Technology of Recruitment

In the summer of ’09 I took the decision of joining a recruitment firm. Since then I have been studying the processes and strategies of various successful recruitment firms to understand factors that help recruitment firms succeed. In this blog, I am breaking down the business model of a recruitment firm and penning the fundamental factors that recruitment firms ought to manage to run their business successfully.

Function of a Recruitment Firms: India’s working population is 699.9 million. 10% of this population, 69 million, have regular employment, perhaps in the 7,38,312 registered companies that are registered in India. This gives the scale of market where labor meets companies and negotiate to close business! Also the information asymmetry in the labor market is high and inefficient.

Essentially, a recruitment firm creates a market where demand (a company’s talent requirement) meets or matches the supply (talent pool) and close employment contract in an efficient manner (productivity).

For success, an improvisation of each of the parameters highlighted above is needed.

  • Demand
  • Supply
  • Match
  • Efficient

Demand: Any organisation has several tasks to be performed. Managements are constantly asking the question “Who is going to do these tasks?” Tasks are done to achieve certain goal, thus we could re-frame the same question as “who is going to achieve this goal?” Demand originates with this question and takes shape of a Job description.

However we know that job descriptions are often inaccurate or vague and therefore recruitment firms should always ask this question to their clients upon receiving any JD. This will help them understand demand in its purest form.

Supply: Once the demand is clearly understood, the next obvious question raises, “Where is the person who is going to achieve the goal?” How the answer to this question is arrived distinguishes the one who succeeds from the one who fails.

The book Outlier by Malcom Gladwell has influenced my greatly. I learnt from the book that the success of a person is significantly influenced by the circumstances experienced by the person. Therefore, while matching demand and supply, it is essential to understand what led to success of the person currently performing satisfactorily.

Steve Jobs made a speech in Stanford, where he said “You can’t connect the dots looking forward; you can only connect them looking backwards”.  To find characteristics of supply, one could pick profile of a successful person in the job and observe his ‘dots’. Once the ‘dots’ are identified and documented, pick the important ‘dots’ and start searching for people who would have those dots.  On side notes, since most of the jobs are replacement positions, its not very difficult to find a person whose dots we need to discover.

Match: Matching supply and demand is discovering facts about an individual to ascertain chances of his success. This includes scheduling, interviewing, testing and other checks. Traditionally recruitment firms have had limited scope to change client’s scrutiny process. However world has become a different place now because market has become extremely supply driven and recruitment firms being closest to ‘Supply’, could offer suggestions.

Every step involved in scrutinising a candidate cost time and money to firm and client. Therefore it is imperative that we optimise the process of matching. Firms should monitor steps involved and continually validate the people and methods involved in scrutinising. Continues improvement initiatives from the team should be handsomely recognised and implemented. To bring in innovation here, it certainly makes sense in forming cross functional teams and equip them with powers to find ways to reduce steps and time taken.

Efficient: Efficiency is calculated by OUTPUT/INPUT. Recruitment firms typically have following inputs:

Demand efficiency: Number of successful Join/The number of JD that enter the firm

Supply Efficiency: Number of people shortlisted/Number of people join

Process (Method) Efficiency: Time taken to process one candidate

Key to success is to measure and improve the above three efficiencies. Holding an individual accountable for improvement of each parameter and holding another individual accountable for all these together is imperative.

Demand Efficiency: Firms should invest on educating their people to understand demand well and setting processes to ensure demands that are not understood are not allocated any resource.

Supply Efficiency: Highest IQ resource in the company should be spending his time in guiding rest of the company in improving supply efficiency.

Method Efficiency: Good IT tools help in improving Method efficiency. Companies should always be on a lookout for improved IT products to increase method efficiency.

Trust: Peter Drucker quoted that “Suppliers and especially manufacturers have market power because they have information about a product or a service that the customer does not and cannot have, and does not need if he can trust the brand. This explains the profitability of brands” Applying the same analogy, the hiring manager and the candidates do not have as much market knowledge as the recruiters or recruitment firms. To bring in efficiency, firms must spend on trust building efforts and transparency.

Companies often mention words such as TRUST in their core value and hope that the trust factor is taken care of! To win trust firms must take scientific steps: creating right brand image, engagement with clients and candidates, listening and being true to commitments. empowering recruiters to stand up to their commitments, training recruiters to act maturely etc.

I need to measure the above for my firm and see if by applying methods mentioned above, and calibrate various levers discussed. If I could, then that would form “Technology of Recruitment”.

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