Demonstrating to CEOs How Recruiting Can Directly Increase Revenues
description
Transcript of Demonstrating to CEOs How Recruiting Can Directly Increase Revenues
1
This new HR program will make
you $100 million…
do you care what it’s called?
2
I was happy with our HR approach,
but now, “I want that one”
CEO of General Mills
DEMONSTRATING TO CEO’S HOW RECRUITING CAN DIRECTLY INCREASE
REVENUES
ERE.Net Fall, 2012
© Dr John Sullivan
3www.drjohnsullivan.com
Shifting to a focused recruiting strategy
4
• 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
3 simple goals for today
5
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? >
Let’s start with a question
6
It’s time to shift to another premise
And that premise is that… executives actually care only about a few things that are known as “business results”
These “business results” appear in… the 10k , the annual report and in executive bonus criteria >
Continued
Here is a list of business results or impacts
Business results/ impacts1.Revenue / Sales2.Profit3.Stock price4.Profit margin5.Customer satisfaction6.Market share
These are not bus. results
7
1.Cost per hire2.Offer acceptance rate3.Time to fill4. Interview to hire ratio5.Candidate experience6.We use social media7.A “seat at the table”8.Being a bus. partner
If it isn’t mentioned in the annual report, it is not a bus. result
8
We now know that CEO’s rate TM
as the #1 business area that…
requires the most change
9
Business areas where CEO’s expect the most change
1. Strategies for managing talent
2. Approaches to managing risk
3. Investment decisions
4. Organizational structure (including M&A)
5. Focus on corporate reputation and rebuilding trust
6. Capital structure
7. Engagement with the Board of Directors
PwC’s 14th annual global CEO survey found
Do you know why we were rated as the #1 area that needs change?
10
Could having dissatisfied customers be a basis for their concern?
11
The targeted satisfaction rate
What is an acceptable percentage of dissatisfied
and… very dissatisfied customers in any field?
12
Customer dissatisfaction with HR support (Hackett)
Source: Business Services Talent Management Performance Study - The Hackett group, 2012
http://www.thehackettgroup.com/about/research-alerts-press-releases/2012/07192012-growing-talent-crisis.jsp
HR functions Very dissatisfied Dissatisfied Total % of unhappy customers
1. Collaboration/ knowledge sharing
48% 31% 79%
2. Retention 38% 32% 70%
3. Learning & develop.
29% 40% 69%
4. WP and succession 31% 37% 68%
With those kind of numbers and CEO’s expectation of change…
Does it make sense to consider a dramatic shift in your approach to
recruiting?
13
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 CEO
2.That the CEO asked him to make the “business impact of recruiting” presentation… to the board of directors of the bank
3.Today’s benchmark firms – Google and Apple
Now let’s shift…
to the elements of a
“focused recruiting strategy”
for improving business results
15
The top 15 focused recruiting actions
These are actions that recruiting can take to increase revenue and profit as a result of…
17
• “Focusing resources” • Hiring “better people”• Data supported rec. tool selection
18
The first focused recruiting action is…
1) Focus on high revenue business units Every business unit, geographic region and
function does not have the same opportunity to increase revenue and profit
So focus recruiting resources on SBU’s that…1) Produce a high % of corporate revenues 2) Have high revenue growth rates3) Have high profit margins
19
Focus your TM to maximize your impact
2) Identify and then focus on using the most effective Talent 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 functions
Question – What are the highest impact TM functions?
What TM functions have the most business impact?
20
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
The HR functions with the highest business impact
21Source: BCG/WFPMA - From Capability to Profitability: Realizing the Value of People Management, 2012
The HR functions with the lowest business impact
22
Bottom 5 performers with the lowest bus. impacts
17. Transforming HR into a strategic partner
18. Health and security management
19. Managing flexibility and labor costs (Contingent)
20. Restructuring the organization
21. Managing work/life balance22. 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
23
Focus your recruiting… to maximize your impact
3) Focus hiring on revenue generating and revenue impact positions Revenue generating positions deserve priority
because… they have the most direct and easiest to measure impact on revenue
Support jobs know 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 and provide the most resources
24
Focus your recruiting… to maximize your impact
4) Develop hiring systems that place higher performers into all jobs
Start by calculating the performance differential between an average and a top performer in the same job
Are top performers worth all of the effort?
25
"The secret of my success is that we have gone to exceptional lengths to hire the best people in the world… boy, does it pay off."
Steve Jobs“The difference between the average programmer and a great one”… it's at least 25
26
Focus your recruiting… to maximize your impact
4) Placing higher performers into all jobs (continued)ID prospects with a history of top performance Use an algorithm to ID performance predictors
(Google)
Market research can tell the unique job acceptance 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 >
27
To understand the cost of bottom performers… you need a hiring quality ROI calculator
http://www.shakercg.com/roi-calculators/sales-impact-of-better-selection-roi-calculator
28
Focus your recruiting… to maximize your impact
5) Focus on hiring more innovators, pioneers and purple squirrels Increasing innovation may have replaced
productivity as the highest HR business impactRealize that it takes unique recruiting
approaches in order to attract, assess and sell innovators
So first determine the dollar impacts and the performance differential of hiring innovators >
What is the performance differential between an innovator and an average employee
One top-notch engineer is worth “300 times or
more… than the average” …
“we would rather lose an entire incoming class of engineering graduates than one exceptional
technologist.”29
Alan EustaceSenior Vice President, Engineering and Research
Do firms with the most innovators make more $
Which firms (in this group) have the most/ least innovators?
IBM HP Microsoft FacebookGoogle Apple
30
Do the firms with the most innovators produce the most revenue?
A comparison of employee output (rev. per employee) Average $208,000 IBM $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 employees at IBM… to produce the same revenue as Apple (Calculated using 2012 data from http:// www.wolframalpha.com/input/?i=apple+revenue+per+employee )
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 $610,063
Key learning - it takes nearly 16X more employees at IBM… and 40X more at HP to produce the same profit as Apple (Calculated using 2012 data from www.wolframalpha.com ) 32
Do innovators increase the firm’s stock value?
Market cap value comparison
HP $65 B
IBM $161 B
Google $185 B
Microsoft $214 B
Apple $623 B (The world’s most valuable firm)
(Calculated using 8/9/11 data)
33
CEO’s are enamored with the performance of Apple
34
The future of both Talent Management and business are shaped like an Apple!
35
Focus your recruiting… to maximize your impact
6) Focus on hiring productive people that stay longer The revenue differential produced by hiring a top
performer… continues each year that they remain on the job
Long retention times 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)
36
Focus your recruiting… to maximize your impact
7) Focus on rapidly filling vacant revenue positions Slow hiring… allows revenue generating
positions to be vacant for inordinately long periods of time
Thus revenues from those jobs will stopFor 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
37
Focus your recruiting… to maximize your impact
8) 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
38
Focus your recruiting… to maximize your impact
9) Focus on hiring more leaders at all levelsSuperior leaders plan better, prioritize, make
better decisions and get the most out of their teamHiring a larger % with superior leadership skills
all levels will increase revenuesHiring 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
39
Focus your recruiting… to maximize your impact
10) Focus on hiring key people directly from your competitors 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
40
Aggressive poaching from top competitorsWhat firm has directly poached 20,000+ hires fromMicrosoft – 4,981IBM – 4,480HP - 2,580Yahoo - 2,438Oracle - 2,043Accenture– 1,849Cisco - 1,620Intel - 1,367Apple - 1,345Sun - 1,340
40
The world’s only recruiting machine
Source: Business Insider Apr. 9, 2012
41
Focus your recruiting… to maximize your impact
You 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 relationship manager The best recruiter
42
Focus your recruiting… to maximize your impact
11) Focus on hiring magnet hires that will bring in additional 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
43
Focus your recruiting… to maximize your impact
12) 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
44
Focus your recruiting… to maximize your impact
13) Focus on hiring individuals that demand less salary 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
45
Focus your recruiting… to maximize your impact
14) Focus on hiring low maintenance employees that 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
46
Focus your recruiting… to maximize your impact
15) Identify & utilize the most effective recruiting tools You will get better performing hires if you utilize
only the most effective recruiting approaches It's 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
47
Use the right source to get quality hires Source effectiveness /quality of hire1. Employee referrals2. Large job boards3. Niche job boards4. Temp to perm5. Recruiters 6. Trade media7. Staffing services8. College recruiting9. Career fairs10. Co-op education11. Mass media12. Military
Source: staffing.org 2011
Source popularity Volume
1. Referrals 28.0%2. Job boards 20.1%3. Career site 9.8%4. Recruiter initiated 9.1%5. College 6.6%6. Rehires 4.3%7. Social media 3.5%8. 3rd party 2.8%9. Print 2.2%10. Temp to hire 2.1%11. Career fairs 1.9%12. Walk-ins 0.8%
Source: CareerXroads 2012
Are there any additional questions?
49
Did I make you think?