Eli Goldratt’s Theory of Constraints and the Recruitment Goal

The photograph above of a hot air balloon breaking through a group of clouds is a freedom metaphor ofbreaking against a constraint, and rising above to achieve a goal. The Big Idea behind this unassumingpotray is a methodology made famous by Dr Eliyahu Goldratt, whoconceived the Theory of Constraints and introduced it to a wide audience through his 1984 novel, The Goal. The similarities of the manufacturing plant, in this fictonal story by Eli Goldratt, and many corporate recruitment departments are striking & its relevance endures even thirty years after it was written

Goldratt’s Theory of Constraints applied to Talent Acquisition

Shortly after the turn of the century, whenBento Boxes had become Japan’s best knowncontribution to the culinary world, came the widely popular conveyor belt sushi restaurants.Also known as sushi-go-rounds, the customers could simply pick little portions of fresh sushi and sashimi oftheir choice from a movingconveyor belt & pay based on the number & type of sushiportions consumed. The idea combined japanese minimalism & their loathing for wastage

The Theory of Constraints thinking process similarly draws uponthis minimalist approach and is built around the core that

Every process has a single constraint and that thetotal process throughput - the rate at whichthe system makes money through sales can only beimproved when the constraint is improved

Only improvement of the constraint will further the GOAL

This concept when applied to recruitments helps us understand the goal as:

Achieving More Profit

To maximize the number of quality hires/month for the Organization Eli Goldratt calls this “Throughput”

&that there is a fixed amount of Time, Money & Resource ~ constraints that need to be optimized

Time Money Resources

Low Performance High Performance

Average Cost per HireResume to Offer

Time to FillInterview to Offer

Sourcing Hrs/Qualified CandidateSourcing Channel Efficiency

Offers to Hire

A Staffing Supply Chain viewed through the lens of Throughput & Constraints shifts the perspective of the recruitment function from

Transaction driven to a Relationship driven process

What Can Talent Acquistion Learn from Eli Goldratt

More is better philosophy to how efficient we are with the candidate activity in the staffing supply chain funnel

Quantity & Cost Containment to Quality of Hire

The Throughput is a great TA metric for these very reasons. Most importantly, it illustrates the efficiency & effectiveness of the entire recruiting process by focusing on cradle to grave hiring ratios & help identify low and high performance process zones as exhibited below

RG: Revenue Growth; PM: Profit Margin; TI: Total ImprovementSource: Boston Consulting Group/WFPMA - From Capability to Profitability, 2012

With Througput everyone sees the value of having a defined role and all stakeholders have a skin in the game enabling a visible bottom-line caseThe Recruiting function, as per the findings of a research study by BCG below, when executed well, has the highest business impact among all TM functions

Recruiting

Onboarding & Retention

Managing Talent

Performance Management

Developing Leadership

Employer Branding

Enhancing Employee Engagement

RG PM TI

Focus is the essence of Theory of Constraints and using the right metrics, recruiters will be encouraged to focus their behaviours on the causes and not the symptoms of recruitment success

Opportunities to analyze fix & improve

Best Practices to review, share & apply

3.5x 2.0x 5.5x

2.5x 1.9x 4.4x

2.2x 2.1x 4.3x

2.4x 1.8x 4.2x

2.1x 2.0x 4.1x

2.1x 1.8x 3.9x

1.8x 1.6x 3.4x

Source/Photo CreditsSingkham: Shutterstock EirngKwan: Shutterstock

AuthorPradeep Sahay

www.toc-goldratt.inen.wikipedia.org/wiki/The_Goal

3.5x 2.0x

Goal Constraints

Throughput