A Brief Overview of Risk Management In Recruiting
It’s no surprise recruiting and financial performance are interconnected. If your talent acquisition team takes too long to fill crucial positions, at some point that lapse will surface in the bottom line. On one hand, prolonged recruiting processes increase cost per hire, while on the other businesses suffer as they operate below staffing requirements.
But what can you do about it?
Lots of recruiting teams follow a first-in-first-out methodology for filling positions. As accepted requisitions come in, they’re routed to the appropriate talent acquisition professional who then initiates the recruiting process. That professional is often recruiting for many positions—and is instructed and incentivized to prioritize efforts based on positions open the longest.
The problem is, acting strategically and chronologically does not typically go hand in hand. This approach does little to account for the importance of filling one position over the other. To address this issue, we could borrow some elements from the practice of risk management.
Risk Management and Your Recruiting Strategy
Risk management is the concept of forecasting and evaluating risks, and creating processes to minimize the impact of those risks. A risk management strategy relies on four main elements: assessing, quantifying, prioritizing, and then mitigating risks.
Assessing risk for recruiting is about understanding all categories of positions and their potential impact on business performance, as well as historical performance indicators related to those positions like time to fill, cost per hire, and so on.
Quantifying risk relates to the assignment of numerical values. Two main variables are usually used for calculating this: (1) likelihood that the position will be difficult to fill and (2) potential impact of the position going unfilled for a long time. You may quantify risk by looking at both of these variables on a scale of one to 10—or any other combination of numbers.
Let’s say, as a high-level example, your business is reliant on engineering talent for growth. Considering that engineers are very hard to come by and that historically it’s taken an average of two months to fill the position, you may rank the likelihood that the position will go unfilled as a 10. You may also rank to potential impact to the business as a 10. That’s a total of 20 out of 20 on the risk scale. In contrast, an administrative assistant may score a 4 out of 20 on the risk scale (easier to fill and less impact to business performance).
The task of prioritizing risk can be done after risk is quantified. You could simply focus more efforts on positions that are riskier or score higher on your risk scale. In the example above, you would allocate more resources toward hiring engineers over administrative assistants. This is in contrast to the idea of allocating resources toward whichever position has been unfilled the longest. Focusing on engineers over assistants may be obvious, but things become more complex when you introduce dozens or hundreds of different types of positions into the mix.
Finally, risk mitigation is about creating processes to lessen the impact of these potential risks to recruiting and business performance. You may institute a set of activities that will take place over the recruiting lifecycle the longer the position goes unfilled. This could also relate to the creation of proactive sourcing tactics like talent pipeline building—to get ahead of a potential risky situation down the road.
Building a More Proactive Recruiting Team
Teams that properly manage risk are almost always more proactive and less reactive. Studies have shown that HR has a tendency to be perceived as a reactive business function from outside departments. This can make recruiters’ jobs more difficult for many reasons.
Adding even a basic risk management model to your recruiting process can help your team fill important positions quicker and more cost-effectively. It can also help the recruiting team to be taken more seriously.
What’s described in this article, as you can see, is a very high-level approach to risk management in recruiting. Some larger companies have far more mature risk management strategies built into their recruiting processes with the support of HR technology solutions, while others have virtually nothing. As we often suggest, if you want to experiment with a new strategy, start small, measure your performance, learn from the results, and move forward.
Regardless of where you are in this journey, it’s important that you understand the importance of acknowledging and mitigating risk. Getting critical requisitions the appropriate allocation of resources could change the way your business performs in more ways than one.
Interested in revving up the recruiting engine and driving performance forward? Check out our recent eBook, “How to Rapidly Improve Your Quality of Hire.”