Yesterday I went to the store to buy some mouthwash. I have just moved and so all my essentials (like mouthwash) are in boxes somewhere buried in my house. I was growing restless and concerned without the warm embrace of the safety of Scope, so I went to go buy some.
This seems like a pretty easy buying decision, one which many people make every day. But as I stood there in the toiletries aisle of my local supermarket I started to see just how complex this decision was really going to be.
It is surprising how often we make complex decisions without all the data. Lost in my own world, I decided to go through all the specifics of the “mouthwash” decision and see what I came up with.
First, I was going to pay money for the mouthwash. The money has value that everyone understands: $5 is worth $5 everywhere I go in the country. But what value does the mouthwash have for me personally? One way to evaluate this is to try to determine the “opportunity cost” of not having the mouthwash. So when I am deciding to buy mouthwash I have to evaluate the cost of not having it, which can include:
- My wife won’t kiss me before I leave in the morning
- My kids won’t hug me when I come home
- My coworkers won’t want to work on projects with me, and
- My dog won’t go for a walk with me
These are all “costs” to me. So in evaluating not buying the mouthwash, I have to evaluate what each of these things is worth to me (quite a lot, it turns out).
In addition, I can take the $5 and buy mouthwash, or I can take the $5 and invest in some hot new Internet stock, which could give me lots of return. So another question is “what is my expected return for buying the mouthwash versus investing the money elsewhere?” So maybe my wife won’t kiss me if my breath smells like feet at the end of the day, but maybe she will get over it if I am fabulously wealthy after my Internet investment goes through the roof.
Finally, I have to evaluate whether it makes sense to buy mouthwash at this time. Maybe there is some new and improved mouthwash that is coming to market in a couple of weeks. Maybe it will be like Willy Wonka’s Everlasting Gobstoppers – I can take a little mouthwash today and have fresh breath for the next 10 years. If I only have $5 total to spend on mouthwash it could be that I would be wasting it if I buy the mouthwash that only lasts a few hours, instead of waiting for a couple of months for the stuff that lasts all year.
Now, why bring up this slightly embarrassing topic of my personal hygiene decisions in a recruiting forum? Simply put, buying mouthwash is a lot like hiring an employee, only more so. No matter how complex I made the “to buy or not to buy, that is the question” hygiene event in the grocery store, hiring an employee is orders of magnitude more complex and portentous. But I guarantee that I put more thought into the mouthwash decision than finance or marketing puts into the hiring decision. And that is the point of this article.
Since we are often responsible for the recruitment piece of the whole talent chain we are often blithely ignorant of all the calculations that go into deciding whether to hire someone. We assume that our hiring managers have done a lot of hard thinking, aided with complete data from their finance and market partners, about whether it is worth it to hire someone. In fact, there is usually more thought put into what to have for lunch that day.
This is rarely the fault of the hiring manager. It is almost always the fault of the finance and marketing departments. In fact, if you trace why great companies become not-so-great and dissolve into the business graveyard, it is often because these two functions just don’t know how to do their jobs.
To prove this, let’s return to the mouthwash decision. But let’s change the scenario participant from me to your hiring manager and the scenario from mouthwash to hiring a new employee.
The hiring manager has a budget. Hopefully this has been developed with great care and consideration the year before, but more than likely the process involved someone trying to make sure that they just got more money than they had last year. In addition, the hiring manager has their business objectives for the year. Again, hopefully these have been developed through the careful consideration of top-down and bottoms-up strategic planning efforts by the best and brightest in the company. But more than likely it was just some random targets picked to make the boss happy.
So the hiring manger has money and goals, and they have a problem, which is they need to meet those goals by spending the money they are allocated. Now this is where it gets tricky. A good hiring manager (business person) will sit down with their finance representative and say “Given what I know right now (which is more than I knew when I drew up the budget) I need to understand the opportunity cost of making a hire.” What does NOT having the person on board cost me?
This is a critical question. The ability to answer this question drives all kinds of critical metrics in our world, including “Time to Value”, “Candidate Quality” and “Cost of Vacancy.” So you would think that a lot of time and effort goes into the finance department developing great toolsets to help answer this question. But of course, nothing could be farther from the truth. Most finance departments don’t have a clue about how to answer this question. It is a complex equation involving the total output of the hiring manager’s organization, the value of that output, the effects of a lack of person power in the organization towards meeting that output, and various other items.
So after the finance person gives the hiring manager a blank look and shakes their head on the “opportunity cost” question, then the hiring manager wants to know what else they could do with their money to achieve their objectives. For instance, what is the possible return the hiring manager could get with their money if they decided to buy more computers to automate some of the function and move other people around rather than hire for this position? Could they achieve even more of their goal for the same amount of money?
Again, this is a critical question and one that directly affects the recruitment function. When we get a requisitions (or are told of a need), we have to assume that the need is real and that smart people have done the calculations necessary to make the sourcing and filling of that requisition worthwhile. But of course we have all found out the hard way that this is usually not the case. Finance rarely can answer the “where do I get the best return” question because it involves variables (like the expected value of a non-financial decision) that they often consider beyond the scope of their duties. The consequence is that we have hiring managers who are taking shots in the dark, asking us to hire people that they will then have to fire or move once they figure out that some other investment of that money could have gotten them a better outcome.
Finally, the hiring manager will often need to know what objective they are really trying to accomplish. We all see this all the time. We get a list of hiring priorities for the year and start to go source for them, only to find out three months later that “plans have changed.” And we dutifully go about disappointing candidates we have been working with for a long time, or telling TPRs that we no longer need their help in this area. This process, more than anything else, hurts our employment brand and causes great pain throughout the organization and with our candidates.
So how often do we ask “why?” Why do we get these sudden shifts from the hiring managers that disrupt our lives and hurt our relationships with candidates? Because the marketing department makes mistakes. Lots of them.
Most people think the marketing department’s job is to put together nice collateral, pick the colors for our lobbies and come up with catchy advertising. But real marketing is about being able to predict the future. Not an easy job by any stretch of the imagination, but an essential one all the same. Marketing is supposed to be figuring out “Here is what our customers will want next year, and here is how much they are willing to pay for it.” This becomes the basis for the strategic plan, which becomes the basis for the workforce plan, which becomes the basis for the budget, which becomes the basis for the email we get saying “We are going to need 50 paper folders next year.”
But marketing as it is practiced today is more art than science, and so marketing changes its mind. A lot. As they get new data, observe new buying trends, figure out the rate of inflation, etc. they make new predictions. Those new predictions cause strategic plans to change, which affects workforce plans… all of which dribbles down to you in the form of an email that says “Stop hiring paper folders, and start hiring Russian acrobats.”
So you would hope that the hiring manager is sitting down with the marketing department and asking questions like, “Before I go and tell recruiting to hire this guy, why don’t you tell me what you think is going to be happening in the next 6 months and how that is going to change my business.” In other words, in mouthwash speak, should I buy this mouthwash or wait a couple of weeks for better stuff?
Just like the finance question, this is important stuff for our organizations. It affects not only who we hire but what “quality” of a hire looks like.
But like their brethren in finance, marketing really doesn’t have a clue about any of that. It would be great if marketing was a business partner to the hiring manager who could answer those critical questions, but a lot of times they don’t have any more thoughtful input than manufacturing does.
So the next time that you feel yourself ready to jump off a cliff because your hiring manager change their mind all the time, or feel like you are hitting your head against a wall because your hiring manager’s seem even more clueless than you feel, start thinking about ways to help finance and marketing to do their jobs better.