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This post is born from my “myth busters” syndrome. It is not my usual content, nevertheless, it addresses a topic which has become a “standard approach” in business and I believe that there are some things to be said about it.
You will read about how we could challenge the typical view of TA being merely a cost centre and instead, highlight its key role as a helpful business partner important for a company’s financial growth.
You will see, through a series of actionable strategies and a call for stronger HR leadership and more buy-in from the executives, how TA can significantly save and also make money for your organisation.
While it is not an all-encompassing resource, it is written with passion and meant to be thought provoking.
What this post does:
Provides 12 actionable strategies, both explicit and implicit, to show how TA can create financial value by either driving revenue or reducing costs
Highlights the significance of Talent Acquisition in aligning human capital with business goals, reducing turnover, and generating revenue
Invites business leaders and TA executives to re-evaluate and harness the untapped monetary potential within their TA functions.
What this post does not:
Promote that all of the above can be done with 0 investment
Offer a quick fix or a one-size-fits-all solution to improving the financial impact of TA functions
Dive into technical details of implementing each strategy - this is a high-level overview.
Exposing Talent Acquisition Myths
Now, let’s discredit the typical misconceptions like “Talent Acquisition is just fancy recruitment” or “TA is a cost centre with no contribution to the bottom line”, by exploring how TA is a strategic business function that aligns Human Capital with Business Goals, saving money through reduced turnover and generating revenue by attracting the right talent.
A study by the Boston Consulting Group showed that companies boasting high-performing talent acquisition functions revel in 3.5 times more revenue growth and 2.1 times higher profit margin compared to their peers. They also bask in 40% lower new-hire attrition and an 18% surge in employee engagement. (Invest in good leadership!).
It’s high time that business leaders and talent acquisition execs alike, re-evaluate the monetary importance housed within their TA functions.
Capitalising on Talent - 12 ways
Here are 12 ways I suggest Talent Acquisition teams can consider for creating financial value, either by boosting revenue or reducing costs.
Some of these should feel like “common sense”, I named them “Explicit”. Others, perhaps more veiled, are termed as “Implicit”.
And above all, at the end of the day, there is a case to be made about the importance of first investing in your talent teams and very importantly, in providing the space for the TA leadership to act as the strategic partner that they are.
Unlocking Financial Growth: The Integral Role of Talent Acquisition
A. Explicit Financial Benefits of TA
1. Reduced Attrition and Turnover:
How:
By having a thorough interview process, feedback loop and a strong check for role fit and skills, you save money by avoiding attrition.
Avoiding attrition means avoiding (among others):
extra costs with renewed on-boarding and training,
the cost per hour for each employee involved in the interview processes
the cost of re-advertising
the cost of loss of productivity in the team you hired for, etc.
Fictive example: “The result was a 15% reduction in turnover, saving costs associated with hiring and training replacements. In monetary terms, that's a 1.5M EUR saved in recruitment and training costs YoY”.
2. Enhancing the Quality of Hire:
How:
By investing in a highly capable talent acquisition team and giving them the seat at the table, they are able to consult on each hiring decision
They may even oppose hiring individuals if red flags have been identified through their assessment (great story on this from my time at Zalando:) ).
Ensuring that great recruitment processes are in place and having the Quality of Hire as a common KPI (between HR, TA and Business).
3. Improve your Employer Branding:
How:
A strong Employer Brand attracts a great deal of candidates, thereby reducing recruitment advertising costs and agency fees
A lot of the employer branding activities do not need to carry additional cost (see Case Study 1), you can build a lot of free materials in-house
A solid Talent Acquisition team acts as an ambassador and as multipliers, meaning that they enable the hiring managers and teams to act as ambassadors too
Invest in your TAs attendance at conferences
Allow your talent partners to take time to build their own individual brand. Enable them to do so
Candidate = Customer. Consider each recruitment process a “customer journey” as much as it is a ”candidate journey” - as much as possible aim to treat your candidates as potential customers .
Fictive example: Enhanced employer brand, resulted in reducing cost-per-hire by 10% as more candidates were attracted to the company, a total saving associated with this of 300K EUR per annum.
4. Promoting Internal Mobility
This is a huge one. Here you have my full case study on a company wide project enabling this.
How:
Talent Acquisition departments should support or even design and deliver internal mobility programs (dependent on the size of your organisation).
Promote from within and optimise your internal talent utilisation:
Avoid the expenses associated with external job postings, recruitment agencies, and lengthy interview processes.
Lower onboarding expenses
Decrease turnover
Retain institutional knowledge - lower the risk of competition advancement
Shorter time to productivity
Reduce training costs
Cost effective skills training - eliminate the hiring costs for a specific skillset and instead train internally.
5. Compliance and Risk Management:
How:
Adequate training on GDPR regulations in the European domain ensures compliance, thus averting potential hefty fines.
Awareness of hiring legalities, including government regulations related to hiring minorities or those with disabilities, is paramount.
Proactive adherence to these mandates prevents significant legal penalties, safeguarding company finances.
6. Talent Pipelining:
How:
Aligning with employer branding, talent pipelining reduces recruitment costs
Building talent pipelines for roles that frequently open up or have high turnover rates, like customer service representatives, can save recruitment time and expenses
Utilising integrated ATS or CRM systems, or even simple tools like Excel, combined with search techniques like Google x-ray or LinkedIn searches, aids in efficient talent pipelining
This proactive approach diminishes both the time to hire and the associated costs.
B. Implicit Financial Benefits of TA
These are primarily achieved through intense, efficient and effective collaboration between several key business domains, they should not be single-handedly driven by or assigned to solely talent acquisition.
1. Diversity and Inclusion:
How:
A diverse workforce brings varied perspectives, leading to innovative solutions.
Diverse teams cater to a broader market segment, opening up new revenue streams.
McKinsey: “more diverse companies are better able to attract top talent; to improve their customer orientation, employee satisfaction, and decision making”
Reduces potential legal fines associated with diversity hiring mandates.
McKinsey: “We found that having gender diversity on executive teams, specifically, to be consistently positively correlated with higher profitability across geographies in our data set, underpinning the role that executive teams—where the bulk of strategic and operational decisions are made—play in the financial performance of a company.”
2. Competitive Intelligence (check your ethics):
How:
Avoidance of Missteps: grasping competitors' strategies helps avoid costly misjudgments or ill-advised investment.
Resource Optimisation: use your existing recruitment function resources to gather market intelligence at minimal to no extra cost, aiding in precise resource allocation and avoiding overstaffing or understaffing
Targeted Talent Acquisition: ensure the right talent is hired for the right roles, aligning with market and competitor trends, which can lead to better business performance and potentially higher revenues
Employer Brand Boost: showcasing market awareness and strategic positioning through competitive intelligence enhances the employer brand, attracting higher-calibre candidates, potentially leading to reduced recruitment costs.
3. Strategic Workforce Planning:
How:
Align talent acquisition with future business needs
Avoid overstaffing or understaffing, reducing unnecessary salaries or last-minute hiring costs
Efficient resource allocation prevents redundant roles and optimises labour costs.
CIPD: “...reduce organisational risk and meet organisational goals by ensuring their workforce planning strategy delivers seven key ‘rights’: the right people, with the right skills, in the right roles, with the right shape, in the right place, at the right time and the right cost.”
Fictive Example: Through strategic workforce planning, you avoided overhiring, saving 1M EUR annually in unnecessary salaries.
4. Client Relationship Enhancement:
How:
Attract talent with a track record of strong client relationships, contacts from your suppliers and / or clients could become your employees and it is also easy to vet them through the relationship building stage
In downtime, use the sales skills and inclination of some of our TA team members and get them to support with enhanced client retention > leading to upselling and expanding client accounts.
5. Strategic Partnerships and Business Development:
How:
Talent acquisition professionals with industry links can open doors to collaborations, avoiding the costs of market entry or product development from scratch.
Joint ventures spread out risks and reduce initial investment costs (eg. think of how you can build a spin-off talent company from your internal talent acquisition workforce, in time of low hiring).
7. Innovative Product Development:
How:
Hiring forward-thinking talent drives innovation, avoiding the costs of purchasing or licensing external solutions.
Harnessing your talent for innovation: corporate innovation programs (eg. Hackweeks) engage your diverse talent, including new hires, to develop new products or processes, potentially generating new revenue streams for our company.
Conclusion on TA as a revenue driver
This post highlights the shift in viewing Talent Acquisition (TA) not just as a cost centre, but as a key player in driving financial growth. We've looked into various areas like Employer Branding, Internal Mobility, Compliance, and Competitive Intelligence, showing how they can help save and make money for your company and you now have 12 potential ways through which you can advocate for your talent acquisition department.
Call to action:
It's time to re-evaluate how you operate your TA functions. Use the strategies outlined here as a stepping stone towards a financially impactful Talent Acquisition function, fostering discussions within your teams, and initiating change for your company's financial growth and stability.
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