When They Fail, Someone Else Pays

We’ve been doing some work for a manufacturing company. They’re big, and at least a decade behind in their hiring processes. Despite their focus on process improvement (six sigma, kaizen, value streams, etc.) they have managed to ignore costs of poor hiring processes.

Not surprisingly, there is no centralized recruiting organization, nor are there regional centers. Recruiting is handled on a site-by-site basis. As one might guess, they rely heavily on third-party recruiters. The executive team is becoming concerned with how this budget has grown, particularly in a recession.

However, when hiring managers are presented with an argument showing how process improvements will lower costs and improve consistency, the reply is that they only pay headhunters if they hire successfully. This is stated as if they’re somehow saving money at a fee of 24% of first years’ salary. Others point out the payroll-saving benefit from leaving jobs unfilled for long periods of time. By that logic, they could maximize savings by not hiring at all.

Against our better judgment, we took a couple of contingency assignments. In each case, they liked the candidates and felt they were hire-worthy. Then the company dragged their feet and lost the field. In each case, the company’s weak processes (and sometimes arrogance) would sink the deal. At least it never cost them anything – whew! That’s why they prefer contingency arrangements. When they fail, someone else pays. And, despite not completing their objectives (at a lower cost, I might add), they tell themselves they came out on top.

These champs should run for office.


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