6.Market share 6. We use social media 7. A “seat at the table” 8. Being a bus. partnerIf it isn’t mentioned in the annual report, it is not a bus. result 7
  8. 8. We now know that CEO’s rate TM as the #1 business area that… requires the most change 8
  9. 9. Business areas where CEO’s expect the most changePwC’s 14th annual global CEO survey found1. Strategies for managing talent2. Approaches to managing risk3. Investment decisions4. Organizational structure (including M&A)5. Focus on corporate reputation and rebuilding trust6. Capitalstructure7. Engagement with the Board of Directors 9
  10. 10. Do you know why we were rated as the #1 area that needs change?Could having dissatisfied customers be a basis for their concern? 10
  11. 11. The targeted satisfaction rateWhat is an acceptable percentage of dissatisfiedand… very dissatisfied customers in any field? 11
  12. 12. Customer dissatisfaction with HR support (Hackett) HR functions Very dissatisfied Dissatisfied Total % of unhappy customers 1. Collaboration/ 48% 31% 79% knowledge sharing releases/2012/07192012-growing-talent-crisis.jsp 2. Retention 38% 32% 70% 3. Learning & develop. 29% 40% 69% 4. WP and succession 31% 37% 68%Source: Business Services Talent Management Performance Study - The Hackett group, 2012 12
  13. 13. With those kind of numbers andCEO’s expectation of change… Does it make sense to consider adramatic shift in your approach to recruiting? 13
  14. 14. The trailblazer best practice in business impact rec.1.M Homula at FirstMerit Bank demonstrated the business impacts of recruiting so well to his CEO2.That the CEO asked him to make the “business impact of recruiting” presentation… to the board of directors of the bank3.Today’s benchmark firms – Google and Apple 14
  15. 15. Now let’s shift… to the elements of a“focused recruiting strategy”for improving business results 15
  16. 16. The top 15 focused recruiting actionsThese are actions that recruiting cantake to increase revenue and profitas a result of…• “Focusing resources”• Hiring “better people”• Data supported rec. tool selection 17
  17. 17. The first focused recruiting action is…1) Focus on high revenue business unitsEvery business unit, geographic region and functiondoes not have the same opportunity to increase revenue and profitSo focus recruitingresourceson SBU’s that…1) Produce a high % of corporate revenues2) Have high revenue growthrates3) Have high profit margins 18
  18. 18. Focus your TM to maximize your impact2) Identify and then focus on using the most effectiveTalent Management approaches Determine which Talent Management functions or processes have the highest revenue or profit impact and then… focus your HR budget on those high-impact Talent Management functionsQuestion – What are the highest impact TM functions? 19
  19. 19. What TM functions have the most business impact? Developing leadership Enhancing employee engagement Global people management/ global expansion Mastering HR processes Managing talent Employer branding Performance management and rewards Providing shared services and outsourcing Recruiting Onboarding and retentionSource: BCG/WFPMA -From Capability to Profitability: Realizing the Value of People Management, 2012 20
  20. 20. The HR functions with the highest business impact Source: BCG/WFPMA -From Capability to Profitability: Realizing the Value of People Management, 2012 21
  21. 21. The HR functions with the lowest business impactBottom 5 performerswith the lowest bus. impacts17. Transforming HR into a strategic partner18. Health and security management19. Managing flexibility and labor costs (Contingent)20. Restructuring the organization21. Managing work/lifebalance22. Managing an aging workforce (Note: this one actually resulted in a reduction in revenue growth) Source: BCG/WFPMA -From Capability to Profitability: Realizing the Value of People Management, 2012 22
  22. 22. Focus your recruiting… to maximize your impact3) Focus hiring on revenue generating andrevenue impact positions Revenue generating positions deserve priority because… they have the most direct and easiest to measure impact on revenue Support jobsknow as "revenue impact jobs" can also increase revenues (i.e. customer service and sales support positions) Work with the COO to identify these positions Assign these reqs. the highest priority, target top performers andprovide the most resources 23
  23. 23. Focus your recruiting… to maximize your impact4) Develop hiring systems that place higherperformersinto all jobsStart by calculating the performance differential between an average and a top performer in the same job 24
  24. 24. Are top performers worth all of the effort?"The secret of my success isthat we have gone toexceptional lengths to hirethe best people in theworld… boy, does it payoff."“The difference betweenthe average programmer Steve Jobsand a great one”…its at least 25 25
  25. 25. Focus your recruiting… to maximize your impact4) Placing higher performersinto all jobs(continued)ID prospects with a history of top performanceUse an algorithmto ID performance predictors (Google)Market research can tell the uniquejobacceptance criteria that top performers haveImprove the hiring processes by using metrics to ID the best sources, screening & closing approachesReduce"hiring failures"by identifying hiring process “failure points” &the costs of a bad hire> 26
  26. 26. To understand the cost of bottomperformers… you need a hiring quality ROI calculator 27
  27. 27. Focus your recruiting… to maximize your impact5) Focus on hiring more innovators, pioneers andpurple squirrelsIncreasing innovation may have replaced productivity as the highest HR business impactRealize that it takes unique recruiting approaches in order to attract, assess and sell innovatorsSo first determine the dollar impactsand the performance differential of hiring innovators > 28
  28. 28. What is the performance differential between an innovator and an average employeeOne top-notch engineer is worth “300 times ormore… than the average” …“we would rather lose an Alan Eustace entire incoming class of Senior Vice President, Engineering and engineering graduates Research than one exceptional technologist.” 29
  29. 29. Do firms with the most innovators make more $Which firms (in this group) have the most/ least innovators?IBMHPMicrosoftFacebookGoogleApple 30
  30. 30. Do the firms with the most innovators produce the most revenue?A comparison of employee output (rev. per employee)Average $208,000IBM $246,900 (22% above the average)HP $354,800 (Nearly 1¾ times the average)Microsoft $811,000 (Nearly 4 times the average)Facebook $1,105,810 (5 ¾ times the average)Google $1,209,000 (Nearly 6 times the average)Apple $2,249,000 (Nearly 11 times the average)Key learning - It takes 9.5 X more employeesatIBM… to produce the same revenue as Apple 31(Calculated using 2012 data from http:// )
  31. 31. Do innovators increase profit?Dollars of profit per employee (Profit per labor $ spent is a better measure)HP $14,949IBM $37,057Microsoft $259,378Google $327,357Apple $610,063Key learning - it takes nearly 16X more employeesat IBM… and 40X more at HP to produce the sameprofit as Apple 32(Calculated using 2012 data from
  32. 32. Do innovators increase the firm’s stock value?Market cap value comparisonHP $65 BIBM $161 BGoogle $185 BMicrosoft $214 BApple $623 B (The world’s most valuable firm) (Calculated using 8/9/11 data) 33
  33. 33. CEO’s are enamored with the performance of Apple The future of both Talent Management and business are shaped like anApple! 34
  34. 34. Focus your recruiting… to maximize your impact6) Focus on hiring productive people that staylongerThe revenue differential produced by hiring a top performer… continues each year that they remain on the jobLong retentiontimes multiply the revenue impact of the new hireWhen you source and assess prospects, consider their retention profile (which covers their likelihood of staying – Google algorithm) 35
  35. 35. Focus your recruiting… to maximize your impact7) Focus on rapidly fillingvacant revenue positionsSlow hiring… allows revenue generating positions to be vacant for inordinately long periods of timeThus revenues from those jobs will stopFor example- when a loan officer position is vacant at a bank, the $5000 in daily revenue that the position typically generates cannot be booked during the Time To Fill delay… and it may be lost to a competing bank 36
  36. 36. Focus your recruiting… to maximize your impact8) Focus on hiring exceptional executivesObviously filling key executive positions like the CEO, CTO, CIO and COO with exceptional talent can lead to better products and increase revenuesUnfortunately, most recruiting functions outsource this key executive search role, so they miss the opportunity to gain market intelligence and to take credit for the resulting revenue increasesSo we must focus on internal executive search 37
  37. 37. Focus your recruiting… to maximize your impact9) Focus on hiring more leaders at all levelsSuperior leaders plan better, prioritize, make better decisions and get the most out of their teamHiring a larger % with superior leadership skills all levels will increase revenuesHiring individuals with proven leadership skills, gets you immediate benefits and… you also save the time / costs of leadership developmentHiring all employees with a high level of collaboration skills will increase cooperation and speed up the rate of change/innovation in your firm 38
  38. 38. Focus your recruiting… to maximize your impact10) Focus on hiring key people directlyfrom yourcompetitorsYou can directly recruit the best directly away from your competitors… if you have a robust hiring process and a strong employer brandNot only does this get your firm new ideas, increased performance and higher revenues… but the revenue of your competitor will go down as a result of their loss of key talent 39
  39. 39. Aggressive poaching from top competitorsWhat firm has directly poached 20,000+ hires fromMicrosoft – 4,981IBM – 4,480HP - 2,580Yahoo - 2,438Oracle - 2,043Accenture– 1,849 The world’s only recruiting machineCisco - 1,620Intel - 1,367Apple - 1,345Sun - 1,340 Source: Business Insider Apr. 9, 2012 40
  40. 40. Focus your recruiting… to maximize your impactYou must identify the highest-impact jobs to poach The best sales manager and salesperson The chief product development manager The top customer service person The Chief Technical Officer (CTO) The leading foreign tax specialist Partner relationshipmanager The best recruiter 41
  41. 41. Focus your recruiting… to maximize your impact11) Focus on hiring magnet hires that will bring inadditional top performers A magnet hire is an industry icon If you hire a single high revenue producing “magnet hire”… they may bring 5 – 7 additional top performing hires over the 1st year Hiring magnet hires and industry icons will further strengthen your employer brand 42
  42. 42. Focus your recruiting… to maximize your impact12) Focus on hiring people that work more hours If employees are absent a great deal, you will obviously suffer a loss of revenue and output If your process selects top-performs that are absent less than the average employee, you may get as many as 7 days more productivity and thus revenue from each hire each year If a new hire is in an exempt position and they end up working more hours than the average employee, you will also generate more productivity and revenue 43
  43. 43. Focus your recruiting… to maximize your impact13) Focus on hiring individuals that demand lesssalaryIf your recruiting system targets and hires individuals that perform at a high level but that will also willing to work for a lower average salary, you will generate salary savingsIf you utilize these salary/labor savings to hire additional employees, you will end up with an increase in output and revenues, with no increase in overall labor costs 44
  44. 44. Focus your recruiting… to maximize your impact14) Focus on hiring low maintenanceemployeesthat allow managers to focus on revenueIf you hire "low maintenance" employees that require less counseling, discipline, training and supervisory time, your new hires will spend a larger percentage of their time producingIn addition, with their reduced counseling and discipline load, their managers will be free to focus on activities that generate more revenue 45
  45. 45. Focus your recruiting… to maximize your impact15) Identify & utilize the most effective recruitingtoolsYou will get better performing hires if you utilize only the most effective recruiting approaches Its important to continually gather and use data that identifies the most effective employer branding approaches, sources, job posting sites and assessment and closing approachesRequire that the most effective recruiting tools be used on each high revenue / bus. impact job 46
  46. 46. Use the right source to get quality hiresSource effectiveness /quality of hire Source popularity Volume1. Employee referrals 1. Referrals 28.0%2. Large job boards 2. Job boards 20.1%3. Niche job boards 3. Career site 9.8%4. Temp to perm 4. Recruiter initiated 9.1%5. Recruiters 5. College 6.6%6. Trade media 6. Rehires 4.3%7. Staffing services 7. Social media 3.5%8. College recruiting 8. 3rd party 2.8%9. Career fairs 9. Print 2.2%10. Co-op education 10. Temp to hire 2.1%11. Mass media 11. Career fairs 1.9%12. Military 12. Walk-ins 0.8% Source: 2011 Source: CareerXroads 2012 47
  47. 47. Did I make you think?Are there any additional questions? 49