Why is HR so slow to adopt full online hiring? Jilly Welch discovers that the familiar problem of strategic worth is still stalling progress
People Management, 26 Jun 2003
This week, HR and recruitment professionals will hear sales pitches from dozens of recruitment software vendors at HRSS 2003 and return to their companies with phrases such as “end-to-end hiring solution” and “return on initial investment” ringing in their ears.
But what happens when the stands pack up and the pitches are over? Is the HR function really taking online recruitment and its accompanying technology to heart? Are recruitment managers genuinely enthusiastic about the savings and quality increases it can lead to? Or, with half of all FT500 firms having no corporate web site recruitment, is there another side to the story?
Ask many of the top companies in the UK, and they are enthusiastic about online recruitment. They say they have their current vacancies online, they have email links, they may even have online forms and a system to scan them. It is, they say, a cheap and easy method of gathering more applications from a wider pool.
Yet the first major benchmarking study of the top 500 companies’ own online recruitment efforts shows that the effects permeate no further. Only a tiny fraction of those that recruit online back this up with fully automated recruitment systems to manage the process.
Software designers and suppliers are reporting that the market has all but stood still in its thinking on new technology. They say customers are both uninterested in return-on-investment calculations and resistant to offers of enhanced tools – even when they are free.
Even Microsoft, which is positively throwing its money at understanding the business software market at the moment, admits there is “clearly no meet in the middle” between the potential of the technology and the willingness of recruiters to use it.
Is it the money? Or the real ability of the tools to deliver? Or something deeper?
The economic downturn is certainly having an effect on the budgets available for large, one-off investments in new systems. But observers say this echoes the fact that even the relatively cheap frontline internet recruitment tools – the recruitment sections on corporate web sites – are “seriously patchy”.
“We expected a big spread in the levels of performance – but not this big,” says Colin Farrow, managing director of consultancy The Driver Is, which conducted a three-month study into the quality of corporate recruitment web sites, released exclusively to People Management. “It’s significant how poorly some firms have performed.”
The consultancy combed each FT500 site to find if it fulfilled nine simple recruitment criteria, including “is there an HR contact?” and “are the company’s business principles referred to?”.
“The overriding criterion was ‘as a user – what would I expect to find?’ We were not looking for leading-edge technology,” Farrow insists, “just assistance and information – an existing career profile, an impression of working there. These are indicators of above-average empathy with the user.”
Results are indeed patchy. The average score is just 4.22 out of 17, which amounts to listing vacancies and allowing online applications. Scores range from full marks for global information firm Reuters’ system of mail alerts, online talent pool and automatching, through to a Eurovision “nul points” for 164 of Britain’s 500 biggest companies. Zero points means that there is no recruitment section online for firms as big as Rentokil, the construction firm Wimpey and the Hilton hotel group.
For example, 33 companies allow job-seekers to register for emails alerting them when new jobs are posted. However, of those 33, only nine had actually sent alerts out by the end of the three-month study.
Consultants who have been working with clients to improve their electronic savvy are not impressed. “I challenge HR to stop paying lip service to online recruitment,” says Mark Barlow, managing director of Qikker Solutions. “Just because firms have a web site with searchable vacancies, they think they can tick the box. They can’t.”
Farrow and Barlow agree that the many “first-generation” web sites still in use may be raising expectations among applicants to an unwise degree. “The CIPD has highlighted that 42 per cent of online applicants abort their form, few know what’s happening with their applications once they’re sent in, and clients themselves are struggling to cope with the volume,” Barlow says. “I’ve had clients say that after the first 100 email applications, they turn their mailbox off.”
One firm that can feel proud of its recruitment web site is engineering services provider Amec. Coming joint first in the corporate web site benchmarking study, the site offers taster job profiles, latest jobs and help during studies and internships.
“I’m not surprised that we scored highly against the criteria. I guess I’m more surprised at the others,” says Arnold Nestler, its head of organisational development and corporate HR service. “When we were putting the site together, we certainly had those criteria in mind. We put a fair bit of effort into making it as user-friendly as possible. We did look into the merits of doing clever things such as careers advice sections and gimmicks like games, but I don’t think they help. Applicants don’t come here to be entertained.”
Yet even a firm this open to receiving applications electronically has grave reservations about adopting an end-to-end electronic system to process, sort and save the resulting information.
“One thing we haven’t done is invite speculative applications in order to build up a store of applicants and skills for future use. We’ve looked at a number of ways of doing that through a hosted web site and database management tools, but we haven’t gone down that road.”
Echoing other HR heads’ doubts about the tools and technologies on offer, Nestler explains his reasoning behind the decision.
“I think to make the savings that back-end automation brings, you first have to force almost 100 per cent of your recruitment online – if you’re entering your own data, it defeats the purpose,” he says. “Our view is that the UK recruitment market hasn’t matured enough yet. People are still expecting to apply through a paper-based method: they’re still reading the papers. The profile of the clerical, blue-collar worker doesn’t yet lend itself to online applications.
“Second, you have to integrate the information into your wider systems. Let me tell you, contrary to what some of the suppliers may tell you, it’s a long way from ‘plug and play’.”
Reuters is striving to be a model electronic hiring company. “We’re an information company, so we were pushing at an open door when it came to using electronic data,” explains Ivan Newman, UK talent acquisition group head.
Newman began by taking graduate applications online. “They expect it all, and fast. So we experimented.” Experimentation has led to a system of automated acknowledgements throughout the application process, tracking of applications, automatic letter-sending and online filtering systems. “We’re not merely asking them to send their CVs – there are also up to 12 behaviour-related qualifying questions, which is really the start of competency-based interviewing,” he explains.
As a result, Reuters believes it has saved 90 per cent of its milk-round costs alone. “We now get only 12 to 15 per cent of staff through agencies, which means significant cost savings,” Newman says. “There are 70,000 people registered in our ‘talent pool’ database, which is better than most agencies can manage.
“It’s paid for itself in four months. The net cost is less than half the savings we’ve made on agencies and one-sixtieth of the overall HR budget. What I really want to do next is get ahead of this fast-moving hiring market,” he adds. “It’s difficult to do, but I want workforce planning on a three- to six-month horizon; get them into the talent pool early.”
However, like Amec, even Reuters’ forward-thinking HR team hasn’t managed to crack the thorny issue of integration into its wider systems. “There is no back-end link with Oracle,” admits Newman. “It’s a cost-benefit discussion. We have 3,000 to 5,000 UK hires a year, which currently take 300 hours – or four working weeks. So it’s that cost versus the cost of getting Oracle switched on. It’s not an HR culture issue.”
Suppliers admit that past – and even current – software systems are not designed to be knitted together.
The big hitters in the market have heard the cries from the market and have agreed to adopt a standard interface language for future products. IBM Websphere, SAP NetWeaver and Microsoft’s dotnet are all brand-named versions of this compatibility protocol. But unfortunately the initiative is not yet widely known or accepted, even among suppliers.
“It’s not backwards compatible,” Barlow explains. “Most vendors are rewriting their products to comply with the standard. But non-interface standard systems are still being sold to recruiters, who should be aware they’re not buying future-proof solutions.”
Nestler at Amec reveals how his own HR function’s current set-up would not lend itself to a full online recruitment solution.
“We don’t want to receive applications centrally – they go to the different HR departments direct,” he says. “I suppose we do potentially lose good people – those who don’t find something that suits them when they visit the site, but who still have good skills. We could use the database of those registered for alerts, but it’s both a technical and a cultural issue: we don’t have the ability to compare the database and the structure of HR works against that way of doing things.
“And anyway,” he concludes, “there isn’t really pressure from operational HR to need that kind of facility.”
Jennifer Griffi, Microsoft’s HR payroll solutions’ marketing director, says that the software giant often comes up against situations like Amec’s and, to a certain extent, Reuters’.
“Very few organisations are setting up the systems that will cope with 100 per cent online management,” she says. “This has nothing to do with the systems themselves, because at the end of the day they’ll do what you want them to do. What stands out is that it’s the culture of the organisation which dictates the pace
of change.”
Mark Barlow of Qikker Solutions agrees. “HR people are way behind,” he says, admitting his frustration with the lack of vision being shown by HR over end-to-end online recruitment. “What the applications can do are light years ahead of what we’re being asked to supply. We had to strip 85 per cent of our systems’ tools out for a local authority client because that’s what it wanted.”
Griffi says: “Microsoft understands the technology, but we’re also realising that we have to understand HR, so we have ex-HR people as consultants. We have a big continuous project running to understand what HR wants from Microsoft. We say ‘please tell us’.”
Return on investment is not swinging the balance either, according to anecdotal reports.
One university of 9,000 staff, which recently received pitches from software suppliers, needed to make an average of 1,200 hires a year to keep up to strength. Suppliers demonstrated £750,000 of recruitment cost savings in the first year, after the cost of the system. But the university decided not to purchase any packages, telling suppliers it didn’t “fit the culture of the business right now”.
System providers also privately report clients turning down low outlay deals. “We suggested to HR departments that we give them the software and take only 10 per cent from the savings they make. They still said no. It’s unbelievable,” said one software vendor.
So if the costs can be offset and the technology is becoming more user-friendly, why is HR so slow to change its cultural approach to full electronic hiring?
“They are afraid for their jobs,” Griffi says simply. “I was at an exhibition in February and I heard that concern again and again. The seminars were full, but they were full of project managers who were reporting ‘we can’t get central HR onside – they seem so hesitant’.”
Griffi’s advice is to avoid getting down to headcounts with the finance director. “Always think ‘this sort of technology will free up HR people to do x’, not ‘oh my god, this means I’ll lose people’,” she suggests.
“It comes back to the whole education of strategic worth,” Griffi adds. “We still have two levels: administrators and board-level operators. I was reading this in People Management 10 years ago while doing my degree. I don’t know why things haven’t changed.”
Farrow of The Driver Is adds: “There is an investment issue and a people issue, but it is more a case that companies need to take time to understand the benefits of investment in electronic systems. It’s down to the quality of thinking, not the technology.”
Meanwhile, Microsoft and others continue to strive to understand what it is that HR really wants – what it needs to convince the board, as well as itself, that investment in end-to-end systems will bring benefits with the shake-ups.
“As a sector, we really need to improve our ‘go to market’ strategy,” Griffi admits. “Perhaps it’s the way we’ve been talking to practitioners – we have to ditch the tech speak and learn a bit more HR speak.”
How e-savvy is your firm?
• Are current vacancies listed?
• Can people apply online?
• Can potential candidates see an existing employee’s career profile?
• Are company business principles referred to?
• Can people register for email alerts?
• Do they actually receive email alerts?
• Is there a graduate section?
• Is there an experience of hires section?
• Are HR contacts featured? Source: FT500 benchmarking study, conducted by The Driver Is consultancy
A match made online
It was a demanding specification. Reuters needed a Portuguese, Spanish and English-speaking recruit with experience of information markets to work in Spain.
“The headhunter we hired asked for three months, then told us that such a person didn’t exist in Spain,” laughs Ivan Newman, head of talent acquisition. “We posted the vacancy on our site and searched our own talent pool database for those matching the skills requirements at 2pm on a Friday. By 5pm we had half a dozen good candidates replying to the automatching mail they’d been sent.”
There have been other success stories for Reuters, a global company that needs technical skills and language ability in equal measure. Creating a centralised reservoir of active and passive job seekers in-house has allowed the HR department to turn a fraught search for qualified staff into a relatively painless online operation.
One woman, with experience of training in financial markets and who happened to speak French, German and English, was idly surfing the web in Paris one Saturday night and came across a vacancy on the site. She emailed her CV, thinking she wouldn’t hear anything – for a while at least. By Thursday, after an interview in Geneva, she had accepted the job offer.
“We don’t send these people general marketing mails asking whether they’re still free, just to keep the relationship going,” Newman explains. “We only send live vacancies. That way, people trust us not to waste their time. We’re communicating this way for a reason, not just because the technology allows it.”
Further information
A range of e-HR suppliers is exhibiting at the CIPD’s HR Software Show, 25-26 June, at Olympia 2, London. For more details, call 020 8263 3434 or visit www.cipd.co.uk/hrss
Also at Olympia is the CIPD’s annual recruitment conference 2003, presenting the latest thinking in recruitment and retention. Visit www.cipd.co.uk/ recruitment conference
Measured response By dramatically reducing the time and money spent on managing human capital, the latest HR software systems are freeing up more time for strategic thinking
