Recruiting here and there: centralized, decentralized or hybrid? Perform recruiting functions wherever they add the most value to your business - Agenda: HR Management - Statistical Data Included

HR Magazine, Sept, 2002 by Michelle Neely Martinez

Three years ago, General Motors North America switched from a decentralized recruiting system in which each business unit did its own hiring to a system centralized at corporate headquarters in Detroit. Why? GM wanted to strengthen its employment brand--especially among new hires--and erase the image of GM as old-fashioned, highly bureaucratic, white-male-dominated and slow to foster opportunities for advancement.

"We wanted to break away from these old views and be portrayed more realistically," says Kevin Smith, manager of talent acquisition for GM North America. "We are striving for consistency in our message to potential hires." He adds that the company wanted to develop more-effective recruiting procedures.

"Now, one department handles the requisition process, setting up interviews and everything else related to recruiting talent," says Smith. About 45 professionals in GM's Talent Acquisition Department handle recruiting for all of GM's North American plants.

Taking a Fresh Look

GM is one of many companies looking at how the recruiting function can add value to the business. Hence, the debate: Should recruiting activities be centralized at the headquarters level or decentralized at each business unit?

For Paul Marchand, director of corporate recruiting for Merrill Lynch, a global financial services firm based in New York, the issue is about "challenging the status quo and going through a thought process that asks the question 'Are we recruiting the right way for our business?'"

That's different from how HR once looked at the question. "Historically speaking, the general wisdom was that, if similar types of positions are being filled on a regular basis, then centralized recruiting would be most efficient," says Cydney Kilduff, SPHR, director of recruiting and staffing for Kellogg Co. at the food manufacturer's headquarters in Battle Creek, Mich.

Kilduff, who once worked at a bank that moved recruiting to a centralized--or what she prefers to call "shared services"--approach, says a major advantage of centralization is that duplication of work is minimized, resulting in increased productivity.

"Particularly in staffing, you can leverage synergies," explains Kilduff, who is a member of the Society for Human Resource Management Employment Committee. "Instead of looking for one financial analyst, you can recruit for five positions from the same candidate pool. Technology solutions, best practices, sourcing techniques are leveraged across the enterprise."

Other advantages of centralization are:

* Stronger technical expertise and specialization can be developed.

* Recruiter performance can be measured, and rewards and recognition can be delivered consistently.

* It's easier to offer recruiters more-challenging developmental assignments when assignments are being delegated from a central point.

Resources can be shifted quickly to meet changing business priorities. "In today's business climate, HR needs to demonstrate agility and the ability to redeploy resources easily," Kilduff says. "Shared staffing meets that need."

But "all cultures can't support a centralized environment," says Ron Weber, talent acquisitions sourcing consultant for Hewitt Associates, a global consulting firm based in Lincolashire, Ill.

For some companies, the most effective recruiting structure is a combination of centralized and decentralized approaches. Merrill Lynch, for example, leans more toward a decentralized model, but uses "a sharedservices approach for some areas of the recruiting function," says Marchand. The decentralized part of this hybrid model allows the 58,000employee company, operating in 40 countries, to be fluid and flexible in meeting the needs of each business unit. The shared-services part of the structure--the centralized part--permits synergy within the organization in aspects of recruiting that apply throughout the company, he explains.

Two Approaches in One

The shared-services portion of Merrill Lynch's recruiting is done to implement standardized metrics companywide, minimize duplication, leverage the best use of technology and identify best practices. The decentralized portion allows recruiters great flexibility in meeting the needs of each specific business unit, ensures quality in the talent hired and retained, and helps build a stronger, more credible relationship with hiring managers and providers.

Marchand oversees the sharedservices portion of recruiting. Each business unit employs a recruitment director who works with line managers. An addition to Merrill Lynch's recruiting structure is a Recruiting Operating Committee. The committee is co-chaired by Marchand and Andrea Beldecos, head of global campus recruiting, and includes recruitment directors from each business unit, other HR professionals and key business advisers. The committee's purpose is to foster regular communication among colleagues as well as to identify exactly how recruiting will be measured and what activities should be considered best practices and implemented throughout the organization.