The Future of Recruiting: It Won’t Be Anything Like Today (Part 2 of 2)

Most corporate recruiting functions are far from strategic, and most recruiters are intensely resistant to change that. It’s a fact that the business world is rapidly changing, and how organizations recruit talent will be forced to change dramatically as well.

The corporate recruiting function of the future isn’t likely to be created from scratch, because the risk of failure is just too great. Instead, when corporate recruiting makes a shift in strategy and composition, it will most likely follow one of the existing “business models” that have already proven to be strategically effective.

In part one of this article, I highlighted the business value-added model, which is the most likely future recruiting model. In this follow-up article, I highlight two additional models likely to serve as part of the foundation of many future corporate recruiting functions.

Model # 2: The Sports/Entertainment Recruiting Model

If you study a wide range of industries, you’ll find that many industries are highly competitive, including finance, air transportation, retail, sports, and entertainment. However, of all the highly competitive industries, the two that rely most heavily on “talent” as a primary reason for their success have to be the sports and entertainment industries.

For example, in entertainment, adding a single “star” to a movie or TV show can make it instantly successful. In sports, although all players make a contribution, it’s generally top talent in a handful of positions who separate the winning teams from losing ones.

If you’re looking for a model to follow, it’s hard to argue against the fact that you can learn a lot from studying the sports and entertainment talent acquisition and management models. If your corporate leadership philosophy is “winning is everything,” this is the model for you.

Powerful Reasons Back The Sports and Entertainment Models

There are many factors that make studying the talent management approaches of the sports and entertainment industries an essential step in understanding the future of recruiting:

Dollarizing the value of top talent. Both of these industries excel at putting a dollar value on top talent. Athletes and entertainment stars receive millions of dollars in compensation for as little as six months’ work because both industries have taken the time to “do the math” on the dollar impact of top talent. For instance, last year the Boston Red Sox spent $51 million just for the right to negotiate with Japanese pitching star “Dice K.” They later paid another $50-plus million to sign him to the team that eventually won the world championship. In sports and entertainment, it’s not the “costs” (which are admittedly sky-high) but rather the ROI of talent that matters.
An extraordinary focus on visible metrics. The best-selling book “MoneyBall” demonstrated how applying “fact-based decision-making” to what were formally “emotional” talent decisions can make a team successful, even though their overall payroll is well below the league average. Baseball stands out as the perfect model for measuring the performance of talent because it actually posts each player’s performance metrics on the scoreboard for all to see. I’ve helped many firms design HR metrics, but there is no better metric and performance-management approach to follow than professional baseball. It’s also important to realize that top performers love visible metrics because of their intense competitive nature.
Prioritizing positions. Rather than assuming that all positions contribute equally to a team or a movie success, this model uses statistics to identify which positions (when filled with top talent) have the highest impact on success. In the NFL, for example, everyone knows that the quarterback is a much more critical position than a punter. Not only are top quarterbacks paid $10 million per year but there are also at least two backups on the payroll.
Planning ahead. Even college sports teams assume that talent will eventually leave the organization, so they plan ahead to continually recruit and develop replacements for as much as four years out. One insider even shared with me that one NFL team lists on a white board (for all coaches to see) the players who are currently on other teams they are targeting to “poach” and bring into their organization within the next five years.

As you can see in these four examples, the approach taken under the sports/entertainment model is more advanced and aggressive than 99% of the corporate recruiting models currently in use. It is the competitiveness and the aggressiveness of this model that makes it an ideal one to copy in order to survive in a talent environment that is likely to be at least 50% more competitive and aggressive than what corporate America faces today.

12 Elements of the Sports/Entertainment Talent Model to Adopt

If your corporation decides to shift its talent acquisition and talent management models in the direction of the sports/entertainment model (which shares some elements with the business “value added” and open-market model) here are 12 approaches:

Global search. Much like the “Champions League” in European football, this model would require corporations to identify, recruit, and retain top talent from literally every country around the world. Rather than shifting a large amount of the work to areas with a lot of talent (like India), this approach would target no more than a handful of top talent from every country.
Continuous search. Rather than just looking for talent when you have an open position, following the sports/entertainment model, the talent acquisition process would be continuous. Just as college teams begin looking for talent in high school, corporations would also extend their search to pre-identify talent in its development stages whether the talent was in school or working at a competitor.
Countering your competition. Most current corporate recruiting models are inward focused. Unfortunately, as the talent marketplace of the future becomes highly competitive, corporations will have to learn to do “side-by-side” talent comparisons with their competitors. Firms will have to “mirror” the sports model where teams compare their talent, paying attention to the competitors’ employees.
Star treatment. As global competition for talent increases, individuals in every industry who realize they are in high demand will begin to consider themselves to be stars. That means that in the future, the entire recruiting and selection process must be tailored to treat top applicants like “stars,” sensitive to candidates’ needs and high expectations. Managers and recruiters with big egos won’t be successful in this environment where the candidate is king.
Executives as recruiters. In the current corporate recruiting model, recruiters and hiring managers do all the work. However, when you’re recruiting individuals who consider themselves to be stars, you’ll need help from the “big guns” to close the deal. That means that the CEO and key executives will have to step up and begin to play a key operational role in the recruiting of stars, just as they do in sports and entertainment.
An emphasis on proactive poaching. The best players (those who can make an immediate difference in your team’s performance) are currently playing for one of your competitors, so target 90% of your recruiting efforts toward “poaching away” the very best from other excellent firms (the remaining 10% would come from college hires). This “poach first” strategy requires a highly sophisticated recruiting and closing process, as well as great recruiters. Convincing well-treated individuals to leave a perfectly good job at a quality firm is 10 times harder than recruiting desperate individuals who are currently unhappy or unemployed.
Brand consciousness. Both movie and sports stars want to work for glamorous directors and sports franchises. If your talent model doesn’t build an employment brand as strong as the Yankees, the Red Sox, Google, or Manchester United, it will have little success with talent who wants to be in the spotlight.
Relationship recruiting. Because both sports and entertainment stars realize that they have multiple choices in where and when they work, any corporate recruiting process that is built on the sports/entertainment model will emphasize the building of “relationships” with the talent they target. These relationships must be strong because it takes a long time to build up the needed “trust” that is essential in order to get these individuals to even consider your firm.
Assessment. Following the sports model, corporations will need to adopt more realistic talent assessment processes that go beyond interviews. These assessment approaches might include “tryouts” and problem-solving simulations.
An emphasis on referrals. When you are recruiting “star” individuals, don’t under-estimate the power of employee referral programs. New stars might convince their colleagues to consider working at your firm, so invest in educating them on how to effectively convince their peers.
Bidding for talent. Adopting the sports/entertainment model requires senior managers and compensation to realize that a majority of the top talent they are seeking to recruit will have multiple offers. This direct competition will require the development of an effective “talent bidding” process. Currently, most executives philosophically refuse to “bid on talent” but such shortsightedness will guarantee failure in the highly competitive marketplace of the future (Note: this and the following “churn” element are both also part of the foundation of the open market or “eBay type” talent model).
Constant churn. Once athletes and entertainment stars learn that their careers may only last a few short years, many begin to lose their sense of loyalty to a single organization. In the future talent world, a larger percentage of individuals will also lose their sense of loyalty (some argue that the new generation has already lost it completely). This shift away from any interest in remaining with the same firm for a long period of time will require corporations to embrace “free agency.” When talent begins to consider themselves as free agents, firms will face a continuous “churn” of employees, where talent continually joins and then exits a corporation. The best corporations will take the position that it’s better to have “Tiger Woods” for one year than an average golfer for a lifetime. This means an added emphasis on retention, but corporations will also have to develop workforce plans that provide methods to get the most out of the talent during the relatively short time that you have it. It’ll also be true that in a fast-changing world, employee skills will degrade rapidly. And this will require an increased emphasis on rapidly “releasing” talent that no longer fits the competency needs of the corporation.

Model # 3: The Open Market (or eBay) Talent Model

It is no secret that more and more work inside most organizations is organized as project work, and as a result, the percentage of the labor force that is contingent in nature is growing rapidly.

Today, it is not uncommon for organizations to have a workforce that is 20% contingent, up to 60% in some industries. Add to the contingent worker growth trend the fact that product lifecycles are getting shorter, a global labor shortage is accelerating career growth, and barriers to talent mobility are disappearing, and it becomes clear that the future workforce with be highly variable in nature and aligned to short-term need versus long-term plan.

The basic premise of this talent model is that over the next decade, the forces mentioned above will refine the market for top talent such that competition for top talent will become so intense and visible that firms will essentially have to compete (or bid) in an ?open marketplace” for top talent. Although many firms “informally” bid for talent now (by making counteroffers), the open market model would make the bidding for talent more frequent, less subtle, and more direct.

For those who doubt this possibility, it’s important to look back to the year 1999, when for a short period of time during the “war for talent,” there were instances where teams of top talent had agents and were actually bid on by competing firms. We now know that bidding for things of value has become quite commonplace on popular sites like eBay.

A Closer Look at the Open Marketplace

There are three primary forces that will contribute to the development of an “open marketplace” for talent. First is the changing workforce. Even today, there are many individuals who don’t desire long-term permanent employment at a single corporation, and corporations that routinely admit they don’t need access to certain skill sets long term. Instead, a growing number of workers and organizations prefer working on a contract basis. Contract work allows an individual to essentially “select” their manager, their project, the length of their employment, and their rate of pay.

Second, corporations are attracted to contingent labor because it enables the organization to be significantly more agile and to restructure without incurring significant labor cost.

Third, the Internet and technology makes it possible for the open market “matching” between the needs of potential workers and available work.

When combined, these factors set the foundation for a talent model where individuals frequently come and go as their interests change and as projects begin and end. In essence, an open market for talent that simultaneously suits the needs of both workers and the corporation.

Incidentally, don’t assume that this “open marketplace” will automatically mean a dramatic increase in labor costs, because the attractiveness of the project and the project team are often at least as important as the labor rate paid.

If your corporation chooses to shift its strategy to prepare for this open marketplace, here are key elements to adopt:

Ideas come from everywhere. Under the traditional employee model, 100% of corporate ideas come from its own employees. As the talent marketplace continues to evolve, it will become more and more possible to obtain a portion of the needed innovations and ideas from “non-employees.” Even today, firms like Google use competitive contests to gather product ideas. Procter & Gamble and IBM are leaders in getting ideas from both customers and partners. We can see this shift occurring quickly with the proven financial viability of websites brokering innovation (mystarbucksidea.com, InnoCentive, NineSigma, yet2.com, and YourEncore.com). The future of recruiting talent will require firms to develop new processes to leverage talent that doesn’t formally work for your firm.
Project marketing. Some firms are currently developing processes (Whirlpool is a leader here) where they “market” available projects on a website so that external talent, internal talent, and even college student interns can apply or bid to work on short-term projects for monetary or developmental incentives. Working on these projects can also be used to assess “unknown” talent in order to determine whether the firm should convert these individuals to employees. The internal posting of available “part-time” projects can also provide opportunities to current employees that are seeking new challenges, as a way to develop skills in addition to those garnered via their current job.
Bidding for talent. As the global competition for talent increases, it is highly likely that there will be online virtual marketplaces where you can literally “bid” for talent, either as contractors or as permanent employees (there is a website, NotchUp.com, that allows you to bid online just for the right to interview highly desirable individuals).

Final Thoughts

Whether you agree with my premise that the “future of recruiting” will follow one of the three talent models that I have outlined, it’s hard to make a credible argument against the fact that the recruiting landscape will change dramatically in some direction. Like it or not, the future of corporate recruiting will, without a doubt, be significantly more competitive, more global, more electronic, and more business-like.

Unlike in the past, the rate of change in recruiting will be so fast that if you don’t act in advance, there just won’t be time to catch up. It’s time to think ahead and realize that the upcoming economic downturn will force almost every corporate recruiting function to dramatically change. Now is the time to shift your approach toward one that will make your corporation a dominant player in the “future” of recruiting, so don’t be caught unprepared.