Fix Your HR’s Conflict: Start Recruiting From Within

Just as CMOs know it costs more to get a new customer than to keep an existing one, CEOs should realize that replacing an employee costs more than saving one.

Ryan Holmes, CEO of Hootsuite—the popular social media management platform—worries about employee turnover. It’s good to see a CEO thinking about why people leave his company because few CEOs do. They’re usually distracted by problems recruiting new hires to replace the ones they lose.

Holmes seems to realize that replacing an employee costs more than saving one, just like CMOs know it costs more to get a new customer than to keep an existing one. Holmes’ insights reveal the conflict about talent that’s hampering HR executives who claim hiring and keeping talent is their biggest challenge.

In “An Unexpected Way To Stop People From Quitting,” Holmes says Millennials change jobs more than twice as frequently as their generational predecessors. Rather than turn to surveys to figure out why, Holmes asked his own employees. It turns out Hootsuite was “losing A players … because they were bored.” The talent wanted to do something new.

Duh. I could have told him that headhunters make a living from A players’ boredom. Talented people who want new challenges are the easiest to recruit and place with my clients. This is not news at all. What’s news is that a CEO is on to it as a smart way to save talent.

Learning To Save Talent

Many years ago, I was doing a search for a Fortune 50 company—we’ll call it Ace Investments—to fill a top product manager job. At the same time, I was running a series of workshops for Ace’s HR recruiters, to teach them how to source and recruit like headhunters do. Two things happened that shine a light on the challenge of saving talent.

First, I filled the product manager position without charging a fee. It turned out another client within Ace, for whom I had recently filled a key IT job, was perfect for that position—better than any candidate I could ever bring in from outside the company. So I recommended him for it. The problem was top HR management: They didn’t want him changing jobs internally.

Second, one of the HR recruiters in my workshop so liked the methods I was teaching that she confided in me about an idea she had. She wanted to present a proposal to her boss to let her be an internal headhunter. That is, she wanted to move talent within the company to fill key open positions. Her logic was the same as Ryan Holmes’. She explained that, “Rather than lose our top people to headhunters who are calling them every day, let’s selectively recruit those employees for other key positions!”

Conflicted HR

HR backed off in the first case. They let the manager switch jobs internally. I like to think that the lecture I gave them helped. “If I recognize he’s ripe for the picking, your competitor has a headhunter who sees the same thing. You’re going to lose him anyway,” I said to Ace’s HR executive. “Besides, can you believe I’m foregoing a $24,000 fee to do the right thing and help you fill this job internally?”

But HR wouldn’t budge on its own recruiter’s request to be an internal headhunter. They said it was a conflict. Letting her recruit internally would set a dangerous precedent encouraging departments to start poaching talent from one another. They told the recruiter, no dice.

She quit and went to work for a headhunting firm. Guess where she hunted heads?

A CEO Who Drives The Talent Strategy

Hootsuite’s CEO gives credit to Google for his talent retention idea. Google already has a “bungee program” in place that allows employees to “plunge into an entirely different department for a brief period.” The purpose is clear: to avoid losing good but bored employees.

Is Holmes actively recruiting his own people? Well, you might call it that. I compliment him for taking control of his HR department’s mission. (See “Passing The Buck: Who’s In Charge Of The Talent?”) More CEOs need to step in and drive their HR’s talent strategy.

Companies like Ace Investments lose when their HR management is conflicted about recruiting talent externally versus internally. You can’t retain talent when you tell your A-list employees to cool their heels if they’re bored, while you pitch exciting new jobs to external candidates who are bored where they are now.

Like Google, CEO Holmes has established some rules for internal job change, but he’s driving his HR department into the conflict. “Why not give these exceptional employees a chance to try out new positions within the company, rather than risk losing them altogether?”

I’ll tell you why Holmes is smart. Headhunters have no conflicts about poaching bored talent.