Business Management

If you’re doing a great job acquiring and retaining customers—congratulations. It’s not easy and doesn’t always come cheap. On average, it costs four times as much to find a new customer as it does to keep an existing one.
But what kind of job are you doing attracting and retaining top-notch, experienced talent?
If estimates are correct and two-thirds of employee hiring decisions may be hiring mistakes, how much is it worth to you to hire the right person the first time? How much does it cost when you hire the wrong person?
“The most valuable assets of most high tech firms (i.e., people) go home at night—or perhaps early in the morning in the case of software developers. As the company grows you have to fight the decreasing quality problem—i.e., the Founders (all “10s”) hire the second wave of employees (who are mostly “9s”), who hire others (“8s” or below) until the company is full of mediocre people who drag the whole place down.” This observation by Joseph Hadzima, Chairman of the Board of Directors of the Global MIT Enterprise Forum, and senior lecturer at its Entrepreneurship Center in an article in the Boston Business Journal.
So How Do You Find Great People?
A tight talent supply and strong demand is making it harder to find good people. And technology firms aren’t the only ones having trouble. If you’re a principal or an executive of a multichannel business, you probably know some quality people from other jobs and companies. Maybe you can get referrals—from your accountants, lawyers, or even by networking the industry. But this will only get you so far. Internet job and resume sites? According to recent surveys, they’re not delivering the goods either. Eventually you’ll need to make a classic “make or buy” decision—either you commit to an active internal recruiting program or you hire a pro.
Do It Yourself
The benefit: The benefit of the “do-it-yourself” option is that you may save short-term cash by not having to pay a professional.
The risk: The negatives are great: Will you devote the time to recruiting or will you put it off to deal with short-term problems and operating demands?
The unknown: Do you have the knowledge and contacts to do a really good job? Do you know how to effectively interview, evaluate and assess candidates? Thoroughly check references and background? Structure and properly present an offer? Handle a counter-offer? Deal with relocation issues and a reluctant spouse?
Hire A Pro
The “hire-the pro” option will cost you money in the short run, but it may pay off long term. By exposing you to a universe of candidates you may not likely see on your own and ultimately getting you the best talent, you’ll be able to focus on your core strengths. There are a number of types of professionals and the choice depends on your recruiting needs
Retained Search
Generally preferred—and sometimes more expensive—retained searches are used to hire CEOs, presidents, VPs, and other top-level senior executives where there are fewer qualified candidates. The critical nature of the position and confidentiality may also be key factors.
This kind of search firm is more consultative. They will probably spend a day at your facility, studying your operation, talking to your key people, and working closely with you to scope out what you really need by getting an understanding of your culture, business, plans, and strategy.
The retained firm will develop a search strategy in consultation with you, including a target list of organizations and people to review in advance, avoiding potential conflicts; and, they will create detailed job specifications and marketing materials.
The firm actively manages the process: talking to, meeting with, evaluating and assessing potential candidates—including psychometric testing—identifying candidate shortlist, arranging interviews, providing frequent status reports, in-depth reference and background checking, and assisting in negotiations, hiring, and ensuring follow through.
How to choose? As with any service provider, you need to ask people you trust who know the players. The knowledge and experience of the search firm in your business is important as well as the chemistry between you and the search consultant.
Contingency Search
Contingency recruiters are usually used for mid-level and multiple position searches and are more “transaction-oriented.” Unlike retained search firms, you pay only when the firm delivers someone you hire, but the fees are often no less than retained searches: 25% to 35% of the individual’s first year total cash compensation.
You generally won’t get as high a level of service from a contingency recruiter. Count on receiving a lot of resumes, often from individuals the firm has not met. Your competitors and other companies may also be getting the same resumes. And, you may have to do a lot of the work yourself, sorting through resumes to find the right person. Although some contingency firms will cold call to identify candidates, in many cases the resumes you receive will be for people who are looking to leave their jobs or who are out of work. This is not necessarily bad—you just have to factor it into your decision.
Assisted Do It Yourself
You may not have to make a total “make or buy” decision. Do some of it yourself and bring in expertise for particular areas. For example;
Contract Recruiters. For about $65 to $100 per hour (or depending where you are), contract recruiters will assist you in running an in-house recruiting operation. They may come in one day a week and work with your staff in defining position specs and organizing the process. A typical engagement might include an immediate need for a large number of people.
Researchers. For about $75 to $100 per hour (or depending where you are), a researcher will identify potential candidates at other companies and may do reference and background checks.
Advertising. The traditional “help wanted” ad works for the right jobs. There are numerous general and business media, industry trade publications and websites you can consider. Expect to pay a few thousand dollars or more for job listings. (Recent surveys suggest that help wanted ads on the Internet have not been effective).
You may also want to consider using a recruitment ad agency that knows the media and specializes in creating effective classified ads. They will be seen, but only by some people, and only on the given day your ad is run.