Companies consider talent as their competitive advantage. Leaders believe that machines, technology, capital, knowhow and processes can be acquired easier than talent. Various studies have proven that acquiring talent is one of their major challenges. Should organizations build their internal capability to hire for themselves or rely on external agencies?
Needless to mention that either method has its own pros and cons. The solution lies in the old saying – ‘horses for courses’.
When do you build inhouse capability?
Some think of talent acquisition as a critical success factor and hence, they must deal with this strategic task inhouse. They cannot outsource this to anyone. Some leaders think that the skills that they are hiring are rare to find and assume that nobody other than an inhouse team can invest their energies in finding those needles from the haystack. We find another argument in support of inhouse hiring when the company doesn’t want many people to know that it is hiring for the particular role.
All these are myths! Rather one should use a simple 2×2 matrix to decide the strategy.
Decide if talent acquisition is strategically important for the organization’s results and secondly if it impacts operational metrics of the organization.
For an airline, in-flight catering is an important function but not strategically important; neither it impacts the operational metrics of the airline in a significant way. However, for a restaurant, it is not only a strategic value but also important operationally. Given this example, one knows that a restaurant has to have inhouse capability to prepare the food.
Outsource when Recruitment is Strategically Less Important but makes an Impact on Operational Metrics of the firm
Leaders choose the top few levers (typically 3 to 5) which are strategically important for the organization. Recruitment may not figure there in the list. However, recruiting the right people on time could be important from operational perspective such as servicing customers, running important errands, completing tasks with speed and accuracy. In these situations, one must leave it to experts than invest energies inhouse to focus on something which is not on the strategic agenda item. The external expert knows how to minimize the cycle time, increase process efficiency and optimize the quality.
This is like a company outsourcing its cleaning needs to an agency; hiring people for sales support, sales promotion, administrative tasks, customer service, maintenance and several other non-core activities through an outsourced agency; back-filling vacant roles.
Outsource and Build Strategic Partnership when Recruitment is Strategically Important but does Not make an impact on Operational Metric of the firm
Organizations take up new projects or have ongoing needs to back-fill vacancies or have a few key roles to fill. These are strategically important for the organization because future revenue streams are linked with the success of these. And most of the times, these do not impact the operational metrics of the organization in the short term.
In these situations, leaders make the mistake of building an inhouse team to deliver on these. Such an effort becomes not only a distraction for the senior leaders but also is an expensive proposition. Moreover, these teams turn inefficient over a longer period of time, say 2-3 years.
The solution here is to build a strategic partnership with an outsourced player who provides high mindshare for the engagement, considers it important for them, works as an extension of the organization, stays efficient and competitive, leverages on its knowledge of the market and works under an objective framework of governance.
Plan it yourself if Recruitment is a Strategic Lever and Impacts the Operational Metric
The top leaders of an organization may feel that getting the right talent on-board is one of their critical success factors and moreover, recruitment impacts the operational metrics of the firm. This situation shows hiring is high on strategic importance and at the same time, has a high impact on the operational metrics such as revenues, cycle times, error rates and so on.
This is like an assembly shop for a car company, kitchen for a restaurant, design shop for a consumer product company, engineering team for a manufacturing company. All these have to be done inhouse.
Planning for recruitment is critical and it must not be confused with the implementation of the plan. Once the organization is clear about the kind of people it needs, the timelines, the critical attributes and the value proposition for a prospective employee, execution starts. Many a times, organizations fail to plan this well and hope that the plan will evolve alongside the execution. If this happens well, it is just a sweet coincidence and cannot be repeated.
For an organization providing services to its customers, it needs to have the right people at the right time. The situation here scores high on both the dimensions : strategic importance and operational impact. Hence, the organization must own the critical piece of planning the talent acquisition process and managing it.
Stop Recruiting if it is Not on Strategic agenda and does Not Impact the Operational Metric of the firm
If nobody cares about recruiting, the firm has to eliminate the function and not even think of outsourcing either. This is simple decision because it scores low on both the dimensions: strategic as well as operational importance.
Talent Acquisition as a process is to be outsourced when it appears on the strategic agenda of the firm or when it impacts the operational metric. Keep the planning function inhouse if it is on the strategic agenda as well as impacts the organization operationally. Leaders have to take a clear stance!