Feature

Cost-effective hiring

Sudipta Dev finds out if it is possible for IT organisations to get the best talent without spending too much money.

Escalating hiring costs is one of the primary concerns for most HR managers. Every organisation wants the best talent available in the market for its competitive business advantage. But this talent comes at a premium, particularly if the organisation is looking for skills that are not readily available in the market. While most organisations believe that the employee referral system is the most cost-effective hiring system, the truth remains that the effort to build an employer brand is the process which can entice talent without having to spend much.

The whole process of hiring, in its totality, is an expensive business. It includes not just the time, money and effort spent on the actual mode of recruitment (that is, through newspaper advertisements, headhunters or jobsites), but written tests and various stages of interviews, the induction process and training … till the candidate comes up to the expected level of productivity. What organisations must try is to keep the cost minimum at every stage to reduce the total hiring expenses. Organisations must ensure that the cost does not exceed 30 percent of the cost-to-company.

"You have to spend money, no matter what recruitment channel you adopt. What matters is how efficiently this money is spent" - Vivek Govilkar Senior VP-HR & Training Group i-Flex Solutions

“You have to spend money, no matter what recruitment channel you adopt. What matters is how efficiently this money is spent. You have to look at the long-term cost, including performance and retention,” says Vivek Govilkar, Senior Vice President-HR & Training Group, i-flex Solutions.

"Cost of talent is viewed differently by employers depending on their urgency of need, availability of talent and ease of deployment" - Monisha Advani CEO EmmayHR

Monisha Advani, CEO, EmmayHR (a Randstad company) states that assessment of an individual’s competencies and commitment levels are critical, “Cost of talent is a subjective matter that would be viewed differently by employers depending on their urgency of need, availability of talent options and ease of deployment (weightage to the prior experience of the candidate).”

The premium is more for specific skills which are not easily available in the company. H Tripathi, Managing Director, Infrasoft Technologies, points that an organisation pays more for senior level people (project leader and up). For the general level, the hiring costs are similar to the market. “If your recruitment cost is high and you land up hiring poor talent then there is a problem with the selection process,” states Tripathi. He believes that a key factor is to have a resourcing team with an excellent network.

Tripathi asserts that 0-2 years is the crucial time. The moment an employee completes two years the HR becomes nervous. Consequently after 2 years they have to be given challenging opportunities to keep them engaged and motivated.

Agrees Ravindranath Alagar, VP, Marketing, Xius (telecom division of Megasoft), “Best talent is not necessarily the most expensive to hire. But retention of the same could be determined by the market forces. It may so happen that the talent would have to be retained through monetary and other methods of compensation.” He adds that “good” talent is a much often misunderstood term, for what is good for the goose need not be good for the gander. Hence it is but natural that the recruiter needs to ascertain the true value of a candidate while putting together a compensation package. It is generally determined by the market forces at play and is usually a question of demand and supply.

Brand attracts

"Brand name often pulls good talent at lower money value. Similarly, professional growth, and long-term plans become influencing factors" - J Kalyanaraman Senior VP, Human Capital Management HCL Comnet

The stronger an employer’s brand the greater the possibilities of people willing to join the organisation without demanding exorbitant salaries. If an organisation has been able to build a brand of being an employer of choice then the walk-ins are successful and a cost-effective hiring mode. “You can get the attention of 400-500 candidates at a time. This is provided you have been able to build a brand of being a good employer,” says Tripathi.

J Kalyanaraman, Senior VP, Human Capital Management, HCL Comnet believes that money alone does not determine a person’s willingness to work anywhere, “Brand name often pulls good talent at lower money value. Similarly, opportunity for professional growth, security, and long-term plans become influencing factors as a person progresses in age, family life as well as in the social circle.” For him what works best is a combination of various practices like internal job postings, referral programmes and batch hiring.

Combination of strategies

Organisations like Tech Mahindra which try to keep hiring costs low prefer models like employee referrals, portals and job fairs. “We spread out though a large number of strategies based on our needs. Our own website and jobsites provide useful information. Then we have our own recruiters based in six to eight locations who have a good network. In most cases they are able to get people through direct sources, but if sometimes they are short of time and need a helping hand, we engage agencies,” says L K Bhatia, VP-Resource Management Group, Tech Mahindra. The company also does intensive hiring through special ‘buddy walk-ins’, where they give an offer by the end of the day.

An organisation which takes great pride in having a sizable women workforce, Tech Mahindra has successfully organised ladies’ special hiring events. While the hiring standards are not different, it is ensured that there is quick facilitation and processing in these events. Another innovative recruitment campaign has been the initiative to hire people (with 5 years to 10 years experience) from other industries like manufacturing, retail and mechanical engineering, put them through an IT training capsule of three-four months and engage them as team leaders. This has been a very successful programme.

How employee referral works

The employee referral programme has been the preferred mode of hiring in most companies and constitutes almost 30 percent to 40 percent of recruitment. The rewards paid to the referring employee costs, but it is still economic. At i-flex the reference programme is instituted and administered by the HR. The reward goes up for those who refer more friends and acquaintances. Govilkar asserts that the reference system is a fail-proof source as when employees like their company and believe in its brand, they get other people in.

The success of the referral programme depends primarily on evangelising the concept among the present employees. Kalyanaraman points out that a referral programme can achieve success only when it engages the employee and clearly explains all aspects of the programme, such as how to refer, whom to refer to and also address “WIFM” (What’s-in-it-for-me) aspect. Incentives and recognition are necessary for this. At HCL Comnet the entire organisation gets an opportunity to view the referring candidates through a weekly/fortnightly e-zine called “Building Comnet Together”. This platform not only gives the employees visibility but also motivates other employees to refer their friends/family as well. “HR in HCL Comnet is conscious that only a “motivated employee” would take part in a referral programme. Thus one of the barometers of motivation is the extent to which referrals happen,” insists Kalyanaraman.

Effectiveness of social networking sites

The effectiveness of social networking sites to tap talent remains a debatable factor. Kalyanaraman feels that social networking sites most of the time play a pivotal role in identifying talent at a reasonable cost to the company. “Most companies are part of a social networking site as they act as a captive database of working professionals. These sites also give the employer an opportunity to track the potential employee’s capabilities and experience, thereby assuring him of the talent he will be taking in,” he says.

Advani acknowledges that blogging and professional networking online has moved from being a netizen’s privilege to an extension of an individual’s existence, “Particularly for the mid-management segment of managers, team leaders, such forums serve as being a talent showcase, opinion and lateral thinking extension. I see great merit in testing the quality of prospective employees through such media.” She warns however that it is difficult as yet to distinguish between what is solicitation, or predatory, or vivarious in such media and till such time that there are tools in place to create these distinctions, these forums will be unfortunately viewed with suspicion. “At EmmayHR, we are committed to tracking this form of media and are committed to embracing it in the future as a means to refining recruitment processes to further serve our customers.”

Tripathi, on the contrary, is uncertain of the potential of such sites in the near future and feels that there is a possibility of organisations barring people from putting their technical skills (related to work in the company) on the sites. “Social networking sites are not for reference checks,” insists Tripathi.

The cost factor related to hiring needs to be looked from a long-term perspective. “Cost at the time of hiring is one aspect. It is just an initial investment, the ROI has to be calculated in totality,” concludes Govilkar.

ec@expresscomputeronline.com