Good ole Fred will be retiring soon. He has been a deeply committed employee of your firm for over 20 years. But he has indicated to you that it is time to travel around the country with his wife. You will need to replace Fred, but fortunately, you have some idea of the timeframe involved in his departure.

That is different than Beth and Ethel. Beth has been with your company for five years and has accepted an offer from a large company that will pay her more money. Ethel has been with your company for three years, and she has decided to pursue an entrepreneurial opportunity. Like Fred, Beth and Ethel have been excellent employees and will need replacements. Unlike Fred, their departures will occur in a few weeks.

The temptation and the usual practice for most small firms encountering this kind of turnover involve digging out and brushing off a position description, posting it, and hoping a decent candidate appears for each of these roles. Unfortunately, research shows that 46 % of new hires will not last 18 months. Thus, recruiting becomes even more time-consuming and expensive if you have about a 50% chance of keeping a replacement.

We all know about the recruiting challenges faced by almost every organization. People are leaving in record numbers, and suitable candidates are hard to identify and attract. It would help if you had all the hiring advantages you can get before you begin to seek replacements. 

If you are lucky, you are constantly monitoring and updating the description and requirements for positions in your organization. Suppose you don't have the resources or time to do this on an ongoing basis. In that case, a vacancy due to retirement, resignation, or other reason will be the perfect time to look closely at your criteria for a replacement.

Asking and answering many questions about each open position, the responsibilities of each role, and the candidate requirements to fill these positions will enable you to focus your recruiting efforts more efficiently and productively.

What is the Role? Do You Need It? How Has It Changed?

Reflect on the positions that each of these people has. Are their titles still appropriate? Should the role be changed or re-titled? Is there a more descriptive or creative title that will help your recruiting efforts?

Are these people responsible for duties outside of their titled role? Is this due to their abilities or personal interests, or are the positions demanding new responsibilities? Talk with Fred, Beth, Ethel, their superiors, and their subordinates to get input regarding the evolution of the roles.

Are there people in other positions performing similar functions to Fred, Beth, or Ethel? Should you include other activities or operations like their responsibilities in their job descriptions? Are there new activities in the department or company due to business changes, additions, or expansions that logically fit with each person's responsibilities?

Once you have answered these and other questions about the positions, you can draft up-to-date position descriptions.

What are the Appropriate Qualifications and Skills Required for these Roles?

Based on the position description and the conversations with the people noted above, you can define the backgrounds, experience levels, and skill sets required for each role. The qualifications listed in a previous or similar position posting may also be reviewed and modified to reflect the position title and responsibilities more accurately. The qualifications for each position must be up-to-date and focused on your current and future needs, not what you sought in the past.

Does the candidate need industry experience when general business experience enables them to perform this role? Is certification in a specific discipline required, or will experience in the area suffice? Does the candidate need to reside in a particular geographic area, or can most of the duties be performed remotely?

One of the hot topics today is the requirement of a college degree. Just because "we have always required a degree" doesn't make it right or necessary. As you look at the duties and responsibilities of these positions, is there an alternative background that will enable a candidate to excel in the new role without a college degree?

How flexible can you be in your qualifications for each position? Can you accept a more junior person if they have specific experiences or capabilities? What about a more senior person? Are any of these positions appropriate for an alternative candidate – part-time or contract role, a returning retiree, etc.?

As you review the success of Fred, Beth, and Ethel, how much was determined by background or experience, and how much was determined by attitude, work ethic, and people skills?

Identify the essential qualitative characteristics that these and other successful people in your organization use daily to contribute to the business's long-term success. What is valuable about each one? Why do you enjoy working with them? What do their superiors and subordinates say? What do the records in HR say about them – any problems or issues, timely growth, honors, or awards?

You can teach most people industry knowledge and specific skills; however, the intangible or qualitative characteristics are harder to find. Your recruiting efforts aim to find candidates who desire to excel and learn, be a team player, fit in with your organization's culture or demonstrate other essential characteristics. This focus will enhance your recruiting process and business success.

But We Need the New Employee Now

As noted, the first reaction to a retirement or resignation is to look for a replacement as quickly as possible. In Fred's case above, you may have a little more time, given that retirement can be a more planned event. In the case of Beth and Ethel, you don't have as much time to identify and attract their replacements.

You will reduce recruitment time if you can develop and maintain the position description, responsibilities, and qualifications on an ongoing basis. If you cannot keep current position descriptions and requirements, you can pose and answer these questions in a relatively short amount of time when the opening occurs.

You do not want to bypass the collection of this information because you will be able to conduct a much more efficient, directed recruitment effort for these needed positions. Your recruiters can quickly eliminate candidates who do not meet your criteria, resulting in fewer, more viable replacement candidates.

This information will serve as the foundation for your recruitment marketing program that you can expand to inform and target specific candidates in the future.

You will also be able to show that your organization has taken the time to analyze and document the types of people who will make a difference. Given that most organizations immediately post openings using dated responsibilities and qualifications criteria, your recruiting efforts will demonstrate an attractive alternative, especially to the candidates you would like to recruit.

This effort to update your position requirements and qualifications will require input from management and existing employees. This communication with current staff will send an important message to them that the organization is striving to keep current and that its leadership values their opinions and viewpoints.

In today's tight labor market, you need to look at more people than those actively looking for a job or change in career. Distinguishing your candidate profiles will enhance your recruiting results. In addition, an honest assessment of any position requirements will reduce the chances of hiring someone who does not fit in the organization or chooses to leave. Repetitive recruiting for the same positions is expensive in terms of out-of-pocket dollars and company reputation.

Combined with determining your "why" an individual should consider working with your organization, identifying your "who" to recruit will make a massive difference in your recruitment success and your long-term business growth.

 Do Accounting and Finance Influence Your Leadership's View of Recruiting?

Accounting and financial records play a critical role in every business and organization. The reporting of revenues, expenses, assets, liabilities, and other accounting transactions provides an internal and external view of how the company is doing.

Organizational leadership must maintain a close eye on the accounting and financial records to ensure that the company performs according to plan. Any deviations from departmental, subsidiary, or overall budgets must be evaluated and corrected. The accounting records also provide investors, lenders, and other interested parties an accurate view of the company's operations.

Each executive and manager will have their method of assessing and prioritizing accounting information. They may place a greater weight on various accounting entries based on their experience, transaction size, department history, how they are evaluated by their superiors, "how we have always done it," etc.

These weighting factors may include the relative importance of a recurring short-term expense versus the higher dollar and longer-term investment in assets. This evaluation will lead management to prioritize assets on the balance sheet over expenses shown on the income statement.

Consciously or sub-consciously, recruiting and the expenses associated with it will be considered less critical than other assets or investments.

However, the reality is that the recruitment and development of people are the most important investments an organization can make.

The Accounting Industry Tries to Raise the Importance of People

Several years ago, the accounting industry explored the financial statement presentation of Human Resource Accounting. The theory behind the effort was that people play such an essential role in the activities and success of a company that there should be a way to include the investment in people on the company's balance sheet.

The industry attempted to measure this investment, but each method required too many assumptions. Thus, Human Resource Accounting is not part of a company's financial statement presentation because there is no agreement among finance professionals and accountants regarding the correct measurement method. 

Some companies maintain internal accounting records that value their investment in people, but these summaries are not a part of the organization's official accounting documentation. A company must present costs for recruiting, development, and other expenses on the income statement.

The Investment Community Does Not Place a Direct Value on People, and It Shows

Are you considering the sale of your company? Many entrepreneurial ventures and organizations that investment groups own are for sale or will be shortly. The investment community values acquisitions and other investments by estimating the cash flows of the target entity and multiplying them by a factor based on the industry involved or other criteria. There is no direct method for valuing people's importance in the purchase or sale of a company.

This omission of people valuation is unfortunate because Harvard Business Review estimates that 70%+ of mergers and acquisitions fail. And most of these failures result from people problems that include crucial people leaving, teams not getting along, and people at the acquired company losing motivation.

Expense vs. Investment

From an accounting presentation perspective, a company must treat the cost of recruitment as an expense. Unfortunately, some company leaders view expenses as simply the costs of doing business – utilities, salaries, supplies, etc. The company's management may consider expenses transactional costs representing short-term activities or even the necessary evils of doing business.

On the other hand, investments usually represent more significant decisions than a current period expense. The acquisition of a new plant or equipment requires much thought, analysis, and comparative shopping. And its cost is depreciated over the life of the investment, which can be many years.

Expenses and investments are both critical to the success of the business. However, given the time and money invested in the company's assets, management often places a higher value on these expenditures. For instance, if business slows down, the company will look to cut expenses to save money. They will reduce travel costs, supplies, and utilities during a slow time. Layoffs occur if the business slowdown is prolonged and recruiting and development programs may stop.

After all, management spends a lot of time evaluating the best equipment to buy. Still, the recruitment of an individual is often a selection among the best available candidates at the time of the need.

In today's recruiting environment, a company must view recruiting differently. This does not mean that you spend less time evaluating equipment or other major purchases, but it does mean that a lot more time and effort go into your recruiting program.

Recruiting is an Investment, no Matter What the Financial People Say

Leaving a key position open or making a hiring mistake can cost the company a substantial amount of money. These people voids and errors go far beyond the dollars spent on recruiting, onboarding, possibly relocating, training, and development.

The more substantial costs will include the negative impact on employee morale, customer relationships, vendor relationships, marketplace reputation, and the time and dollars required to repair these damages. For many positions, the total cost of a bad hire will exceed the purchase price of some machines or other fixed assets.

No other asset will impact your company's successes or shortcomings more than your investment in people. As with your other investments, recruitment and people development costs require a lot of thought, analysis, and planning.

This evaluation process starts with determining who the right people are for your company and why they should be a part of the organization. Once you develop this message, you can select the best way to communicate this information to these "right people," current employees, customers, vendors, and other company partners.

These steps are the foundation of your recruitment marketing program. A diligent effort in defining and documenting this people investment will significantly impact your recruiting and your long-term business success.