Article: 4 Steps to Reduce Your Cost of Hiring

Talent Acquisition

4 Steps to Reduce Your Cost of Hiring

Dr. Scott Erker, SVP Selection Solutions, DDI shares his views with People Matters, on the latest trends in hiring and talent acquisition across the globe
4 Steps to Reduce Your Cost of Hiring

Hiring is not to sell one's profile, but to actually assess if there is a win-win fitment for both parties


Organisations need to focus on accelerating development from the day of joining so that the new employee can become productive faster


Dr. Scott Erker, SVP Selection Solutions, DDI shares his views with People Matters, on the latest trends in hiring and talent acquisition across the globe. Excerpts from a face to face interaction with Dr. Erker

After spending years in the field of assessments & in building talent acquisition systems across many global organizations, my view of the global talent acquisition space is that it resembles a “staffing schizophrenia”. This situation is a combination of many pieces coming together: on one hand, some jobs are attracting too many candidates and most of them are not appropriate for those roles; on the other hand, hiring managers have high talent expectation, and as a result even though many candidates apply for a job, you cannot actually fill the position as the desired level of talent capability does not match the quality of talent available.
The problem is not in finding enough candidates, but in finding the right fit in terms of abilities, skills and culture. This has resulted in many companies in India resorting to grow leadership from within, especially in the senior manager levels.
This poses a huge challenge for organizations as managers are become demanding on their requirements, and sometimes even unrealistic. This requires them to explore more candidates, which adds to the recruitment bill, in terms of cost and time.
Cost implications of the selection process being considerable, I worked with our CFO to put together an economic model for staffing. Hiring expense includes money spent from the moment I need to fill a vacancy until I have hired the right person, and then the second part of the expense includes induction, training and development (which is the ramp up cost). This is a diminishing cost because the person starts to use it over a period of time and becomes productive after a certain point of time. This process can be long or not, depending on the level of skill required of the job and availability of talent, making turnover very expensive.
Organizations need to be realistic in their hiring and prioritize on the areas to focus on in order to find the right candidates.

The trends that helps reduce cost of hiring are seen as follows:

Hire for culture fit. I think we have better tools today to hire for culture fit. Culture fit needs to work both ways: both hiring managers and new hires need to be confident with the employment decision for it to work. The hiring process needs to be designed to provide both parties with information, data and clues, on what the job will entail, much deeper than what is visible at the tip of the iceberg. It must provide information on aspects like information on the informal culture of the team, how decisions are taken, relationship dynamics etc. The objective of the hiring process is not to sell the organization (from the organization’s perspective) or to sell the profile (from the candidate perspective) but to assess if there is a win-win fitment for both parties. For culture fit assessment, for example, one can use behavior-based interview and motivation interview. This combination will allow one to assess what the candidate can do and also what he/she enjoys doing. For some roles, job simulation can be a great aid where the person experiences some challenging aspect of the job to see how he/she perform and feel. This gives the candidate a chance to experience the job even before he/she is actually put on the job. These assessments are also useful for vertical movements in the organization, especially when moving from an operational job, to a managerial role.

Select (and develop) front-line leaders. We ran a big study to ask people about the leadership training they received, and most expressed that the major challenges they faced was that they never had a chance to experience the nuances of being a manager when they were individual contributors. There is an immense value in building assessment programs around these activities to see how people do it. There are many situations where managers are not ready to handle a role as they have never been put in those situations, such as, giving feedback to an underperformer or handling delicate issues like complaints and conflicts.
The main problem is that the process of identifying gaps and correcting them is not streamlined in most organizations. People go to training programs without knowing what they need to improve upon or how that learning will help them enhance productivity. Last summer, DDI evaluated more than 200 frontline managers using our new Manager Ready assessment. We asked these managers to rate themselves across 7 of the 9 competencies assessed by Manager Ready. We found that 91% managers had at least one blind spot across these 7 competencies. The average manager had at least 3 blind spots. One-fourth of the managers had blind spots in 5 or more of the 7 competencies.

Focus on on-boarding and development. The worst thing that can happen is if on a given day your new recruit meets your worst employee. Organizations need to focus on accelerating development on the first days and weeks from joining so that the new employee can become productive faster. In reality, not many organizations focus on setting expectations, creating net worth for people, especially in a complex work environment. Early development has immense benefits: from fewer mistakes and faster productiveness, to early success. This signals that the organization cares about the new person’s success, which in turn reinforces the new hire’s decision to join the organization.

Focus on predictive hiring analytics. Anything we discussed in the previous points would not matter unless hiring teams measure relevant metrics. The starting point is always to understand the business and what it takes to succeed in that business, the particular culture and environment. The metrics that organizations need are shifting from ‘cost of hire’ and ‘time to fill’, towards ‘quality of hire’ and ‘potential of hires’ to meet future needs of the organization. Selection professionals not only need to think about selection risks but also take note of employee development to gauge what happens in the first month in the job, six months in the job and later on, be able to feed these findings back to the selection process.

Top 10 Situations new managers are not ready for
• Reprimanding an underperformer
• Firing someone
• Going from co-worker to boss
• Learning the ropes
• Dealing with senior management
• Handling customer complaints
• HR issues such as sexual harassment
• Coaching or managing others
• Resolving conflicts
• Layoffs

Predictive Hiring Analytics: Crucial questions one should ask
1) From what source am I getting my ‘best’ candidates?
2) Are my assessments predicting:
- Success in the final interview?
- Win-win hiring decision?
- Job performance and engagement?
3) Does my final interview:
- Lead to job acceptance at an acceptable rate?
- Predict win-win hiring decision?
- Predict job performance &
- What lead time do I need to fill capability needs next time?
4) Do win-win hiring decisions predict:
- Turnover
- Engagement
- Performance

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Topics: Talent Acquisition, #Outsourcing, #HRMetrics

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