Failing to manage your company’s talent needs, says Wharton management professor Peter Cappelli, “is the equivalent of failing to manage your supply chain.” And yet many small and medium-size employers still lack efficient, consistent and compliant recruiting processes to succeed.
As Peter Cappelli, Professor of Management and Director at the Center for Human Resources at Wharton, points out, supply chain managers “ask questions like, ‘Do we have the right parts in stock?’ ‘Do we know where to get these parts when we need them?’ and ‘Does it cost a lot of money to carry inventory?’ These questions are just as relevant to companies that are trying to manage their talent needs,” he says. To put it another way, the concepts of supply chain management, with its emphasis on smart inventory management, linear, stage-based process flows and a constant focus on efficiency optimization, should be applied to recruiting processes.
Supply chain managers and recruiters face similar challenges
Supply chain managers plan for uncertainty and variability. Demands for products increase and decrease. Parts that were once plentiful become scarce. Market opportunities that require finished goods become critical overnight. Similar uncertainties exist for employers when it comes to recruiting. Employers are rarely able to predict the demand for talent. Demand for workers with popular skills sets become difficult and costly to attain. Unexpected attrition causes demand to be critical in a matter of hours.
Part of the problem is that many companies are locked into an older paradigm based on the assumption that they can accurately meet their talent needs through static forecasting and planning models, even though the global marketplace is an increasingly unpredictable, unforgiving environment. “The idea that we can achieve certainty through planning is no longer true,” Cappelli states. “Instead, we have to deal with uncertainty by being more responsive and adaptable.” In short, this means that employers must tool their recruiting processes with the focus being on repeatability and reliability.
Managing Inventory is Paramount
The term “talent management” simply means “trying to forecast what we are going to need, and then planning to meet that need,” Cappelli notes. The definition of supply chain management is essentially the same: “We think that demand for our products next year is going to be ‘X’. How do we organize internally to meet that demand?”
Supply chain managers are constantly conscious of the concept of inventory. Will they have the right widgets on hand to produce goods to take to market? Similarly, recruiters have the same concerns about inventory. Is there an inventory of candidates that will yield hires? In supply chain terms, having a huge inventory of parts on hand is actually a bad thing. For example, having a warehouse full of widgets that aren’t being used is wasteful. Similarly, an applicant tracking system full of applicants waiting to be reviewed and interviewed is even more costly. Talent doesn’t sit in a warehouse like widgets do. Talent is perishable in a way that widgets aren’t. In fact, one of the most wasteful (and costly) things you can do in recruiting is to squander an inventory of talent.
Pro Tip: If you have positions with vast numbers of applicants that you haven’t processed, you need to optimize the inventory management stage of your recruiting supply chain. That is, don’t let applicants stack up. Attracting applicants in a tight employment market is expensive. At the same time, applicants are a perishable resource. This makes processing applicants at the beginning of your talent chain one of the most critical events to drive successful hiring practices.
Reducing bottlenecks is another supply chain concept relevant to recruiting processes. Many employers experience bottlenecks exactly the way goods can get backed up on an assembly line. For example, applicants commonly sit in hiring managers’ inboxes for weeks and are never processed. This type of bottleneck commonly breaks the recruiting supply chain and is further compounded due to the perishability of candidates. Here, it’s important to remember that like an assembly line, the recruiting process can move only as fast as the slowest stage.
Many small and medium-sized employers have bottlenecks long before the first candidate applies to a job. Job approval processes, the equivalent to queuing processes in supply chain management, are often rife with inefficiencies that cause waiting which in turn delays the delivery of inventory (candidates) and therefore stalls the end goal of hiring a productive employee. Other common bottlenecks are created by employers adding non-critical stages to the hiring process which cause inventory to build up behind the slower-moving stage in the process. Failure to properly understand the cause and effect of bottlenecks in recruiting processes cost employers time, money and resources just like the failures to supply chains.
Pro Tip: Get rid of muda aka waste. Lose the paper forms, extra steps in your process, excessive consensus building and anything else that creates unnecessary waste that will create bottlenecks.
Modern Applicant Tracking Systems are supply chain systems for hiring.
As is with the continuing renaissance of supply optimization, never has so much technology and brainpower been applied to the recruiting technology space. Once closed networks of candidates are now open to anyone with an internet connection (LinkedIn). Paper forms have turned digital (paperless onboarding). Applicant tracking systems are deeply integrated with internal and external technologies creating audit trails and massive efficiency gains. Some may take this for granted but it was only 10 years ago that most employers were still shuffling papers.
With uncertainty in the market and ever-changing demands, businesses rely on supply chain management software to run their operations. The same goes for employers that are hiring. Employers require technology that’s precise and analytical to run hiring. Like supply chain software, modern applicant tracking systems need to be flexible yet adaptive enough to handle exceptions. Additionally, both supply chain software and applicant tracking systems need to create a broad view of real-time information that facilitates decision-making and maximizes efficiency. Another critical feature for both supply chain managers and recruiters are robust reporting capabilities that pinpoint bottlenecks and empower leaders to make adjustments in realtime.
Pro Tip: Choose an applicant tracking system that’s engineered like a supply chain management tool. One of the core advantages that sets Newton apart from other applicant tracking systems is Newton’s inherent ability to create a linear process with critical stage-gates that drive the decisions that drive hiring. Green is go. Red is no. In between is a flexible process that works for just about every company on the planet. To learn more and to request a sales demo, click here.
The opportunity for small and medium-size employers is to run recruiting like a business.
There is a huge opportunity in modern recruiting to cauterize processes and to create the same sort of efficiency gains that supply chain managers have championed for nearly 4 decades. As employers look to achieve the benefits of better hires at lower costs with more predictability, concepts from supply chain management should be an obvious choice. Quick wins to improve recruiting processes should include optimizing inventory management, eliminating wasted steps that create bottlenecks and choosing hiring software that acts like a true supply chain management platform creating the visibility and exception management needed to run recruiting like a business.