In recruiting there are winners and losers. It’s a zero sum game. Top candidates are recruited by multiple companies and quickly make decisions about where to go. One company will win the best candidate and the rest will lose. Multiply that effort times the number of people you hire each year and you quickly realize you’re in a fierce competition. It’s why they call it a “War for Talent”.
While the “war for talent” has been around since 1997 when the phrase was first introduced by McKinsey & Co., we’re seeing the results first hand of the early winners and losers in the battles that have ensued. They’re showing up in the form of a whole host of disruptions to old businesses once considered the stalwarts of enterprise.
Consider for a second that Kodak was founded in 1888 and is now a skeleton of it’s old self after it emerged from bankruptcy, surviving primarily by selling off decades of intellectual property. It’s failure to adapt and shed its core film business at a time when camera technology moved to the smartphone spelled its demise.
The taxi business in San Francisco is all but gone thanks to Uber and Lyft and is rapidly eroding in every city those two companies enter. Airbnb is now, by a measure of hotel rooms, the largest hotel company in the world. Elon Musk just announced Tesla’s new Powerwall, a lithium-ion battery (starts at $3,000) that stores the sunlight generated from your solar panels, taking you completely off the power grid. Musk has essentially come out with the iPod of sunlight energy storage, meaning that the Powerwall will only get smaller, cheaper, and store more energy over time. Even something as seemingly mundane as a thermostat has entered the digital age with Nest (now owned by Google).
Nobody is immune. Every company is at risk of being disrupted in the digital age. And the pace at which disruptive technologies are being introduced is staggering and is showing no signs of slowing down.
Start Acquiring Talent Like You Acquire Customers
Historically, recruiting has been delivered under the broad umbrella of Human Resources. The problem with this outdated approach is that recruiting is nothing like the rest of HR. Why? HR has traditionally been a tactical back office function with a primary focus on service delivery and cost reduction. HR is not a zero sum game. HR isn’t poised to be in the trenches to win battles everyday like recruiting is.
As a CEO or head of sales and marketing, what do you do when you want to acquire more customers? You spend more money of course–you ramp up the sales team and buy more advertising to build more opportunity pipeline. What do you do when you want to compete for hiring better talent? Do you figure out how to spend less money? No. Like sales and marketing you should spend more on recruiting and employer branding. And therein lies the fundamental problem. It doesn’t make sense to think about nor position recruiting under a cost reduction focused function. Sales and marketing doesn’t report into the CFO or CHRO so why would recruiting?
The view on recruiting needs to change if you’re going to win the war for talent. The winners have already started to think about and operate their recruiting functions like sales and marketing, in some cases pulling recruiting out of HR all together. Take Google for example. By most people’s standards they’re the best corporate recruiting function there is. Many would attribute that to their powerful brand, something that exists outside the recruiting sphere of influence. Think again. They have 1 recruiter for every 58 employees compared to the industry average of 1 recruiter for every 577 employees. And that’s just recruiting headcount. According to Laszlo Bock, head of people at Google, they spend twice as much as the average company on recruiting. Recruiting is not about saving money at Google. It’s about hiring the best people at all costs.
In the digital era where innovation and creativity have already trumped productivity as the key business driver, talent acquisition has never been more important. Of all HR functions, recruiting contributes the most impact to revenue and profit. In 2012, Boston Consulting Group and the World Federation People Management Association conducted and survey and found that the impact of better recruiting at high capability companies over low capability companies was 3.5x on revenue and 2x on profit. In short, the better you are at recruiting, the better your revenues and profits are over your weaker competitors by a significant factor.
Technology: You Can’t Run Recruiting Likes Sales and Marketing in the Talent Suite
The legacy underlying technology in place to support hiring in an organization is the applicant tracking system. These were systems designed in the 1990’s, purchased by HR, and driven by a need to automate compliance. They were never designed for strategic talent acquisition; helping you source and attract the best talent, engage talent on any device or medium of their choice, and collaborate across the enterprise so that everyone involved in hiring is engaged to quickly vet and close the best candidates.
That’s quickly changing as the old guard of leading applicant tracking systems have been gobbled up by the big ERP’s making way for new, more innovative, and disruptive hiring systems. You’d think that was good news for companies and heads of talent. However, post consolidation these same ERP’s are now pushing the unified “talent suite” which includes recruiting alongside performance management, learning, succession planning, and the list goes on and on. But a quick look under the hood and you’ll see that it’s the same applicant tracking technology recruiting needs to get away from if it’s to finally be run like a sophisticated sales and marketing machine. It completely misses the points made in this article about why recruiting needs to be managed differently. In short, it’s recruiting for HR not recruiting for the future survival of the business. The recruiting technology you choose needs to drive the strategic changes needed to source, attract, and hire the best people.
As I shared, in recruiting there are winners and losers. If you want to win, now is the time to start thinking about recruiting like sales and marketing while deploying leading technology and having the same mindset about acquiring talent as you do customers. The clear alternative is to lose in recruiting and ultimately lose your company to the competition.