Are Your Budget Practices Actually Costing Your Organisation More in the War for Talent?
4 May 2017
Let’s imagine the following scenario: You’re the hiring manager or internal recruitment practitioner in your organisation. A trusted recruiter contacts you with a great opportunity to pick up a skilled candidate who is experienced in an area you typically find difficult to secure high performers in. But you have no budgeted vacancies. You have to say no right?
Not necessarily – is there another way?
Ask most Senior Executives for their top five challenges in delivering future organisational strategy, and ability to win skilled talent will likely feature highly on the list.
We all know that a business without a robust and clearly defined strategy is likely to lack direction, and will often fail to achieve its goals. The same can be said for your talent acquisition function. Many organisations would claim that they employ a strategic approach to their talent acquisition, but is that really the case? Based on more than twenty years of recruitment expertise, I would say no.
Most businesses follow the traditional approach of setting their corporate strategy with a three to five-year outlook. They then operationalise their business plans on an annual basis, all within the context of a defined budget. Part of that planning process will, without doubt, refer to people strategy with a defined organisational structure and headcount.
This is often where the ability to take an agile approach to talent acquisition dies and just in time hiring takes over.
The road to poor recruitment outcomes is paved with good intentions
Armed with their charts, workforce plans and budgets, hiring teams often slip into well-trodden, day-to-day routines which focus on filling immediate needs and leave little room for innovation and acquiring talent as an opportunity. And who could blame them; they have a budget to meet after all. This is especially true in organisations where the recruitment budget is controlled by a CFO who continues to see the function largely as an administrative one.
I can’t tell you how many times I have approached an organisation with a well matched, highly skilled and talented candidate who would be a great fit for their team and culture, only to be told that there is currently ‘no room in the budget’. Six times out of ten I will likely receive a call from that same organisation less than eight weeks down the track, with an immediate need for the very same talent they had an opportunity to acquire a few weeks earlier.
What do you think happens then? You guessed it! Talented people don’t last long when they start to consider a change, particularly in professions that require specific skill sets, experience or Government specific security clearances. Nine times out of ten, the candidate is no longer available on the market.
Research shows that the top ten percent of talented candidates are gone from the market within ten days.
The wait will cost you
In Canberra, the average wait time to fill a vacant role is 60 – 70 days. This is well up on the National average of minimum time to hire at around 45 days.
I wonder how many organisations keep track of the true cost of vacant positions within their team. This is more obvious for roles that are direct revenue generators. However, the true opportunity cost of unfilled positions can be quite difficult to put a finger on for many roles. Lost productivity and impact on the team are some of the key considerations.
Furthermore, ‘just in time’ hiring decisions in a skill short job market can often contribute to low performing teams. Hiring managers are faced with limited choice on the talent available to them at exactly the right time and in the right place when the button to hire is pressed. But they need to fill the role for the business or area to continue functioning.
Don’t throw out your business strategies just yet
I am certainly not suggesting that organisations shouldn’t execute their well-laid plans and stick to their carefully crafted budgets. Clearly, these things need to be in place. I am advocating however that there needs to be more room for an agile approach to strategic talent acquisition.
If organisations were better educated and resourced to secure talented people when they become available on the market, we would without doubt in many cases, see a more productive and efficient performance in the mid to long term business results. We have numerous case studies developed over the years that would support this view.
Running lean teams across the organisation with little margin for error might look great to the Executive when the initial budget is presented. The shine quickly fades however when results start aren’t achieved and business performance stagnates.
Organisations need to be more realistic about their ability to attract ‘hard to hire’ talent to their teams, and build addition contingency into their labour budgets. Empower recruitment teams to secure these key people as and when the opportunities present, and create a culture and process within the organisation that facilitates their successful induction even if it is not yet a defined role.
This is not necessarily an easy thing to do. It takes commitment at all levels within the business and some lateral thinking to make it work. But there is no doubt from the cases that I have witnessed that it can supercharge an organisations progress towards high performance.
My top three recommendations for living strategic talent attraction;
- Look well into the future and visualise your ‘hard to hire’ talent and skills requirements.
- Resource your organisation with people who can identify, approach and engage these candidates. I am not talking tick-box recruitment administrators here. I am talking super-charged, pro-active talent sleuths who just don’t stop. If you can’t afford to do it yourself, consider outsourcing it to an effective recruitment and talent sourcing agency. Our networks are always broader than yours as we do this every day across multiple markets and businesses.
- Identify the cost of unfilled vacancies in key areas to your organisation. This information will help you to win the argument when it comes to convincing senior management to build some contingency into your labour budgets.