Whilst I wouldn’t say that recruitment is a “manufacturing” process, churning out products ready for distribution. There are many similarities between the two functions. Lean recruitment is a notion that takes these similarities into account. Fundamentally both deal in supply and demand. Both involve a business critical process. The slicker or “leaner” that process can be made, the more “waste” can be eliminated and affect the outcome.
Companies have been spending significant sums for years on predictive analytics software to make sure their supply chain processes are as slick, efficient and joined up as possible. Yet as a concept, it is still so new to Talent Acquisition!
Quite obviously the recruitment process is centred on people rather than materials. Which adds complexity and variation. However, can recruitment learn a lesson from supply chain?
Many businesses must be on point when it comes to ordering supplies to meet the demand of their customers. An overestimation of demand leads to bloated inventory and high costs. Underestimating demand means many valued customers won’t get the products they want!
Supply chain management is the process by which a company ensures it has just enough supply to meet demand, but what happens if this balance isn’t achieved?
If your business overestimates demand, it ends up with more inventory than is necessary. This can increase labour – in terms of recruitment think about the amount of time spent keeping large pools of candidates “warm”. And all that time spent attracting and engaging them in the first place.
Suppose you suddenly find yourself inundated with large orders (think vacancies). This is a nice problem to have – if you have enough inventory to meet the demand that is. It’s not so nice if you failed to forecast how much supply you would need and wind up with a shortage of inventory (candidates). In such a case, the likelihood is that customers (Hiring Managers) will become extremely disgruntled (poor experience). Plus to make up the shortfall in inventory, you may need to buy in additional inventory from expensive external suppliers (recruitment agencies).
What’s the impact? Well:
The question of whether forecasts are necessary for business crops up from time to time. The inescapable conclusion is that no matter what type of business you are in, or what function you perform, there is a need for data upon which to build a forward-looking plan.
These plans are applied to many different areas of the organisation. That have different needs and objectives. So, it’s not just Supply Chain…
Marketing people need forecasts to determine which new products or services to introduce or discontinue. Which markets to enter or exit Which products to promote.
Salespeople use forecasts to make sales plans. Sales quotas are generally based on estimates of future sales!
Managers in the supply chain use forecasts to make production, procurement, and logistical plans.
Finance use forecasts to make… financial plans. They also use them to report on earnings expectations.
It can sometimes be difficult to quantify the benefits of forecasting. However, if we stay with the supply chain analogy for a little longer, there are certain components that can be quantified. Showing the benefits of forecasting. One way to measure the benefits of forecasting is to see how much would have been lost (labour/time) if the forecast was not accurate. Another way to measure them is how much would have been gained (or saved) with improved forecasts.
Now, this is where things get interesting for recruitment…
Following this logic, a robust recruitment forecast/plan allows for better use of budget to produce “inventory” (candidates) for business demand. What’s more, those candidates will be far more likely to have the skill sets required by the business. Cool, right?
Knowing what demand is anticipated by the business means the engagement of candidates begins earlier. Creating additional value through enhanced candidate satisfaction in their journey with your business.
Add to this a reduction in time to recruit (because inventory is ready) and you have further value in:
Last but not least! Having a strategic and focused plan of what is needed, the recruitment function is aligned with the overall talent needs of the business. Spending time more efficiently and greatly reducing the high costs associated with “reactive” inventory bolstering – Not naming names… Namely recruitment agencies.
There aren’t many people out there that can look into a crystal ball and predict the future. But if a business wants to manufacture well and fulfill customer demand, the key is to forecast accurately.
We at Foresight know that you don’t need a crystal ball to forecast for recruitment. You just need to ask the right people the right questions.