Recruiting strategy

20 Factors You Need to Include In Your Business Case to Get More Recruiting Budget

Even though the Conference Board found that Human Capital is still the #1 global challenge facing CEO’s, you still hear the universal complaint from recruiting leaders that they are underfunded and simply don't have the budget to do bold and exciting things in recruiting.

I find that this lack of funding isn't because recruiting doesn't have a high impact, clearly it does. In fact, the BCG and Google have both independently found that recruiting had the highest business impact of any people management function. But instead, you can attribute their weak performance in budget battles to the fact that recruiting leaders simply underperform when building a strong business case.

The first and most important lesson for recruiting leaders to learn is that most recruiting business cases don't fail because of what’s in them, they fail because what is not in them.

Critical “budget approval factors” and phrases that instantly make a business case more compelling

The following is a long list of business case elements that I call “budget approval factors.” They get their name from being cited by budget decision makers as primary reasons why they have approved or rejected budget requests.

I have found that each of those factors listed below have had a measurable impact on getting recruiting proposals approved. I urge you to take a rapid scan through the power approval factors in this checklist so that you can quickly realize how many critical areas you have been omitting from your business cases. Remember that each one that you add might by itself tilt the budget decision toward your side.

1. The total revenue impact of your project:

CEO’s care most about “top-line growth” (corporate revenue). So don’t be subtle, start off with the total estimated impact that your new project will have on increasing corporate revenue. Use total impact phrases like “The business impact of the new salesperson referral program is estimated by the CFO to be over 14% of sales or $76 million in added revenue.”

Another example would be "Increasing the on-the-job performance of new hires (quality of hire) by 10% as a result of the new assessment process, will have a corresponding increase in revenue per employee of 5% per year over 100 hires, or an added $23 million extra revenue.

2. How you directly impact other corporate strategic goals:

There can be no doubt executives care most about the corporation’s strategic goals, in part because their bonuses are based on meeting them. Those strategic goals usually include revenue/profit, product development, production, customer satisfaction, market share, time-to-market and the product brand.

Also, be aware that issues that are raised by outside financial analysts should also be considered as important as strategic goals. You must, of course, show the direct connection between any improved recruiting results and those strategic goals. Start with strategic goal impact phrases like “10% of our customer service positions are vacant due to our slow hiring process. For each 1% of open positions, the CFO found that customer satisfaction went down by 1% at a cost of $1.5 million in lost future sales. Thus slow recruiting will cost us $15 million this year in the customer service area alone”. Also, show how the program will reinforce and add to your firm’s critical success factors.

3. Solving business problems, not a recruiting problems:

Strategic thinking evaluators think in terms of business problems. So if you utilize words that focus on functional problems, like cost per hire and time to fill, you will reveal that you are internally focused on “recruiting problems.” Instead, start every component of your business case focused 100% on business problems.

For example, use phrases like "Sales are down 14%, and that lower revenue impacts the entire business. The data shows that the root cause of the sales problem is the weak performance of new sales hires, as a result of the inadequate assessment of sales candidates during the hiring process". Remember executives spend all day talking about business problems, so show the impact of recruiting on those talked about business problems.

4. Converting recruiting results to $:

It’s impossible for many to fully understand recruiting results and to compare them to sales or production results. Unless you convert them to a standard of comparison, their dollar impacts on corporate revenue. So work with the CFO to convert recruiting results like the quality of hire, retention, vacant position days and higher offer acceptance rates to their dollar impact on revenue. Use phrases like "The sales hiring initiative hired sales people that sold 39% more during their first year, increasing sales revenue by $23.4 million in the first year".

5. Using the language of business:

There is no disputing that the langue of business involves numbers and dollars. That means that rather than using "words" in your proposal to sell it, it must be dominated by numbers and dollars. Use phrases like "The total revenue impact of this project is estimated to be $3.4 million because new hires will be retained an average of 12 months longer."

Rather than "wordy" phrases like "the quality of hire will go up significantly," say "In already measured jobs, the metrics from the pilot proved that on-the-job performance will improve an average of 13.4%, which will across all jobs, be a $3.1 million impact". If you must use words, include strategic ones like strategy, positioning, competitive advantage, ROI and adding shareholder value.

6. The consequence of delay/doing nothing:

Remember you must put a dollar cost on any likely major failure if you want to get the attention of executives. But if you want fast action, you must also show that delaying a decision will make a problem much worse.

In fact, sometimes your strongest selling point is that both costs and the severity of the problems will escalate if you delay. Consider phrases like "If there is no action within three months, we estimate that the costs will escalate exponentially from 1% to 12% of the total budget in that area."

7. A data-driven and metric-rich approach:

Everyone at the executive level operates in a data-driven environment. So it's essential that you show that all major decisions on your project will be made based on data.

Being data-driven means that you must utilize results metrics and show that everything that is important will be monitored and measured. Consider key phrases like "Metrics have been developed to monitor every important aspect of the project. Our results metrics have been pre-approved in advance by the CFO, the COO, and the 6 Sigma team." Including predictive metrics makes a good proposal much stronger.

8. A list of the WOW's:

Often evaluators only remember one or two key items from a proposal. And those items are generally called WOW's because the reader at least mentally thinks WOW in their head after reading them. It's essential that you have at least two WOWS’ in every proposal, and the more the better.

Consider phrases like "The CFO literally said WOW after hearing about this amazing feature." Some WOW features might include generating a profit in recruiting, writing your own software or hiring an industry icon to run this program. Pre-test your WOW’s to make sure they get the desired response.

9. We will be first:

Executives who care about winning always like to be the first. You can assure them that you're being innovative and on the leading edge with phrases like "We are the first in the industry to try this approach, so our initiative will give us "first mover advantage."

An alternative approach that can also add value involves stating that the competitors already have the program. Because sometimes the fear of falling behind competitors may cause some executives to approve it.

10. Provide a competitive advantage:

All executives are highly focused on competing with their competitors. As a result, you must also show that this new initiative differentiates you, is hard to copy and that it provides you with a competitive advantage.

Often conducting a competitive analysis is the best way to show that you know what others are doing and where your firm is ahead. Use phrases like "Benchmarking reveal that we are the first in our industry to use blind resume screening and interviews. And as a result of this lead, we expect 10% of new technical hires to be diverse, which exceeds our competitor's average of 4.6%."

11. CFO-specific budget approval factors:

CFO's dominate budget cutting, and they have their own unique set of criteria for approving projects. These CFO budget approval factors often include a low initial investment, a short payback period, an immediate start up, no new headcount, low costs/hi-efficiency and increased productivity.

Some also care about no Sarbanes-Oxley issues, strong results metrics, a positive impact on cash flow, and a positive ROI. Be aware that even if other executives approve, a CFO may unilaterally block you if their funding criteria are not met.

12. CEO-specific budget approval factors:

CEO's also have their own unique set of criteria for approving projects. They often include a focus on top line growth (revenue), an increase in market share, an impact on shareholders/the BOD, increased corporate capabilities, new product development, enhanced future growth opportunities and a sustainable competitive advantage. Having the support of the CEO and no resistance from the CFO are an unbeatable combo for getting a large budget increase.

13. Speed:

In a world where being the fastest matters, executives have learned to look for speed aspects in proposals. If the team has accelerated deadlines or is breaking a time barrier, it should be mentioned. Use phrases like "Filling jobs faster in the product development area will reduce new product time to market by 21% or 45 days, the fastest TTM in the industry."

14. Innovation is included:

At firms that emphasize innovation, in order to be respected, recruiting projects must also include it. So consider phrases like "This project includes innovations like the use of virtual reality in assessment and the use of the text interviewing on the mobile platform."

15. Prepared for the future:

Projects that are forward-looking get a higher priority because they prepare the firm for the future. It’s important for a firm to aim ahead of “where your competitors will be.” So projects that have a forecast, a workforce planning component, and predictive metrics are more likely to be approved.

Consider using phrases like "The forecasting element can accurately predict future turnover so that managers have enough time to find top quality replacements, so there is no lag in production." If you program has an "alert feature" that warns managers of upcoming recruiting problems and opportunities, it is even stronger.

16. Project scalability:

You must reassure executives that if things go well, you can rapidly scale-up an initial effort so that it can be applied throughout the firm. Consider phrases like "scalability is of course built into our plan, the volume can be cut by 50% if business revenue drops, or if it proves to be wildly effective, it has the capability of being up-scaled to meet the needs of the entire firm globally."

17. Include your competitor's reaction:

It simply naïve to assume that once you implement a new program, that everything is set. This is because, in the highly competitive world of recruiting, it is likely that your talent competitors will react and respond to your recruiting actions in some way.

In order to show that you are aware of those possible countering actions, include phrases like "We anticipate that our talent competitors will also match our diversity program in response to our initiative. But because we will have one year of data by then, we will be able to utilize it to update the program and maintain our lead."

18. Include the environmental factors that impact success:

All programs are based on assumptions about the environment that the program will operate in. It's essential that you show executives that you are aware of those environmental factors and that you will monitor them and track how over time changes in them impact the operation of your program.

To show that you are aware of these e-factors, consider including phrases like "The success of the recruiting effort will depend highly on a high unemployment rate. Should our continuous monitoring show that the rate has fallen below 4.5%, this "active candidate" approach will likely no longer work."

19. Skin in the game:

Many executives expect that there be some accountability and consequences attached to getting more resources. Practically what that means is that there should be some punishment or negative consequences when a major project fails. In this area, considering using phrases like "The entire team has "skin in the game" because no one will receive their bonus if the project’s goals are not met each quarter."

20. Calculate the program's ROI:

The single most common calculated ratio in business is a return on investment or ROI. It is highly valued because it compares program costs to the value of its results, and this makes it possible to compare diverse programs across many functions. You simply have no choice but to calculate the ROI of your program. But also, consider including phrases like "the program's ROI is 16%, which is a full 6% above the average ROI for all approved projects during last year."

*Image from Death to the Stock Photo

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