What do we know about applying lean principles to the recruitment function? We wrote the book on it.
The Lean Recruiting Toolkit: An Agile Blueprint for Creating & Executing Top Hiring Strategies by Craig E Brown.
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Are you tired of having that “perfect” job candidate slip away between your fingers? Are you frustrated with ever-changing hiring requirements? Are you discouraged by the lack of qualified talent in the marketplace?
The Lean Recruiting Toolkit provides simple solutions to these and other challenges facing talent acquisition professionals in today’s hyper-competitive, candidate-driven marketplace. It is a practical, step-by-step guide to creating and executing your very own Lean and Agile recruiting strategies to ensure you hire better employees faster -- who end up staying longer.
What’s more, using the Kaizen theory of continuous improvement, your results get better and better over time, freeing up your schedule to do the rest of your job!
Using the Lean Recruiting Canvas created by recruiting expert Craig E Brown, you will be carefully guided through this strategic framework in a methodical, yet efficient, fashion.
Whether it is…
In this timely release, Brown provides actionable and best-in-class strategies for finding your next hire -- with loads of fantastic examples and real-world anecdotes along the way.
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See below for excerpt from The Lean Recruiting Toolkit
Problem: What Challenge is Your Company Facing?
A good place to start, I think, is the Problem, which should be your starting point on the Canvas 90% of the time.
Your Problem is a clear statement of the business challenge leading to the role requirement.
How do you define a Problem?
Now, I would assume that many of you would have thought that your Problem is, "I need to fill this role, because someone has left, or someone quit, or was fired," or whatever the case may be. But we're looking at the Problem within the greater context of the entire business, rather than just within the recruiting function itself.
I began working with Tom about three or four years ago. He is the VP of Sales, and by default, the Chief Operating Officer, of an advanced software start-up based out of Toronto. The company makes a CRM solution that specifically focuses on the finance industry.
He was looking to hire a senior level software sales executive in the Boston area. For those of you who are not familiar with Boston, it has a robust financial district and it's a very good hunting ground for start-ups in the financial services industry looking for new clients. And it's not terribly far from Toronto either. It is very easy to get back and forth.
So, I went through my regular process at the time. I set up a meeting with Tom to really grill him on the company and on the position. We went through what he thought an ideal hire would look like, the salary, and all sorts of other requirements.
The next step for me was to request to have a demo of their software. I do this regularly with new clients that I work with so that I will have a good grasp of what I'm talking about when I explain their solution to prospective candidates.
I had a look at the software. It looked great to me and I was excited to start working on the requisition.
I started the search and fairly quickly found a number of candidates that I thought were pretty close to the mark. I sent them across to Tom with my notes. To my surprise, all of them were rejected, but for different reasons.
Three of the candidates were more-or-less on the mark. Their salary requirements were on target, but they weren't quite experienced enough.
I had another two candidates who were on the mark with regards to their type and level of experience, but unfortunately their salary requirements were too high.
Senior level software executives tend to command a pretty healthy salary. Normally in the US, their base salary will be in the range of $100,000 a year if they have five to ten years’ experience. And then, if they're hitting their targets, they'll also earn another $100,000 a year, making their earnings at least $200,000 and sometimes higher.
The candidates that I had sent to Tom that were salary-appropriate only had about five or six years of experience, and he was really looking for nine or ten. The ones that did have nine to ten years of experience were all expecting an annual base salary in the $125,000 to $130,000 range, doubling that number with their commissions.
The great thing about working in major cities such as Boston, New York and London is that they have very vibrant business communities. The downside, of course, is that the salaries tend to be higher than employers expect (and hope for), especially in bullish economies.
After a couple of weeks of going back and forth with Tom and the candidates, I decided to have a heart-to-heart with him. I requested a second meeting, where we could hash things out and really see if we could make some adjustments to his requirements.
During the meeting, it became apparent the reason that Tom needed to hire salespeople was that his company had recently secured Series A funding for about $2M. When investors invest that sort of money in a company, they often do not 100% understand the technology. They are investing in the marketing plan. And by marketing, I mean sales.
In their marketing plan, they had indicated they were going to double their sales in the next six months and triple them by the end of the year. Tom determined the best way to do that was to get more salespeople onboard.
Tom had brought in over a million dollars in the last year by himself. His rationale was that if he could hire another senior level software executive, it would be well worthwhile, even if they were getting paid $200,000 (including their commissions). The new hire would bring in another million, so it's a five-to-one Return-on-Investment, which would be pretty good.
I went over my concerns with Tom at great length. It's not that the candidates couldn’t be found. They were there. But they either weren't experienced enough or they were too expensive, so a change had to be made.
I started to talk to Tom more about his average working day and how much he was actually spending on various activities. He roughly divided it into three.
One-third of his day involved making his sales calls to new prospects, one-third involved following up, doing demos and closing the sale. The final third was concentrating on the rest of the business; everything from a wide range of operational duties, to fundraising, and emptying the garbage can.
It finally occurred to me that perhaps Tom didn't need another ‘him’ on the sales front. He didn't need to replicate himself, at least not at this stage. Perhaps what he needed was somebody lower down the chain to actually just make the phone calls for him and put his own time to better use.
For those of you who are not familiar with software sales, the entry-level role is often a Sales Development Representative (SDR). It can be critical depending on the structure of the sales department.
What SDRs do is mainly ‘dial for dollars.’ Their sole mission in life is to call prospects, either ones they've identified online or perhaps through lists that have been handed to them. They then try to get the prospect on the phone, explain the basic concept or solution, and then set an appointment on behalf of the senior software sales executive, at which point the more senior sales person would take over.
The great thing about SDRs is they free up the time of the senior people, and they also cost a lot less. Rather than looking at paying this person $200,000 a year with commissions, the base salary would more likely to be in the $40,000 to $60,000 range, with On-Target-Earnings (OTE) of approximately $80,000 to $90,000. So effectively, what we determined is that we could double Tom's value to the company – double Tom's sales – by adding a person who would cost less than half of what he expected.
In the end, we managed to find Tom an SDR who came on board very quickly. Sarah was a young university grad who had just under two years’ relevant work experience under her belt. She was smart and driven and had done similar work for her last employer. Sarah managed to dial anywhere between 50 and 100 prospects a day. By the end of month five, Tom’s sales had managed to double, and he was paying the new employee less than half of what was anticipated.
Our Problem wasn’t that Tom needed to hire a new senior software sales executive.
Our Problem was that the company needed to double sales by month six in order to fulfill its commitment to investors. And we found a creative, cost-effective way to achieve that.
Remember what I said about Lean? We should only make changes if the result is an exponential improvement?
So the moral of the above story is that I should have grilled Tom more thoroughly at the outset. I had been somewhat reticent in doing so. I didn’t want to pry.
But, had I done so earlier, it would have saved me a number of hours (maybe nine or ten) over a period of three weeks. It would have also saved Tom time. We got there in the end, but it would have been better if we had identified the true Problem and its associated Solution to begin with.
Identifying Your Problem
Really, depending on what type of organization you work for, the real Problem will arise from a need to do one of three things: to increase revenues, to reduce outgoings, or to improve efficiencies.
If you are a for-profit company, corporation or business, the most important factor to consider is increasing revenues. Sure, you will also be influenced by the reduction of outgoings and the improvement of efficiencies as well, but your primary concern will generally be to increase revenue to improve shareholder returns. It all comes down to the bottom line.
Public Sector Organizations
If you work for a public sector entity, you probably will not be as concerned with increasing revenues. Your revenues come from taxpayers. There's not really much you can do to increase revenues - you get what you get. Your goal, for a public sector entity, is to provide the best service possible to your clients, aka taxpayers, with the budget that you have been handed. You're focus will instead be on reducing outgoings or improving efficiencies as a means of doing this.
Charities and Non-Profits
A third example is if you work for a charity. You will be very interested in increasing your revenues through donations, and you'll be interested in improving efficiencies, but not so much at reducing outgoings. When you increase revenues, your goal isn't to keep that and give it to shareholders. Your goal is to give that to the clients of the charity. So the more you increase your revenues, the more you're going to increase your outgoings. The outgoings aren't so important to you to keep down.
With a charity, your main focus when defining your Problem will likely be how to improve efficiencies, or perhaps how to increase donations. Large charities have professional fundraisers for a reason – they bring in far more than is spent on their salaries.
Resisting the Temptation
Now, the temptation, which I'm sure many of you encountered when filling out the Canvas the first time, is to write down something like, "I need to hire because someone quit / got fired / got promoted / is on maternity leave."
Whatever the case may be, I'd really like to stress that needing to hire someone is a recruiter's problem, and not the business' Problem. The business' Problem is the problem that arose that led someone to think, "We need to hire someone."
This is a really important point.
Be sure you do not confuse the Problem with Solution. Needing to hire someone is never the Problem. Hiring someone is a potential Solution. Not always, but we're going to get into the Solution section a little bit later.
You may be intimately familiar with your business. Maybe you've been there for a number of years and you know the specific department that’s asked you to go ahead and fill this requisition very well. But, then again, maybe you don't. You may have to ask. You might want to start with your own recruiting team. You may have to go to the Hiring Manager.
If you do, you’ll probably start by asking, "Well, how did the need to fill this role come about?" They're probably going to hit you with, "Well, someone got fired / promoted, so we have a vacancy." But you want to dig deeper to the root cause of the Problem.
As a general rule, dig until you see dollar signs.
I want to give you a couple of example business Problems, because this might still be a little bit fuzzy in your mind.
Example Problem 1
The first example is a software product company that sells its own software. The company has inbound leads that are not being followed up on and is losing $450,000 per year.
The term ‘Inbound leads’ refers to sales leads acquired through online activities such as being active on social media or perhaps through advertising. Potential customers express an interest in your product by completing an online form and submitting their details.
In this case, the company’s Problem is that it has so many leads coming in that the current staff can't possibly pursue them all. Sure, it would probably cost between $50,000 and $75,000, or maybe even $100,000, a year to hire someone to follow-up on these leads. But, if the company spends this, it could receive almost half a million dollars in new income. That certainly sounds like a genuine business need.
Example Problem 2
"With the departure of one of our developers, we will not meet our project deadline, thereby endangering our contract with our client."
It's difficult to put a precise figure on this. It is possible that the client will be happy anyway and could even agree to extend the deadline. But the cost could really be that the next time this client needs to contract a company, they may think twice about choosing you because they think your company is too short-staffed. This sounds like a genuine business Problem as well. It's a little bit harder to quantify, but it definitely seems necessary.
Example Problem 3
"Our Administrative Assistant is going on maternity leave, thereby leaving our CEO unable to do her own job properly."
Again, this sounds like a genuine business need, because if the CEO, who's probably paid a lot more than the Administrative Assistant, gets stuck doing secretarial duties, she won’t be able to make the more important decisions that are a much greater value-add for the company as a whole. I'd say this is a genuine Problem.
Why fill this role?
You need to step back from the situation you are in and ask yourself, "Why is it necessary to fill this role?" And, the answer should never be “because someone quit”.
The answer has to be a genuine business need, or Problem. If you can't answer it in these terms, ask someone else for their opinion, someone on your own team or even the Hiring Manager. If you dig deeply enough, you will come up with your Problem.
But if you can't think of an answer, then perhaps there is no Problem.
Here’s a quick example. A salesperson leaves a company and the VP of Sales says, "We need to hire a new salesperson." You discover the reason the person has left is because the market has dried up a bit. The company is going through a dry spell, which is anticipated to last for six months to a year.
Maybe hiring nobody is the Solution in this situation, and that's actually a real win for your company, because you're saving a whole bunch in salary until the market rectifies itself.
If you are really struggling to find an answer to this question, if you are really stuck, ask yourself this…
“What bad things will happen to the company if this role is not filled?”
If neither you, nor the Hiring Manager, can answer this question, you don't need to hire someone.
Why examine the Problem in the first place?
As I just mentioned, you may not actually need to hire someone. You can save your organization thousands of dollars per year, maybe more, if you can find even a couple roles a year that you really don’t need to hire for.
And it's not just about money. Yes, you're saving money, but you also don't have extra people hanging around with not enough to do. Morale will suffer. People will become bored. They will quit anyway.
You may come up with more effective alternatives. Again, I’m getting a bit ahead of myself with the Solution section, but hiring a full-time salaried employee isn't always the answer.
The best reason for examining the Problem thoroughly?
Quite simply, it gives us a clear and accurate starting point for filling your role.
If you go back to the root cause, the root Problem, this is going to help you decide who exactly you need to hire to solve this issue. And all of the other points of the Canvas will flow so much more smoothly with an accurate Problem definition.
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