Guiding the Strategic Conversation on Talent

The HR leader must be one of the business leaders crafting strategy.

I thought it would be helpful to walk through a strategic presentation, about HR, to an executive team. The goal is to get to the point and simply answer the question at hand. It doesn’t require highly sophisticated analysis; it’s a framework that everyone can easily follow. It provides an example that illustrates the role of data and it shows how you can have an impact with basic data that any HR department should be able to get its hands on.

As you’ll see, the presentation is packed full of numbers, and this is why you need someone who can do analytics early on in a company’s history, but note that this presentation isn’t about “analytics.” This presentation is about the strategic issues the top leadership team cares about. That is, to speak intelligently and convincingly about strategic issues.

You’ll notice that there is nothing more advanced in the math that underlies this presentation than grade school arithmetic. The advantage of operating at that level is that it’s easy for the executive team to digest quickly—we never need to step back and spend fifteen minutes trying to explain some statistical technique—and it is also easy for us to do at this stage of the company’s maturation. I’d love to do more sophisticated things like conjoint analysis, but it’s amazing how far you can get with just basic counts and percentages.

Another point worth noticing is that we avoid reams of data that would lead the audience to drift into unconsciousness. There is always a story to be told—it’s the story that plays the lead, and the numbers validate and illustrate the story. The executive team doesn’t really care that there are many, many pages of numbers that got culled out of the analysis; they don’t need the whole story about how you narrowed the analysis to just a few select points. The analytics are not the point, so we don’t lead with the data and how we got it; we stay focused on the business issue.

Starting with the End in Mind

Being clear about the desired outcome before we begin telling the story.

‘Broadly speaking, as the HR leader I have to determine and communicate which HR levers (e.g., hiring, training, reward, etc.) have the biggest impact on executing the business strategy. I need to discuss any place where HR factors will undermine the execution of business strategy. From there, we, the executive team, need to either take some actions (such as making an investment in talent acquisition) or be aware of the dynamics such that appropriate actions may be taken (such as correcting imbalances in the organizational structure).”

While it’s clear that I have a desired outcome from the presentation, this isn’t a sales pitch. Often HR professionals seem to want advice on how they can sell their projects to top management, but that’s not the right stance. Here HR is a part of top management, so the desired outcome is the same for HR as for everyone else on the executive team: to succeed in achieving a range of agreed upon business objectives. The pitch is simply to communicate as clearly and convincingly as possible what we know how to achieve those business objectives.

The example that follows illustrates a situation that is very common for growing technology firms. Growing firms have ambitious business goals; to achieve those goals they need to hire a lot of new people, and if they fail to hire those people they won’t achieve those goals. The leadership teams need the HR leader to forecast the path forward so there is a predictable future. If decisions need to be made, then they are made early on, not after a crisis hits.

Setting the Stage

Start by getting people on the same page and showing them where we’re going.

This portion of the presentation focuses on the talent acquisition challenges in the context of the business strategy. The leadership team has a lot on their minds, so you need to quickly take them through the data on talent acquisition, highlighting the issues, the impact of those issues, and of course, what decisions needed to be considered.

The first slide, Figure 6.1, is designed to get everyone focused and on the same page. CEOs have told me more than once that this is their favorite kind of slide because it is such a simple way to lay out the hiring challenge. In this example, there is a “stretch goal” that the business is shooting for and a more readily achievable goal we call the “commit goal.”

The table in Figure 6.1 has a row for each of the five main departments and shows the amount of hiring required. It’s quite simple, but let me walk you through it column-by-column.

If we start with the first row, Professional, we see the End of Year Approved hires is 50, and in the next column that the Third Quarter Starting Headcount (i.e., the current headcount, since we were in the third quarter) was 40. As the figure shows, 50 minus 40 is 10, which is the “delta” between the headcount we have now and the headcount we need by year-end. We tend to add in the hires we’ll need due to Attrition for the Total Number of Hires to achieve our Stretch Goal (to fill all approved positions). We then subtract the people about to come on board (Starts + Accepts) to get the final Hires Remaining number. The final column, Commit Goal/ Hires Expected, gives the numbers of hires we are confident we can achieve.

The implication of this slide is first that if anyone on the team didn’t agree with the numbers, they should speak up. Second, it implies that we had some hiring challenges that we needed to look into more deeply.

A Model of the Constraints on Hiring

Clearly identify the factors the team needs to focus on.

Now that we have everyone on the same page, we want to get them to focus on the three factors that will let us determine whether or not they would be able to achieve the commit goals and stretch goals. These three factors are:

In Figure 6.2, we see the three constraining factors (time, capacity, and volume) around the image of a rifle site aiming at our hiring goal. On the right, I’ve listed the three goals we want to focus on. The “Tech Commit” goal of how many technology hires we are confident we can make, the “Tech Stretch” goal which would be harder to achieve, and then “Goal 3,” which is hitting 90% of the approved hires in all other departments.

The implication of this slide is that these are the only three factors, so if anyone in the leadership team wants to talk about other recruitment factors, they had better say so.

Jumping to the Conclusion

Don’t hold leaders in suspense.

It is tempting to slowly build up an argument from the foundations and eventually have it all come together into a compelling conclusion. Leaders hate that approach. Leaders want to know what your conclusion is first and see if you can back it up. The intention with the next slide is to lay out the main conclusion—the one that would grab the team’s attention and get them thinking about what actions we might need to take.

Note how HR is collaborating with the leadership team in looking ahead to potential problems and setting the basis for shared ownership for solving them. Sometimes we use terms like “collaboration” and “shared ownership” without being clear about what they really are or how they can be achieved. Neither collaboration nor shared ownership need to be addressed by a special HR initiative—they come from the ongoing way HR interacts with the rest of the leadership team. It seems pretty obvious when I lay it out with some simple slides, but the whole positioning of this presentation is illustrative of how an HR leader sets the right tone with their peers on the leadership team.

The slide shown in Figure 6.3 uses the traditional coloring scheme of green, yellow, and red to show what is on track, what is marginal, and what is a problem. The rows show each of the three goals we introduced in the previous slides and the columns show the three constraints of capacity, volume, and time. The table makes clear that the stretch goal for hiring technology professionals (Goal 2) is not going to be possible without changes. Even the less ambitious target for technology hiring (Goal 1) has a potential problem with the volume of candidates and definitely a problem with leaders’ time.

The final column the slide shows some possible solutions. For example, since the leader most responsible for technology hiring is the CTO, getting other leaders trained in this approach to hiring could take off some of the time pressure. The next two suggestions relate to improving the volume of quality candidates either through the usual pipeline or through referrals.

The implication that HR wants leaders to grasp is that they are going to have to make some business decisions to deal with the predicted problems before they become actual problems. Of course, before any decisions are made, the leadership team will want to see the data that leads to this conclusion.

Drilling Down on Capacity

Provide the data that leaders need to decide on the necessary actions.

Having made some bold conclusions, the intent is then to walk through just a few slides so that the leadership team can be confident that what is suggested is grounded in good data. It will give them a chance to test any assumptions and point out anything that has been overlooked.

The first slide in this part of the presentation looks at the capacity the recruiting team has to fill these jobs for each of the three goals.

If you compare Figure 6.4 to 6.3 you can see we took the Capacity column (which showed green, red, green from top to bottom) and arranged it horizontally. For each of the three goals there are columns comparing the existing capacity to the goal. In this example, for Goal 1 there is the capacity to match the goal or exceed the goal by adding two new recruiters. The callout box to the left of the columns shows how capacity is calculated. If leaders want more information on any of the elements of the chart, your analytics team should be able to provide that; they would have needed it to create this slide, but there is no need to show all their work.

The second set of columns shows that even with two new recruiting hires, this company wouldn’t have the capacity to achieve its Tech Stretch goal. Goal 3 did not appear to be in trouble; although, the callout text on the far right of the slide notes that within this set of open positions we might need to shift recruiting resources from Professional (where there was over-capacity) to G&A and IT, where there was under-capacity.

The implication is that we would need to invest in recruiting capacity (i.e., hire more recruiters) if we wanted to hit Goal 2.

Drilling Down on Volume

How strong is the pipeline of candidates?

The problem with recruiting is that if any one of the three elements (capacity, volume, or time) is lacking, then results will fall short. We’ve covered the issue of capacity—now the next step is to show the leadership team where the company stands on pipeline volume.

The funnel image on the left in Figure 6.5 captures the fundamental nature of recruiting and highlights how similar it is to sales. The idea is that hopefully a whole lot of potential candidates enter the funnel at the top; as they go through the process, many are screened out or drop out, leaving just a few hires at the end of the process. The conversion rate referenced on the image of the funnel is the percentage of candidates this company has historically been able to convert to hires. Assuming that the company can maintain the conversion rate, they are able to predict the numbers of hires they will be able to make based on how many candidates are at the top of the funnel.

The chart with columns shows how the volume of hires from the funnel has been growing month to month. If we add the “H1 Active funnel” volume to the volume we expect to get from the “H2 Projected pipeline”, then there is enough volume to meet Goal 1. (This is explained a bit further in the next Figure.)

At the bottom of the slide, you can see Goal 1 as a checkmark, but in yellow because it’s based on a somewhat optimistic projection—even an optimistic projection isn’t enough to meet Goal 2.

The implication is that there is a bit of risk with Goal 1 if they don’t do anything new, but they’ll probably make it. The leadership team will have to consider whether they can live with this risk.

We then move on to provide a bit more insight on the challenges with candidate volume.

The second slide on candidate volume, Figure 6.6, provides illustrative numbers only. It shows three main sources of hire that feed the H1 active pipleline: candidates sourced by recruiting agencies; candidates who have applied to advertisements, and candidates who were referred. The rows show the raw number, the conversion rate, and hence the total number of hires. In this figure, we used 100 for the raw number in each case to simplify the example. You would enter in your raw data for each category, and your conversion rate to get your total expected number of hires.

Drilling Down on Time

How much time does it take to hire a new employee?

You don’t want to drown the leadership team in data, but you do need to take them through the last big constraint on hiring: leadership time.

In Figure 6.7 we look, for each department, at how long a candidate is in the pipeline and how long it takes to fill a job opening once we have a requisition. The reason the numbers are different is that when there are strong candidates who are likely to be hired, most companies are pretty good at accelerating the process. However, the more important column is the second one: the average time to fill, since that tells us how many jobs the company can expect to fill in the available time.

There is one more point that I’ve used in this sort of presentation that I think is worth sharing. It turns out the time it takes different teams to make a hire can be dramatically different.

In Figure 6.8 the average time the hiring team spends per hire is shown for each area. The implication is that some teams may be spending too much time and other teams may be spending too little.

What You Can Learn from This Presentation

In some ways this is just a basic presentation of facts, but you can imagine that a lot of work goes into pulling this data together; of course, the few numbers shown here are the tip of the iceberg and are all supported by many more calculations that you would make available in an appendix.

As simple as this presentation is, it does capture some of the characteristics of an analytics-savvy HR function. We are focused on a business issue that puts us in collaboration and shared ownership with the leadership team. We have a clear idea of the decisions that need to be grappled with, and we can back that up with data. We keep it as simple as we can, while providing enough data so that the leadership team both understands the situation and has confidence that HR has based this limited set of data on a deeper analysis.

Takeaways