An Inside Job At CNA
Three years ago, CNA Financial Corp. was the perfect case study of how not to handle recruiting. For starters, the Chicago insurance carrier entrusted the job to human resources generalists scattered at its offices around the country. But as a rule, hiring managers didn’t think the human resources staff understood the intricacies of the specialty insurance markets that CNA sells to, and didn’t always share information. That left the staff to start from scratch when openings came up. In many cases, they turned to contingency search firms for a quick fix, paying up to $15,000 a pop for hires that weren’t always a good fit. To make matters worse, efforts to track candidates, open positions, retention rates and other data were hampered by a homegrown applicant-tracking system that managers admit simply didn’t cut it.
In early 2003, management ordered a complete overhaul. First on the to-do list: bring recruiting in-house.
Today, CNA operates a 30-person department that handles everything from college recruiting to field hires to some executive searches. The company coached hiring managers to work strategically with recruiters so that hiring needs are anticipated. Finally, CNA chucked its old technology for off-the-shelf software from an outside vendor that enables it to create online "talent communities" of job prospects, and to better track job requisitions, retention rates and other data.
The results: CNA’s in-house team filled 2,000 new positions in 2003, bringing total head count for the $11.7 billion commercial, casualty and property insurer to 10,000. Shifting recruiting in-house helped CNA save an estimated $3.5 million in agency fees and other costs last year, according to Tom Culhane, assistant vice president of recruitment and relocation. Those savings should continue, as CNA expects to add another 2,000 employees in 2004.
"There’s no silver bullet to all of this," says Pete Wilson, executive vice president of CNA’s U.S. specialty lines, who viewed the transition from the hiring manager side. "A lot of what made it work for us was good common sense in how you build partnerships."
CNA isn’t unique in its quest to gain control over recruiting processes and costs by shaking up the status quo. "I can’t think of a firm that isn’t discussing right now if they should bring it in-house or outsource," says John Sullivan, an industry expert and management professor at San Francisco State University.
It makes sense to own your recruiting efforts, Sullivan says. No matter how good they are, outside search firms won’t ever know a company’s needs and corporate culture as well as it does. Search firms take longer to fill spots, and their candidates don’t tend to stay as long, he claims.
But it takes time and talent to bring recruiting in-house, resources that not all companies are willing to commit. "You can’t treat it like a small project. It has to be a continuous process," says Christopher Bogan, president of Best Practices, a Chapel Hill, North Carolina, consultant who studies recruiting for major corporate clients.
"I can’t think of a firm that isn’t discussing right now if they should bring it in-house or outsource."
For CNA, the process began after executives determined that the company’s then-decentralized recruiting operations lacked consistency: different business units handled things in different ways, wasting time and money. When CNA management identified a number of insurance markets they wanted to enter in 2004, necessitating a heavy wave of hiring beforehand to get people up to speed, they realized that the old inefficiencies wouldn’t do.
Culhane, a former McKinsey consultant who’d overseen other recruiting overhauls, was hired in early 2003 to lead the change. He started by creating a recruiting and relocation team in CNA’s Chicago headquarters, transferring in some existing staff members and hiring others. Today, the department includes five experienced headhunters, two campus recruiters and one executive recruiter to fill positions at the assistant vice president level and above. Six recruiters working in field offices around the country support hiring managers in their regions. Rounding out the department are staff members who schedule interviews, follow up with prospects and provide other support.
Next on the remodeling agenda: phasing out contingency search firms. That dependency is tapering off slowly, as some hiring managers find it hard to let go. "These vendors are very well networked and have their finger on the pulse of the business outside [managers’] current company," Culhane says. Managers "struggle to give these relationships up for fear they too may need these folks some day."
In 2003, contingency search firms filled 8.5 percent of CNA’s new positions, down from a high of 20 percent in 2001. Midway through 2004, the number had dropped to below 3 percent, Culhane says.
A big part of the revamp was getting executives to change how they approached the hiring process and interacted with the human resources staff. In the past, managers didn’t act until they needed a spot filled. For their part, the employees in human resources assumed they’d get all the information they needed about a position without aggressively tracking down any other data, which wasn’t the case.
As part of the overhaul, CNA put its line managers through a high-level review of their businesses to determine what future opportunities they wanted to pursue. The result of the review was a project plan that managers now use as a hiring blueprint. From there, managers were coached to work with the in-house recruiting staff to put hiring plans in motion. Wilson says the key was making sure that top people kept an open mind. "Don’t treat this any differently from any other process you’re using to accomplish a goal," he says.
Today, before searches begin, hiring managers and recruiters conduct what CNA calls client engagement meetings so both parties know what they’re looking for. During a search, they stay in touch through regular briefings. Such meetings are face-to-face for some of CNA’s six field recruiters who are based alongside the business-unit managers they serve, while others stay in touch via phone and online.
Collocating recruiting with the business units and holding regular meetings during and between searches places CNA’s practices on a par with those of other high-performing companies, says Bogan of Best Practices. "It puts them at status quo with good recruiters," he says.
All of CNA’s other changes would have been for naught if the company hadn’t replaced a dysfunctional applicant-tracking system. Starting in 2002, CNA had used its legacy system for some aspects of tracking job candidates through the hiring process, and licensed software from an outside vendor, Hire.com, for others. But data on job openings, retention rates and performance of new hires was still either nonexistent or hard to extract. "It was broken," Culhane says.
Eventually, CNA chucked its homegrown software entirely and licensed the complete applicant-tracking system from Hire.com, which hosts the system off-site, freeing up CNA’s IT staff to focus on other areas. CNA pays something near the low end of Hire.com’s licensing fees, which run from $12,000 to $100,000 a month, depending on the number of employees and intended users, though Culhane declined to state the specific cost.
In addition to using the software to generate better hiring and job-retention statistics, CNA employed it to assemble so-called talent communities of underwriters, actuaries and other prospective employees. Using the software, CNA creates databases of individuals who respond to its job openings posted on a third-party site such as Monster.com, or people who send general inquiries to its corporate Web site. With their permission, CNA sends the individuals regular e-mail updates on jobs, corporate news, and anything else the recruiting staff deems of interest. The hope is that when jobs come up, these prospects will be "warmer" than candidates contacted through cold calls, better qualified and quicker to hire, CNA and Hire.com executives say. The more prospects identified through the new channels that have turned out to be fantastic hires, the more comfortable CNA managers have become with the methods and the more willing they are to work with in-house recruiters, company executives say.
CNA also uses the software to track new-hire requisitions. Before, it had no central repository of information on how many requisitions were in the pipeline, a problem that sometimes led to unnecessary hires. With a centralized system, CNA’s recruiters and managers have specifics on how many requisitions are in the approval process, what types of jobs they are and how they match up against the company’s needs.
If business grows substantially, can CNA’s in-house staff pick up the slack without once again turning to contingency firms? Definitely, Culhane says. Current recruiters could fill up to 5,000 spots a year without adding personnel. One way CNA executives believe they can achieve that is through load balancing. Twice a week, human resources managers analyze recruiters’ workloads and the company’s hiring needs to determine whether any given recruiters need assistance. If they do, recruiters with less on their plates are pulled in temporarily.
Bringing recruiting in-house wasn’t without its challenges, but the time and effort have paid off, Culhane says. "We’re maintaining quality, reducing costs and keeping the [recruiting] team members busy."
Workforce Management, August 2004, p. 14 -- Subscribe Now!