10 years ago, none of us could have predicted that virtual hiring would become the…
How do you view HR? Are you the department that fills open positions and ensures compliance with state and federal regulations? Or are you one of the critical driving forces behind the success of every team, every department and the company as a whole?
That's not as overdramatic as it might seem.
HR talent management solves company problems at every level. The strategies you develop and the people you hire set the pulse of the company. Thing is, strategies aren't free.
In a rapidly changing hiring landscape, the HR team with the most cash wins. With the budget season fast approaching, now is the time to build your case for more resources to do a better job for everyone who relies on you. When you win, so does everyone else from the C suite on down the line. Your task is to prove your worth. Here's how to get a better budget next year and use what you've got as effectively and efficiently as you can.
- 75 percent of change initiatives fail (Towers Watson). Executives need to know why your plan is better.
- Executives don't measure business success by how many recruitment problems are solved. Illustrate how a better budget for you can solve their problems.
- KPIs such as quality of hire probably won't resonate with company executives. Learn the dollar value of better retention, turnover, and other KPIs and talk to them in terms of money.
- How efficiently did you use your budget last year? Show your work.
- What's the competition doing and how are they faring? Find out, and show how your 2018 budget will be used more effectively for better results than all of them.
A Bigger Budget is Risky. Why Should Company Executives Trust Your Plan?
If you're advocating for a bigger budget to effect positive change, you'll need to prove why it's more likely to happen with your plan than without it. That's because 75 percent of change initiatives fail. It's an expensive risk that needs as much supporting evidence as you can gather.
In a 2014 Towers Watson study, researchers found that the short-term and long-term success of change projects were grim and grimmer.
- Only 55 percent of change initiatives worked out as expected in the beginning
- Later, that number dropped to about 25 percent
Why do so many change initiatives fail? According to the study, a lack of understanding across departments plays a significant role. If HR doesn't understand high-level company goals and strategies, they're less equipped to support them on the ground in their own departmental initiatives.
This problem with understanding doesn't just flow from the executive suite down through the company. It also flows up from HR to company executives. With more people on the same page from the earliest possible stage, more people get the big picture and you're more likely to get the budget you need for the coming year.
Talent is an investment now, or at least it should be. Done right, the more you put into it the more the whole company will benefit. How can you prove that it's worth it? Business behemoths such as Google have done the legwork and put in countless hours of testing.
- Google spends twice as much on recruiting that takes twice as long to complete
- Long-term financial success of the company depends on devoting more upfront resources to hiring
- While employer branding isn't cheap, leaving it out of the recruitment budget costs the company in profits later on
- Fastidious recruitment, screening, interviewing and hiring takes more time, which costs money, but gives a higher ROI (The Undercover Recruiter)
Your job in the close of 2017 is not necessarily to reinvent that particular wheel. It's to use the successes of those bigger companies-illustrate how change initiatives at Google and other big names worked out for them-to show what your plan can do for your company.
What are Your Company's Success Drivers and How Can HR Support Them?
- Two of the most important things you can to do make your budget case are learning what drives company success and evaluating how your efforts can make a difference.
- What are some of the most important roles in the company?
- How often is turnover an issue in those roles?
- How difficult are those positions to hire for?
- How will allocating more budget dollars to hiring key players help executives see the change that they need?
Naturally, HR initiatives are valuable. But just how valuable is anyone's guess until you pull together those facts in concise terms.
To speak to executives in terms of value, you first have to know the value of your work. Then you have to prove it.
Talent Growth Advisors says there are five steps that help bring the finance committee onto your team.
- Explain your understanding of company success drivers
- Highlight which of those drivers are most important
- Identify critical roles and how they relate to success
- Speak to budgetary needs to hire for those critical roles in concise terms
- Prove why the budgetary investment is necessary and show the ROI that they should expect from it
What are the Risks of a Disappointing HR Budget?
While you're building a case for a better budget next year, don't forget to include the risks of not getting what you need. Sometimes, the negative possibilities do more to get attention than a host of positive ROI projections.
Are your closest competitors shelling out more to HR? If so, that's an important talking point. You want to do more with more, not hope for the best with less. A smaller HR budget in your company gives a hiring advantage to every competitor who spends more. That should be unacceptable.
Here are a few more ideas from Glassdoor to work with:
- The average time-to-fill is 52 days and costs $4,000.
- If a weaker budget increases time-to-fill, how much does cost-per-hire increase as a result?
- 89 percent of people surveyed were actively looking for work and over half were in the process of considering a new job. How many of your employees might say the same, and how much would it cost to replace them?
- How could a healthier budget help develop employee engagement initiatives to reduce turnover and keep more people on board? Companies with engagement programs enjoy over 25 percent higher revenue.
- Most job candidates in 2017 are passive. Passive candidates use social media. Do you have a sophisticated social strategy? Occasionally posting a job opening doesn't count.
- Millennials might have a radically different idea of the employer/employee relationship, but they are fast becoming a significant segment of the working population. Can you afford not to develop a talent strategy around what matters to them, such as training?
- Nearly 70 percent of companies have in-house training programs. Forty percent are spending more on training now than last year.
All of That Sounds Great, But What About Last Year's Budget?
With the race to the budgetary finish heating up, don't forget about what's left of this year's budget. Before approving more, the finance committee will probably want evidence of how well you've handled the budget they already approved last year.
What initiatives did you implement? Did they meet your expectations and fulfill your promises? Why or why not?
If you're aces at stretching the budget and getting the most from every dollar, now is the time to shine. But if the last year was problematic, all isn't lost.
Don't spend time dwelling on what might have gone wrong in 2017. Think of those issues as learning opportunities instead of failures. After all, isn't that how research works?
Google didn't arrive at their widely admired ninja-level human resources strategy by never making a mistake. Chances are, they made lots of them. If they're a dynamic company, which is obviously the case, they still do. The important thing is to learn from setbacks and show the committee how your course corrections should play out.
There's still time left in 2017, which means there's still a little jingle in the HR piggy bank for this year. Here's how you can spend it all with plenty to show for it.
- Invest in employer branding initiatives. ERE says 47 percent of companies believe good branding attracts the right kind of job candidate and improves quality of hire.
- Investigate the technology you use, identify gaps in functionality, and if it's affordable, invest in something better. If it's not, add that to your budgetary plan for next year along with the ROI.
- Check out your hiring site. Are there plenty of landing pages with clear calls to action? Marketing guru, Niel Patel, says outdated CTAs get pennies on the dollar for your effort. Your customers, also known as candidates, are savvier than ever before. Give them a reason to want to click and get more candidate leads for your hiring funnel in the bargain.
Executive buy-in gives you the resources to develop a better strategy for hiring and retaining candidates. You'll need it more in the coming year since there's no indication that unemployment will change significantly in 2018.
The problem isn't an absence of need, but communicating that need to finance in ways that speak to their own goals. If a bigger and better budget is your heart's desire, start building your case now to prove why it matters not just to HR, but to the whole company.