Mistake #4: Using contract recruiters to hire your employees.

As noted earlier, the most succinct definition of human capital management (HCM) is how an organization gets the right people, with the right skills, in the right place, at the right time. This is trickier than it sounds, however. It requires an understanding of all of the factors at play that can impact this including, among others, the economy, the business cycle, the competitive landscape, and a company’s processes, procedures, and strategies. These things affect both the company as a whole, as well as an individual employee and their “lifecycle” within a company. By “lifecycle”, I mean the end-to-end process by which an employee joins a company, grows within that company, and then exits the company.

The term “human capital” was first defined by economist Adam Smith as being one of the four types of fixed capital, the others being machines, buildings, and land.  In this view, all labor was seen as being both equal and interchangeable. In the 1960’s, economist Theodore Schultz coined the term “education capital” to reflect the difference in the value of labor.

Human capital is like any other capital in that investments in education and employee development can result in increased dividends for both the employee and the company. The key to human capital management, then, is how to manage these investments so as to get the most from each employee in everything they do, at each stage of their lifecycle within a company.

The foundation of successful HCM is the hiring of the right employees into the right culture with the right level of engagement to keep them safe, happy, and productive.

Good HCM by a company begins even before any contact with a potential employee. It begins first with your presence in the marketplace. What is your external brand? Are you comfortable with it? Does it adequately represent who you are to the world? Your brand or image must be compelling, distinguished, and attractive. The thing that will cause a consumer or company to purchase your good or service will be the same thing that will attract a future employee.

Many companies place a lot of resources in their marketing and branding departments to help position the company in the marketplace and rightfully so. These are resources well spent. It is ironic, then, that with so much effort placed on getting the company message out to the end customer, the company neglects to use the right messenger to reach out to potential employees.

Oftentimes when building a company, a CEO will hire contract recruiters to help hire new employees. Bad move. Good HCM means not only crafting the right message to attract prospective employees but also using the right messenger to evangelize that message. There are lots of great contract recruiters, to be sure. But no contract recruiter will ever be as effective as that same recruiter who has been made an employee.

You want the person who will be the first face of the company to a prospective employee to be an actual employee. Only an employee, and not a contractor, will be invested in getting the best candidate for each and every role, each and every time. Only an employee will have truly absorbed the message the company wants to share with prospective employees and be able to relate it in a compelling and meaningful way. And only an employee can discuss a company culture in a way that demonstrates that they truly understand the environment.

Simply put, employees have more invested in the success of the company and they will provide the extra effort to make the sale to a prospective team member. It is the difference between owning a house and renting a house. When you own, you clip the hedges, mow the lawn religiously, and perform all necessary maintenance in a timely manner. When you rent, you expect someone else to pay attention to these matters. You don’t have the same psychological or monetary investment in the house and so if the maintenance schedule slips you don’t see it as your problem.

Once you have the right message and messenger out in the marketplace, good HCM dictates that you also have an excellent process to shepherd prospective employees through the recruiting process. The recruiting process should be flawless, from soup to nuts. A candidate should never be treated as if you are doing them a favor to interview them.

On the contrary, they should feel valued and treated with respect at every stage of the process. In this way, they are more likely to accept should you make them an offer. Even if don’t, they will leave the experience feeling as if they were treated well and your reputation will not suffer from it.

Companies work hard to build their brands in the marketplace only to see their brands suffer at the hands of a recruiting process that treats candidates poorly. These candidates are left feeling ill disposed towards the company and they share their experience with their networks. A company’s recruiting process is a hidden source of brand liability that is not frequently acknowledged or discussed.


One thought on “Mistake #4: Using contract recruiters to hire your employees.

  1. Pure and utter nonsense! This has to be one of the most ridiculous things I have ever read! If you put some effort into hiring the right “person”, no matter if they are contract or FTE, you will be just fine! Believing in this nonsense would be Mistake #5!

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