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Fact Brief
Centralizing the Recruitment Function
Profiled
Industry Employees Revenues Key Questions:
Institution
A Health Care 5,000 – 10,000 $5 billion – $10 billion Why do organizations implement
centralized recruiting?
B Computer Software Less than 5,000 Less than $1 billion
How do companies structure
C Chemicals 10,000 – 20,000 $5 billion – $10 billion
centralized recruitment functions?
D Construction More than 30,000 $5 billion – $10 billion
How successful are centralized
E Health Care 5,000 – 10,000 $10 billion – $15 billion recruitment functions?
The following research brief outlines the centralized recruitment function at five profiled
companies and the functions’ drivers, effectiveness, and evolution.
EXECUTIVE SUMMARY
To reduce costs, control processes, and adapt to organizational change, profiled organizations centralized the recruitment
function. Findings reveal that profiled companies report varying degrees of success with a centralized structure but that no
company has effective methods of measuring the function’s success.
Companies implement one of the following Centralized recruiting is successful at three While centralized structures have not
types of recruitment structures: companies for the following reasons: evolved drastically, profiled organizations
report the following changes:
• Centralized—Central organization makes • Consistency—Enables companies to create
policy and strategy process standards • Structure—Adapted to increase efficiency or
• Decentralized—Business units control • Efficiency—Reduces duplication of process meet recruiting needs
recruiting processes and centralizes knowledge • Staff—Increased or decreased staff due to
• Hybrid—Business units control processes but • Costs—Reduces overhead and staffing recruiting volume
strategy is centralized agency costs • Technology—Adopted new technology to
improve information storage and reporting
Centralization Drivers Centralized recruiting is unsuccessful at
two profiled companies for the following One organization anticipates no future
Profiled organizations centralize recruiting reasons: changes, but four organizations report
for the following reasons: further anticipated evolution in one of the
• Lack of Expertise—Recruiters have poor following areas:
• Cost Savings—Reduce costs by leveraging understanding of business units
resources, creating more efficient functions, • Low Client Satisfaction—Internal clients are • Structure—Restructure to include regional
and reducing overhead unhappy with lack of recruiter expertise hubs, a hybrid structure, or in-house function
• Control/Standardization—Standardize and • Poor Vendor Management—Centralized • Process—Evolve processes to gain efficiency
centrally control policies and processes vendor provides poor service
• Organizational Change—Adapt to
organizational and structural change Profiled companies use metrics, surveys,
anecdotal feedback, and assessment of
Structure Details recruiter engagement to measure function
success.
All profiled companies centralize recruitment
by one of the following: Organizational Acceptance
• Central Hubs—Four companies centralize Profiled companies receive neutral and/or
recruiting at corporate headquarters poor feedback regarding the centralized
• Regional Offices—One company centralizes at
function. Companies have no effective
headquarters but regional offices complete
processes method for collecting feedback and rely on
informal means.
All profiled organizations centralize most
recruitment activities and costs. Centralizing Effectively
Structure Background
Recruiting Roundtable research finds that the decision to structure the staffing function
as a decentralized, centralized, or hybrid model must be made after carefully weighing
the needs of the company. General characteristics of each structure are detailed
4
below:
Advantages Disadvantages
• Hybrid—In a hybrid model, each business unit has a recruiting specialist to fulfill
functional roles within that designated unit, while strategic decisions and activities—
such as branding, advertising, compensation decisions, and targeted recruiting
programs—are centralized. However, it is the responsibility of the individual
business unit team to manage the recruiting process, from the interview to the offer.
General characteristics of hybrid structures are detailed below:
Centralization Drivers
Control/ Organizational
Cost Savings
Standardization Change
Reduce costs by leveraging
resources, creating more Standardize Adapt to
efficient functions, and and centrally control policies organizational
reducing overhead and processes and structural change
Centralized
Recruiting
Cost Savings
Finding 2: Potential for
Cost-Savings Drives
Centralization Through economies of scale, centralized recruiting achieves greater productivity while
requiring fewer expenditures. Interviewed individuals at all profiled organizations cite
Cost savings is the most cost savings as the leading driver for implementing a centralized recruiting function and
significant driver for centralizing 8
recruiting at all profiled anticipate realizing cost savings in the following ways:
organizations.
Table 2: Cost Saving Means
Means of Cost
Details
Savings
Centralized functions enable organizations to capitalize on knowledge- and
human capital-based economies of scale by leveraging and redeploying
resources, as detailed below:
• Eliminate Redundancies—Company D and Company E sought to eliminate
Improved unnecessarily duplicated processes and efforts by assigning support activities to one
Efficiency central employee rather than one employee in each business unit.
• Consolidate Expertise—Consolidating expertise improves efficiency and reduces
efforts at Company A and Company C. Similarly, Borders Group centralized to
consolidate candidate information in one location, promoting the sharing of
information among hiring managers, a previously uncommon practice.
Control/Standardization
Organizational Change
The most important driver for centralization at While creating a more efficient
Company E was its acquisition by a larger function was the primary driver,
organization. The parent company acquired several Company A centralized recruiting
organizations at one time and implemented a when the company built and
centralized structure to ensure standardization of moved all corporate functions to
staffing activities. a corporate campus. This move
made the previously desired
Company C initially moved to a decentralized centralization easier to
structure in anticipation of a corporate split. After the implement.
division failed to occur, it restructured centrally.
Structure Details
Company A, Company B, Company D, and Company E have one centralized hub that
handles most recruiting activities. These companies create recruiters or recruiting
teams to focus on specific functions, regions, or business units, as follows:
Each recruiting team has one manager, three recruiters, and two
employment specialists providing support for recruiters. These teams
Recruiting are focused around the following functions:
Teams
• Health Services Recruiting • Government Business Recruiting
• Support Services Recruiting (e.g., IT, Finance, HR)
Each staffing teams includes one manager and between one and four
Staffing support staff. The teams do not focus on recruiting, but rather on the
Function following:
Teams • Data quality projects • Referrals and sourcing
• Relocation and orientation • Assessment projects
Director of Recruiting
Oversees all recruiting activities
One
One
Support
Recruiter
Employee
Operations Manager
Oversees all recruiting activities
Seven Recruiters
One college and six business unit-focused recruiters
Regional Offices
Activity Responsibility
11
Commonly Decentralized
Recruiting Activities Nearly all recruitment activities at profiled organizations are centralized, with recruiting
Research indicates that for specific positions and creating requisitions being the only activities decentralized
companies typically decentralize among profiled companies. The most common reason for decentralizing specific
the following recruitment
activities is to provide greater control to business units. The table below details the
activities:11
activities companies decentralize and the rationale for doing so:
• Budget—Allows business units
to control staffing processes at
a micro-level Table 4: Decentralized Staffing Activities
Activity Co. Rationale
• Hiring Decisions—Provides
business units control over Candidate Availability—Business units occasionally identify qualified
incoming personnel B internal candidates prior to requesting applicants from the centralized
• Functionally Trained function
Interviews—Increases likelihood Recruiting/
of candidate selection based on Control—Professional hiring is completely decentralized because
Hiring for
cultural fit and business needs C business unit vice presidents desire control over their divisions and
Specific
of unit hiring practices
Positions
Candidate Pool—Field hiring is decentralized because regional HR
D has a better understanding of the construction employment market in
specific locations
Hiring
Control—All hiring manager interviewing is decentralized because
Manager E
business units want control of interview and hiring practices
Interviewing
Cost Responsibility
Finding 6: Companies
Centrally Fund Costs All profiled organizations centrally fund most costs incurred by the centralized
recruitment function. While all recruiting is funded centrally at Company A,
All organizations centrally fund
most costs incurred by the the remaining organizations do charge some costs back to business units, as detailed
recruitment function. further below:
Function Performance
Finding 7: Moderate Success
with Centralization
Interviewed individuals at three organizations (Company A, Company C,
Three companies report and Company D) characterize their centralized recruitment function as a success
successful centralization while while the remaining two companies (Company B and Company E) do not consider
two report unsuccessful
centralization. their centralized function to be a success.
Centralization Benefits
Centralization Drawbacks
Finding 8: Centralized
Recruiters Are Out of Touch
The interviewed individuals at Company B and Company E indicate that they are not
Two companies find that satisfied with the centralized recruitment function. The table below describes the
centralized recruiters are less reasons for their dissatisfaction in further detail:
engaged with the business unit,
have limited expertise, and
therefore provide inferior service Table 6: Drawbacks of Centralized Recruiting
to their internal clients.
Centralized functions do not allow recruiters to work closely with and
become part of a specific business unit, and yet each business unit or
Lack of function operates in a specific way and has unique needs. By
Expertise incorporating recruiters into each unit or function, they would better
understand the unit or function and would be more likely to identify
appropriate candidates.
Performance Measures
Companies typically rely on qualitative and anecdotal methods to determine the success of centralized recruiting because of
the difficulty associated with tracking metrics such as cost-per-hire and time-to-fill and the absence of systems able to
measure quality of candidates and new hires. While profiled companies commonly use formal and quantifiable
measurements, these organizations indicate that informal and qualitative methods are often more reliable and indicative of
the function’s performance. The figure below details the four methods profiled companies use to determine the effectiveness
13
of their staffing functions:
Method 1: Metrics
All profiled companies track metrics to measure function effectiveness. While Company A, Company C, and
Company D have only moderate success due to difficulty tracking and analyzing metrics, the remaining companies’
metrics are ineffective for the following reasons:
Company B monitors metrics included in its SLA with its third party agency. While the agency meets its
Unrepresentative
service level agreements (SLAs), this does not represent performance because businesses often fill positions
Metrics
internally before the agency opens a requisition, therefore skewing the staffing metrics.
Company E’s metrics are ineffective because the company does not hold recruiting teams responsible for
Unaccountable
their performance. Thus, teams do not strive to meet metrics and the company no longer closely monitors
Teams
metrics.
Method 2: Surveys
Four companies (Company A, Company B, Company C, and Company D) survey internal clients to gauge recruitment
Qualitative Measures
function effectiveness. While Company A’s surveys are effective and examine client satisfaction, time-to-fill, and
candidate quality, the other organizations’ surveys have not provided adequate insight for the following reasons:
• Informal Surveys—Company D has not yet formalized its surveys and processes
• Low Participation—Company B has low response rates from its surveyed hiring managers
• Insufficient Data—Company C recently began surveying and has not collected sufficient data
Informal
Methods
The next page addresses each profiled organization’s internal reception of the implementation of centralized recruiting.
Organizational Acceptance
According to research, after centralizing recruiting for initial stages of the hiring
process, many organizations decentralize due to business unit preference for more
control. Business units may not favor centralized recruiting because standardized
processes may not suit their special needs and because it may increase the feeling
of “bureaucracy.” This section examines the acceptance of centralized recruiting
14
among business units and other segments of each profiled company.
Finding 11: No Effective • Poorly Received—The centralized functions are poorly received throughout the
Method to Collect Feedback
company at Company B and Company E. The reason for such a negative
Despite a strong desire for input, reception and the employees most and least opposed to the structure are
companies only use client detailed below:
surveys and an open door policy
to collect feedback on centralized
recruitment and report limited 9 Poor Vendor Selection at Company B—The centralized function receives negative
success with these methods. feedback throughout the organization because the vendor is slow to fill many
positions. While most business units oppose the structure, it is primarily due to the
fact that as business unit recruiting volume increases, so does business unit
dissatisfaction.
9 Poor Engagement with Business Units at Company E—Nearly the entire organization
at Company E opposes centralized recruiting due to recruiters’ inability to engage
and be a part of business units. The one business unit least opposed to
centralization is also the most closely located to the corporate headquarters, and
therefore experiences more frequent recruiter communication.
Centralizing Effectively
Step 2: Prepare
Companies recommend the following preparation for centralization:
• Build Quality Teams—At Company D and Company E, strong teams with
good recruiters and experienced and credible members who adapt to difficult
Step 2 conditions are essential
• Create Strong Processes—Company D and Company E work with
businesses to create partnerships, develop standards and processes for
services, and identify metrics
• Obtain Technology—Four profiled companies work to identify and obtain
quality technology and the services of vendors
Step 3: Introduce
Company B and Company D recommend conference calls, three
month roadshow presentations, and detailed written communications
Step 3 to educate business units on the values of centralizations.
Throughout these outlets, organizations should detail the
responsibilities of all affected employees and answer any questions.
Step 4: Communicate
At Company A, Company D, and Company E, it is necessary to
Step 4 maintain communication to ensure recruiters understand the
changing needs of business units. While internal technology systems
and regular conference calls may assist with communication, to
ensure continued engagement at Company E, regular in-person
meetings are necessary.
Function Evolution
Since a centralized structure does not tend to work well in certain situations—
including the hiring of candidates in high demand and low supply due to the need for
more discussion and negotiation—companies often adapt their centralized structure
Finding 13: Recruiters Receive to include more decentralized and hybrid characteristics. This section examines the
Standard Compensation evolution of profiled companies’ centralized recruiting functions since implementation
15
and change are expected in the future.
All profiled organizations
compensate recruiter with base
pay salaries. No organizations Past Changes
provide recruiter incentives.
While the centralized recruitment models at profiled companies did not change
drastically since implementation, interviewed individuals state that model evolution is
always expected as companies adapt to changing business climates. Changes
occurred in the following areas of profiled organizations’ recruitment functions:
Anticipated Changes
The interviewed individual at Company A does not currently anticipate any specific
changes, but is sure the function will evolve as it always does. The four remaining
organizations foresee changes in their recruiting processes and structures, as
follows:
Manager,
Talent Acquisition &
Staffing
1 Job Posting
4 Recruiters 1 Education 3 Recruiters 2 Recruiters
1 Job File Quality Staff
2 Employment Investment 2 Employment
Staff 2 Employment 1 Staff
Program Staff 2 Employee
Specialists Specialists Specialists
Referral Staff
Staffing Manager
Sr. Staffing
Staffing Sr. Staffing Consultant OE
Consultant Consultant (Contractor) Specialist
Professional
Sr. Staffing
Sr. Staffing Consultant OE
Consultant (Contractor) Specialist
Sr. Staffing
Sr. Staffing Consultant OE
Consultant (Contractor) Specialist
Staffing
Sr. Staffing Consultant
Consultant (Contractor)
Sr. Staffing
Consultant
Function Effectiveness
6. How successful are centralized recruitment functions? How do organizations
determine its success?
7. What critical factors contribute to the success of the centralized recruitment
function?
8. How well received are centralized models within organizations?
9. Do companies solicit feedback on the centralized staffing function? If so, in what
format do they collect feedback?
10. Who do companies consider to be the strongest supporters or advocates for
centralizing the recruitment function?
Function Evolution
11. How have centralized recruiting models changed or evolved over the years?
12. Do companies anticipate future changes? If so, what?
Guide to Tables and Figures Table 1: Characteristics of Hybrid Recruiting Models Page 3
Table 2: Costs Saving Means Page 4
Table 3: Staffing Function Teams at Company A Page 6
Table 4: Decentralized Staffing Activities Page 8
Table 5: Benefits of Centralized Recruitment Page 10
Table 6: Drawbacks of Centralized Recruitment Page 11
Table 7: Neutral Employee Reception of Centralized Function Page 13
The Corporate Leadership Council (CLC) has worked to ensure the accuracy of the information it
provides to its members. This project relies upon data obtained from many sources, however, and the
CLC cannot guarantee the accuracy of the information or its analysis in all cases. Furthermore, the CLC
is not engaged in rendering legal, accounting, or other professional services. Its projects should not be
construed as professional advice on any particular set of facts or circumstances. Members requiring
such services are advised to consult an appropriate professional. Neither Corporate Executive Board
nor its programs are responsible for any claims or losses that may arise from any errors or omissions in
their reports, whether caused by Corporate Executive Board or its sources.
1
Recruiting Roundtable, Organization Structure Summary, Washington: Corporate Executive Board (Date Unknown).
2
Recruiting Roundtable, The Recruiting State of the Union, Washington: Corporate Executive Board (January 2004).
3
Recruiting Roundtable, The Recruiting State of the Union.
4
Recruiting Roundtable, Organization Structure Summary.
5
Wheeler, Kevin, "Why Strategy and Structure Go Hand in Hand," ERExchange (29 March 2001).
(Obtained through www.erexchange.com). [Accessed 24 May 2005].
6
Recruiting Roundtable, The Recruiting State of the Union.
7
Recruiting Roundtable, Organization Structure Summary.
8
Author Unknown, "HR Tech Conference: How Borders Group Takes e-Recruiting to the Next Level,"
Managing Human Resource Information Systems (November 2001). (Obtained through Factiva).
9
Corporate Leadership Council, Centralizing the Staffing Function, Washington: Corporate Executive Board (April 2001).
10
Corporate Leadership Council, The Structure of the Recruiting Function at U.S. Retail Companies,
Washington: Corporate Executive Board (March 2004).
11
Wheeler, Kevin, "Why Strategy and Structure Go Hand in Hand.”
12
Corporate Leadership Council, Centralizing the Staffing Function.
13
Corporate Leadership Council, Centralizing the Staffing Function.
14
Wheeler, Kevin, "How to Organize Your Recruiting Function: The Pros and Cons of Three Models," ERExchange
(20 March 2002). (Obtained through www.erexchange.com). [Accessed 24 May 2005].
15
Wheeler, Kevin, "How to Organize Your Recruiting Function: The Pros and Cons of Three Models."