Let’s face facts: you want infallible accuracy in ensuring all the minute details fall into the right places and are executed properly. Who better to talk to than someone in Finance to refine and optimize the cost of the hiring process? All departments are integral to a smoothly sailing ship, but Finance is the backbone.
They’re there for a reason – to keep the books aligned. The person in charge of finance is an empathetic, patient person with enough organizational skills to ensure that everything is as much balanced at year-end as at year-beginning, and with enough contingency planning in place to allow the company to successfully navigate even the rudest awakenings that befall organizations.
That’s where Craig DiForte comes in as Workable’s CFO. He’s been in the finance biz since graduating with an MBA in Finance from Boston University Questrom School of Business in 2002 and has been managing Workable’s money since 2016.
So, he’s seen a lot in his work. He also knows what costs money and what makes money, and to take it to another level, he knows where money can – and can’t – be spent in order to have it reflect on the bottom line. And mostly, he knows how to make sure it all ties together into a nice bow.
So, according to Craig, here are seven ways you can optimize the recruitment pipeline without getting hit too hard by the actual cost of hiring staff:
- Communicate, communicate, communicate
- Measure the process regularly
- Remember, timing is money
- Consider different timing processes
- Plan for the inevitable turnover
- Implement clear processes
- Keep checking in
1) Communicate, communicate, communicate
“The one thing you have to make sure that you’ve done,” Craig says, “is that you’ve effectively communicated the plan to all of the hiring managers.”
He explains, using an example: everyone – including the hiring managers – needs to be fully informed on how many they can or need to hire that year. “If your VP of Sales doesn’t know that she only has the budget to hire 20 heads,” he says, “and she opens up a requisition for 30, you’re immediately going to have a problem.”
That scenario is a lot of things, but it’s especially a problem for Finance. This planning conflict will throw the books out of whack because your VP of Sales has put a process in place for something that your budget won’t allow for. Ten additional heads being hired means 10 more salaries than you’ve planned for. And 10 more interview processes that are a time and resource suck for your hiring team. And, of course, there’s the expensive damage control in rolling everything back to the original 20. All of these things cost money and force Finance to move things around to accommodate.
You don’t want that to happen in your company, so you need to make sure everyone is on the same page for absolutely everything. This means meeting regularly, keeping communication channels open and keeping everyone together in the loop as to where you are and where you’re going in the hiring plan.
“You need to make sure that this hiring plan is communicated,” Craig reiterates. “You want to be sure that the plan has been communicated out, and that you’re now executing on it.”
2) Measure the process regularly
You must continually check the pulse of your recruitment process at regular stages, and measure where you’re staying on plan and where you’re going off plan, Craig says.
“Your [hiring] plan basically comes down to the question: ‘Have I hired the people that I meant to hire, at the time that I meant to hire them?’ There’s a timing variance you need to think about.”
Measurement doesn’t just apply to timing and scheduling – true to Craig’s background, he reminds us to look at the actual money being spent on payroll: “Did I hire them at the right salary that I thought I was going to hire them at?” he asks as an example. Again, a slight variance in salary for multiple roles can add up, creating a fresh headache for Finance.
Salary differences isn’t the only flux in the cost of the hiring process: measuring also means looking at reports and identifying the areas where you can optimize the recruiting process.
For example, Craig asks: “What are the savings related to cancelled hires?” Once that’s in place, he says, “then you can have a net hiring plan adjustment number, where you can say; ‘OK, the original hiring plan has 100 people, but we added 15 and took out five, so now we’re really at 110.’”
“The extra cost of doing that is Y, whatever Y happens to be. That’s one metric you want to be able to track,” he says, because you’re going to want to measure your anticipated outcome against your real outcome. “You want to be able to ask, ‘How am I doing against the original plan? And what are my variances?’”
When you look at reports regularly, and identify opportunities for optimization, then you’re tightening up the process and making it move more effectively – making things more cost-effective. You’re not just saving money, you’re also making your existing money go further.
3) Remember: timing is money
Drilling down deeper, Craig says that looking at the savings opportunities in the hiring plan isn’t just about looking at salaries. When you’re looking at the cost of hiring staff or hiring ahead of schedule, you also have an opportunity to cut back costs.
Craig says, “Hiring people too slowly can be a bad thing from a performance standpoint, but it can save you some money because you thought you were going to fill a role in January and you didn’t fill that role until March. That might be a problem from a company performance standpoint – but from a headcount standpoint, you just saved two months’ worth of salary.”
It’s just one example of many, but the intricacies of the many moving parts of the recruitment pipeline are such that money will always play into the overall equation. It’s not so easy to budget for a hiring strategy, particularly since you’re often accounting for unexpected events and benefits.
Crunch those numbers: learn how to calculate recruitment costs for budget planning in our new tutorial.
Don’t fall into the trap of thinking timing alone is a valid criterion. For instance, you may need to speed up the hiring process and hire someone earlier than originally planned – despite the cost of doing so – if this means you’ll hire an exceptional candidate who may not be available later.
Or, in some cases, it makes sense to offer a higher salary because of the higher productivity that new employee can bring to the table. You’re not necessarily costing your company money if you paid a higher salary than a competitor – you’re recruiting better talent who will ultimately boost productivity.
In short, keep an eye on timing (when you open up a new requisition and when you hire a new person compared to when you need them), but also factor in these other qualitative and quantitative gains.
Craig explains further: “You need to be able to find the mechanism to take all of those things into consideration to determine; How much am I saving on my hiring plan right now? Or how much am I costing myself more? Because if I’m hiring everybody fast, and I’m hiring them at higher salaries than I thought, I’m costing myself too much money.”
“But maybe,” Craig notes, “I’m making myself more productive. There can be a benefit.”
4) Consider different timing processes
You also have to think about onboarding schedules for new hires and upcoming projects that you’re hiring for. These both take into account the type of roles you’re filling for.
“For instance,” Craig says, “if they’re salespeople, there can be a great benefit to hiring early because they start ramping faster and they’re going to get to full productivity earlier.”
The impact to the bottom line is easily tangible for sales: with more salespeople – particularly if commission-based – you get more sales, and your company is more productive.
But what about engineers? “If you’re hiring an engineer for a certain project that you’re going to work on, but the project doesn’t start until April and you hire them in February, that might not be the best early hire; depending on the project, and the skills of the person you’re hiring, the ramping time can be different in each case.”
Whether you’re hiring ahead or behind, Craig says, it’s a strategic decision based on the role you’re hiring for. You don’t want employee salaries burning a hole in your pocket when they’re not contributing anything to your bottom line or producing anything.
5) Plan for the inevitable turnover
“You’re going to have something come up during the year,” Craig warns. “The ubiquitous backfill. Some people will leave – there’s no getting around it. You’re going to have to replace them.”
Of course, turnover is a real fact of business. But there’s something else impacting the cost of the hiring process: “One of the things that you need to make sure of in your plan is that when you backfill, you’re not adding an extra position.”
This could happen if, for example, “Jane tells you she’s leaving, but gives you a month-long notice and you say, ‘Well, Jane is very important. She has to be replaced.’ So you open a new request for Jane’s replacement while Jane’s still there.”
Which is fine, until: “A month later, Jane actually leaves. Then if you’re not watching your hiring plan, somebody might open a new request for Jane’s replacement because Jane has actually left now,” Craig says.
“That’s how one position turns into two positions. You want to make sure that you have a good process for managing your backfills and how they go into your hiring plan so that you don’t double-count them.”
6) Implement clear processes
“You could have created the greatest budget in the world, and within a month or two months depending upon the industry that you’re in, it will start to go sideways a little bit,” says Craig. “You’ll find out that either because certain people leave or because you come up with new initiatives, or because something changes the economy or the market, that you need either more or less people than you thought you did.”
So, you need to have a procedure in place from the get-go for removing or canceling hires and requests in the hiring plan. You’ll also want to open up some resources – be it time, money, or otherwise – to accommodate unbudgeted hires.
And what’s more, Craig says, you have to have a clear approval process in place. “What’s your process for making sure those [new hires and cancellations] get approved? Sometimes people forget to get approval on both sides of that – they know they need an approval to add a new hire, but they forget they need an approval to remove one.”
And communication, again, is key. “Sometimes they’ll remove one, and then the manager will think they still have a request in place and they’ll try to hire for that role.”
Check out here how GCC Services fosters a more inclusive hiring process with Workable Video Interviews.
7) Keep checking in
We come full circle here: in the spirit of communication, keep checking in with each other on a regular basis. “You need a clear communication and approval process for making sure everyone’s coordinated on how you put in new positions and how you take out positions you decide you don’t need anymore.”
Once you have those kinds of changes, you’re adding another level of complexity to your reporting where, Craig notes, you want to measure, for instance, the added cost of unbudgeted hires.
Again, communication is key, Craig says. And this involves everyone who’s involved in the hiring plan, including HR, Finance and hiring managers. “Plus, the hiring manager should understand clearly what’s happening with their respective teams so people know where they are.”
In the end, your hiring strategy for the upcoming year should be run like a business within the business. Have regular meetings and check-ins with everyone who’s a part of the whole process. “Make sure that you have policies and procedures in place to handle changes to the plan, which could be additions, subtractions, cancellations if you will, or backfill positions. You need to have processes for all three of those.”
And then make sure you have the numbers crunched regularly. “You want to know: what are your metrics and what are you reporting against in terms of total cost-to-hire, total time-to-hire. Then, there’s the other more nuanced pieces that we talked about; that is, how many are you hiring early? How many are you hiring later? What’s the net effect of that on your numbers for your total cost?”
Craig smiles, knowing this is a lot to take in if you want to run things smoothly with an outcome as optimal as possible. What if you don’t have the time to incorporate all of that into your hiring process? Well, he has an answer to that, adding a joke about shamelessly plugging the Workable product: “That’s one of the reasons the Hiring Plan module in Workable is incredibly useful, because everybody has access to the same platform and can check in and see what’s happening at every step of the way.”
That’s a sure-fire way to get Finance on your side in the hiring process. Your work life will be a lot easier in the end, and the bottom line will thank you.
Want to figure out what’s normal and what’s not in your budget calculations for a hiring plan? Check out our tutorial on how to do that.
You can also see Craig and Matt Buckland – who was Workable’s VP of Customer Advocacy for two years – on planning a strategy for high growth in this webinar: