One of the biggest challenges for executives is effectively communicating the organisation's strategy. Corporate mission and vision statements, company roadshows and team presentations are the typical tools used, but few if any of these provide little more than momentary inspiration for the people that are expected to make it happen. Little direction is provided to answer the employee's primary question: what do I need to do to make this happen?
One excellent approach to effectively communicating strategy is outlined in the January 2001 Harvard Business Review, which featured an article by Kathleen Eisenhardt and Donald Sull looking at strategy as a set of simple rules. Supported by anecdotal evidence from such recognisable corporations as Yahoo!, Miramax and Cisco, the authors demonstrated how businesses in highly competitive markets with few opportunities for unique and sustainable differentiation (two key characteristics of the recruitment industry) have been able to achieve their strategic objectives.
The key learning from the creation of simple rules is that they allow an organisation to see opportunities and move quickly enough to capture them. For example, when Cisco started acquiring aggressively, one of its simple rules for identifying targets was that it could acquire companies with at most 75 employees, 75% of whom were engineers.
Unlike the multitudes of KPIs dotted throughout process manuals, a small number of simple rules provide just enough structure to allow an organisation to capture the best opportunities. Eisenhardt and Sull discovered that simple rules fall into five broad categories:
How-to Rules. Consultants must take job briefs from clients face-to-face, is an example of a rule that provides direction for a key process.
Boundary Rules. These rules establish parameters. For example, when evaluating a recruitment assignment, a simple rule may state that only assignments with a placement value of at least $5,000 are accepted.
Priority Rules. Simple rules can set priorities for resource allocation among competing opportunities. Consultants working too many assignments may be guided by a rule that establishes priority between clients, net placement value and/or contract duration.
Timing Rules. Many companies have timing rules that set the rhythm of key strategic processes. For instance, a rule stating that all candidate applications must be acknowledged within 24 hours of receipt guides the achievement of candidate satisfaction.
Exit Rules. These rules provide guidance for pulling out of the pursuit of particular opportunities. For acquisitions, for example, the purchasing company may have a rule around the retention of key personnel: if any of that group leave before due diligence is completed, they withdraw from the process.
So what does all this mean for recruitment businesses? Research and experience show that execution of a company's strategy is far more important than the actual strategy. In fact, the ability to execute is a critical component of business value. As an example, for various reasons many recruitment businesses have succumbed to price pressure in recent years, with reports of some companies accepting permanent recruitment assignments for placement fees as low as 6%.
To escape the discount trap, business owners may create a set of simple rules for the key strategic processes of their business (such as client acquisition, client service, candidate care, the recruitment process, talent management and statutory compliance) that forge closer relationships with clients, deliver superior results and demonstrate the value of the full-service approach.
The number of rules is critical - the fewer the better – as is their specificity. The optimal number of rules falls somewhere between two and seven for any key organisational process, providing enough guidance and parameters without sacrificing flexibility and innovation. When creating rules, avoid including those that are broad (guiding principles and core values are not simple rules), vague, value-destroying or stale. If current strategy or its execution are not delivering results, executives should not be afraid to step back and embrace the possibility of change. Despite the denials of many recruitment professionals, the market is changing and technology will have a more significant impact on the value of the service over the next decade than many realise.
If you feel that execution is affecting your business' results, create some simple rules. Keep them simple, specific, few in number and focused on key strategic processes and base them on your experience of what works. Don't throw out the procedures manual, just establish a set of rules that are easy to follow and that provide the opportunity for innovation and growth as the market changes.
