Gearing for Growth: How Mid-Sized Firms Can Ensure Talent Issues Don't Put a Handbrake on Growth

GEARING FOR GROWTH: How Mid-Sized Firms Can Ensure Talent Issues Don’t Put a Handbrake on Growth

introduction

Few talent acquisition endeavours are as high stakes as those within a company in high organic-growth mode.

In such organisations, the task is to successfully recruit a substantial number of employees in a very short timeframe. The company may be launching a new product, entering a new market, building a new facility or extending its sales and operations into new geographic regions. Speed is of the essence to seize the business opportunity, yet it must not detract from the ability to secure top skill sets.

HR and/or talent acquisition teams to handle effectively.

For HR, in particular, workforce expansion requires adding high volume recruiting activity to a burgeoning workload, much of it focused on the successful onboarding of new talent and the continued support of incumbent staff. It is additive work — not shifted work — because core HR activities cannot be deferred during the growth period.

Such hastened talent demands often are beyond the capacity of a midmarket company’s

The consequences of these pressures can be significant.

If scurrying to fill employment

ranks, poor hiring decisions may be made. By slowing down to carefully consider job candidates, the launch deadline may be missed.

This report underscores the need for middle market companies (organisations with between 500 and 5,000 employees) to explore and understand how best to effectively manage rapid workforce growth.

The consequences of these pressures can be significant. If scurrying to fill employment ranks, poor hiring decisions may be made.

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Middle Market: Fast Growth Now Many middle market companies are experiencing fast growth, both organically and through acquisitions. Having exercised caution in the first decade of the 21st century, midmarket businesses are expanding services and bridging new geographic territories.

Buoyed by rising confidence in both the global and local economies, many organisations plan to invest their capital into growth opportunities in 2015–2016.

As midmarket companies grow organically, operational capacity must increase, requiring more talent, different talent and often better talent than before.

In Australia too, a story is unfolding of midmarket firm growth.

Certainly, the signs are there that growth is on the agenda for leaders of mid-sized firms in Asia. An independent study commissioned by Standard Chartered found that mid-sized companies in Asia are highly confident in their ability to grow, looking to both domestic and international expansion.1

According to GE Capital’s 2014 Australian Mid-Market Report, middle market firms make up 1.4% of all Australian companies yet account for nearly one-quarter of the workforce and contribute AU$544 billion annually to the national economy.2 Australia’s total GDP in 2014 was AU$1.9 trillion.3

The report, Asia’s Mid-Sized Companies: Confident, Dynamic and Growing, surveyed 300 APAC-based CEOs and CFOs of firms with an annual turnover of between US$30 million and US$100 million. It found 86% of respondents were confident

During the course of 2013 to 2014 the Australian middle market shifted its focus from cost control to growth. As midmarket companies grow, operational capacity needs to grow as well and that requires more talent, better talent or both. The GE

Standard Chartered, Asia’s Mid-Sized Companies: Confident, Dynamic and Growing.

GE Capital, Australian Mid-Market Report 2014.

Pitcher Partners, Dealmakers: Middle Market M&A in Australia.

4 GE Capital, Australian Mid-Market Report 2014.

5 Hudson Global Inc., Australia Hiring Expectations, Quarter 2, 2015.

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in their potential to grow their turnover in the next five years, with the average anticipated turnover rising to 39%. 75% plan to take on more workers in the next five years, with 64% planning on growing their headcount between one and 50%.

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report noted, “Talent factors increasingly captivate the MidMarket. The impact on the bottom line of attracting and retaining good talent is emerging as a key business focus”.4 Employers in the professional and financial services sectors in particular are hungry for the right talent to support structural transformation projects and underpin future business growth.5 As midmarket companies plot their respective growth strategies, the related talent implications are often the last considered. In this era of fastpaced business decisions and rapid change, the failure to quickly enter a new geographic territory, for instance, can result in a competitor getting there first. In such cases, the company with the most agile recruitment capabilities will win the day.

Typical Talent Challenges for High Growth, Midmarket Companies MACRO ISSUE

RESOLUTION

HR lacks defined strategy

Use data and analytics to position HR as revenue-impact dept.

Bottom up HR strategy

Enlist senior management for top-down approach

TALENT-SPECIFIC ISSUE

RESOLUTION

Weak employer brand and Employee Value Proposition (EVP)

Create programs to boost hiring and retention

HR expected to be “jack of all trades”

Find partner for advanced sourcing, recruiting processes and tools

Seeking talent that does not exist

Get access to current talent pools, comp rates and job descriptions

Stuck in the “top candidate” trap

Identify true top talent with competency profiles

HIGH VOLUME PROJECT SPECIFIC ISSUE

RESOLUTION

HR lack of time and resources

Allow HR to focus on strategy and find partner for large projects

HR not always privy to large project plans

Engage key stakeholders in workforce planning

Changing project needs and “surprises”

Access a nimble team that can scale and pivot quickly

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Planning the Scope of Hiring As middle market companies evaluate short and longer-term organic growth options, they must consider the talent needed for these plans to succeed.

In today’s talent-based economy, workforce demand planning is vital to the success of a company’s organic growth plans, but all too often companies don’t have the discipline, the time or the internal skill set to conduct proper workforce planning.

While HR leaders will attest to the importance of proper advance workforce planning, many are not privy to their companies’ growth plans until they are in play.

In today’s talent-based economy, workforce demand planning is vital to the success of a company’s organic growth plans, but all too often companies don’t have the discipline, the time or the internal skill set to conduct proper workforce planning.

Suddenly, they must recruit and hire a great number of skill sets in a very short timeframe.

An HR/talent acquisition staff accustomed to handling a handful of hires a year is now faced with hiring exponentially more people, often in new and varied positions.

Unable to meet the demand, they risk workforce gaps impeding the business intent of the strategic growth initiative. If they stumble, the growth initiative may fail to achieve the strategic intent.

Meanwhile, the CEO is focused on expanding the business — not talent planning. This puts the onus on HR/talent acquisition to strategically determine the different skill sets and overall employee volume needed to fulfil the growth objective. Then, they must handle all the transactional elements of recruiting, including interviewing and onboarding the new employees.

HR could outsource the workforce demand planning and transactional elements, and identify key areas where they can engage with a Recruitment Process Outsourcing

(RPO) partner, but many mid-size company HR leaders, in addition to their CEOs, have little experience leveraging this third party model.

They also may consider an outsourced recruitment provider as a mere implementer of tactical needs no different from hiring an employment agency. Many are unaware of the tremendous upside potential of an RPO strategic alliance buoyed by senior leadership support.

Want to transform?

Create a plan and work the plan “(In) organisations that took a rigorous, action-oriented approach and completed their transformations (all initiatives had been fully implemented), executives report a 79% success rate — three times the average for all transformations… No single action explains the difference; in fact, the more actions an organisation takes, the more likely its transformation is to succeed.”

McKinsey & Company, “How to Beat the Transformation Odds”, April 2015

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9 Warning Signs

Your company is unprepared for large project growth

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HR doesn’t have the bandwidth to set aside their current responsibilities and focus on recruitment

Workforce and demand planning are not specific functions of the firm

Your business line hiring managers have never been trained on proper interviewing skills

No formal employer branding programs or employee value propositions are in place

Your midmarket company is growing fast.

HR has scrambled to put in the proper training and benefits programs. Now you’re expanding into a new market or launching that new product.

You’ll need 50+ hires quickly. Is it realistic to assume your HR team can pivot into a lean-andmean recruitment machine? Here are some hints that they may not be prepared:

The attributes of your company’s top performers have never been documented

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You lack internal experience with advanced sourcing techniques and talent communities

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Other responsibilities preclude HR from keeping current on recruitment tools, trends and salary market rates

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No formal process exists for comparing competitive data such as salary, compensation and benefits

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You lack a defined recruiting process complete with prescribed actions, procedures and participants

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talent market and Salary misperceptions Coming out of the recession, misperceptions persist about talent availability.

Simply posting a role to a job board to generate qualified candidates isn’t as effective as it used to be, yet some hiring managers hold onto the image of yesterday’s candidate landscape of eager job seekers at every turn. They are bewildered to find skills shortages and the need for advanced sourcing strategies and condensed time-to-offer metrics to secure desirable candidates.

Just as HR professionals have access to unprecedented social data about candidates, the reverse is also true. Candidates can obtain company information, employee reviews and customer feedback that were inaccessible not long ago, underpinning the importance of a strong employer brand.

The recession produced another byproduct: long-tenured employees who juggle multiple roles. The employee may have started in one role, but over time and staff cuts, the role has expanded to include multiple functions typically performed by others. When the need arises to replace these employees, a skewed perception of what to expect may translate into time wasted searching for candidates who simply do not exist.

Compensation packages are now multifaceted and competitive. This may be a hurdle, as burdened HR teams do not have the right data or the capacity to properly price the required skills in the relevant labour pools. It is common for organisations to ignore the supply and demand dynamics of the

labour market and underestimate the compensation requirements of targeted candidates.

Compensation “equity” is confused with “equality”, with skills “selling” at today’s market price, not at the rate of the existing team hired five years ago.

An RPO provider flush with clients is a fountain of knowledge for current market compensation rates. Unlike agencies, RPO fees are rarely if ever based on starting salaries, so the marketrate data is unencumbered by competing priorities.

Some hiring managers hold onto the image of yesterday’s candidate landscape.

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Everyone wants top performers and seeks the stereotypical profile: a pedigree that includes the best schools and a resume peppered with tenures at top consumer brands.

HR managers also must avoid the “top performer” trap. Everyone wants top performers and seeks the stereotypical profile: a pedigree that includes the best schools and a resume peppered with tenures at top consumer brands. This is not an accurate depiction of what constitutes a topnotch performer for every organisation, however.

RPO providers can undertake competency profiling of existing star performers, creating recruitment efficiencies crucial to companies in high-growth mode.

Often, these profiles lead to the best hiring outcomes. To do this internally, HR leaders must be able to assess if the organisation has clearly defined career paths, know how to manage top performers and develop programs that deliver on employer brand promises. If this is not the case, HR risks trading the challenge of hiring top performers for one of retaining top performers.

Common Talent obstacles “Top Performer Trap” “Role Scope Creep”

“Skills Gap”

“No Employer Brand”

“Solely Relying On Job Boards”

“Compensation Equity vs. Equality”

“Talent Availability” “Defining Star Performers”

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Talent, Talent Everywhere

8 Signs You’re Stuck in a Talent Time Warp Just because the economy has rebounded from the Global Financial Crisis (GFC) doesn’t mean that your talent mentality has also rebounded. no rush making an offer Some still believe they’ve got all the time in the world for interviews and making offers. Not so. If you are interviewing a candidate, it’s likely he/she is interviewing with other companies.

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WE DICTATE COMPENSATION NOT THE MARKET The market dictates current compensation rates, and it’s not based on what’s “fair” compared to your other employees. Just because the last three people hired five years ago make X doesn’t mean that it aligns with today’s expectations.

Unrealistic compensation offerings make recruitment an uphill climb.

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WHAT SKILLS SHORTAGE? When it comes to science and technology careers there simply aren’t enough candidates to go around. Deliberate employer branding programs, attractive employee value propositions and creative sourcing are what it takes to snag these candidates before your competitors.

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What Employer Reputation?

Access to unprecedented amounts of social data isn’t just a one-way street.

Candidates can view previously unimaginable levels of company information, employee reviews and customer feedback. Recruiting efforts will lag for those companies that do not deliberately create an appealing employer brand.

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Everyone needs a job, so hiring the best should be fast and easy. Wrong.

During the GFC great candidates may have seemed like they were growing on trees, but not anymore.

Today professional-level candidates have more options and opportunities, and recruiters need advanced sourcing techniques and impressive employer brands to find and attract them to the company.

One Employee will Gladly do the Work of Three

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The 10-year veteran employee who accumulated multiple jobs along the way has left the firm. Just create the replacement’s job description based on that person’s final responsibilities.

Not anymore. Just because one employee weathered job scope creep doesn’t mean new hires will be able or willing to do the same. Base job descriptions on realistic expectations or you’ll waste valuable time looking for candidates who do not exist.

TOP PERFORMERS ARE THE SAME EVERYWHERE Top schools. Yes. Admired consumer brands on the resume. Excellent.

That’s what everyone looks for in a top candidate, but it doesn’t mean that these candidate types will perform well in your cultural environment. Create competency profiles based on living-andbreathing top performers in your organisation, and use them when searching for candidates. It will make recruitment easier, and you’ll get better results in the end.

EMPLOYEES WON’t dare leave Employees no longer count their lucky stars just to be employed.

You’ve got to make it worth their while. What’s your employee value proposition? What career paths are offered? How do your compensation packages compare with competitors? Ignore these questions at your own peril.

the impact of change Midmarket companies tend to move fast. When an opportunity presents, the business must be aggressive.

Consequently, the frenetic demands to screen 500 candidates, pare this group down to 200 individuals and ultimately recruit 50 people within six months, create chaos and confusion. RPO brings order to chaos by mapping out the required activities of all participants, including hiring managers.

A thoughtful plan makes an organisation more deliberate.

The competent RPO provider asks prudent questions such as: Is it reasonable for managers to devote 80 hours per week to interviewing? How will the company onboard 250 people at once? Do ample work space and equipment exist for the new hires? Astute questions that business leaders ordinarily do not consider force a better plan and foster stakeholder commitment early in the program.

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Another daunting challenge for HR is managing the impact of the workforce expansion on current employees. Legacy employees must not feel threatened by the influx of so many new people. HR also must ensure that the new hires are aligned with the existing culture — the self-sustaining pattern of behaviours, thoughts, feelings and mindset within the organisation.

A cohesive culture is arguably the most important factor in running a successful enterprise. For it to truly provide value, companies need to hinge the RPO effort to their employer brands. This is a top-down endeavour, requiring legitimate executive sponsorship and support. A strong employer brand assists recruitment objectives, while a negative employer brand is a serious handicap to successful hiring.

A purposeful employer brand generates feelings of meaningful work and engagement among employees whose loyalty and word of mouth guide other talented individuals to the business. These varied cultural traits ultimately combine to differentiate a company from its competitors, generating profitable business results.

In many organisations, HR is built for the business the company was in, rather than the business it will be in. In such cases, the consultative and transactional benefits of RPO must be carefully weighed and considered.

In many organisations, HR is built for the business the company was in, rather than the business it will be in.

To Manage the Impact of Change Align new hires with the company culture

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Maintain a consistent, authentic and appealing employer brand

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Manage the workforce expansion effects on current employees 11

RPO To THe RESCUE If a midmarket company plans rapid expansion, RPO is a “plug and play” alternative to drive cost and time efficiencies and consistent quality of hire.

A good RPO partner brings deep expertise to the challenge and works with HR, talent acquisition and hiring managers to realise superior workforce demand planning, project management and delivery. The provider can discern talent types and volumes, clarifying and mapping out how many skill sets are needed to achieve desired growth outcomes.

RPO can also help an organisation refine and broadcast a powerful employer brand by defining an effective recruitment value proposition to target candidates outside the firm’s core competency (e.g. why should an accountant join your whiz-bang technology company?). This ensures messaging will be fresh and attractive to a large number of the best job candidates in the shortest period of time.

RPO can further influence an organisation’s cultural alignment with the prospective employees needed to transform the growth initiative into a successful enterprise. By leveraging the provider’s extensive data sets and workforce analytic capabilities,

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clear and compelling competency profiles and job descriptions can be developed to drive outreach to the right people with the right skills.

RPO also ensures more open communications with existing employees to reduce the potentially adverse impact of the workforce expansion on high performers and even the rank and file. Furthermore, RPO handles the compliance laden and complex transactional elements of mass workforce recruitment. If hundreds of new employees are needed within a few months, the demand can be fulfilled with less risk of a poor skills match, thanks to the use of employment needs analyses, benchmarking and process standardisation. For

RPO handles the compliance laden and complex transactional elements of mass workforce recruitment.

companies entering new markets and geographies, the provider’s knowledge of local laws and regulations and its boots on the ground globally are an added bonus.

Importantly, RPO can support more long-term recruitment and succession planning needs, providing not just the “quick wins” necessary to launch a midmarket company’s growth initiative.

Unlike agencies, RPO has access to internal talent pools, making the provider better placed to support talent management and succession initiatives. RPO offers the ability to identify and judge the performance of highpotential employees to fill new positions as they are created or become available.

RPO is the surest way for a rapid expansion plan to have the most positive impact on the business. After all, people are the nucleus of an organisation, the most important business asset — by far. Finding topnotch employees in great numbers in a short period of time is not a task for the fainthearted.

10 Qualities to Seek in a Hiring Partner

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Recruitment and Employer Branding Expertise

Experienced providers offer extensive research skills, are familiar with cutting-edge recruitment and sourcing strategies, and can furnish tools and techniques for building a desirable employer brand. They can also build specialty talent pools and communities.

Speed

Skilled RPO providers streamline your recruitment process by creating a simpler, more efficient solution — all while balancing improvements in time-to-fill and maintaining a high quality of hire.

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Flexibility and Scalability

One of the greatest recruitment challenges is effectively responding to rapid fluctuations in hiring demand. An RPO provider should offer several solution options for scalability and flexibility to minimise your cost and risk as your hiring demand levels vary.

Cost Savings

The longer a role is left unfilled, the more it costs a business. Placing the wrong hire in a position creates unnecessary turnover. An RPO decreases a company’s cost-per-hire and timeto-fill while enabling HR and hiring managers to focus on high priority responsibilities.

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A skilled RPO provider will assist in selecting the best tools and technologies according to your business requirement. They can also analyse and interpret industry and market intelligence, leverage big data for better business decisions and implement automated candidate campaigns.

From an equal opportunity, compliance and process perspective, your RPO provider must build your hiring system around your goals and objectives. This includes pre-defined Service Level Agreements (SLAs) complete with a governance model to safeguard expected program results.

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High-Touch, Consultative Approach

A premium RPO partner provides white-glove service to both hiring managers and candidates.

For hiring managers, this means offering strategic planning and ongoing reporting and measurement. For candidates, it translates into an exceptional hiring process experience.

Customised Solution

Many large recruitment companies operate on a one-size-fits-all model. They simply plug your company into their RPO model. Be sure your RPO provider can customise the solution to the unique needs of your organisation.

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Technology and Data Expertise

Compliance

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Talent Management and Coaching Services

Premium RPO providers offer value-added talent management and coaching services such as competency profiling and psychometric testing, interview skills training, career and leadership coaching and services to aid with succession planning.

Ability to Reach Beyond Current Borders

Whether you operate globally today or have future expansion plans, seek an RPO provider who can grow with you globally. Be sure your provider has an on-the-ground, multinational recruitment presence with local teams that grasp the values, customs and cultures of a location.

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case studies EnergyAustralia Challenge

RESULTS

EnergyAustralia, a major energy company, was operating under a relatively unknown retail brand in its primary location for recruitment following a large acquisition. It had a significant level of ongoing recruitment, a new contact centre to build and de-centralised contingent recruitment. Its previous recruitment methods were also high cost, heavily reliant on agencies and limited at promoting its brand and employee value proposition.

In the first 12 months the solution delivered:

SOLUTION Hudson RPO started onsite in September 2013, delivering endto-end recruitment and onboarding for all job families. We implemented a blended RPO/Managed Service Provider (MSP) solution to these challenges, with three key focus areas: «« Fill up to 1,200 positions

annually with 95% direct fill rate «« Centralise contingent recruitment «« Deliver a project to establish a new 310-seat regional contact centre Team delivery was structured by specialisation, augmented by a dedicated on-site sourcing team, and with access to the shared services hub. The team was also supported off-site by specialists in EVP/brand and sourcing.

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«« 1,662 positions filled (internal,

external, permanent, fixed term, contingent) «« 96% directly sourced external roles, resulting in significant cost avoidance «« A visible and growing employer brand and value proposition Centralising contingent labour delivered: «« Transition of all incumbent

suppliers into a single model «« 83% direct fill for contingent versus 100% agency fill in prior model «« Full visibility and control of spend, and substantial direct cost savings Recruiting an all-new 310seat contact centre in Phase 1 delivered:

Other innovations delivered: «« A full employee branding and

value proposition EVP project «« A highly visible campaign with a dedicated EnergyAustralia careers microsite «« A new employee referral program managed through PageUp technology «« Improved exit interview process, designing, developing and implementing exit surveys and reporting for a central and reportable view of exit survey data «« Introduction of new background, qualification, work rights and reference checks «« Introduction of “Wasabi Waiter” Revelian gamification. The tool introduced gamification to the assessment of cognitive ability for candidates in contact centre roles and provided an innovative experience for candidates

«« 243 hires, from 1,728

applications managed «« 100% direct fill in a new region with no pre-existing talent pools «« A highly visible dedicated advertising campaign and microsite

“Together we have achieved incredible cost savings for the business, improved the rigour and governance surrounding recruitment and introduced a level of transparency and consistency that had previously not existed.”

Sheryn Grant, Talent Acquisition Business Manager, People & Culture, EnergyAustralia

SOLUTION «« Achieved the 20% Proactive

Sourcing KPI (despite significantly higher than expected recruitment volumes), resulting from the growth of proactively talent pooled candidates from zero pre-October 2013 to 866 in October 2014, of which 332 candidates are actively managed

Key commercial results for EnergyAustralia in year 1: «« Moved from 90% agency

reliance for external recruitment to sourcing 96% of hires directly «« Reduced average cost per hire by 74.6% «« Reduced cost of running HR by 11.5% in 12 months

UCB Challenge In 2013 Belgium-based UCB, the world’s fifth-largest biopharma company, was planning a large expansion of its China operations.

It needed to recruit 250 sales and 60 non-sales positions by June 2014. Until this point the UCB HR China team had done all its recruiting through agencies, and it lacked the brand recognition of other large pharmaceutical companies in China, so recruitment was expected to be challenging.

The Hudson team knew they would need to deeply understand the UCB brand and culture in order to sell it to potential candidates. This deep understanding accounted for much of Hudson’s success in convincing such a large number of candidates to interview and consider a career move to UCB. The project began with a team of four recruiters, two researchers and two support staff members.

The work started small with 15 positions in the first month, and then 25 in each of the following five months. The team then up-scaled to five recruiters, three researchers and three team coordinators.

Initially, UCB wanted the 250 sales positions they requested to be filled by June 2014. Then, in late November 2013, the company moved that deadline up to March and eventually to the end of February 2014. UCB also needed to fill 25 Medical Science Liaison (MSL) positions by the end of February. MSL professionals are difficult to find and even more difficult to convince to change employers; their work is dependent on in-depth knowledge of their employers’ products, and that takes time to develop.

Hudson worked with the UCB HR team in planning the expansion project, providing advice on timing, locations and processes for recruiting for such a large volume of positions. Sourcing strategies, which included major China job boards and LinkedIn, were put in place by Hudson, and an employee referral campaign was refreshed, all of which resulted in a strong candidate flow.

Given the approaching deadline, the Hudson RPO China team increased its productivity and output, filling 110 positions in December 2013 and 88 in January 2014, with additional hires being finalised over the next two months.

For the MSL initiative, Hudson RPO talent mapped more than 850 professionals across China, pre-screened the applicants down to a qualified group and managed them through the interview and selection process.

Hudson geared up again for the next phase of UCB’s expansion plan in Q4 2014, with approximately 90 new headcounts required. Based on the success of the work in China, Hudson RPO rolled out the solution into India as well, starting in September 2013.

RESULTS «« Having already filled 130 sales

positions in the preceding five months, the Hudson RPO team filled 110 sales positions in December 2013, 88 in January 2014, and 53 others in February 2014, meeting the client’s ambitious deadline «« The team exceeded UCB’s requirements for the 25 MSL positions by finishing slightly ahead of deadline; all candidates were of the highest quality with all holding at least a master’s degree «« Hudson RPO also filled the 60 non-sales positions, which included the MSLs and compliance, regulatory and HR roles, in the same timeframe

“There is no way UCB China could have met their expansion plan targets without the Hudson team.”

Mohammed Chaoui, Head of UCB APAC

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ABOUT HUDSON RPO Hudson RPO specialises in recruiting professional-level candidates for mid to large-cap multinational corporations in select industries. Hudson RPO offers a wide range of recruitment process outsourcing services including outsourced recruitment, custom blended RPO/MSP solutions, project recruitment, contingent workforce solutions as well as consulting services. A global force in talent acquisition solutions, Hudson RPO designs, implements and manages custom RPO programs. More information is available at HudsonRPO.com

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