Do all businesses give thought to the risk?....

Being resident in a geographical area that has copious ‘Wannabees’ who aspire to be the next Mike Lazaridis, Jim Balsillie, Steve Jobb, Larry Page, Sergey Brin, Ilya Grigorik or other such greats in the local technology entrepreneurial marketplace.

According to sources, the region has a very strong ‘geek culture’ mainly due to the proximity of a university ranked 113^th overall by Times Higher Education World University Rankings and the region has positioned itself to support through commercialization of innovation, creating economic prosperity by removing barriers to the creation and growth of technology companies.

Despite all the kilowatts of brain power and ideas emanating from these ‘Wannabees” (…and I hope they all work out, succeed and become rich and famous), I am truly amazed at how limited they understand the people side of their business, most often relying upon their financiers (Venture Capitalists, Angle Investors, etc…) to provide people solutions for them.

With all businesses, RISK is a key factor when it comes to any decision making, applying a RISK ANALYSIS approach to your present/future peoples needs, is critical:

Risk = Probability of Event (PoE) x Cost of Event (CoE)

For the Hiring/Recruitment process, the Probability of Event analysis would (or should) have been completed, now comes the often omitted part of the process – Cost of Event analysis. Using the same decision tree/mind map used in the PoE, attribute a true CoE, ensuring hidden/in-direct costs a attributed. When considering the true cost, consider – not only the time spent conducting the event, but the cost of not doing other events/activities. The cost of not doing could very well out strip the cost of doing. So if you are involved with a business/organization that has developed the product/service and are now growing your team, ask yourself: What is the REAL CoE?

So what has CoE to do with the Recruitment? Simple really (don’t let your internal influencer's tell you anything differently!):

Probability of Event is extremely high due to 4 key factors:

1. The need for additional people to support growth/expansion
2. The need to replace people who move on to new/different challenges
3. The need to replace existing people that are not a ‘fit’ for the future culture/needs of the business.
4. The need to Invest In (the right) People is paramount

Cost of Event (Direct and In-Direct)

1. Time required to properly scope, define, determine, identify, qualify, solidify and secure consensus on the position and person specifications
2. Time required to identify and secure the new person
3. Time taken away from all other duties, responsibilities’ and activities whilst conducting points 1 & 2
4. Material cost of marketing opportunity to outside world
5. Material cost of activities related to securing new person
6. Non recoverable lost time costs
7. Cost of un-suitable person in the position
8. Cost of lost reputation with customers, through Inaction/Slow action

Using a simplified weighting chart, lets consider the RISK of using the wrong solution for the on-boarding of your people;

Weighting values – 1=low, 2=moderate, 3=high. Now apply to formula:

R = PoE x CoE

• Option 1: Need people = 3 | Using Internal resources = 3 | therefore R = 9
• Option 2: Need people = 3 | Using External Professional resource = 2 | therefore R = 6
• Option 3: Need people = 2 | Using Internal resources = 3 | therefore R = 6
• Option 4: Need people = 2 | Using External Professional resource = 2 | therefore R = 4

A qualifying note here; External Professional resource is 100% focused on the events related to Recruitment, they are not diverted by other duties, responsibilities or activities. Internal resources have their primary functions and recruitment is an also do function.

All professional external resources will always want to make sure that the PoE analysis has been completed and clearly establish the CoE before proceeding to ensure complete and satisfactory delivery to mitigate R.