Recruit+Onomics

Recruitment is process of identifying the target market-pool of candidates for the organization’s product-Employee Value Proposition undertaken by the marketer/recruiter.

Selection is the filtering of the target market into sub groups such that we have the primary and secondary target audience is well defined thereby giving us the suitable/unsuitable candidate pool.

Demand Theory of recruitment would define the relationship between the recruiter’s desire to pay the price of EVP and the availability of goods-the talent. So if the talent is available in abundance then the price that he willing to pay, being the EVP, would automatically fall hence displaying the inverse relationship. Similarly, for the candidate if there are jobs available in abundance then the demand for a certain job would be low and hence the price demanded i.e. EVP would be high.

The Supply theory would come into play as the importance of filling the position/price of talent=EVP/opportunity cost of talent=Competitive Advantage increases, the recruiter increases the talent as that fetches him a higher overall return. Hence, the logic of giving priority to those goods which make more money over those which do not make as much, applies here.

Elasticity of recruitment = %change in demand for talent/% change in business environment
So the elaticity of recruitment is the responsiveness of the demand for talent to the chnages in the business environment.

Applying the funda of innovation economics here, the central goal of the economic policy (in this case recruitment strategy) should be to spur higher productivity and greater innovation. This when applied to recruitment would mean meeting the recruitment metrics effectively and have better and more innovative ways of achieving the same. Secondly, this form of economics also says that markets (organizations/recruiters) relying on price signals, in this case salary, alone will not be as effective. Hence, the EVP has to be packaged as a bundle of offerings and not just salary alone. The recruitment/marketing strategy (Employee Value Proposition) would then be created based on the need identification of the end customer which would be needs of the prospective employee. The Marketing Strategy would attempt to ensure that there are no gaps in the customer’s demand and the product’s (job) promise (EVP=Employee Demands). Hence, making the product i.e. the EVP attractive enough to convert the sale leading to the acceptance of the offer. Being the first point of contact between the customer (candidate) and the product (EVP), it is the recruiter’s responsibility to effectively utilize pull & push strategies to create the magic and convert the sale.

The Opportunity Cost of foregoing talent acquisition would be the competitive advantage that he would gain from that acquisition. Talent being the constant source of differentiation amongst competitors would have too high a return on investment to forego.

Cost Benefit Analysis of recruitment can be done on the following basis:

1) Recruiting Cost Ratio = (Total Recruitment Costs/ Total Compensation recruited)*100
2) Recruiting Efficiency = 1-RCR
3) New Hire Performance (based on the grading systems)
4) Manager Satisfaction Feedback Score
5) Time Taken to fill the position
6) New Employee Loss Ratio
7) Turnover Index
8) Source Value Index = (%New Hires fro Source/% Recruitment Budget Allocation) {Booz Allen's Recruiting Survey}
9) Competency Opportunity Cost: On the loss of an experienced and more efficient employee and replacement with a less experienced and efficient employee that comes with new hire costs (fixed costs+ variable costs)
(For calculations refer: http://www.staffing.org/)

Recipe for Employee Engagement: What are the Ingredients??

Yesterday, I attended a workshop on Employee Engagement. Often faced with the challenge of accurately defining the engagement process, post the workshop I thought of making an attempt at it. I walked out with the following thoughts on the same.

Engagement is a religion where you convert the employees to the organization’s cult. I would personally define it as a heightened level of devotion wherein the employee is unable to identify any gaps in the religion’s offering i.e. The Value Proposition.

It is the ability to foresee and meet the stated and the unstated needs in such fashion that you create a state of mind where the employee is so addicted (the state of being enslaved to a habit or practice) that he chooses to go beyond the contract. So in short employee engagement is analogous to addiction. It is the organization’s ability to make the employees dance to its own form of music i.e. move them towards value creation and achieving heightened levels of excellence. The employee exists to own the success & failure of the organization and intervenes to improve business results.

As Marcus Buckingham & Curt Coffman have put it in their book, First Break All the Rules, these needs have to be met in a set hierarchy. They say that the act is analogous to climbing a mountain where you get acclimatized to a certain type of atmosphere and then move further up and if at all you try to skip a level it will lead to mountain sickness.

So, I guess we could say that we need to meet the vanilla requirements before we add the chocolate sauce.

The inability of the above or inefficiency at it would lead to haunting of the ghosts of disengagement. Disenchantment at work may result in the draconian threat of attrition. And if at all, the disengaged stay back then they will turn into parasites working towards converting the religion of the engaged employees (to that of disengagement).

A colleague rightly put it; Engagement can be compared to a marriage wherein you are marrying the employee to the organization. Like in every relationship, the employee will fall for the charisma of the brand, then there will be the initial commitment phobia from the employee’s end, he may get cold feet and hence there would be domestic issues but it is the organization’s job to create that chemistry i.e. an Occupational Intimacy which will make the employee Say, Stay and Strive (the 3 behaviors of an engaged employee as defined by Hewitt Research) i.e. become a talent magnet. If, however, the brand is mishandled then the dynamics of the r0elationship will get eroded and the reactive approach of wheedling with fresh promises, exit interview approach in this case, doesn’t help too often. Oprah Winfrey spoke similarly about marriage, it’s about Am I in it today? It’s not about will I be in it tomorrow, or should I have been in it yesterday, it’s about being committed to it today.

However, having said that the Engagement process is not a story of mush and romance alone. It has a strong business case. Research has shown a positive correlation between engagement and business performance.

Hewitt Research on the subject suggests that successful employee engagement leads to:
· Increased Shareholder return
· More Market Value/Employee
· More Sales/Employee
· More Profit
· More Revenue
· Greater Customer Retention
· Higher Profitability
· Reduction in turnover cost

Gallup research Statistics say that successfully engaged organizations are:
· 18% more productive
· 12% more profitable
· 12% better at engaging customers
· 51% less likely to leave
· 27% less likely to indulge in absenteeism

Now of course there is always a debate on who owns the onus of creating that magic. It is obvious that it is the line manager who is the driver of the experience of the brand, for any employee. He is the first face of the employer for any employee. HR being a default engagement champion will act as a catalyst to provide a successful & supportive macro environment (providing the processes, methodologies, platforms etc) but it will be the line manager who has to act as an anchor and give direction to the employee.

Would like to sign off with a recently heard quote by Henry Ford: “Why is it every time I ask for a pair of hands, they come with a brain attached?”

HR in the Battleground..!!

There is a growing realization that people are the most important asset that an organization possesses. Human talent has become the differentiating factor among competitors across all industries. The competitive advantage that arises from the talent has a greater impact than from the other resources which are getting largely commoditized, as in they are easily replicable.

Change has allowed HR’s value proposition to move from being an administrative function to being a business partner. The function is now moving focus from just do-ables to deliverables.

With due respect to the challenges faced by other functions, I would like to draw a comparison with a few of them, in order to negate the impression of HR as a cost function.

Like in marketing they sell products to the external customers of the brand, in HR today we sell the company to both the external (the talent/employee pool) and internal customers i.e the employees through employer branding phenomenon.

In the world of finance, we have equity leading to asset productivity which in turn leads to profit, similarly in HR, we have investments in Talent management leading to talent development which in turn leads to an organization’s strategic success.

As in Supply Chain Management, in HR too you make and buy to manage risk, adapt to uncertainty in demand, aim at an improved ROI in developing employees, preserve the investment by balancing
employee-employer relationships as talent development is a perishable commodity.

Selection today is the most important purchase decision that a company makes. Investment in talent development is the most strategic investment of any organization.

Hence, this strategic function, namely HR, now provides us with the opportunity to face one of the toughest challenges in the economy, increasingly being recognized as The Talentship Challenge. This is not about developing people and creating succession plans. It is about meeting the objectives of the company which in business terms amounts to making money for the company, a common goal we all strive towards.