We all now know the reason the banks got into trouble. The people running them, the Chairmen and CEO’s didn’t understand what some of their operations actually did. It seemed great for a while as a fictitious profit rolled in and then BANG, they were bust.
In the same vein this behaviour is happening again across other industries in a slightly different way.
PwC’s 2012 CEO survey (referenced below) highlighted that the biggest challenge businesses face is recruiting and retaining the best talent. I can only assume the COO’s and the FD’s of these organisations are asleep in the board meetings when “the biggest challenge topic” is discussed. Or maybe it is not even a topic for the board – just a sound bite for the media.
This doesn’t seem to happen when it comes to recruitment. HR Directors must be failing to convince their leaders that in order to recruit the best people on time, every time – you need investment. Or maybe HR is not held in the same regard as Finance, Marketing or IT. To my knowledge there isn’t a single top 250 company led by someone who came from HR. They are usually from a finance background and occasionally marketing. Maybe that tells us something.
So what’s my point? I appreciate that large companies need to control costs and have processes in place to be as efficient as possible. When it comes to recruitment some procurement departments have persuaded HR to give up control and outsource to third parties such as Recruitment Process Outsourcing (RPO), Managed Services providers (MSP). The ultimate aim is cost savings. Yes efficiencies as well, but I am unaware of an agreement between an RPO or Managed Services Provider that included an increase in investment by the employer. RPO and MSP sell cost savings. So in short it is a cost cutting exercise.
Therefore point 1 is that business leaders are facing their biggest challenge by cutting investment.
MSP’s usually offer a low cost to the employer on the basis that it aims to fill a large number of roles itself. The trouble is they use the same contract for all suppliers regardless of supplier specialism. Try going into Mercedes dealer with a budget for a small Fiat. We specialise in marketing communication recruitment which includes everything from digital and content to creative, design, market research PR and media. I wouldn’t know an SQL programmer if it bit me on the arse, likewise a Facilities Manager or Head receptionist. We have no interest or expertise in recruiting office staff, IT, Finance etc. Bottom line is we specialise. Therefore when an MSP takes over the recruitment process within a client of ours and say we have to reduce our fees by 30% and have little or no contact with the hiring managers they seem to by mystified when we say no.
The trend seems to be that after declining the RPO/MSP’s kind offer to” take it or leave it” we now know it takes approximately 6-12 months before the Hiring Managers contact us direct and you go back to normal in defiance of the new regime. However the damage done in the meantime can’t be repaired. Missing headcount is a massive opportunity cost that COO’s and FD’s just don’t seem to get. If you don’t need them, don’t recruit them. If you do, then the role has a daily value to the business and every day it is not there is a real opportunity cost. So CEO’s and Chairmen if recruiting and retaining staff is your biggest challenge – take some time to understand how it works. The value of long-standing relationships, intellectual property, understanding of culture combined with the value of acquiring the best specialist talent should not be underestimated. Invest more in your specialist partners, not less.
In the same vein this behaviour is happening again across other industries in a slightly different way.
PwC’s 2012 CEO survey (referenced below) highlighted that the biggest challenge businesses face is recruiting and retaining the best talent. I can only assume the COO’s and the FD’s of these organisations are asleep in the board meetings when “the biggest challenge topic” is discussed. Or maybe it is not even a topic for the board – just a sound bite for the media.
Talent shortages and mismatches are impacting profitability now
One in four CEOs said they were unable to pursue a market opportunity or have had to cancel or delay a strategic initiative because of talent challenges. One in three is concerned that skills shortages will impact their company’s ability to innovate effectively. PwC
Most logical people may think that to overcome your biggest challenge it may be a good idea to increase investment in the resources required to find a solution.One in four CEOs said they were unable to pursue a market opportunity or have had to cancel or delay a strategic initiative because of talent challenges. One in three is concerned that skills shortages will impact their company’s ability to innovate effectively. PwC
This doesn’t seem to happen when it comes to recruitment. HR Directors must be failing to convince their leaders that in order to recruit the best people on time, every time – you need investment. Or maybe HR is not held in the same regard as Finance, Marketing or IT. To my knowledge there isn’t a single top 250 company led by someone who came from HR. They are usually from a finance background and occasionally marketing. Maybe that tells us something.
So what’s my point? I appreciate that large companies need to control costs and have processes in place to be as efficient as possible. When it comes to recruitment some procurement departments have persuaded HR to give up control and outsource to third parties such as Recruitment Process Outsourcing (RPO), Managed Services providers (MSP). The ultimate aim is cost savings. Yes efficiencies as well, but I am unaware of an agreement between an RPO or Managed Services Provider that included an increase in investment by the employer. RPO and MSP sell cost savings. So in short it is a cost cutting exercise.
Therefore point 1 is that business leaders are facing their biggest challenge by cutting investment.
CEO’s actions seem upside down
CEOs report challenges in hiring across most industries
Even industries such as banking that have retrenched workers in large numbers are still struggling to get the right people. The strain in hiring will not abate in the near term. More CEOs expect to expand their workforces than reduce. PwC
But the bigger picture shows that the leaders, like the bankers, don’t have a day to day understanding of the talent needs, people challenges and issues that their businesses and as importantly, suppliers face. The RPO or MSP usually sits between the recruitment supplier and the end user (hiring manager). In fact many contracts stipulate that contact with the end user is forbidden. Thus the relationship between supplier and end user is broken or at best hampered.Even industries such as banking that have retrenched workers in large numbers are still struggling to get the right people. The strain in hiring will not abate in the near term. More CEOs expect to expand their workforces than reduce. PwC
MSP’s usually offer a low cost to the employer on the basis that it aims to fill a large number of roles itself. The trouble is they use the same contract for all suppliers regardless of supplier specialism. Try going into Mercedes dealer with a budget for a small Fiat. We specialise in marketing communication recruitment which includes everything from digital and content to creative, design, market research PR and media. I wouldn’t know an SQL programmer if it bit me on the arse, likewise a Facilities Manager or Head receptionist. We have no interest or expertise in recruiting office staff, IT, Finance etc. Bottom line is we specialise. Therefore when an MSP takes over the recruitment process within a client of ours and say we have to reduce our fees by 30% and have little or no contact with the hiring managers they seem to by mystified when we say no.
Seeking more information on effectiveness of their investments in talent
Productivity and labour costs remain important measurements. Yet for many CEOs, those tools aren’t enough. Such measurements cannot isolate skills gaps or identify the pivotal jobs that drive exponential value. Hence CEOs are looking for a more comprehensive understanding of talent today and their needs for tomorrow. PwC
When you then mystery shop one of the MSP offices posing as a client, say a Digital Marketing Agency, and say you are looking to hire a Head of Social, who can you speak to. Well you can guess the rest, they have no idea. It’s not what they do, they don’t specialise. You wouldn’t ask your GP to do your hip replacement, you want a specialist.Productivity and labour costs remain important measurements. Yet for many CEOs, those tools aren’t enough. Such measurements cannot isolate skills gaps or identify the pivotal jobs that drive exponential value. Hence CEOs are looking for a more comprehensive understanding of talent today and their needs for tomorrow. PwC
The trend seems to be that after declining the RPO/MSP’s kind offer to” take it or leave it” we now know it takes approximately 6-12 months before the Hiring Managers contact us direct and you go back to normal in defiance of the new regime. However the damage done in the meantime can’t be repaired. Missing headcount is a massive opportunity cost that COO’s and FD’s just don’t seem to get. If you don’t need them, don’t recruit them. If you do, then the role has a daily value to the business and every day it is not there is a real opportunity cost. So CEO’s and Chairmen if recruiting and retaining staff is your biggest challenge – take some time to understand how it works. The value of long-standing relationships, intellectual property, understanding of culture combined with the value of acquiring the best specialist talent should not be underestimated. Invest more in your specialist partners, not less.
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