Three Critical Steps for a Better Talent Acquisition Process

As customers continue to request services that offer more value than simply HR administrative relief, we’re spending more time at TriNet these days evaluating--and stepping up our capabilities to deliver --strategic human capital management (HCM).

To help us understand more of what actually matters to operating managers, we undertook a study of HCM practices in small, high-performing companies in key growth sectors such as technology, financial services, and professional services. The goal was to build some actual data sets around both HCM practices and outcomes in small high performing companies nationwide, including what worked and didn’t work to maximize their corporate performance. There were 700 companies in the study population with an average wage of $102,000, and an average workforce size of 18.1 employees.

The results? We found that several relatively easy-to-implement human capital best practices are often not being followed—and they’re precisely the ones that can make a significant impact on a company’s performance, even at an early stage of growth and development. These practices fall under the categories of Risk Management, Talent Acquisition, Performance Management, and Compensation and Benefits.

It goes without saying that each of these areas merits its own discussion. But for now, let’s look closely at Talent Acquisition.

It should come as no surprise that hiring practices can create or destroy value. A single bad hire can cost between $60-120,000, and 10-15% of the employee base (of the companies in our study) turned due to avoidable hiring errors. That’s two employees a year in a 20 employee company. Not exactly the kind of track record you want if you’re a nimble firm intent on developing a product and getting to market in record time.

On the flip side, a great hire is worth 3-7 times a mediocre one in terms of efficiency, productivity, and ROI brought back to the company.

But when we looked at our research data, we realized that key executives often didn’t change their tactics even when the bad numbers started rolling in. Rather than implement a consistent hiring process based on proven best practices, they appeared to be chalking up their problems to current market conditions.

Conversely, the companies with successful hiring practices did, in fact, have both a hiring strategy and a process in place. They spent more time defining the job description in advance, considered a broader range of recruitment options to source candidates, and gave their hiring managers more training than average.

The bottom line? Process matters. It can make a substantial impact upon your hiring costs, and have an even bigger impact by increasing the overall quality of people coming into the organization. Here, then, are the three effective hiring strategies small and medium-sized businesses can implement right now:

1. Take the time to define a position’s requirements carefully before recruiting
2. Use a broad based sourcing strategy to identify candidates across multiple sources
3. Train hiring managers and monitor completion of defined steps in a company hiring process

Establishing a process in regards to Talent Acquisition is one of the aspects of Human Capital Management that TriNet assists our customers with every day. I’ll address the others later.