Why Recruiting Should Report to the CEO, not HR

As the Internet big banged into existence in the early 1990s, recruiting was brought in-house. Prior to that, line managers used their own external search firms to meet their hiring needs. HR took over this function based on their ability to increase efficiency, control costs and establish process integration based on the use of an applicant tracking system.

I always believed this was too tactical a mission for such an important objective. 

Regardless, over the past 15 years I don’t think HR has done a good enough job in converting talent acquisition into the competitive asset it could and should be. As a result I believe it needs to report to the CEO. Here’s why this should be done immediately.   

• Quality of hire is more important than cost of hire. The ROI of every great hire dwarfs the cost savings of hiring reasonably good people more efficiently. HR ignores or doesn’t get this strategic opportunity. Over the past 15 years there is no proof quality of hire improved yet there is proof that 70% of the U.S. workforce is currently disengaged. This isn’t much different than in 2000.
• Talent is #1 or it isn’t. If hiring great people really is the most important task of managers, they should be measured and rewarded on how well they are doing. HR has not been able to achieve this most important objective.
• Hiring is a business process, not a series of point solutions. HR leaders have not grown up in the ranks of achieving big results using fully integrated forward-looking and feedback process control systems. If they were, current hiring processes would not still be a series of disconnected steps and procedures on top of a cumbersome IT platform that provides little real time information.
• The lack of workforce planning and a recruiting ERP system. I find it incomprehensible that a fully integrated workforce plan isn’t seamlessly built into the recruiting ERP system, which also doesn’t exist yet.
• HR people are not equipped to cross Geoffrey Moore’s chasm. HR people in general have not shown a propensity for risk taking. As shown in Moore’s graphic, most fall in the later 50% of adopters of new technology, waiting for others to prove them out. This alone suggests HR should not lead a department that should give a company a competitive edge.

• Recruiting is more akin to sales and marketing, not administration. Recruiting top talent requires advanced consultative selling based on state-of-the-art marketing. Given this, it makes no sense to have recruiting report into an admin function.
• Too much vendor following and not enough leading. Most HR technology is vendor driven. This should not be the case. There are new core ideas still being generated regularly to fill the gaps caused by HR’s inability to figure out the right solutions long ago. The continuing problem with this new technology is the lack of system integration.
• HR seems to be afraid of line management. The CFO doesn’t need permission to have budgets justified. HR shouldn’t need to require line managers to do the right thing. Of course, they need to define the right thing and be strong enough to implement it.
• We still have diversity hiring challenges including glass ceiling problems. These are not difficult problems to solve. Start by eliminating skills-laden job descriptions and switch to performance-based job descriptions instead.
• Too much reliance on statistics to make decisions. Correlation doesn’t imply causality. Root cause analysis would have identified each of these problems long ago. This alone would have uncovered the flaws in continuing the use of pre-apply assessment tests and behavioral interviewing, to name a few.
• Too much focus on avoiding legal problems. The strategy needs to be hiring the best while minimizing risk. I’ve spoken to the top labor attorneys in the U.S. and they are surprised HR takes an overly conservative approach that compromises their ability to attract stronger people.
• HR people have too little UX. Understanding the user experience (UX) means sitting in the shoes of the user. Too many HR people haven’t even been users of the policies they advocate, especially the most important – understanding what it truly takes to hire A-level talent.
• Too much anarchy. There are proven ways to hire top people at scale. Yet at most companies each hiring manager is allowed to use his or her own “pet” ideas on how to assess and hire people.

Over the years I’ve met some remarkable recruiting leaders who have the right stuff. These are the people who should be given real C-level titles and report directly to the CEO. Surprisingly, most of these people didn’t come up through the ranks of HR - more typically it was sales, marketing, engineering, operations or finance. Despite all of these concerns about HR described here, the talent acquisition function is too important to not stand on its own. Reporting to the CEO instantly sets the tone that hiring is truly #1. With this change and the right non-HR person in charge, it soon will be.

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Lou Adler (@LouA) is the CEO of The Adler Group, a consulting and training firm helping companies implement Performance-based Hiring. He's also a regular columnist for Inc. Magazine and BusinessInsider. His latest book, The Essential Guide for Hiring & Getting Hired (Workbench, 2013), provides hands-on advice for job-seekers, hiring managers and recruiters on how to find the best job and hire the best people. His new video program provides job seekers inside secrets on what it takes to get a job in the hidden job market.