Your company should use a search firm...
When time and cost justify using a search firm!
This decision should be treated as any other business decision. It should be justified on the basis of cost and time.
Here is a fact-gathering checklist to get you started:
- What is the job to be filled?
- What are your company's own capabilities for filling this position?
- What is the urgency? (What is it costing you to have the position remain unfilled?)
- Is the search confidential or unusual in any way?
- Is it a search for a position that you have successfully filled in the past, or does it involve new skills or background requirements in areas where you have no contacts, no history or precedent, or no real place to begin?
- What's the degree of difficulty of the search - i.e., how does demand for the skillsets desired measure up to the availability of qualified candidates?
Do this analysis early, and make sure that all the decision makers have been able to give both feedback and consensus. Time and timing are the keys to your success.
It is refreshing to work with companies who know which positions they should put out to outside recruiters and which ones they should fill themselves. But, we are sometimes called upon to work on failed searches, where the professional recruiter is brought in as a last resort. In these instances, much time and money has already been wasted, and the typical search now becomes even more difficult because of the delay.
Human Resources departments are staffed to fill a specific level of anticipated ongoing needs, however, when the need is critical and urgent, and the skill sets required are either highly specialized or particularly scarce, then the justification exists for using an outside recruiter. This recruiter should have a successful track record and appropriate contacts in the specialized field being targeted.
Lost Time is the MAJOR CONTRIBUTOR to Cost
In a situation such as this, it is important for the staffing and hiring managers to assess their internal capabilities quickly and make the decision about whether to go outside on a timely basis.
Here are three reasons why this is so:
- Recruiting does not happen in a vacuum. When a company puts out the word via advertising and network referrals that it is looking for a certain kind of person, that word gets around, particularly in tightly knit professional communities comprised of people with specialized skills. This is both a good thing and a bad thing. It's a good thing if the exposure results in a referral that leads to a successful hire. But it's a bad thing if it doesn't - and especially when those ads and referral requests happen over and over again with no result. After a while, the 'word' that gets around gets old and somewhat tainted, and the audience to whom it is directed becomes jaded.
- When a recruiting and hiring process gets prolonged, it begins to take an inordinate amount of the manager's time -- reviewing resumes, interviewing candidates and either disqualifying them or making offers that are not accepted. Management time will also be consumed moving staff assignments around to fill in for the lost employee. This is precious time that would be much better spent by the manager generating revenues, reducing costs, optimizing operations and planning for the future. When the manager's time is spent trying to replace a key employee who has left the company, the rule of thumb is that the value of the manager's lost time and productivity is at least two times that of the employee.
- If the decision to go outside is made too late, it will be that much more difficult for the recruiter to fill the position. This is because recruiters rely on referral networks that they build on for each search they conduct. If these networks have already been "spoiled" for the specific opening in question through the overexposure described in # 1, above, then it will be an uphill battle for the recruiter to attract the best candidates, and the result may be a less-than-stellar hire.
The choice to involve an outside recruiter in a search for a key individual is thus a classic make-or-buy decision. The question is not whether your internal organization could achieve the hire under ideal conditions, but rather whether adding the outside recruiter to the mix will achieve better results, sooner -- given the conditions as they actually exist. That choice needs to be made in light of the real costs in time and money of not filling the position, not just in terms of the out-of-pocket costs of engaging the recruiter.
As any seasoned Procurement Professional will tell you, the best strategy is to match the capabilities of the supply source with the nature of the supply problem to be solved.
How great is the total cost of leaving a key position unfilled for too long?
Don Schwerzler, Managing Director of Southern Business Research, feels that unfilled positions cost the U.S. economy billions of dollars.
"Most organizations fail to make a direct connection between the time it takes to fill a vacancy, and any specific dollars they end up losing from the bottom line," he said recently. "As a rule-of-thumb, the average manager should make for their company at least five times his or her salary -- i.e. a $50,000 supervisor should move $250,000 to the bottom line; a $100,000 executive should personally be responsible for $500,000 profits."
"As a rule-of-thumb, the average manager should earn for their company at least five times their salary."
Let's apply Don Schwerzler's formula to a real-life situation:
A company needed to fill two key positions - a Purchasing Manager and a Materials Manager - and opted to use the same search method for both, even though the circumstances surrounding each were very different.
This strategy worked well enough for the Purchasing Manager position, which was filled successfully.
The Materials Manager position was a new one for the company, and proved much more difficult to fill, largely because of a lack of agreement among top managers about its specifications, performance expectations and requirements. It remained open nine months later, despite the company's active efforts to fill it.
In the process, a great deal of time and money were invested in travel, entertainment, management interviewing/review and psychological testing, with no successful hire.
But those out-of-pocket costs do not even begin to define the total scope of the costs of leaving the position open for so long.
Let's make the assumption that the position will eventually be filled by an $80,000 Materials Manager. Using Don Schwerzler's formula, an $80,000 position earns the company five times salary, or $400,000 per year. That's $33,333 per month. Over the period of the nine months that the position has been open, that amounts to $300,000 -- and still counting.
Given the strategic nature of the Materials Management function, I'll bet that many of you could make the argument that the cost was actually a great deal more than that.
The bottom line?
The decision to seek external assistance in order to fill your key positions quickly and efficiently is not nearly so simple as "only call an outside recruiter when all else fails."
Call us today. If you describe the position you are looking to fill, we can explain the probability of success with any and all methods available to you. Then you can make the most informed decision possible.