Turning Internal Recruitment functions into its own profitable business

A presentation I attended from Carol Mahoney (VP of Talent Acquisition @ Yahoo!) at the Australasian Talent Conference back in April has had a profound affect on me... It has stayed in my thinking and has now bubbled to the top, it is an idea I have to action, something I have to make real... Only problem is... I'm not sure how to.

Whilst her points about branding, buzz marketing, purple squirrels and purple berrets left their mark. One of the points Carol made, really hit home. With the economic situation as it is now, it began to resonate even louder.

The point being run your internal Recruitment division like a business. I have let this idea stew for quite a while, not courageous enough to action the idea, and not exactly sure where to start. I took that first step today!

In my organisation, I am a cost centre! (it's OK, don't feel bad, I am reconciled to the idea) When there are slow times, down times, up times, well anything really, the first place which is drawn into the spotlight as a scapegoat is Recruitment. Justifying our existence if you will. Now, don't get me wrong, Recruitment is viewed as a business imperative and has come a hell of a long way in the last 6 years in our company, however I need to do more.

Companies and people always seem to value things, ideas, thoughts and reports if they are physically paying for them. I needed to find a medium which communicated beyond new hires and cost to hire and start talking the same language as our Executive. Putting a whole lot of work into this before getting executive approval would be fruitless and an exhibition of wasted effort for no return. (not something I am a fan of doing)

TODAY, I had a high level conversation with our COO about the concept in general and if we believe the company is ready for it. Our COO (previously a CFO) looked perplexed and yet interested in the idea. This surprised me, I had all my counter arguements ready to fire off, and yet had to cool my jets mid way through my rebuttal with a great, sounds OK then? Great right? well yes, however I have one minor obstavle to overcome....

I HAVE NO REAL IDEA as to how to achieve this, from where I currently stand. The first step is done, i have semi buy in, the rest needs to evolve, budgets and KPI's will be needed to be developed and stuck to. When this gets in I aim to be able to conclusively prove that Recruitment in my company is adding genuine and significant value and be able to quanify it to everyone.

Can I get any advice from those out there who have been through this? Allow me to learn from you please.

thanks for reading...

Dan

Comment by Steve Levy on November 10, 2008 at 8:32am: What financial metrics does your COO - formerly CFO - use to measure the health and wellness of your company? Did your pro forma use these metrics in describing the opportunity?

Comment by Dan Nuroo on November 10, 2008 at 5:34pm: Thanks Steve, This will sound bad... our metrics are very scant to say the least here. We are dragging ourselves out of being a privately owned company with limited systems to a publicly listed company with poor systems. We are an IT services company, however we are like the painter with the worst looking house in the street. Our metrics are simply based around average salary and EBITA. This is all about the evolution of our organisation.

My pitch to the COO was purely verbal, needed to gauge interest before putting too much work into, I tried to use their terms in terms of ROI, effectiveness, profit centre v cost centre, cost savings, accountability etc. These terms gained interest, and thus the effort I am trying to put in now.

I am finding it a really interesting exercise, breaking down our costs etc, however the real fun bit will be when I start trying to figure out my charging rates to the business! That will cause a few ripples in a variety of Managers

Comment by Michael Johnson on November 17, 2008 at 4:19pm: You might want to reach out to Elaine Orler at Knowledge Infusion. She's very passionate about this subject and has been through this exercise multiple times.

Mike

Comment by Steve Levy on November 17, 2008 at 4:31pm: As soon as I read EBITA - or did you mean EBITDA? - it spoke to the challenge. Still, you probably have enough financial data to map it to key recruiting metrics (even if they're basic) and come up with some rudimentary EVA for recruiting.

Let's keep chatting...

Comment by Dan Nuroo on November 17, 2008 at 4:33pm: Cheers guys, I have a meeting with new CFO today, I think I have sparked his interest. Will keep you posted.

Comment by Steve Levy on November 17, 2008 at 4:41pm: ask him/her what are their favorite metrics to measuring the health and wellness of the organization...then work to develop recruiting counterparts to these.

Comment by Dan Nuroo on November 20, 2008 at 5:11pm: Struggled to get the kind of answer which really made logical, strategic sense I'm afraid. I'll have to pull the snippets I got and formulate my own... His main point of view was to compare with the opportunity cost v cost per hire. Therefore comparing what we would be charged by an agency vs what we essentially outlay to hire someone. Which is fair enough, although the "opportunity cost" depends on what type of model you would use, ie RPO v Agency, how you'd engage the said parties and the fact that you would still have to pay someone to be the conduit between the 2. That said i have enough I think to about to start getting stuff on paper. I think it will be a real eye opener for the business and am, scarily enough, pretty excited about actually getting around to doing it. The interesting part of the conversation was the fact the he questioned my motives.... "i'm not sure why you would want to do this? Build up your empire to ask for more bonuses and pay rises?" Well hey, why not! If it is proven we are adding significant value then it is deserved, however the risk is that the opposite could be true too (just taking devils advocate, I know it isn't the case... ummm does that add too much into the religion v ethics debate raging on THAT other discussion? :) )

Comment by Steve Levy on November 20, 2008 at 7:02pm: But cost-per-hire???? Please Dan, noooooooooo

Comment by Dan Nuroo on November 20, 2008 at 7:40pm: Big picture Steve. Baby steps here, it will be a big paradigm change. gotta start somewhere.

Comment by Michael Johnson on November 20, 2008 at 11:42pm: As a consulting/IT Services firm you might consider looking at the bench size of your consultants (i.e. the paid but not billable consultants on average over a period of time) and put a cost against that by multiplying their compensation by the avg. number on the paid bench. You could then build a strategy around pipelining hire-ready talent and adopting the proper CRM tools in which to build and maintain those talent relationships. You can then show how recruiting could reduce the paid bench costs while maintaining a non-paid "bench" in your CRM that allows you to respond on-demand based on the needs of the business. Along with a good CRM strategy and technology you will also need to align closely with the sales/bus dev people in your company to understand where the potential new business is going to come from and what will be required on the talent side. You can then dig into your CRM and show them the pipeline you've developed in the market that will meet their needs. You can see a graphic example of a talent pipeline in my group called CRM in Recruiting - http://www.recruitingblogs.com/group/crm/.

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