In good hands: Smart recruiting for a capable public sector

3. IS RECRUITMENT DESIGNED TO ACHIEVE AGENCY OUTCOMES?

3.1 Audit criteria

Recruitment should support both the immediate needs of business units and also the longer-term, strategic needs of the whole organisation.

In determining whether recruitment is designed to achieve agency outcomes, we examined whether:

• recruitment is integrated with workforce planning

• recruitment policy provides guidance to managers

• recruitment policies and activities are evaluated.

3.2 Recruitment is integrated with workforce planning

The agencies we audited demonstrated a range of approaches to the integration of recruitment with workforce planning. In some agencies, decisions were based on filling traditional staffing establishment figures. In others, decisions were made within the context of workforce needs and skill gaps identified strategically at the highest organisational level.

VicRoads

In VicRoads, workforce planning is a major part of its human resource strategy, Great People – Smart Services¹, which sets out its workforce planning goals:

• to ensure that VicRoads has the appropriate knowledge, skills and abilities to address its current and future business needs

• to identify where VicRoads is currently in terms of capabilities and where it wants to be positioned in the future

• to position VicRoads as an employer of choice to ensure that it attracts and retains the appropriate capabilities.

The organisational need for each recruitment action is analysed within the context of workforce needs and skill gaps identified at the organisational level. Attraction of staff is highlighted as a major issue and the need to recruit in areas of current and future skill shortages has been clearly identified.

For example, as a result of its workforce planning approach, VicRoads identified that it was facing a current and future shortage of engineers. This was due to a national shortage in this area and the higher salary paid by the private sector. The need to focus on recruiting such staff was identified as an organisational priority.

Senior management decided that rather than relying on the existing practice of placing all aspects of recruitment in the hands of managers, an organisation-wide approach to attracting these staff was needed. As a result, the Workforce Planning Unit within the human resources area now works in partnership with managers in recruiting external staff. This demonstrates a strategic approach to recruitment – supporting the needs of the agency.

State Revenue Office

In the State Revenue Office (SRO), recruitment operates within the human resources area and implements workforce planning decisions made at a strategic level.

The SRO’s workforce planning approach is based on resourcing considerations and the analysis of the workforce needs and trends across the organisation. It identifies establishment levels – the numbers of staff required within each business unit and the organisation as a whole – using a process that is linked clearly to agency outcomes. This staffing profile provides the basis for decisions regarding the filling of vacancies as they arise.

The SRO has recently developed a workforce directions paper, based on an analysis of staffing issues and requirements, which provides an overview of future planning in each division. These workforce directions provide the guidance for recruitment decisions as they arise. For example, the Legal Branch has identified the lack of a real career path for lawyers and, subsequently, it has adopted the strategy of advertising internally, where appropriate, in order to provide the possibility for career progression.

Parks Victoria

In Parks Victoria, recruitment is not formally integrated into a workforce planning approach. A staffing committee consisting of senior management meets to sign-off ongoing recruitment requests from managers.

Guidelines for the strategic allocation of labour resources were developed in 2005 to provide the basis for recruitment decisions. However, these guidelines are focused on rules for the filling of certain types of positions across the organisation. This approach has elements of workforce planning but tends to focus on immediate workforce needs rather than longer term needs.

Parks Victoria has implemented a number of initiatives, such as a seasonal ranger recruitment campaign and an exchange program with Parks Canada, to address its need for a regular seasonal workforce. Its implementation of the Wur-cum barra program (a Victorian Government indigenous employment program) is an example of a workforce initiative reflecting the business needs of the organisation. The core business of Parks Victoria is strongly linked to the indigenous community and it is highly strategic to recruit indigenous employees. Parks Victoria is one of the most successful agencies in meeting their targets under the Wur-cum barra program.

Parks Victoria’s seasonal ranger (far right) at work.

Department of Innovation, Industry and Regional Development

Recruitment in the Department of Innovation, Industry and Regional Development (DIIRD) is located within the human resources branch and is a service to support divisional managers in the recruitment of immediate staffing requirements. It is not undertaken within a broader workforce planning context.

DIIRD adopts a divisional approach to establishing staffing needs due to the diversity of its business units. Divisions within DIIRD estimate their staffing requirements annually and are then funded on the basis of these figures. When divisions recruit, they are required to keep to their nominated staffing budget. The business unit manager and the human resource account manager assess the role and need for the position before recruitment occurs, and confirm that it is within budget. This is very much a business planning, operational approach, and not a longer-term workforce planning approach.

DIIRD has acknowledged the need to develop a more strategic approach to planning its workforce by creating a workforce planning role within the human resources branch.

Office of Public Prosecutions

Recruitment in the Office of Public Prosecutions (OPP) is also a stand-alone, operational process and not formally integrated into a workforce planning approach. The OPP’s board of management approves recruitment on the basis of available funding, rather than through a systematic analysis of business need.

However, the OPP has commissioned several reviews over recent years which have focused on its workforce needs. For example, one of these identified that its proportion of relatively inexperienced staff was increasing². This is a significant issue for the OPP and one that needs to be addressed within a broader workforce planning strategy.

3.3 Recruitment policy provides guidance to managers

The policies relating to the attraction and selection of staff within the audited agencies ranged from comprehensive statements of the purpose of recruitment, with detailed policy guidelines, to sets of procedures for undertaking the recruitment process.

The SRO’s recruitment policy is detailed and clearly linked to the business and informs planning at all levels within the organisation. Its policy also identifies the risks to the organisation of not being able to attract sufficient and suitably qualified staff. One risk identified in its workforce directions paper is the potential erosion of technical expertise due to retirements and resignations. As a result, retention strategies have been implemented to manage this risk.

DIIRD has a solid policy basis for recruitment, emphasising the need for a robust recruitment strategy. Its recruitment policies are comprehensive and focused on assisting managers with the recruitment process. Its recruitment toolkit for managers, Better Selection Practices, includes a rationale for effective recruitment along with strategies for attracting and selecting staff.

One of DIIRD’s policy directions is to be an employer of choice, as shown in Figure 3A.

FIGURE 3A: DIIRD’S POLICY DIRECTION AS EMPLOYER OF CHOICE

Source: Department of Innovation, Industry and Regional Development, Better Selection Practices: Recruitment Toolkit for Managers, 2002.

In VicRoads, comprehensive policy documents are supplemented by expert advice from its Workforce Planning Unit. Managers are provided with guidance on policy and strategies to:

• attract a suitable pool of candidates

• select staff who can contribute to the delivery of agency outcomes.

Recruitment policies of Parks Victoria and the OPP are not as comprehensive. The documentation is more focused on procedures for recruiting rather than on providing a business basis for recruitment practices.

3.4 Recruitment policies and activities are evaluated

3.4.1 Performance indicators

Two of the audited agencies had performance indicators established for recruitment.

The SRO has established the following indicators for its recruitment processes:

• actual staffing levels compared with establishment levels contained in the workforce plan (target of a minimum staffing level of 93 per cent and a maximum of 102 per cent)

• average time taken to fill a vacancy from the date of request to the acceptance of offer (target of 8 weeks).

The SRO reports performance against these indicators in its monthly balanced scorecard.

VicRoads has indicators for some aspects of recruitment such as the time taken to fill vacancies, but does not have any targets.

None of the agencies audited had performance indicators that measured the success of those aspects of recruitment that were identified as key issues for the organisation. Performance measures linking recruitment to agency outcomes did not exist.

3.4.2 Data collection and analysis

The amount and quality of the data collected on recruitment varied across agencies.

All agencies collect some form of recruitment data. For example, all were able to provide lists of recruitment actions over a period of time, whether positions were advertised internally or externally, the type of employment and the dates of the various stages of each recruitment action.

Not all agencies were able to identify the number of applicants for positions, the numbers interviewed and the time taken to fill positions. In some agencies, this information could only be obtained from individual recruitment files.

Only 2 agencies, the OPP and the SRO, consistently maintain records of the total number of applicants per position. This means that agencies are not identifying potentially valuable information, such as the number and source of applicants. Analysis of this information could assist in determining the effectiveness of specific attraction strategies.

The OPP was also able to provide detailed data on all staff, including cessations, commencements, turnover data, temporary appointments and promotions. However, there was no evidence of any analysis or reporting using this data.

Several of the agencies produce reports on recruitment that tend to be snapshots of recruitment activity. Few report on the data to senior management and conduct any analysis to identify trends to assist in implementing changes and improving performance.

There is potential for the new VPS e-Recruitment System to assist agencies with a range of data to enable them to identify aspects of recruitment that need improvement.

There was little evidence of changes being implemented as a result of issues identified in data. One exception is VicRoads, where an analysis of the vacancy rate and skill shortages led to external recruitment being centralised to meet time targets.

None of the agencies reported to senior management to enable strategic decisions to be made on whether recruitment could contribute better to agency outcomes.

3.4.3 Selecting the right people

The agencies do not effectively evaluate the outcomes of recruitment, in terms of whether the right people are selected.

All agencies have performance management programs and probation systems through which the performance of all staff is monitored. However, none actively collect this information or undertake any systematic analysis of the performance of new staff.

Both of these programs provide opportunities for monitoring the performance of new staff – if they are implemented seriously and information is fed back into the evaluation of recruitment.

VicRoads has recently undertaken a survey of new employees to evaluate their recruitment processes. This approach could be extended to survey managers on a regular basis as a means of evaluating their satisfaction with new staff and the overall recruitment process.

The absence of processes and tools for evaluating the success or otherwise of recruitment activity reinforces our observations that recruitment activity is focused more on filling existing vacancies than on addressing skill shortages and longer-term, strategic workforce issues.

3.4.4 Cost of recruitment

Agencies were able to provide data on the cost of advertising and the use of external recruitment companies. However, they do not systematically collect or analyse and report this information or other recruitment cost data. Generally, data is not collected on:

• time of managers and other staff on recruitment - time away from normal duties is a significant cost, estimated in 2004 to be just over 70 hours³.

• turnover costs these can be considerable, both in terms of lost productivity and training costs for new staff, estimated to range from 0.5 to 2.5 times the annual salary of the job in question. Replacement costs are also considerable: over $50 million per annum for VPS 1-5 positions for the period 2001-2003⁴. Taking into account the number of staff in the broader public sector, 230 000 employees in June 2004, then this cost is far greater.

• cost of poor selection - selecting an inappropriate person, either in terms of skills or cultural fit, may result in loss of productivity and lower staff morale. Lost productivity and replacement costs are estimated to be just over $100 000 per position.

The SRO has acknowledged the need to measure staff time in the selection process. It has developed a table within its selection report for panel members to record the time taken for the various stages of the process. Unfortunately, this information is not consistently provided by managers and a potentially useful source of data is therefore not available.

FIGURE 3B: EXAMPLE OF STATE REVENUE OFFICE TIME RECORDING TABLE

Source: Victorian Auditor-General's Office based on information provided by the SRO.

After VicRoads established the Workforce Planning Unit as an option for centralised recruitment, the Unit analysed its external recruitment costs and negotiated new fixed price contracts with 9 recruitment companies at a projected annual saving of $450 527.

Parks Victoria is currently undertaking an analysis of the cost of its contract with its external recruitment company.

Using the estimates of recruitment costs used by the Office of Workforce Development in the e-Recruitment System business case, we calculated the approximate cost of recruitment for 2004 for the agencies we audited.

FIGURE 3C: ESTIMATED COST OF RECRUITMENT IN 2004 BY AUDITED AGENCY

Note: Based on the estimated cost of the percentage of internal and external recruitment for ongoing and fixed term vacancies in 2004.

The lower estimate includes costs for internal staff in recruitment activity, administrative costs and print advertising for externally advertised positions. The upper estimate includes these costs plus the use of recruitment agencies and relocation costs.

Source: Victorian Auditor-General’s Office, based on figures in Office of Workforce Development, Consolidated business case for the acquisition and implementation of an effective e-Recruitment System, Melbourne, July 2004.

Although recruitment in the audited agencies involves significant expenditure in terms of staff time and dollars, there is a lack of disciplined collection of data on costs and the subsequent analysis and reporting of these costs to senior management.

3.5 Conclusion

In the agencies where recruitment is integrated with workforce planning, it is more strategic and more focused on the longer-term needs of the organisation. In organisations where the link between recruitment and workforce planning is tenuous or even non-existent, recruitment is more reactive and focused on the process of filling vacancies rather than on addressing skill shortages and longer-term, strategic workforce issues.

Overall, VicRoads and the SRO adopt a more strategic approach to recruitment. It is aligned with business needs, has a strategic focus and is an integral part of workforce planning. There are some instances in the other agencies where recruitment is considered within a broader workforce planning framework, but mostly recruitment is considered as a silo activity with tenuous connections to driving agency outcomes.

All agencies had well-documented policy or guidance statements for recruitment and these tended to reflect the degree to which recruitment was seen as an operational or a strategic activity.

Most of the agencies do not effectively evaluate the success of their recruitment activities in the context of agency outcomes. Consequently, it is difficult to assess their effectiveness in attracting pools of applicants for positions and, subsequently, in making the right selections.

The collection, analysis and reporting of recruitment data in all agencies requires improvement, particularly data that would assist senior management to make strategic decisions on how recruitment could contribute better to agency outcomes.

A range of methods for evaluating recruitment outcomes is available including tracking career progress of applicants, feedback from newly appointed and exiting staff, surveys of manager satisfaction with new staff, and analysis of performance assessment records. Agencies should choose the most appropriate evaluation methods for the aspects of recruitment that they have identified as critical.

In general, there is a need for agencies to set performance indicators for aspects of recruitment that are identified as key issues for the organisation. The new Victorian Government e-Recruitment System should be able to assist agencies in collecting data on recruitment for their performance indicators.

Overall, the agencies did not know the cost of their recruitment. It is important that agencies collect information on the cost as it allows them to measure the efficiency of their recruitment processes and to understand the real cost of recruitment.

Recommendations

1. That public sector agencies integrate their recruitment function into workforce planning.

2. That recruitment activity is evaluated regularly to assess its success in meeting agency objectives.

3. That suitable tools and data sets are developed to enable the evaluation of recruitment activity, especially relating to the costs of recruitment.

¹ VicRoads, Great People – Smart Services: 2002- 2004, State of Victoria, Victoria, 2002.

² Smart Consulting & Research, Review of the Office of Public Prosecutions Revisited, February 2003.

³ Office of Workforce Development, Consolidated business case for the acquisition and implementation of an effective e-Recruitment System, July 2004, p. 38.

⁴ Based on research by Cascio (1991) and used in the Office of Workforce Development’s Separation of Staff in the Victorian Public Service, May 2004, p. 7. Cascio defines separation costs as those incurred in exit processes, vacancy, replacement and training costs, and loss of productivity and corporate knowledge.

⁵ Estimates provided to the Victorian Auditor General's Office by Link Recruitment, May, 2005.