'Cost per hire, time to hire' is the modern mantra of the recruitment industry. But like many mantras, the phrase continues to be chanted by rote long after the real significance of the words has been lost. We are told that securing and retaining top talent is a strategic goal for all companies. Significant sums are now being spent on developing employer brands, and there is a recognition that recruitment is no longer entirely the responsibility of the recruitment team. If so, how does the cost of recruitment and the duration of the process contribute to achieving this goal?
Cost and time developed as key metrics some years ago as a reaction to the frankly anarchic situation in many companies, where hiring managers chose their favourite recruiters to work with them with no heed to any terms and conditions. HR got landed with the cost and the responsibility for sorting out any problems which stemmed from an internally unregulated process. While that worked for the recruiters, it was never going to go unchallenged by a professional HR function. There was a genuine disconnect between what recruiters offered, what was charged and what was delivered.
Unsurprisingly, some ground rules were laid down to curb previous excesses. PSLs were introduced, agencies traded greater volume for lower price and HR got to exercise greater control over how work was carried out. This was an entirely understandable reaction to what had gone before.
But is there any evidence that running a more streamlined process in terms of cost and time has added to the quality of a company's talent pool? Are cost and time still the most important and most valid measures of an effective recruiting process?
I know that if you ask any buyer of any product or service they will tell you that ideally they want to pay nothing and have it delivered yesterday, so those issues are never going to be unimportant. And of course they are pretty easy to measure. No corporate recruitment function is going to pass up the opportunity to point to concrete evidence of their efficiency.
But do these simple measures of 'success' really encourage the sort of recruiting behaviours which will guarantee delivery of the best available talent over the long term? If a recruited candidate turns into an unqualified success, is anybody going to remember (or care) 2 years down the line how long it took to recruit them, or even how much it cost? Conversely, if after 6 months a candidate turns into an abject failure, any money or time spent recruiting that candidate will be perceived as a waste. It's the result that counts to the client, not the process.
For agency recruiters, there is already an incentive to work quickly because the quicker they provide a solution the nearer they are to getting paid. However, interest and commitment from the recruiter will very quickly wane without interest and commitment from the hiring organisation. Recruiters will move on to work on what may be more productive roles for them. They, too, have targets to meet. Speed does not equal quality.
Similarly with cost per hire. Recruiters' fees have almost always been paid as a percentage of salary. This is a completely arbitrary arrangement. It does not accurately reflect the amount of work that goes into a process; neither does it reflect in any way the benefit the client derives from the recruited candidate. There is no more connection between good recruitment and high fees than there is between good recruitment and low fees. Lowering average cost per hire is not an indicator of higher quality recruitment.
So isn't it time that these two hoary old stalwarts were thanked for their contribution to the improvement of recruitment delivery and shuffled off to the sidelines in favour of some newer standards which reflect the needs of businesses now?
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