The Talent Acquisition Process in Indonesia is Broken: How to Fix What Most Internal Recruiters and Headhunters Rarely Realize
Wednesday, 01 November 2023
I'm almost entering my 17th year as a professional in the executive search industry in Indonesia.
Even though I have quite a long experience in handling so many different companies in diverse industries which span over 20 countries worldwide, but I always focus to help those clients of mine in identifying local talents to work for their offices which located in various cities throughout Indonesia -- from Medan in the northern part of Sumatra, all the way to Raja Ampat in Papua.
This article is actually my observation from almost two decades working in this industry, because I have to be very honest, in a talent-driven market, it's alarming how many organizations in Indonesia are unaware about a broken talent acquisition cycle they have been doing all these years, which ended up in unnecessary difficulties to hire the right talents for the right jobs at the right time.
I aim to reveal the logical and systemic flaws that most internal recruiters and headhunters often overlook, offering a research-backed findings for transformative change in the talent acquisition process in Indonesia in general -- not just for my clients who have heard me advise them to fix almost all of these things for so many times before.
8 Broken Talent Acquisition Processes Commonly Found in Indonesia
1. Disregard for Candidate Experience
The Issue: Companies often operate under the assumption that candidates are desperate for a job, leading to a neglect of the candidate experience during the recruitment process.
This oversight of what the candidate's feel and think during the entire recruitment process can have long-term consequences, affecting not only the quality of hires but also the company's reputation because of a poor candidate experience during the recruitment process.
- Treat Candidates Like Customers: Quick responses, respectful treatment, and constructive feedback can significantly improve the candidate experience.
- Transparency: Keep candidates informed about the status of their application and preparation for the next steps if they passed the previous process.
- Feedback Loops: After the interview process, provide candidates with feedback, whether they are selected or not. This not only improves the candidate's experience but also enhances your employer brand.
2. The Trap of Past Tradition
The Issue: Many companies are still using the same recruitment methods they've used for decades, failing to adapt to the changing landscape of talent acquisition.
This is particularly problematic given that younger generations entering the workforce have different career aspirations and expectations than their predecessors, which might need different approach, different assessment tools, and more efficient recruitment process from the internal recruiters.
A study by Håkansson and Nilsson (2018) found that recruitment practices change over time and that relying solely on traditional methods may not be effective in attracting a diverse, younger workforce.
The interesting research finding above clearly suggest that sticking to traditional methods (that mostly irrelevant nowadays) could be detrimental in attracting a younger, more dynamic workforce.
- Modernize Your Hiring Channels: Platforms like LinkedIn and industry-specific job sites are more aligned with the expectations of younger job seekers.
- Leverage Social Media: Because younger generations are more likely to discover job opportunities through various social media channels.
- Streamlining The Recruitment Process: Creating a quick yet effective hiring process is no longer a luxury for companies; it's now a necessity for securing the right talent in the shortest possible time.
- Engage in Employer Branding: A strong online presence and solid online reputation of companies can attract younger talent who are looking for more than just a paycheck.
3. The Reputable Universities Fallacy
The Issue: Many companies still operate under the assumption that candidates from top-tier universities are inherently more capable and will perform better than those from lesser-known institutions.
This belief can lead to a narrow talent pool and missed opportunities to hire high-potential candidates from diverse educational backgrounds.
A study by S. M. Gaddis in 2004 found that graduates with credential from elite universities result in more employer responses in the job application process, but this does not necessarily translate to better performance in the future from those graduates after they were hired.
- Recruitment Fit: Focus on the knowledge, skills, relevant experiences, and potential of the candidate rather than the prestige of their alma mater. I always advise my clients to use my simple but comprehensive Recruitment Fit™ Model to ensure objective assessment in the hiring process.
- Diverse Talent Pool: Expand your search to include candidates from a variety of educational backgrounds.
- Level The Playing Field: Use same set of interview questions, standardized tests, and reliable personality assessments to evaluate candidates on a level playing field.
4. The Popular Brand Illusion
The Issue: Companies with popular or strong brand names often (falsely) assume that their reputation alone will attract top talent.
Sometimes this false assumption leads to a neglect of the candidate experience as I explained above, as these companies think that everyone will be fighting to work for them.
A study by Devon DelVecchio et al. in 2007 found that job seekers believe working for a strong brand will allow them to advance better positions and provide them job-related training.
Another study by John Kim et al. in 2011 suggests that corporate-level brand plays a major role in influencing a potential recruit to pursue a job.
However, none of those studies indicate that a strong brand name guarantees a better candidate experience or higher retention rates.
- Employee Surveys and Focus Groups: Use these tools to better understand the existing employees' perception about what it feels like working in a company with a strong brand name. It will be effective to identify the blindspots in acquiring the right talents available in the market.
- Holistic Candidate Experience: Don't just rely on your brand name; invest in creating a candidate experience that matches the expectations set by your brand.
- Another Offer: Always assume that most likely those highly-qualified candidates also have another offer from other high-profile companies, so you must have the right plan in advance to ensure they will choose to work for your company instead of others.
5. Ignorance of The Proper Compensation Strategy
The Issue: Many companies set their sights on hiring top-tier talent with specialized skills and so many requirements but allocate a compensation package that is far below market rates.
This disconnect between expectations and reality often leads to a prolonged hiring process, candidate disengagement, and ultimately, failure to secure the desired talent.
Worst of all, word spreads quickly in professional circles, and companies known for lowballing offers may find it increasingly difficult to attract quality candidates in the future.
- Market Research: Conduct thorough market research to understand the going rate for the skills and experience you seek, especially in your industry.
- Flexible Compensation Packages: Consider offering flexible benefits that might appeal to candidates, such as remote work options, learning and development opportunities, or any other creative form of monetary compensation, such as allowances or variable pays.
- Disclosure: Be upfront about the compensation package during the initial stages of the hiring process to ensure alignment between company's allocated budgets and candidate's salary expectations.
6. The Interviewers' Incompetence
The Issue: Many hiring managers or users lack the training and skills to conduct effective interviews, leading to poor hiring decisions.
Whether it's asking irrelevant questions, focusing too much on credentials, or failing to assess soft skills, these shortcomings can result in hiring candidates who are not the right fit for the role or the company culture.
This will bring unexpected consequences, such as:
- Poor Fit: Ineffective interviews lead to hires that may not align with the company's needs or culture, resulting in lower productivity and higher turnover.
- Wasted Resources: Time and money spent on the hiring process are wasted when the potential candidates are bypassed.
- Reputation Risk: Poor interview practices can damage a company's reputation, making it harder to attract quality candidates in the future.
- Training: Provide comprehensive training to hiring managers on effective interview techniques, including how to ask open-ended questions and assess soft skills.
- Interactive Structured Interviews: Use a structured interview process with standardized questions to ensure all candidates are evaluated on the same criteria. Conduct these interviews in a two-way, interactive format that resembles a casual discussion. In my experience, this approach uncovers surprising aspects of candidates that can be invaluable in making hiring decisions.
- Third-Party Assessment: Consider using external experts or assessment tools to evaluate candidates objectively.
7. Unconscious Bias and Discrimination Practice
The Issue: Still related with issue number six above, many companies unknowingly perpetuate recruitment bias, leading to discriminatory practices in their talent acquisition process.
These biases can manifest in various forms, such as ageism, sexism, and racism, and often operate at an unconscious level in the entire organization.
A vast body of research, including this article in Harvard Business Review by Rebecca Knight, shows that unconscious biases like racism, ageism, and sexism play a significant role in hiring decisions.
These biases can be embedded in job descriptions, interview questions, and even on the job advertisements posted in various job portal platforms.
Of course, discriminatory practices narrow the range of candidates considered, limiting access to potentially high-performing individuals who don't fit the biased criteria.
- Create a Written Policy: Senior leadership team must create a clear written non-discrimination policy that must be implemented by all parties involved in the hiring process for all level within the organization.
- Rewrite Job Descriptions: Remove adjectives and phrases that are associated with a particular religion, race, gender, age, or ethnicity.
- Set and Track Diversity Goals: Establish organization's diversity targets and regularly measure performance against these goals to keep equality in hiring process as a top priority.
8. Headhunters Who Have Conflict of Interest
The Issue: From its inception, the recruitment consulting industry has largely operated as a sales-driven profession.
If you ask any headhunter about their compensation structure, most will confirm that they earn a commission for successfully placing a candidate with a client. This is particularly true for those working in contingency firms, where client payment is contingent upon successful placement—no hire, no pay.
Now, consider the implications of this model. How many client assignments do you think a headhunter can juggle simultaneously?
As a client, expecting quality service becomes unrealistic when your headhunter is managing too many search assignments from various clients concurrently.
The situation worsens when companies exploit the "no hire, no pay" model.
Viewing it as a zero-risk strategy, they pit multiple headhunters against each other for the same vacant role, knowing they'll only have to pay the one who successfully places a candidate.
In this scenario, headhunters transform into bounty hunters, competing for the prize rather than focusing on the best fit for the client's interests.
So, when your company works with headhunters who are motivated by commission-based incentives to meet their individual sales targets from successful placements, can you truly trust that they have your best interests at heart as a client?
- Performance Metrics: Headhunters must shift their service from a commission-based model to a value-based model. Establish performance metrics that go beyond immediate placements, such as candidate retention rates, time-to-hire, and the candidate's performance during the probation period.
- Open Communication: Maintain open communication between the client and the headhunter. Regular updates and feedback loops can ensure that both parties are aligned in their objectives, so it will also speed up the recruitment process entirely.
- Exclusivity Contracts: Consider entering into an exclusive agreement with a single headhunting firm for specific roles. This ensures that the headhunter is fully invested in finding the most suitable candidate, not just the first available one.
- Client Education: Corporate clients must understand on the pitfalls of exploiting the "no hire, no pay" model and the benefits of a more collaborative, value-based approach, whenever they work with headhunters.
Personally, I oppose the common practice among most recruitment consulting firms of compensating headhunters through commissions or other forms of variable pay for successfully placing a candidate with a client.
This commission-based model inherently creates a conflict of interest, as it prioritizes the consultant's financial gain over the client's need for a well-suited candidate.
The immediate consequence is a focus on quick placements rather than on finding candidates who are the best long-term fit for the company.
This misalignment of interests can lead to poor hiring decisions, affecting not only the company's performance but also the career trajectory of the candidates involved.
Therefore, to maintain the integrity of the talent acquisition process and to align the consultant's motivations with the client's long-term success, it's crucial for headhunting or recruitment consulting firms to move away from commission-based compensation models.
As a testament to the viability of this approach, my company, Headhunter: Indonesia®, has successfully eliminated commissions and any other form of variable pay to consultants for successful candidate placements since January 2020—and since then our business has been doing just fine, while maintaining high-level of clients' satisfaction.
A Call to Action, Not Just Criticism
In summary, the talent acquisition system in Indonesia isn't just flawed—it's fundamentally broken.
But let's be clear: it's not beyond fixing.
By paying attention to the overlooked mistakes that even seasoned business leaders, internal recruiters, and headhunters make, and by putting research-backed strategies into action, companies can fix them all to build a better and stronger talent pipeline.
This isn't just theory; it's a practical roadmap to long-term business success.
Lastly, I want to make one thing clear: I didn't write this article just to point out problems or to complain.
In fact, I didn't have to write this article at all.
Yes, these challenges have even led us to turn down potential collaborations with some companies as new clients because our philosophies on hiring don't align.
But given our nation's vast population and abundant resources, we possess unique competitive advantages that, if leveraged correctly, can drive us toward prosperity.
Through this article and as part of a moral imperative, I just want to make a meaningful contribution (no matter how small it might be) by sharing my professional expertise and point of view to gradually improve talent acquisition practices in Indonesia.