Competitive Staffing - Things to Consider
Mike Roberto, Lydian Group
Competitive Staffing - Things to Consider
I. The current state of affairs
II. Characteristics of populations from a recruiting perspective
III. Attributes of those populations from a recruiting perspective
IV. Active vs. Passive approaches
V. Qualitative objective for any recruiting campaign
VI. Review of alternative recruiting approaches
VII. Deciding what's right for you
Populations
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From Similar Technical Environments
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From Dissimilar
Environments
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People who are looking
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People who are not looking
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Access to Populations
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From Targeted Environments |
From Dissimilar Environments |
| People who are looking |
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- Contigency Recruiters
- Mercury News ads
- Online Postings
- Employee Referrals
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| People who are not looking |
- Employee Referrals
- Invasive Recruiting
- Relationship-building/PR
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Attributes of Populations
Looking:
- Not as selective as a whole
- Engaged in and considering multiple opportunities
- Being introduced to more companies with or without their knowledge by recruiters
- In general, not as competent as their happy/employed counterparts
- Have time and take time to browse & respond to Merc ads, on-line postings, recruiters, job fairs, etc.
Not Looking:
- Happy and protected· Less aware of what's available
- Awareness is limited to companies with competing or related products, and to "noise" in the industry at large
- Skeptical or distrustful of recruiters, especially contingency recruiters
- Very focused on work and lifestyle - not easily distracted to consider other opportunities
For non-administrative positions, most firms need, demand, and choose to employ people from the NOT LOOKING population. Roughly 80% of people hired are primary or secondary referrals from EMPLOYEES. For your companies, the percentage can be higher. What percentage of Sales, Marketing, & Engineering people at your firm were either:
identified, solicited or closed
because they knew someone at your company, or vice versa?
The active ingredients to this phenomenon are Familiarity, Reference-ability, and Trust.
Generally, staffing approaches fall under 2 areas:
Passive: Career expo's, newspaper ads. on-line postings
Active: Personal networking, invasive recruiting, college recruiting
Passive "Fishing"
Indirect or passive approaches to the marketplace yield minimal results in critical time frames, but can product an aggregate result over time.
And, over time, the ROI as measured by cost-per-line, will likely be unimpressive until the firm establishes their own "noise" in the overall labor pool. By the way, an IPO or Acquisition helps a great deal!
Active "Hunting"
Active approaches are where you get the most leverage on your time and dollars, both near and long term. In the very early stages, this happens naturally, and fine until your employees' personal network OR THEIR ABILITY TO EXERCISE that network reaches its limit.
The people who join during the early days are risk-takers who feel the uncertainties by familiarity with people in or close to your firm.
Reference Points for Potential Candidates
The next wave of people who will choose to join will only make career decisions based on trusted reference. You need to understand this and put your resources into extending your reference-ability to the labor market. This must happen in four areas:
People - Who works at XYZ Corp. and why are they there?
Products/Technology - How can working at XYZ Corp. enhance one's marketable technical skills? How visible will this work be in the industry at large? What are the threats to the mainstreaming of this technology, and does XYZ have a reasonable proposition for addressing or adjusting to these threats?
Viability - How stable is the employment scenario at XYZ Corp?
Economic - Is XYZ Corp pay-competitive? What is the stock liquidity path, and what's the leverage, now and later?
Staffing Program Objective
Any ongoing staffing effort must set out to educate the labor market and address these 4 items to some degree before a first round interview, or you may not get the chance to show what a great working environment exists at your company.
You achieve this by:
1)reinvesting in the existing network, &
2) creating and sustaining new network.
Reinvest in Your Existing Network (Not for direct, near term recruiting)
- start a database
- ask employees who they know
- participate in events like this one, technical forum, etc.
- implement an employee referral award program
Create & Sustain a New Network (Not for direct, near term recruiting)
Keep these people updated every quarter as to your firm's progress.
Alternative Recruiting Approaches
| Ad Campaign in the Mercury |
$20,00 to Infinity |
| Contract Recruiter |
$50.00 - $90.00/hr - usually require 40 hrs., 3-month commitment |
| Contingency Recruiting Firms |
20-25% of first year's compensation for each person hired |
| Retained Recruiting Firms |
25-35% of first year's compensation for each person hired. 1/3 of estimated fee as down payment, 1/3 upon presentation of a slate of qualified candidates, 1/3 upon start date. Exclusive engagement.. |
| Con-tainer Recruiter Firms |
Hybrid pricing approaches, with most of the fee contingent on a successful hire. |
| Postings on Your Web Page |
free |
| Postings on ba.jobs.offered newsgroup |
free |
| Participation in other on-line match making services |
There's a new one every day |
The Contracting Alternative
- By some estimates, 6 out of 10 jobs in the US will be temporary or contract engagement
- Manufacturing is outsourced, and is a boom industry, In many cases the Purchasing function related to manufacturing is outsourced as well.
- MIS is starting to e outsourced, in part or in total, by individuals or companies.
- In its earlier incarnation (1992-1994), Lydian Group led the trend of outsourcing the Human Resources department, in part or in total.
- More and more technical people are freelancing.
- EDA companies now offer consultive designers as a means of establishing their tools as a standard within a firm's Engineering department.
- People in general are searching for ways to balance work and quality of life. The typical commute in Silicon Valley is generally not conducive to quality of life!
- Project-based work is supplanting functional jobs, performance metrics are getting tighter.
- There is a tremendous amount of software development taking place offshore, for companies here in the Silicon Valley.
- The trend is for employers to hire only those people who are critical to the success of the company over an extended period. This includes key Sales and Marketing positions, as well as core technologists. As long as you have a good law firm protecting your intellectual property, and given the high cost of Attracting, Retaining, and Containing people and employment-related liabilities, this may be the way for you to go.
Considering the Contracting ROI
Expect that agencies will try for a 50% to 100% markup for providing contributors who engage on a time basis. Keep in mind that an employer's minimum cost-of-payroll is around 15%, so the rest of what they charge is margin to them. Ask what the rate of markup is!
Run a comparison which looks at the costs of recruiting and traditional employment as compared to the premiums paid for project or time-based interim help, over a critical time period or milestone for your business. Given the costs of recruiting if you don't have a network or choose to sustain one, and given the "up-front" nature of those costs, you may get further, faster, and with more linear cash outflow by going the contract route.
What's Right for You?
Don't Wait Until You Need People to Assembly Your Recruiting Strategy!
Every one of the approaches described has been shown to 'work". Think outside of the box. Assemble a mix of strategies which address both short and long term needs. "Fishing" is ongoing and longer term, "hunting" is for near term, critical hiring.
Put recruiting expenses into your business plan and operating budgets - cost per hire will be between $5k and $20k. If you're using headhunters to recruit your founding team, you're looking as $25k to $40 k per hire.
Install as many flavors of compensatory inducements as you can. Employee referral bonuses, management incentives, stock options, loans, MBO incentives, retention bonuses (cash or additional stock options). In this way you have a broad arsenal from which to match the broadest array of sensibilities of the people you are trying to recruit.
Install development teams in other cities.
Put as must though and discipline into your recruiting strategy as you do your marketing & Sales strategies. Your existing and future employees are your primary customers. Think of them that way, and use any metaphor or discipline that you would apply to to other aspect of your business to construct and drive your staffing effort. Try reading and re-reading Crossing the Chasm and view it in terms of your staffing challenge.
Michael Roberto, Lydian Group
Mountain View, CA
Phone 650/691-1404
Fax 650/691-1402
email: miker@lydian.com