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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?

Issue Overview: Organizations implement centralized structures to control costs


Table of Contents and standardize processes

Executive Summary 2 Companies carefully choose appropriate recruiting structures…


Function Structure 3
Organizations decide on recruiting function structure after carefully considering their
company’s unique needs. While centralized recruiting organizations make staffing
Function Effectiveness 10 policy and strategy decisions for all business units, decentralized models delegate
responsibilities for recruiting processes to individual business units. Companies may
Function Evolution 15
also use a hybrid model, in which strategic activities are centralized but recruiting
1
Appendixes 17 processes are decentralized.
Research Methodology 19
…and trend towards centralization…
Although there is no consensus as to the “right” structure for the recruiting function,
companies demonstrate a trend towards centralizing their recruiting functions in all or
part. As detailed in the left hand margin, participants in the Recruiting Roundtable’s
P re v e la nc e o f R e c ruit ing 2004 survey, The Recruiting State of the Union, were much more likely to have a
M o de ls
centralized (63%) than decentralized (4%) or hybrid (33%) recruiting structure.
Companies choose centralized models to achieve economies of scale and create
33% 2
uniform and standardized processes.

…but a high degree of organizational change exists.


63%
4% Despite the trend towards centralization, the Recruiting Roundtable’s survey reveals that
since 2001, companies experienced a high level of change with regard to the structure
C ent r al i z ed D ecent r al i z ed
of the recruiting function. The research reveals that, across industries, two-thirds of
Hyb r i d
companies changed their structure at least once, and of these respondents, one third
3
conducted more than one structural change during this time.

The following research brief outlines the centralized recruitment function at five profiled
companies and the functions’ drivers, effectiveness, and evolution.

 2005 Corporate Executive Board


Catalog No.: CLC13679XX
CENTRALIZING THE RECRUITMENT FUNCTION PAGE 2
MAY 2005

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.

I. FUNCTION STRUCTURE II. FUNCTION EFFECTIVENESS III. FUNCTION EVOLUTION

Structure Background Evaluating the Recruitment Function Function Evolution

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

To successfully centralize, profiled


organizations recommend the following:
• Strategize—Gain understanding of business
unit needs and market conditions
• Prepare—Create strong teams and processes
and obtain quality technology
• Introduce—Educate business units to gain
support
• Communicate—Maintain communications
between recruiters and business units

 2005 Corporate Executive Board


CENTRALIZING THE RECRUITMENT FUNCTION PAGE 3
MAY 2005
Function Function Function
Structure Effectiveness Evolution

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:

Recruitment Model Overview

• Centralized—A centralized staffing process reduces the redundancy of maintaining


separate functions across an organization, taking advantage of both the financial
and knowledge based benefits obtained from the economies of scale inherent in
centralization. A centralized organization makes staffing policy and strategy
decisions applicable to the entire organization and also manages the recruiting
Finding 1: Companies
process for all business units. Key advantages and disadvantages are as follows:
5
Leverage the Benefits of
Multiple Structures Advantages Disadvantages
• Creates uniform corporate culture • Increases feeling of “bureaucracy”
Literature indicates that • Standardizes policies and processes • Requires high levels of planning
companies leverage the benefits
• Reduces administrative costs • Processes may not suit needs unique to
of both centralized and
decentralized recruiting structures • Facilitates strategic recruitment specific business units
by designing systems that
integrate both elements. In these • Decentralized—When recruiting processes are delegated to individual business
recruiting models, recruiters join units, recruiters are responsible primarily to business unit management and there is
business units and act as a little standardization of staffing processes across the company. Business units are
liaison between businesses and
the recruiting function.5 responsible for identifying, interviewing, and hiring candidates and can exercise
more flexibility and control over their recruiting practices. Key advantages and
disadvantages are as follows:

Advantages Disadvantages

• Provides greater control to business • Hinders ability to track global metrics


unit • Creates inconsistent employment brand
• Promotes more careful recruiting • Results in redundant costs and staff
• Gives candidates more personal feeling • Discourages business unit cooperation

• 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:

Table 1: Characteristics of Hybrid Recruiting Models


Corporate centers of excellence house recruiting specialists and
Strategic
managers who oversee critical recruiting activities to ensure greater
Centralization
strategic control from the center

Economies of Semi-autonomous administrative service centers consolidate


Scale administrative tasks and reduce costs

Recruiting specialists deployed to the field to deliver services to


Line Delivery
divisions and assign duties to line managers

 2005 Corporate Executive Board


CENTRALIZING THE RECRUITMENT FUNCTION PAGE 4
MAY 2005
Function Function Function
Structure Effectiveness Evolution

Centralization Drivers

Literature indicates that companies implement centralized recruitment functions to gain


control over and create standardized processes and policies across the organization,
facilitate a strategic approach to staffing, and reduce administrative costs and other
forms of overhead. This section details the drivers for implementing a centralized
6,7
function at profiled organizations.

Reasons for Centralizing Recruiting

Profiled companies centralize recruiting to achieve several of the same benefits


indicated in secondary literature. The interviewed individuals at profiled companies cite
the following three drivers for centralizing the recruitment function:

Figure 1: Drivers for Centralizing the Recruitment Function

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.

Company D’s centralized function reduces overhead costs by consolidating


Reduced recruiting activities in one central location.
Administrative
Costs Company B and Cap Gemini centralized recruiting to provide greater staffing
support and reduce dependency on staffing agencies.

 2005 Corporate Executive Board


CENTRALIZING THE RECRUITMENT FUNCTION PAGE 5
MAY 2005
Function Function Function
Structure Effectiveness Evolution

Centralization Drivers (continued)

Control/Standardization

Four profiled organizations (Company B, Company C, Company D, and Company E)


cite the second most common centralization driver: the desire to control, standardize,
and create more consistent recruiting processes. Doing so enables organizations to
9
achieve the following:

• Maintain Standards and Quality—Centralized recruiting enables companies to


maintain standards and improve the quality of staffing activities
• Strengthen Employment Brand—Centralized recruiting takes a broader view of
recruitment needs—rather than the short-term needs of each business unit—
thereby understanding and conveying the corporate values and creating a
permanent presence in the job market, resulting in a stronger employment brand
• Increase Applicant Satisfaction—Companies that ensure consistent and quality
staffing activities increase applicant satisfaction
• Support Organizational Strategy—Centralized functions are more closely aligned
with other corporate functions, enabling recruiting to better understand, support,
and influence organizational strategy, vision, and goals
• Manage Risk—Organizations manage risk by closely monitoring legal and ethical
issues

Organizational Change

Organizations often restructure functions due to corporate-wide changes. Three profiled


Finding 3: Organizational companies (Company A, Company C, and Company E) implemented centralized
Change Drives Centralization recruiting due to large corporate-wide changes, as detailed in the figure below:
Organizational change such as
acquisitions and relocations was Figure 2: Organizational Change Driving Centralized Functions
a driver for centralization at three
profiled companies. Acquisitions or Corporate Splits at Corporate Relocation at
Company E and Company C Company A

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.

 2005 Corporate Executive Board


CENTRALIZING THE RECRUITMENT FUNCTION PAGE 6
MAY 2005
Function Function Function
Structure Effectiveness Evolution

Structure Details

Within a centralized recruiting structure, companies have a centralized function that


conducts all recruiting from the corporate office. In some cases, field recruiters
complete recruiting activities but report to the corporate recruiting function. This section
10
details the centralized recruiting structure and responsibilities at profiled companies.

Overview of Recruiting Structures


Finding 4: Organizations
Typically Centralize Recruiting All profiled organizations have a U.S. or North American-centric centralized recruitment
at Corporate Headquarters model. Recruitment is centralized at one hub or by regional offices, as detailed below:
Profiled companies typically
centralize recruiting at the • Central Hub—Four organizations centralize recruiting at one location
corporate headquarters. • Regional Offices—One organization centralizes recruitment processes at one
One organization centralizes
location but regional offices complete hiring activities
processes at headquarters but
completes hiring at regional
offices. Central Hub

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:

• Functionally Focused Teams—While Company A, which centralized in 1998, has


two business units with HR staff to assist with recruiting activities, these units still
must follow centralized processes. Recruiting for the rest of the organization is
completely centralized at corporate headquarters. Company A has three recruiting
teams focusing on specific functions and four teams dedicated to other staffing
activities, as detailed below (see Appendix A for the company’s recruitment model):
Table 3: Staffing Function Teams at Company A

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

• Functionally Focused Recruiters—With the exception of one business unit which


has one recruiter, Company E, which centralized in 2002, locates its entire
recruiting function at corporate headquarters. Company E has no recruiting teams
but recruiters functionally align themselves informally by expertise. Company E’s
recruitment function includes the following staff (see Appendix B for the company’s
recruitment model):

9 One Staffing Manager—Manages all recruiters and vendors


9 Onsite Vendors—Assist with recruitment of non-exempt employees
9 Nine Recruiters—Recruit exempt employees and align themselves by expertise
9 Three Support Staff—Provides support to three recruiters

 2005 Corporate Executive Board


CENTRALIZING THE RECRUITMENT FUNCTION PAGE 7
MAY 2005
Function Function Function
Structure Effectiveness Evolution

Structure Details (continued)

Central Hub (continued)

• Regionally Focused Teams—Company D centralized its recruiting practices in


Finding 5: Companies Utilize 2004 and handles all recruiting at its corporate headquarters. There are three
Individual Recruiters or Teams regionally focused recruiting teams, one for each of the regional hubs in the
previously decentralized structure. While each decentralized hub formerly
Of the four organizations that
centrally locate all recruiting, two possessed four recruiting staff, the figure below details the employees now
use recruiting teams and two use included in the centralized function:
individual recruiters organized
around regions, business units, or
functionalities. Figure 3: Centralized Structure at Company D

Director of Recruiting
Oversees all recruiting activities

Three Recruiting Teams


Each regionally focused team includes the following:

One
One
Support
Recruiter
Employee

• Business Unit-Focused Recruiters—Company B centralized entirely in 2004 and


has a managed services agreement with a vendor to serve as its recruiting arm in
North America. Prior to centralization, two HR employees handled all recruiting and
there was no specialization by business unit. The figure below summarizes
Company B’s centrally located recruiting structure:

Figure 4: Centralized Structure at Company B

Operations Manager
Oversees all recruiting activities

Seven Recruiters
One college and six business unit-focused recruiters

Two Employment Specialists


Assist all recruiters with scheduling and other
administrative activities

 2005 Corporate Executive Board


CENTRALIZING THE RECRUITMENT FUNCTION PAGE 8
MAY 2005
Function Function Function
Structure Effectiveness Evolution

Structure Details (continued)

Regional Offices

Company C recentralized to a U.S-centric model with regional offices in 2004 after


moving to a decentralized model in 2001. The centralized recruitment function is
located at company headquarters and includes one staffing manager and six corporate
recruiters. The company also has three regional offices which include one or two
additional recruiters. The responsibilities of central and regional recruiting are as follows:

• Central Recruiting—Central recruiting is responsible for all recruiting processes


and recruiting candidates for corporate and support positions.
• Regional Recruiting—Three regional offices follow corporate processes but are
responsible for filling positions within their business unit.

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

Orientation and Costs—Regional HR handles onboarding because it


Onboarding D is better able to orient an employee to the position and there are no
travel costs incurred

Efficiency—It is more efficient for business units to complete a


Requisitions A
requisition than request one from the centralized function

 2005 Corporate Executive Board


CENTRALIZING THE RECRUITMENT FUNCTION PAGE 9
MAY 2005
Function Function Function
Structure Effectiveness Evolution

Structure Details (continued)

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:

• Abnormal Costs at Company E and Company D—Along with all pre-employment


testing, business units at Company E are responsible for any necessary recruitment
costs (e.g., print ads, search firms) beyond those usually incurred. Company D
charges the business unit for extensive costs associated with a specific project
(e.g., hiring an additional recruiter to fill positions needed due to a new contract).

• 80/20 at Company E—At Company E, 80 percent of costs are centrally funded,


while business units are responsible for 20 percent.

• Placement Costs at Company B—Through its contract with a recruitment agency,


Company B centrally funds most staffing activities, including branding and
advertising. However, any additional placement costs—third party vendors,
hiring internal candidates, etc.—are the responsibility of the business unit.

 2005 Corporate Executive Board


CENTRALIZING THE RECRUITMENT FUNCTION PAGE 10
MAY 2005
Function Function Function
Structure Effectiveness Evolution

Evaluating the Recruitment Function

Research indicates that organizations typically do not obtain quantifiable evidence


regarding the benefits achieved by centralizing the staffing function. However, most
companies report that centralizing recruiting provides benefits in the form of
increased function efficiency, improved candidate quality, and reduced costs. That
said, profiled organizations also report challenges associated with recruiter expertise,
internal client satisfaction, and vendor management. This section examines the
12
effectiveness and challenges of centralized recruiting at profiled companies.

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

The interviewed individuals at Company A, Company C, and Company D indicate


that their centralized staffing function is successful due to the following advantages:

Table 5: Benefits of Centralized Recruitment

Consistency Centralized functions inherently create more consistency in the


and application of processes. This provides more control and enables a
Control company to create organizational process standards.

Centralized functions create opportunities for synergy by streamlining


and increasing process efficiency and reducing duplicated efforts in the
following ways:

Synergy • Process Synergy—Centralized functions reduce duplication of processes.


For instance, recruiters in a centralized function are able to share candidates
and Efficiency between business units.
• Knowledge Synergy—Functions with recruiters in a centralized location benefit
from a wealth of knowledge and abilities and increased communication.
Recruiters share insights with each other and are able to assist and perform
backup for specific teams when necessary.

Centralized functions reduce the following administrative costs:

Administrative • Overhead Costs—Fewer necessary staffing employees and locations leads to


Costs reduced overhead costs.
• Agency Costs—There is not as much of a need for staffing agency assistance
due to greater internal support.

 2005 Corporate Executive Board


CENTRALIZING THE RECRUITMENT FUNCTION PAGE 11
MAY 2005
Function Function Function
Structure Effectiveness Evolution

Evaluating the Recruitment Function (continued)

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.

Low Internal Internal clients at both organizations prefer decentralized recruitment to


Client gain the recruiter expertise detailed above. Currently, the business units
Satisfaction do not want to give up control of the hiring process.

Company B began using its current staffing agency at the time it


Poor Vendor implemented a centralized function. Company B is dissatisfied with the
Management agency’s service because it is difficult to obtain reports and it takes long
periods of time to fill jobs for certain technical positions.

 2005 Corporate Executive Board


CENTRALIZING THE RECRUITMENT FUNCTION PAGE 12
MAY 2005
Function Function Function
Structure Effectiveness Evolution

Evaluating the Recruitment Function (continued)

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:

Figure 5: Recruiting Function Effectiveness Measures


Formal
Methods
Quantitative Measures

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

Method 3: Anecdotal Feedback


The most common method for determining function effectiveness at Company B and Company E is through informal
feedback. These organizations proactively seek feedback and internal clients also routinely provide feedback. While
there is no formal process, these companies dedicate time to receiving and analyzing feedback regarding client
satisfaction, areas of strength, and areas for improvement.

Method 4: Assessment of Recruiter Engagement


Due to their isolation in the centralized function, Company D determines if recruiters are sufficiently engaged with a
business unit and aware of its workload and staffing needs by assessing the following criteria:

• Recruiter inclusion in business unit workforce meetings


• Frequency of recruiter communication with business unit

Informal
Methods

The next page addresses each profiled organization’s internal reception of the implementation of centralized recruiting.

 2005 Corporate Executive Board


CENTRALIZING THE RECRUITMENT FUNCTION PAGE 13
MAY 2005
Function Function Function
Structure Effectiveness Evolution

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.

Recruiting Structure Feedback

Finding 9: Employees Provide


Across all companies, executives most strongly support the centralized function.
Feedback Informally That said, centralized recruitment functions are either neutrally or poorly received at
all profiled companies. However, regardless of satisfaction, interviewed individuals
Employees at profiled do not expect high levels of positive feedback. Detailed below are the reactions
organizations most often voice
their support or opposition to centralization receives at profiled companies:
centralized recruiting functions
through informal feedback. • Neutrally Received—Employees at Company A, Company C, and Company D
do not provide a significant amount of feedback regarding their satisfaction with
centralized recruiting. The reasons for this feedback and the strongest
advocates and supporters of the functions within each of these companies are
detailed below:
Finding 10: Executive Support
and HR Opposition to Table 7: Neutral Employee Reception of Centralized Function
Centralized Recruiting Co. Reason Advocates Opponents
A Disinterest in Structure— Most employees are neutral
Executives most often support Employees are only concerned
centralized recruiting while with service, not with the Director of Talent
opposition is strongest within the Some HR employees
C structure—and often times may Management
HR function, which is highly oppose
not be aware of a change. strongly supports
affected by the structure.
Infrequent Praise—Since only
Executive Some HR and
negative and no positive feedback
D Management Operations employees
is expected, this may demonstrate
strongly supports express concerns
satisfaction with the structure.

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.

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CENTRALIZING THE RECRUITMENT FUNCTION PAGE 14
MAY 2005
Function Function Function
Structure Effectiveness Evolution

Centralizing Effectively

Those organizations failing to successfully implement a centralized recruitment cite


inadequate preparation and guidelines as the reasons. To successfully centralize
recruiting, profiled companies agree that the four stages of implementation detailed
in the figure below are critical:
Finding 12: Preparing Before
Centralizing is Necessary
Figure 6: Steps to Successfully Centralize Recruiting
It is necessary to discuss
centralization with business units Step 1: Strategize
and educate the entire
organization regarding the impact To create a strategy to best serve business units, Company B and
Step 1
of centralization prior to Company C recommend interviewing the businesses to gain an
implementing the change. understanding of their unique needs and position and analyze market
data to identify future trends.

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.

The following section examines how profiled companies’ centralized recruiting


evolved since implementation and how these organizations expect it to change in
the future.

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Function Function Function
Structure Effectiveness Evolution

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:

• Structure—Company A and Company E’s structures changed to increase


efficiency or meet recruiting needs. While originally on one team at Company A,
employment specialists now reside on each recruiting team to improve
recruiting performance. Recruitment at Company E became integrated into HR
as the company added staff to meet recruiting needs.

• Staff—Company B, Company C, and Company E either added or reduced


staffing employees to meet changes in recruiting volume. Company B modified
the number of vendor employees as volume changed, such as reducing
headcount on several occasions as recruiting decreased, and Company E
added staff and contract recruiters to meet increased staffing demands.

• Technology—Company B, Company C, and Company D adopted new


technologies to improve information storage and reporting. While Company E
outgrew its applicant tracking system, Company C’s new technology onboards
employees more quickly by enabling new hires to sign up for benefits and
complete paper work before their first day at work.

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Function Function Function
Structure Effectiveness Evolution

Function Evolution (continued)

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:

Finding 14: Company E Plans • Structure—Interviewed individuals at Company B, Company D, and


to Decentralize Company E anticipate the following major changes to the structure of the
centralized recruitment function:
Due to its dissatisfaction with the
centralized function, Company E
recently began to move towards a 9 In-House Function—Company B may end the relationship with its vendor and
decentralized function. complete recruiting internally. This would enable recruiters to function as relationship
managers with internal clients.
9 Regional Hubs—Company D will determine if altering the model to have recruiters in
regional hubs is beneficial.
9 Hybrid Structure—Company E recently began moving towards a more decentralized
hybrid structure.

• Process—Company C is currently using Six Sigma to examine various


recruitment processes, including those regarding passive candidates. The
interviewed individual does not expect any extreme changes.

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CENTRALIZING THE RECRUITMENT FUNCTION PAGE 17
MAY 2005

APPENDIX A: COMPANY A’S RECRUITMENT MODEL

Manager,
Talent Acquisition &
Staffing

Administrative Temporary Project


Assistant Support

Data Quality IT/Finance/ Relocation/ Employee Assessment Government


Health Services
Projects Marketing/PR/HR New Employee Referrals/ Projects Business
Recruiting
Recruiting Orientation Sourcing Recruiting

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

 2005 Corporate Executive Board


CENTRALIZING THE RECRUITMENT FUNCTION PAGE 18
MAY 2005

APPENDIX B: COMPANY E’S RECRUITMENT MODEL

Staffing Manager

Staffing Sr. Staffing


Sr. Staffing Consultant
Consultant OE
Consultant (Contractor)
Professional Specialist

Staffing Sr. Staffing


Sr. Staffing Consultant
Consultant OE
Consultant (Contractor)
Professional Specialist

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

 2005 Corporate Executive Board


CENTRALIZING THE RECRUITMENT FUNCTION PAGE 19
MAY 2005

THE RESEARCH PROCESS IN BRIEF

The Corporate Leadership Council conducted a comprehensive search of published


Research Methodology materials regarding the subject of centralizing the recruitment function, drawn from
previous Corporate Executive Board research, trade press journals, other research
organizations, and the Internet. Council staff then interviewed five human resources
professionals at different organizations. This report represents the findings from
secondary and primary sources.

Project Aims Function Structure


1. When did organizations move to a centralized recruitment function?
2. What drives the movement to a centralized staffing model?
3. Are all staffing activities centralized? If not, what determines whether activities
are centralized or decentralized?
4. How is the centralized recruitment model structured?
5. Who is responsible for the staffing costs incurred by the centralized function?

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

Figure 1: Drivers for Centralizing the Recruitment Function Page 4


Figure 2: Organizational Change Driving Centralized Functions Page 5
Figure 3: Centralized Structure at Company D Page 7
Figure 4: Centralized Structure at Company B Page 7
Figure 5: Recruiting Function Effectiveness Measures Page 12
Figure 6: Steps to Successfully Centralize Recruiting Page 14

 2005 Corporate Executive Board


CENTRALIZING THE RECRUITMENT FUNCTION PAGE 20
MAY 2005

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."

 2005 Corporate Executive Board