LEAH DANIELS
LEAH DANIELS, SVP, STRATEGY

Stop reporting KPI’s and start delivering ROI. Using Agile Recruiting to Get a Seat at the Table.

June 30, 2020 at 04:03 PM — Post

Wait, stop me if you have heard this one.

A CRO walks into a CFO’s office and says, “Last year, you gave me a $10 million budget, and with that budget, we made 10,250 phone calls, sent 35,673 emails and lowered our time to close from 65 days to 62 days. Next year, I’m going to need a bigger budget.”

No? How about this?

A CMO walks into a CFO’s office and says, “Last year, you gave me an $8 million budget, and with that budget, we ran 125 campaigns which generated 4,562 leads, of which 245 were new companies we had not previously interacted with. Next year, I’m going to need a bigger budget.”

A CTO walks into a CFO’s office and says, “Last year, you gave me a $6 million budget, and with that my team bought 27 servers and wrote 1,650,000 lines of code, which produced 22 new features and one new product. Next year, I’m going to need a bigger budget.”

I think we all know this is not how these conversations go. As a fly on the wall, they tend to go more like this:

CRO: “Last year, you gave me $10mm in budget and I made $100 million in sales, $30 million in new business, $20 million in upsells/cross-sells & $50 million in renewals.  I’m looking at next year and I think I will need $12 million to make my targets.” 

CMO: “Last year, you gave me an $8 million budget, and with that budget, we generated 4,562 leads, of which resulted in $25 million in new business, $10 million in upsells/cross-sells. In addition, we supported the facilitation of the $50 million in renewals. Next year I will need $9 million to support our targets.”

CTO: “Last year, you gave me a $6 million budget and with that my team developed new features that directly contributed to $2 million in new sales and $20 million in renewals. In addition, we brought a new product to market that resulted in $3 million in new business and $15mm in upsells/cross-sells. Next year I’ll need another $6 million to hit our new targets.”

Yet, the head of talent walks into a CFO’s office and says, “Last year, we hired 22 new employees, reduced cost of hire by 5% and reduced our time to fill by three days.”

For reasons still unclear to me, the talent arm of companies reports out KPIs but not the impact of their efforts. Talent acquisition sounds like the first group of examples, instead of the second.

Every business operation in modern companies ties their success to revenue impact. Every business operation except HR and by extension, recruiting.

HR and Talent organizations tend to focus on key performance indicators (KPIs), and while those are important for running a business, performance indicators are all they are. They are not the measurements in which a business can hang their hat;rather, they are indicators of the heath of the team or business. ROI lets you ask for money, it gives you an opportunity to get a seat at the table, it ensures that you are not a cost center, but rather a function to drive revenue

Today, recruiting teams are continually asked to do more with less, and as we face uncertainty like never before, the only certainty is that you will be asked again to do more with less. You will need to figure out how to lower the cost of acquisition, find unicorns for free, help maintain the consumer brand while driving the employment brand, all for less. Now you will also need to figure out how to adapt to a business environment that is changing faster than your data can even inform you. Your definitions of success are all irrelevant right now. Nothing that was an indicator is currently valid as the talent landscape shifts dramatically.

Recruiting teams are being called on to help with “the great rehiring.” Or, to figure out how to run team-based approaches to staffing: to hire more part-time workers and less full-time employees, and to predict turnover in uncertain times where schools are closed and employees can’t work from home. The job just got harder.

If you are in a typical recruiting organization you have built your reputation on execution excellence. And execution excellence is measured in KPIs.

But to be successful in this new world, you have to have an eye on what’s coming down the pike. You have to be able to advise, to tamp down inaccurate assumptions (eg., high unemployment means a deluge of candidates, which interestingly is currently not true), and be able to react to changing business needs as the markets continue to shift.

Now, if ever there was a time, recruiting leadership must stop reporting the metrics they run their business on as the metrics of success, and start to translate those accomplishments into revenue. Every other key function in the company states its success in terms of revenue, even if it’s duplicative. Sales (which only happen when marketing, sales, product, customer success, and product development come together) sets a number and marketing and development co-op that number to delineate their successes.  

The other half of the organization delivers value in supporting the organizations or minimizing risk (IT support, finance, legal, HR), and these functions though primarily rely on human cost, not tools, technology, media, and outside support. The cost of lowering their budgets is the elimination of headcount.  

Recruiting finds itself often where much of its cost is not humans, but tools, technology, and media; in this way, it is more similar to marketing. The key is to emulate marketing in how to report out, and not emulate HR and how they determine value.

Track your “deals” to success. Look for, and commandeer ownership, for the successes of your new employees in their first-year. This is not the time to be nice and let the respective department claim total impact for those people. There is no reason recruiting can’t also take credit for first-year successes.

Done right, your argument might look more like this:

“Last year, you gave me a $2 million budget and with that, we made 42 hires. Those hires had the following impact: The 10 salespeople drove $5 million in revenue in their first year, a 20% higher average then salespeople hired the year prior. The three marketing people we hired were responsible for 120 of the campaigns that produced $6 million in new business and $2 million in upsells. The five new developers we hired came onboard on average six weeks earlier than expected, allowing the business to get the new product out the door sooner resulting in $2 million in revenue earlier than predicted and $18 million new product revenue overall. The Talent organization directly contributed to the bottom line affecting at least $15 million in revenue last year.”  

And follow up with:

“As we look to next year, we won’t be able to continue to deliver at the same rate if we are expected to only react to the rapidly changing needs of the business. In order to hit our targets we will need a $2.5 million budget, and to be brought in early to business transformation conversations so we can  lend our expertise regarding what is possible given the new world we are in.”

Good luck!

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