(First in a nine-part series about the concept of Efficiency vs. Effectiveness and some possible measures to help you determine whether the job you are hiring for is one or the other.)
Administrative functions are treated as services. Their purpose is to provide services to internal customers. (In this context, I use the term services specifically to describe internal service departments or groups, not to describe an organization whose business is providing services instead of products.) Services are measured by customer satisfaction metrics: speed and quality of delivery against specific goals of the department’s internal customers. Since quality is often a qualitative term, the real measure of a service group's effectiveness is customer satisfaction.
Executives, however, are much more concerned with the market's perception than with manufacturing's satisfaction with their recruiter, for example. This is why internal services are the first to be outsourced. Internal customer satisfaction is not a metric that affects stock price in a tangible way.
To an executive's ears, “internal service” almost always translates as "increased expenses." “Business” on the other hand almost always translates as "revenue." (This is why I continue to hammer home the importance of making corporate recruiting a strategic business asset, and not a strategic service.) Sales is an example of a business function. Business functions generate revenue and provide strategic advantage. A business function is measured in hard dollars, the ability to predictably grow revenue over time, or both.
Business functions are very rarely outsourced. Service functions very often are. Not surprisingly CEOs and other executives prefer to spend their time focused on business functions rather than service functions. Service functions are generally considered tactical cost centers. Business functions are perceived as functions that drive the business.
Recruiting should not measure its success by how happy its customers are, but instead by how much it contributes to both the top and bottom line. Analyzing requisitions according to the effectiveness vs. efficiency framework is the first step in changing the perception of your recruiting organization from that of a service function to a business function.
Tomorrow: Efficiency vs. Effectiveness: Definition
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