Insanity is doing the same thing over and over again and expecting different results.
Remind you of your budgeting process?
Most Talent Acquisition (TA) teams have long suffered the consequences of working with unrealistic budgets, yet it’s still a tough pattern to break. And while budget season is months away, why not take steps now to make your budget work for you throughout the year?
Today the need to fix the budgeting process has even more urgency. As long-term labor availability continues to trend to the negative, the hard costs for recruiting talent are on the rise. Suppliers are now charging more. New investments are being made in recruiting technology. More is being spent to elevate employment brand and improve the candidate experience and on-boarding. With 10,000 baby boomers retiring every day and a labor shortage projected to last through 2050, it’s unlikely things will improve anytime soon.
Wrecking Budget Havoc
Despite our honest efforts to create useful budgets, there are underlying forces working against us. There are no crystal balls to predict what the business will need 12 months into the future, yet most budgets are created a year in advance. Some budgets are still based on old salary bands — that are legitimately unrealistic in today’s market. Lack of strong ties between HR, operations, and sales can degrade communication and impede information-sharing, and turnover within HR/Ops ranks often leads to unfamiliarity with business goals.
There are external factors at play, too: disruptive technologies like robotics, artificial intelligence and self-driving cars; the general scarcity of talent due to a strong economy; and new government regulations (or threats thereof). Each one of these can stall or kill growth decisions, upsetting assumptions already factored into budget equations.
How to Create More Realistic Budgets
Typically, most organizations set their budgets by looking at what they spent over the last year and how effective that spending was. While there is no one-size-fits-all answer, here are a few tips to get you started on an alternative approach that serves your goals all year long:
- Track your true spend. Most organizations are not very good about tracking their true recruiting spend. For example, if a Hiring Manager doesn’t feel fully supported by the investment being made in a hire, he or she will operate outside of HR, incurring additional expenses that don’t get included in the cost-per-hire. Or, attendance at a ‘free’ job fair may be viewed as a zero dollar expenditure, while there is an actual cost associated with any length of time spent outside of the office.
- Get better at data control. Companies (especially larger ones) lacking a proper understanding of how to use data may find it difficult to aggregate all the costs associated with headcount planning. Making recommendations to the C-Suite on how to save on expenses while achieving headcount goal is much trickier without seeing the total picture. Senior executives are best served with regularly scheduled analytics reports and simulations that clearly demonstrate the best actions to deliver the desired business outcomes. (In many ways, that’s the only way to manage up to that level.) Many TA teams lack a dedicated person to leverage data, so rally the support and get what you need to make more data-driven decisions.
- Communicate directly and frequently with business leaders and managers. Learn to speak the language and quantify hiring in business terms. Explain the ROI for a filled position and conversely the overall business impact if the position goes unfilled. Clarify how hiring the best talent increases the budget and why (e.g. greater time-to-hire). Suggest having quarterly updates to the budget so that economic or business assumptions can be adjusted. Even better, make sure HR/TA have a seat at the table for discussion on headcount planning and associated costs.
- Improve performance metrics. Do you have a way to effectively grade your program to know if it’s effective or not? Go back to the data and decide which metrics to use to measure success. For example: Is the customer satisfaction of the business high or low? What do the hiring managers have to do on their own that costs their time? How much revenue is the business missing out on because open jobs are 60 days old? Should the emphasis be on cost-per-hire or time-to-fill? Be sure to get input from the business and other stakeholders before finalizing metrics and review on a regular basis.
Get Out of the Silo
Attitudes are changing and the typical measurement of success based solely on positions filled on time and within budget is no longer the operational reality.
Yet, few corporate TA teams approach the budgeting process with the level of vigor required to properly fund and resource their company’s desired business outcomes.
Take the steps to develop an alternative approach that unifies business strategy, operations, HR, and TA and sets recruiters up for success.