Episode Transcript
[00:00:00] You okay? Today I would like to talk about recruiting a massive, massive industry and perhaps the most important thing we do in human resources. If we don't get the right people into the company, it doesn't matter how well we manage them. And it is also a very complex, multifaceted part of business. This. It impacts leaders, managers, HR. It's got legal issues and there is high volume recruiting. There is recruiting for mid level managers and professionals and people with deep domain expertise. There's recruiting for senior leaders and executives, all of which are different, by the way. And the function of talent acquisition, as it's usually called, is actually one of the most non systemic in our model of all. It is one of the most transactional parts of HR. It struggles to be strategic, and that is why so many companies outsource it. So let me give you a little bit of background on why I say that and then we'll talk about what's going on. So number one, the CEO survey from PwC that came out two weeks ago, which said that 40% of the time spent in companies is wasted on bureaucracy. That's the CEO's opinions, but there's probably some truth to that. Ranked the things that are the most bureaucratic, number one being emails, number two being meetings, number three being recruiting. So recruiting is very high up. There considered to be a complex bureaucratic, time wasting process by leaders. And then when you ask recruiting professionals, and we have a big survey we just finished taking with AMS that we'll be writing up in a report later, 60% of talent acquisition leaders say the number one project on their plate is to increase the efficiency of the talent acquisition team and reduce the cost. So let's talk about cost. Recruiting is very expensive, and that's why companies lay off people so quickly. The recruiting process is expensive. There's a lot of technology tools. Most companies have dozens of TA tools. We'll talk about that in a minute. You have to place job ads, you have to go to universities, you have to hire executive headhunters or sourcers or recruiters, or you outsource it. And then there is the time it takes while the job is open, which is a wasted productivity. Then there's the onboarding time, then there's the bonuses that you have to pay. I actually did a study on data scientists several years ago and found that it was six times cheaper. It was one 6th the cost to develop a data scientist from an internal candidate than it was to hire a data scientist from outside the company. So it's very expensive. And what we find is that the talent acquisition leaders, despite all the money we spend on it, don't often have a seat at the table. In that survey that I mentioned earlier with AMS, almost 50% of the talent acquisition leaders said that a their company has no workforce planning process whatsoever, and b they're not included in whatever process they do have. So what we tend to do is treat the recruiting function like the Amazon fulfillment center, as one person put it, throw them a bunch of job wrecks and hope they can go find the people. But the problem is, in the Amazon fulfillment center, we have clearly defined products in the job search. We really don't know exactly who we're looking for. And the hiring managers are not experts at the job market and the labor market and understanding what the different skills and roles and locations of specialty people are. So this is a big, complicated area. And let me just add that I'm not trying to be negative at all. I have the greatest respect for recruiters and talent acquisition professionals because their job is so multifaceted and it is so difficult because they have to understand the culture and jobs and management issues of their company and the role that they're trying to fill. So that's a very human centered process. Then they have to understand how to source people. Where are we going to look for those people? Where are they? What do they look like? What are their backgrounds? How do we identify and assess their skills? And then they have to reach those people. Then they have to talk to them and interview them and screen them. Then they have to get them through the process inside the company of going through the interview process, and then they have to close them on the opportunity. So it's a very complex area and companies that have really high performing recruiting teams are very, very successful companies. I will never forget when American Express went through their massive talent acquisition transformation probably maybe eight, nine years ago. And I knew the guy that was running it at the time, and he showed me what they did. American Express, which is a very savvy company relative to talent, had come to the conclusion that the backgrounds and skills of the people they needed in customer service and sales were people that had worked in the hospitality industry, not people that had worked in customer service, not people that had worked in financial services at all. And sure enough, I call American Express every now and then, and they are the most customer centric company that I've ever done business with. And that's because they figured that out and they figured that out in their recruiting business. So there's a lot of sophistication to this and a lot of data involved and a lot of technology. Now, why is it an issue now? It's an issue now for two big reasons. One is the job market is extremely competitive. The unemployment rate is very low. People have left the workforce. Employees feel activated. They have much more authority and autonomy. They are looking around, they're being very selective, and it is very hard to hire people with new skills with highly in demand skills. In fact, 45% of the talent acquisition leaders that we just surveyed said that their number one issue is skills, hiring for skills, and that they are committed to improving internal mobility so they can find those skills inside the company, because it's so hard to find them outside the company. And one of the reasons that talent acquisition struggles is it has been put on an island. When I talked in the beginning of a podcast about systemic HR, the whole theme of systemic HR is stitching together the centers of excellence in HR into an integrated set of solutions for the problems that the company's addressing. Well, talent acquisition usually is on an island. And we're throwing over requests as if they're a sales department. We're saying, go find somebody that can do this. And we're not looking at things like mobility, internal hires, adjacencies of skills, how we're going to create more diverse candidates, except in the TA function itself. So it has to be much more integrated. By the way, diversity comes up as a very high priority for the talent acquisition leaders, too, for two reasons. One, of course, the company wants more diversity, but the other is in a tight labor market like this, which I think we're going to have for a long time. You have to look in new places and source hidden secrets of people that weren't always considered to be good candidates for the job. Now, let's talk a little bit about strategy, and then I'll talk about why recruiting has its challenges. Right now, as I talked about in the article I wrote last week, many, many companies overhire, and the reason they overhire is they delegate responsibility of headcount to line managers. And there's nothing wrong with that. But we need to look at it holistically, because when a line manager makes a business case to the CFO or to whoever that they need people, they are simply reacting to the fact that their group is somehow out of capacity and wants to grow. And as you know, there's many ways to grow the output of a group. You could redesign it. You could get more technology, you could reskill people. You could replace an underperformer with a high performer you don't have to just add more people all the time. I mean, sometimes that works, sometimes it doesn't work. But the system in most companies doesn't allow that conversation to take place because headcount is allocated from the CFO and it's sprinkled around like fairy dust to everybody who thinks they need it. So the talent acquisition group is oftentimes whipsawed between hiring and layoffs and hiring and layoffs, simply because the company doesn't have an integrated process. And as I said in the systemic HR research Kathy and I went through each of the domains of HR, talent acquisition is the least systemic of the others. So I would suggest to you one of the ways to make talent acquisition more strategic is match it up with career and l and D. And there are companies starting to do that so that the whole process, you rethink the whole process in a much more integrated way. The second big issue is the tech. There are a lot of legacy systems in talent acquisition. Now. The core platform, of course, is the applicant tracking system, which is basically a database. And it was developed for largely compliance reasons. And it stores candidates and it has all sorts of other features, but those are old systems. Many, many companies have 1015 year old atss, and now we have miraculous tools for AI based sourcing, matching, candidate assessment tools of many, many types, interview scheduling tools and systems that can do video interviews in an asynchronous basis, and many, many more. And we're about to publish a bunch of research based on some things we've been looking at with paradox. That that entire process of all of those things being used to find somebody, screen them, bring them in, interview them, and so forth, usually takes 45 days on average. But the high point is 70 to 90 to even 120 days to hire somebody because of the complexity of the process. And the poor talent acquisition group is managing 1520 different systems, each of which have different skills modules and assessment modules in it, trying to come up with strategic ways to assess people and trying to focus on the needs of the company and the cultural needs of the company, not just the job descriptions. By the way, as you know, job descriptions are another problem. So there's this big legacy technology infrastructure that companies have to deal with. Along comes some new ideas and a vendor like Paradox, I just mentioned them, or Eightfold, but let me talk about Paradox first. And Paradox says, okay, after ten years of R and D, by the way, paradox didn't invent this overnight. They say, well, why don't we think about this from the candidate side, not the recruiter side, what would make the candidate experience so fast and so simple that they could get through it in a day? And we could much more quickly assess who the right people are and dramatically improve our quality by improving our speed. By the way, low speed results in low quality because high quality candidates won't wait 90 days. They'll find another job somewhere else or they'll get pissed off about what's going on. So what paradox did is using conversational AI, is they went through each of the steps of hiring and they found ways to automate it through their chatbot and McDonald's, FedEx, General Motors, Lockheed Martin. A whole bunch of companies have used this for high volume and high know more, higher end professional hiring, and radically simplified the system, virtually eliminating the need for an ATS. Now, they don't have the AI engine of an Eightfold or a beamery, and so they don't do everything. But that's an example of how you can improve this process that ceos think is the number three worst thing going on in the company in a radical way. There are other vendors like that now. Eightfold or phenom or beamery are more on the sourcing side, but they have similar tools for AI for identifying and selecting and seek out another one candidates to fit that pipeline. So you may be advertising the job, like in the case of McDonald's, when you drive through the drive through and you order a hamburger, it says, would you like a job with that hamburger?
[00:12:00] I mean, it literally does that. So they can get candidates because they need a lot of hires, because there's so much turnover. You can't do that with a traditional atfs based workflow system. It's impossible. So there's some massive, massive automation potential now available that was not available five years ago. And what I'm really here to talk to you about is those kinds of projects which sound like massive projects and you hate to even bite off on them, have huge impacts on the quality of hire, the time to hire, the cost of hire, and basically the perception that talent acquisition will have within the rest of the company. Now, as much as I'm a fan of paradox and Eightfold and Beamery and phenom and all these other great new vendors, there is no one vendor that does everything. What you'll find is that the more AI centric, sophisticated new companies are significantly further ahead than the traditional vendors being oracle, SAP, workday, cornerstone, so forth. And some of the older.
[00:13:06] You know, one of the ways to improve the effectiveness of recruiting is to put together a project. It's going to take a year or two and really clean up and simplify your talent acquisition architecture. The third thing I want to talk about is the jobs and roles in recruiting. It was interesting, we had a bunch of meetings in Europe last fall and then late last couple of weeks. And what I hear from talent acquisition leaders is we don't get enough support, we don't get enough training and education. Our recruiters are considered to be expendable, replaceable human beings. They get laid off all the time when we have a downturn. And that's a problem, because even as automation and AI gets better and better and better, which it will, there is almost always going to be a human side to recruiting. Now, in the case of McDonald's, you can get people through the candidate pipeline and they can show up at the store and the store manager can talk to them, and the recruiter doesn't have to get too involved. Of course, that's not true for the corporate jobs, but there is a role for human beings that's extremely important in the high end roles in companies. There's still an assessment and conversation process to have with candidates and in the jobs where we can replace lots and lots of recruiters on the high volume with technology. The recruiters can now become talent scouts. They can look at the labor market, they can look at data, they can optimize the systems, and they can spend more time figuring out how to improve internal mobility skills, models, clean up job architectures, et cetera. So the recruiting industry is changing. And if you as a company don't feel like you're part of that transformation, that evolution, you're going to fall behind. I can guarantee you that. Because the competition for talent is really brutal and the companies that are good at this are clearly out engineering and outperforming those that don't. Let me give you two examples. I had a really great conversation with one of the executives at Meta, the Facebook yesterday. And as most of you know, Meta laid off 22% of its workforce in the last year and spectacularly improved its margins and its profit by 200%. I mean, that's why the stock just skyrocketed. And I was asking her about the process they went through. This particular executive is involved in all of the analytics and other things that go on behind the scenes. And she said, we were working on that reengineering process for well over a year, and we did a lot of analysis of the performance of the people in the company. They have very sophisticated performance assessment process. The job roles and the structures in different teams and went through a rigorous process of figuring out who we didn't need in the company anymore. And then of course, the business areas and the products that they decided to discontinue. And that is why the company is performing so well. Now, Meta Facebook is really the darling of the Internet industry at the moment. And I think a lot of that is because they really, really take the talent part of their business much more seriously than most people realize. By the way, Microsoft is very, very similar. Microsoft has a similarly rigorous set of talent issues. Compare that to many other tech companies who I know where the entire HR department is recruiting, and as soon as the CEO or the CFO says we need to clean it up, they just lay a bunch of people off. So all of that skill set and institutional knowledge leaves. Now, those companies tend to be whipsaw companies. They go up, they go down. They haven't built long term muscle in their infrastructure. So my point here is that no matter how big you are, if you're not going to take the recruiting process seriously, invest in the recruiting team. Integrate the recruiting team into these other parts of HR and consider outsourcing what you don't know how to do. By the way, if you look at vendors like ams and others, they are very sophisticated at this. And if there are roles or jobs that you feel that you just don't have the qualification to hire, outsourcing them can be really valuable for your company because you can learn from the outsourced provider how to do it better and what infrastructure, tools and processes you need to make it better, too. So the reason I wanted to talk about this today was I'm really thinking that for 2024, in the world of AI and Galileo and all these cool things we're going to be doing, bottom line, is going to be productivity. Productivity is going to be the differentiator between company a and company b in the same industry. Yes. Product quality, yes, sales, yes, customer service and all that. But given that those things are well known under the covers, the companies that can do things like recruiting well, that can match and integrate internal mobility and skills based hiring with the recruiting function, that can outsource the things that they know they don't know how to do, that can clean up the technology act and reduce the time to hire by reducing the number of bureaucratic steps that can take less time from line managers, that can turn recruiters into talent advisors are going to be the competitive companies that win. And as you've heard before, I am completely convinced from all the conversations I have, the labor market's just going to get harder, it's not going to get easier. So this is an area of investment that is well worth making. We have some great materials on this. We have several courses in the Josh Burson Academy. We have a number of industry studies on recruiting, benchmark data on the time to hire and cost to hire that you can look at to see where you're at, a great maturity model that can step you through the different issues to consider as you evolve your recruiting. And of course, we'd love to just talk to you about what you're doing because we know all the tech vendors, too. So that's kind of my 20 minutes for today. In the next couple of weeks, I'm going to talk more about Galileo. I'm going to talk more about irresistible, tell you a little bit about what we're doing there and our new course in the Josh Burson Academy. Academy on AI. On February 20 eigth, the day before leap year day, we're going to be launching the AI and HR course that is the culmination of more than a year of research we've done on AI. And that course will teach you everything you need to know as an HR professional to feel comfortable, fluent, and ready to do something relative to AI and HR. So join the JBA and you'll have access to that course, and I'll talk more about that soon. Thanks, everybody. Have a great week.
[00:19:59] It.
