TA Leaders are under tremendous pressure as we move through 2023. Many are dealing with acute talent shortages, others have to downsize their team, and everyone is attempting to make sense of the implications of rapidly advancing AI technology. Whilst the immediate pressure can drive a focus on short term thinking, there is a massive opportunity for the TA Leaders who take a longer term view to reposition Talent Acquisition within their organization strategically.
So what is the opportunity here, which other business functions can we model from, and what practical steps do TA Leaders need to take? My guest this week is Graeme Paxton, Founder and CEO of Caraffi. Carraffi is on a mission to make talent the engine room of everyone’s organization, and Graeme has a vast amount of experience in helping TA Leaders think strategically.
In the interview, we discuss:
The current state of the market
• The strategic opportunity in challenging times
• Changing where TA sits in the organization
• Breaking the cycle
• When hiring volume decreases, the importance of hiring increases
• Shortage in critical skillsets
• What TA can learn from the strategic evolution of Marketing
• The three questions that keep CEOs up at night
• Aligning metrics with the business balance sheet
• How to measure the business impact of TA
• From transactional service to business driver
• Understanding the vision of your business to identify future critical skillsets
• How far in the future should TA Leaders be planning?
• Can TA Leaders be the CEOs of the future?
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Transcript:
Matt Alder [00:00:00]:
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Matt Alder [00:01:39]:
Hi there, this is Matt Alder. Welcome to episode 499 of the Recruiting Future podcast. TA leaders are under tremendous pressure as we move through 2023. Many are dealing with acute talent shortages, others are having to downsize their team and everyone is attempting to make sense of the implications of rapidly advancing AI technology. Whilst the immediate pressure can drive a focus on short term thinking, there is a massive opportunity for TA leaders who take a longer term view to reposition talent acquisition within their organization strategically. So what is the opportunity here? Which other business functions can we model from and what practical steps do TA leaders need to take? My guest this week is Graham Paxton, Founder and CEO of Karafi. Karafi is on a mission to make talent the engine room of everyone’s organization and Graham has a vast amount of experience in helping TA leaders think strategically.
Matt Alder [00:02:54]:
Hi Graham and welcome to the podcast.
Graham Paxton [00:02:57]:
Hi Matt, nice to be here.
Matt Alder [00:02:59]:
An absolute pleasure to have you on the show. Please could you introduce yourself and tell everyone what you do?
Graham Paxton [00:03:06]:
Yeah, sure. So I’m Graham Paxton. I’m founder of a business called Karafi which is a talent acquisition advisory. I fulfilled my lifetime ambition to be a recruiter back in 2001 and since kind of working in S3 and other contingent type recruitment businesses about 2008 decided to try and change tac really in my career and help internal teams build brilliant talent acquisition strategies. As I felt there was a bit of a gap in the market and at crafi that’s what we do. We really help internal talent acquisition leaders grow, develop themselves and build brilliant technology, brand and operational excellence solutions.
Matt Alder [00:03:55]:
Fantastic stuff.
Matt Alder [00:03:56]:
So, so many things that we could talk about, but perhaps we should start talking about the current state of the market because, you know, we were just talking before we started recruit recording about what a slightly sort of confusing time it is. What are you seeing in the market at the moment and how is the recession or the threat of recession affecting talent acquisition?
Graham Paxton [00:04:18]:
Yeah, so I’m going to caveat this straight away with the thought, Matt, that my Cryst is as broken as anyone else’s is at the moment. I think we’re in a pretty unusual series or set of market conditions. Having said that, my take on the world is that we’re starting to see a bit more consistency in behaviors and consistency in kind of market conditions and thoughts on talent acquisition. So to me, I think we’re all clear there are going to be some challenges in the global economy and also in the European economy brought about by the last two or three years that we’ve had. I think for the last three, four years the markets have been awash with cash and that’s brought significant investment. But obviously there’s been quite a lot of investment from governments in, in a number of life or death type initiatives. But what that’s really created, I think is a condition where organizations are now having to think about and really face up to the fact that there is a tightening, debts have to get paid back, money is less available and as a result organizations are now starting to think about, okay, how do we plan our future and what does that future look like? And that feels a bit more consistent. It feels like organizations aren’t flattered by the amount of cash swashing around the market and have to really start planning their future based on successful balance sheets. Impact that has on talent I think is quite simple really. Organizations typically, when they’re facing the threat of a recession, and I’m not sure we’re fully in a recession, but I think that’s the way we’re headed is they need to start to reduce fixed costs in an organization, which typically means from a recruitment angle, you’ll short sell permanent hiring, but they’ll still have the same types of projects and programs of work. So you tend to find a war on OPEX and a slight easing on capex type projects, which means that if you’re short selling permanent recruitment and permanent hiring, you’ll probably have this need for contingent labor and more specialist project based work. Now I don’t really see. I work quite closely to a number of contingent recruitment businesses and I think most CEOs in that space are quite surprised that they’re not seeing the slowdown they expected. They’ve all had two fantastic years following Covid. They’re not seeing the indications, but the interpretation from their side is that they will start to really suffer around permanent hiring towards the end of this year. And I think that will be echoed for most talent acquisition directors out there.
Matt Alder [00:07:31]:
I think it’s really interesting because we’re constantly seeing this cyclical cycle. We’ve just been through this phase of companies just being desperate to hire recruiters and not being able to find enough of them, which came after lots of recruiters got laid off during the pandemic. And now we’re kind of at this sort of next phase of the economic cycle. Typically in times of recession or as you said, the threat of recession, we see layoffs. I’m already hearing TA teams talking about their do more with less strategy.
Matt Alder [00:08:05]:
Are you seeing any leaders kind of.
Matt Alder [00:08:08]:
Breaking out of that cycle? And I suppose more importantly, what’s the opportunity here? Also kind of reflecting on what you were just talking about, I think Matt.
Graham Paxton [00:08:17]:
First of all, as TA leaders and we work with so many TA leaders that are trying to create internal strategies and try and make sure that there is a solid path to hire brilliant talent into an organization, I think the first thing is we’re kind of masters of our own destiny. And those kind of cycles that you talk about quite often you, we talk to TA directors and they feel a bit of a victim of it. Oh, the business needs this. Oh, we need to hire so many people and let’s get more recruiters in. And I think, I think what we’ve done is allowed that kind of cycle to happen and sort of painted ourselves as a victim of that. I think what we’ve got to try and do is change where TA sits with an organization. And that’s easier than you might think. So over the last, I’d say year 18 months we’ve been constantly talking to people about how do I get a surge recruitment support, get some fixed term contract recruiters in, get some, you know, increase the size of my TAE function because they’ve been answering the question paper the business has given them rather than question that question paper. So the first thing I would say in the answer to that is yes, I agree that organizations see this cycle and as a TA leader, you feel that cycle. I think that we’ve got to start to use this period and what might be quite severe market conditions to really change where talent acquisition sits in an organization. And I think we get a real opportunity to do that. So if there is a decrease in the hiring, there will be an increase in the importance of the hiring. So we’ll only hire people that are critically important to the success of the organization. So rather than being a commoditized service, talent acquisition becomes a strategic driver of an organization. And I think that is a really important position to latch onto for any talent acquisition leader is that we might find ourselves in a position where talent is a little more available than it was, but the critical skill sets that we’re looking for are still in shortage. So we’re going to still need to be cleverer and more strategic about how we hire. So weirdly, in a recession, talent acquisition becomes more important because the type talent will be one of the slingshots out of recession. And it’s really important. The talent acquisition uses this type of environment to position itself as a driver of the business, not as a cost of the business.
Matt Alder [00:11:02]:
I want to sort of dive into that a bit more deeply in a second, really to get your advice in terms of what people should be doing to achieve that. Before we do though, what other functions in the business should TA be looking to in terms of the example that they. They set during times like this and. And what the leaders of those those functions are doing are doing differently?
Graham Paxton [00:11:25]:
Yeah, that’s interesting. So realistically, a business and a business vision really has three types of audiences. I kind of explain this sometimes to people around what keeps your CEO up at night? And really, there’s only three things that keep you CEO up at night. One is, do I have enough customers and are they spending enough money? The second is have I got enough fuel in my balance sheet to invest in what I need to invest to reach the ambitions we want? And the third is have I got the right people in the right jobs doing the right things? So if you look at that, really, where do organizations really excel? Well, over the last 5 or 10 years, or 20 years or 30 years, or however long you want to look back from a customer angle, organizations have really transformed. So if you think about marketing, marketing used to report to sales. Now sales report to marketing predominantly in organizations other than a cfo, you know, the primary route to the the CEO position is a chief marketing officer. Now how have they done that? Well, what they’ve ended up doing is transforming what is a really good idea, you know, out of common sense. Thirty years ago you met a marketing director that said we should advertise on tv. Why? Because our competitors are doing it. Just feels like the right thing to do. Nowadays people talk about marketing spending basket value dwell time in a store, lifetime value of a customer and always kind of shocks me when you look at any analyst report or Chairman’s report or CEOs report, they are full of customer metrics that show brand communication around the marketing function will actually impact the balance sheet. When you come to people and when you come to talent acquisition metrics are freely available, but they are never aligned with the balance sheet. And as a result what we have is a absolute blueprint. But we’ve got to be cleverer about how we communicate the impact of our work. For an example, marketing doesn’t talk about how much an advert costs. What it talks about is the lifetime value of the customers it brings in. Recruitment talks about the time to hire and the cost of hire. So the over the threshold type metrics, it does that because it needs to justify its existence. Very few talent acquisition functions measure themselves on the impact of those hires and the performance of those hires three, four, five years in. So as a result, what you do is you commoditize yourself, you make your service very transactional. So really interesting question because there’s actually a blueprint really out there that has really transformed the function and transformed the strategic importance of that by aligning its metrics with balance sheet. And I think talent and talent acquisition particularly has the opportunity to do that, but as yet has really struggled to find the capability to do it.
Matt Alder [00:14:49]:
So what’s your advice? Talk us through the thought processes TA leaders should be sort of following to kind of really realise this opportunity.
Graham Paxton [00:14:58]:
So the first piece of advice is to think in, in that dimension, what are you really doing to impact a business vision? So to think about that, I forever talk to people about what’s your vision, what’s the what, how does it, how does your company make a pound and give yourself permission to really understand that? What keeps you CEO up at night? How is your business performing? Where is it performing? Really quick life hacks on this because most, you know, if you work for a public company, those are so easy to find this information because every analyst report every six months the CEO has to condense that into pictures. So all you need to do is go onto your website, look at investors and what you have is pictures of what the plan is. And how you’re performing against it. So understand that just because you’re recruiting doesn’t mean you don’t have to understand where the business is going. Once you understand the vision, you can then start to identify the critical future skill sets that you need to to that have, that are important to the success of that organization. And if you simply tier the kinds of hiring that you’re doing, so you tier it into what are future and critical skill sets and what are more transactional, then align all of your approaches towards, you know, they’ll differ. So certain future critical skill sets will need more in depth, more enhanced type recruitment activities. The more transactional stuff doesn’t. So first and foremost, whatever you do, work out where your business is going, work out what skills that relies upon and start communicating your strategy based on.
Matt Alder [00:16:47]:
That and then you know what next after that.
Graham Paxton [00:16:51]:
So then it’s the bit that most TA directors do well at, which is, you know, you start to think about the tactical how are you going to achieve things? Mostly the dislocation between a TA director and the CEO is the lack of communication and the lack of ability. I always got a brilliant stain that always sticks in my mind, a Churchill statement that said long apology to his wife, five or six pages long, and at the end said, I’m really sorry for the long apology. I didn’t have time for a short one. And I think that from a TA director angle, this is really important with what’s coming up in terms of the recession, we will constantly be asked, we need to reduce costs. The recession come in, we’re going to hire less people, therefore I need you to completely drop your budget. The job of a TA director is to start to condense and distill a communication which says, but the business is going to last five, ten years beyond this recession, more than that, forever. So how are we going to impact that and how can we create a competitive advantage in the future critical skill sets? So the job of TA right now is to distill a message, align it with the future vision and make sure that there is support so that you can really transform where TA sits in an organization from being a transactional service into a strategic driver. One of the critical success factors for that organization, slingshotting into better market conditions.
Matt Alder [00:18:27]:
I think that’s really interesting in terms of the, I suppose the extending of future horizons from the way that people might be thinking at the moment. I mean, how far into the future should TA be planning? Where should they be looking at in terms of, in terms of a transformation or Showing illustrating how they’re going to provide value.
Graham Paxton [00:18:47]:
That would really depend on the type of business that you’re operating on. But let’s just say some of the best TA directors we’re working with at the moment are looking at around a five year lens. Some of the embattled TA directors that we talk to who might be struggling to convince the business around investment at this point in time are looking at things in a three month lens or a six month lens or a one year lens. So I think the challenge that TA have to look at is fixing the basics and delivery. Fulfillment is one element of a TA director’s role. The rest should be around sourcing future critical skill sets. Sourcing, by the way, not meaning fulfillment of vacancies, but what are we doing in order to target communities of future talent and critical skill sets? The things where we just, you know, there are huge skill shortages brand, how are we communicating our business and setting ourselves out as a destination employer? Operations in terms of metrics and science and intelligence and technology in terms of automation are the others. So if you think of fulfillment as one element, what we tend to find is TA directors that have a short mindset, a short view of their job, I. E. They’re only really worried about what’s happening next year are far too focused on fulfillment. The more strategic TA directors are looking at some of the more impactful programs and they’re looking at the world with a five year lens and they’re thinking about future critical skill sets. How do I link sourcing into that? How do I build a CRM not as a static database, but as a community building tool? What tech have I got for automation? Where is my brand going? These are conversations which you have to look at over a five year lens, not a one year lens. And that’s probably the biggest difference between TA directors at the moment. And quite often it’s not because one’s better than the other, it’s because one’s better at communicating the importance of TA than the other.
Matt Alder [00:21:00]:
So as a final question, and you know we’ve already put the caveat in about everyone’s crystal ball being very much broken, what does success look like here? What do you think the TA team or the successful TA team of the.
Matt Alder [00:21:14]:
Future will, will look like? And where would its focus be?
Graham Paxton [00:21:18]:
So I’m probably going to ask answer that question with a broader remit, if that makes sense and success. So I said to you earlier, the three things that keep a CEO up at night. Have I got enough customers and are they spending enough money. Have I got enough cash in the business to fuel my ambition? And have I got the right people in the right jobs? And when you look at that, the first two of those things that keep me up at night haven’t enough customers and haven’t got enough cash. They tend to be run by the CMO and the cfo. They are the two people that are likely to be my successor. The third area is run by the cpo. That fundamentally is a position which I think to this day still doesn’t have anyone that’s moved from the job of a CPO into the CEO’s position in a Fortune 500 or FTSE 250 business. So there is the problem. So if you look at where the future goes, I think talent is your most important asset. I don’t think that’s a giveaway statement for a shareholder. I think that’s an actual truth. So, first of all, CPOs need to be really strong at aligning their achievements and their performance with the balance sheet in the same way that chief marketing officers have. Now, once they create that, they will be a natural successor to CEOs. And I think that is the future state that we’re looking at. I think my kids and grandkids will grow up in a world where they can’t believe that wasn’t the case. So if we look at that, where does that, what does that impact the ta? Well, if you’re a cpo, talent is one of your major driving forces. And talent acquisition directors need to be able to put themselves at the forefront of promotion, into the leaders of all talent initiatives. So performance reward, internal comms, et cetera. So I see the future of talent acquisition being get really strong at your metrics, get really strong at understanding how your role impacts the balance sheet, evidence that communicate that, then take a bigger role in talent, then take a CPO’s role. And all of this progression is about showing that people run businesses and therefore the role of CPO or talent is a natural precursor to being a brilliant CEO.
Matt Alder [00:23:49]:
Graham, thank you very much for talking to me.
Graham Paxton [00:23:51]:
Thank you.
Matt Alder [00:23:53]:
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