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Find the $$ for Your Recruiting Strategy
You know you need it. It will transform your business, saving you and your company hours, headaches, and ultimately cash. But when asked why to spend the money on this new strategy, the only answer you have for leadership is “Well…isn’t it obvious?” With that, here’s hoping you’re okay with operation status quo.
Finding the right technology is only part of the battle. Getting it passed the number crunchers is a challenging hurdle that can kill many projects before they get started. What you know is an invaluable purchase can be difficult to justify to people who don’t do your job and who only want to talk in measurable terms.
That’s why I’m going to be kicking of the year with a series of articles about finding the money for your recruiting strategy. Working with a few recruiting technology providers for the past 20 years has allowed me to help several large enterprises justify recruiting technology purchases. It’s only through those justifications that companies breathe life into the solution and make them realize any value. Through this 3-part series, I’m going to talk about and share tools in overcoming that “last mile” of justifying expenditure. At the end of this series, I will provide a calculator designed to help you plug and play your project numbers and to derive your own returns.
Where to Start? Identifying the Value
I’ll avoid calling this ROI – the HR world is not one in which you will hear the register ring too often. With that said you can still make dollars and sense of the value a project will have to the overall direction of your organization and present it in a way which highlights qualitative and quantitative benefits. Being able to lay claim to the value you are providing the company will be a boon to you and your department, and if you don’t declare that value in measurable terms someone else will be happy to take the credit for the benefits you are producing.
The Soft Value
Depending on your company, soft values can carry big weight. Other companies won’t look at anything but hard numbers and if that’s your company, skip down to the next section.
Sometimes everyone is on the same page about a company objective. In such cases, it’s worth identifying those goals and claiming them as soft values of your project, which creates a tangible connection between your objective and the company’s objectives. For example – let’s say your CEO has publicly announced a diversity initiative. It’s going to be pretty difficult to crunch hard numbers for this but you can still claim value by tying into it as a “soft value”. For every soft initiative you can reference that aligns with your project, claim a nominal amount of value, low enough that it would be hard to argue. These benefits, while not enough to justifying funding in and of themselves, add up to create a larger sum of value for your project.
Examples of some soft values – feel free to come up with your own:
- Factor in being rated as a “Best place to work”
- Manage and enhance employment brand
- Establish and manage vs. react to social employment presence
- Increase revenue by treating candidates like customers
- Find and hire better talent than the competition
- Implement/Manage campus recruiting program
- Implement/Manage veteran hiring program
- Implement/Manage diversity recruiting program
By not trying to justify these with large dollars, you still get to claim value and point back to them as proof that your project is progressing. You also avoid making claims that you can’t justify or quantify later. Depending on your company size the dollar amount you apply that is low enough to not raise dispute will vary – anywhere from $500 to $25,0000 per soft value.
The Hard Value
Few projects get funded without a clear path to direct value that can been seen in dollars and cents. This is where hard values are needed. For something to be a hard value it needs to be tied to an underlying math equation that that can calculated both today and in the future. This calculation needs to be one that you can prove and one in which others (particularly management) can have faith. While I’ve shared a few possible hard values below, these will only count in your environment if they can be proven and you have the broad buy in to help their justification. Oftentimes, you can justify the spending on just one well established hard value. A common one for recruiting solutions is reduction in agency hiring spend. If one such hard value will sell leadership but the others may not, it is worth your time to focus your resources on that one saleable hard value. However, the more metrics you can justify and add to your case, the more weight the project will carry. More metrics also means your project will have higher visibility and greater reward (and risk). Depending on your organization, singular vs. broad hard value focus will make more or less sense strategically. Even if you don’t use them all in your plan to secure budget, it’s worth finding and measuring those that apply to your projects’ objectives. Below are some possible examples of hard values:
- Reduce agency spend
- Reduce time to productivity for replacement hires
- Increase employee retention
- Reduce days to fill a position
- Reduce physical costs
- Reduce physical interviews
- Reduce scheduling time
- Reduce headcount (controversial but yes this one happens too)
- Defend against lawsuits (aka compliance)
The math behind these hard-metric examples is explicit and distinct per item listed. It’s worth stating that even the soft values above could be converted into a hard value, if you can come up with an equation that meets the criteria I outlined above. For each hard value metric there is a process you should follow:
Here is an example of this process:
- Hard value: Identify the hard value
- Equation: Identify the equation for how you can prove the benefit
- Gather Data: Gather the associated key numbers for your baseline of current state
- Objective: Define your project objective for the benefit
- Measure: Identify how you will measure future states, then make sure you do that
Let’s pretend you gathered the data needed for your equation and the current costs are $5M annually. If your objective is to reduce agency fees by 10% this gives you a savings of $500K. This single metric (coupled with compliance) has typically been the easiest and most common approach I’ve seen to justifying project spend. The other hard objectives listed above, while more involved in terms of identifying and measuring data, oftentimes have a greater reward. The core aspect to selling hard values is understanding how to define your equation and gather your data. If you do this properly, the final key to success will be defining your objective in a way that you believe and that others will believe as well.
In my next post I’m planning on unpacking the value of a few more specific calculations, particularly the ones that are harder and more complicated to lock down. For example, there’s a great deal of value in calculating time-to-productivity when trying to justify investment on internal mobility or referral hiring specifically. But how exactly do you do that math? Check back in next week for more.
What soft or hard values have you used to justify projects? I’d love to hear from you. Feel free to share and if they are not already there, I’ll try to work them into the calculator I plan to share at the end of this series.
And if you’re not a math person, don’t worry. There’s a lot more to getting your business case together. Here are some some other great resources you can lean on to help you Making the Business Case for HR Software, How to Build an HR Business Case.