Human resources (HR) and talent acquisition (TA) teams often have to fight for budget. According to a Blissfully report, the average company spends $343k on SaaS per year, with Sales and Engineering eating up most of that spend.
While this chart from Blissfully shows that HR’s budget is growing, it doesn’t always mean it’s for the better. The Flexera 2020 State of the Cloud Report found that 30% of cloud spending is wasted. So how can your HR and TA teams fight for more budget while also spending efficiently?
Ryan is the Founder and CEO of Sagemark HR, a consulting firm specializing in streamlining talent operations to improve business outcomes. We sat down with him to talk about how HR and TA teams can reduce waste by leveraging technology, and how they can utilize that leftover budget to empower their future processes.
Check out the full interview here and a writeup below.
How do I start to identify the waste in my budget? (4:09)
Ryan and Sagemark HR work with TA and HR teams that desperately need innovation in their processes. Specifically, he works with leaders on leveraging technology to streamline operations and save money.
However, the prospect of buying new tech isn’t always met with a resounding yes. Ryan sympathizes, “There’s always this feeling of, ‘I know I need this but I don't have budget to spend.’”
As a result, Ryan formulated an exercise made up of five areas to help HR and TA teams trim the fat in their budget to get tools that will enhance their operations.
“The five areas I tend to look at are a delivery model of the organization, recruitment marketing spend, how they’re leveraging or spending on external partners or services, the current technology they have in place, and specifically their process inefficiency.”
Let’s dive into each of those one by one.
1. Delivery Model
What’s a delivery model? Any examples of how you improve HR and TA delivery models? (5:57)
“The delivery model is just how you deliver the service of recruiting or talent acquisition to the organization,” Ryan explains.
By taking a look at a TA team’s delivery model, Ryan can understand what pockets of waste the organization has on a broad level. “If their main goal is to deliver recruiting and talent acquisition but they’re also doing some other areas of HR that may be outside the true recruiting scope, sometimes there's a better cost position for the organization to have that handled elsewhere.”
Ryan notes that traditional TA and HR delivery models are very people centric. When the company scales up, the departments tend to grow their headcount before considering technology as a solution. On top of that, Ryan notices that interview scheduling and resume screening can take up to 75% of HR and TA departments’ time. That’s a lot of wasted cost and effort that technology can fix!
“You don’t necessarily need to cut heads in order to fund this,” Ryan reassures, “A lot of it is freeing up those people for higher value activities.”
Ryan also finds that many companies have full-desk recruiters that spend much of their time building out spreadsheets and manually creating reports. “There are tools out there that can automate that and integrate with your other tools… you don’t need people allocating time to building spreadsheets and you can get by without extra recruiters.”
2. Recruitment Marketing
What about recruitment marketing? Where do you find waste there? (12:00)
Over the last year, most of Ryan’s clients have been focusing on recruitment marketing. Specifically, they put a lot of money and time into their employer brand, job board advertising, and sourcing. “Don’t get me wrong, they are critically important to the success of your organization,” Ryan starts, “[but you’re] filling a leaky bucket.”
Focusing on a smooth recruitment process is just as vital. Instead, Ryan finds that companies are “throwing a bunch of budget at other tools on the recruitment marketing side… but not being thoughtful around ‘how is this being allocated?’ and not necessarily reviewing the performance of each of those elements either.”
Ryan isn’t knocking the great software solutions out there that actually can help. He’s just encouraging companies to be more thoughtful with their recruitment budget. If you streamline the application to hire process, you can then start looking at elements to drive conversion.
For example, he’s worked with organizations that spend $1 million on recruitment marketing and employer branding tools. But their application process was 30 minutes long or there was a huge time gap between touchpoints, creating huge drop offs. This only perpetuated reliance on recruiting tools to reach candidates.
“If they would just focus on a couple of those elements, they wouldn’t need to spend like they’re spending,” Ryan says, “cause they can dramatically increase their conversion rate at the front end of the process.”
3. External Partners
Onto external and third-party partners. What waste exists in that space? (17:39)
Ryan believes that external and third-party partners are a part of your delivery model. “It’s an extension of your team... It’s really hard for organizations to build full in-house teams and address every need.”
As such, external recruiters and third-party organizations are vital. However, this doesn’t mean there’s nothing to audit.
Ryan shares the example of outsourcing reference and background checks. “There are tools that will do that at a third of the price… you could make that change, put in a different tool, pay for it, and still have two-thirds of your spending left over.”
What’s the technology piece? How can I improve there? (19:37)
There’s one thing Ryan’s sure of. Leaders need to get better at buying HR and recruiting technology.
What issues has Ryan specifically encountered? “I see a lot of organizations that have either overspent on contracts [or] have unfortunately selected the wrong technology for what their needs are. They’re not necessarily getting the appropriate return on investment or they bought something that they’re not ready for.”
Experience is the only solution. Plan to upskill your TA and HR teams so they understand how to buy technology. Make use of consultants like Ryan or do your own research. Otherwise, it’s likely you’ll end up with suboptimal contracts and misfit technology.
5. Process Inefficiency
Finally, let’s talk about process inefficiency. What do I need to know? (23:55)
When looking at process inefficiency, the name of the game is long-term payoff.
“Look at what [your process is].” Ryan poses a couple questions: “Where are there bottlenecks? Inefficiencies? Wasted spend?” For example, 48% of businesses say their best new hires come from employee referrals. Are you taking advantage of employee networks and using social media to find those people?
Here you have to get granular and look into day-to-day operations and figure out what you can improve. “It’s fairly easy to get that long-term [payoff] if you’re having manual transactions or poor experience elements that are reducing your yield and success rate on your recruiting practices.”
After we’ve gone through these audits, what are some other ways I can reduce waste? (25:18)
Every organization is different. Therefore, reducing waste is extremely specific in each case. However, Ryan believes that there is a right place to start. “You don’t want to start with… a full blown in-depth 9 month assessment with 100 different opportunities. You want to prioritize the biggest return on investment.”
One generally good way to accelerate budgeting is to renegotiate contracts with your tech vendors. Ryan suggests asking to reallocate the spending on features you may not often use into features where you see the most success. That way, you’ll boost your already successful efforts. “The great solution providers out there are true partners,” he promises, “[they] want to work with you to be successful.”
If you can't renegotiate a contract, Ryan recommends earmarking use cases, benefits, and wasted spend for when the contract is up.
He poses an example of trying one of the best of breed video interview software solutions, costing $400k per year. “After year one or year two, you find out that our adoption rate hasn’t been great. We’ve utilized this but maybe we’re not maximizing our ROI. If we just had a basic video interviewing solution [with] some of the functionality, but it only costs us $100,000, that might be a better fit for us going forward based on how we’re utilizing it and the maturity of the organization.”
Identify when the contract is up. Identify a tier 2 or tier 3 provider that will work for your use case. Reallocate the savings into other efforts.
Ryan recommends two outlets for near-term savings. First, use programmatic job advertising to automate recruiting efforts. Subsequently, utilize your tools to the fullest extent of their capabilities instead of opening new roles. If you end up with excess in your budget, reallocate that to be ahead of the curve for next year.
How do we as a TA/HR org make sure we keep that budget? (34:22)
Keeping extra budget is a big problem in TA and HR. These teams skew reactive instead of proactive. Therefore, budget tends to come only when absolutely necessary.
How can TA leaders change this?
Ryan says TA teams have to change how they position themselves in their organization. Have a well-documented plan. Keep track of data, including ROI and key performance indicators (KPIs). “By having that type of position statement in place, oftentimes they’re able to position themselves as leaders and not have this money go back.”
He also urges TA teams to document a place for that money to go so it’s not sitting around. “You don’t want to just start with saving the money and then do that presentation, because that’ll get grabbed quickly.” With a clear plan, company leaders can see where that money will go and how it impacts holistic business strategy.
It’s also very possible to have leftover money to give back to the organization after funding what you need. Ryan quips, “That’s the kind of stuff that they’re gonna build statues of these TA leaders over, right?”
How do we reallocate that, making the most of the new budget? (37:25)
TA teams are constantly bombarded by tech solutions advertising their shiny new features. It’s a challenge to prioritize in the face of compelling marketing materials!
Before identifying solution providers, take a very honest assessment of the current state of affairs. What are your best practices? Pain points? How about stakeholder input? How interested are they to invest in TA? “Use all those inputs to triangulate the 2 or 3 biggest areas of impact,” Ryan proposes.
By prioritizing the most important areas, your TA team can kickstart the journey from reactive to proactive in order to solidify their operations as some of the most important in your company.
This is not easy!
Buying HR and TA technology isn’t something you can learn in an hour or a week. It takes time and practice. However, that shouldn’t deter you from starting to learn. It’s an important skill set for anyone in an HR or TA leadership role.
Need a place to start? Check out our guide on how to buy HR tech. After all, Ryan promises that “if you want to be a leader in the TA space going forward, your ability to build a strategy that helps you identify the right technology for your organization will clearly be a differentiator.”
About Ryan Dull
Ryan Dull is the Founder & CEO of Sagemark HR, where he helps scale and modernize recruiting practices to deliver better talent faster. As someone with over 20 years of experience in the HR/TA space, he’s never afraid to take on a challenge.
In fact, Ryan found himself the victor of two unique competitions in the span of a couple weeks. First, he won a mechanical bull riding contest—against actual cowboys! Second, he found himself on stage performing crazy moves to take home first place in a dance contest. All it took was for him to raise his hand and say “why can’t I do this?” He carries that mentality with him in everything he does, especially his career.
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