Service Level Agreements: An Introduction

Last week I conducted one of my frequent informal surveys of ERE readers to see how many of you are using service level agreements (SLAs) with your managers. I also wanted to see what they contained and how they were arrived at. I received survey responses from many of you, but need some more time to follow up and probe a bit more deeply into many of them. If you missed the survey last week and would like to complete it, please see last week’s article. I will give you a summary of the responses next week. This week I will provide some basic definitions and thoughts about SLAs. The first question that I usually get asked is, why would anyone want to have an SLA in the first place? Many people believe that an SLA will hold them to requirements that are impossible to meet or would require them to perform at superhuman levels. I believe this is a mistaken concept. If you negotiate the SLA, which is a given, you should be able to arrive at numbers and quality definitions that are reasonable and achievable. Others believe in being self-driven and in creating their own goals and requirements for recruiters. They do not seek out the hiring manager’s approval. Many of these recruiting functions are successful and do collect metrics and other information that shows how well they are doing. The primary problem with this approach is that the hiring managers may not know how what or how well the recruiters are performing. A hiring manager will only follow his or her own experience. I received one response from last week’s survey that seems to echo this belief and the consequence of it: “We do not use SLAs, pay internal recruiter incentives or use a quality metric for new hires. On the other hand, we do set goals, measure and report TTS [time to source], RFT [?], source of hires, CPH [cost per hire], and Staffing Efficiency ? among other things. I admit, we still do not have a widespread understanding by top management of the shareholder value of great hiring.” While I intend to follow up with this respondent to probe a bit more deeply into how the recruiting function is structured, it is probable that one of the reasons top management has little appreciation for the value of the recruiting function is because it does not have service level agreements or quality metrics. Service level agreements (SLAs) are very simple in concept: they are agreements between a recruiter and a hiring manager on numbers and often on the quality of the people to be hired. They are developed before the hiring starts and may also contain incentives for the recruiters. They are almost always negotiated, rather than simply imposed by the hiring manager, department management, or the recruiting manager. Third-party recruiting agencies have used them for years, although they are called contracts or letters of understanding and have some legal clout. The benefits of using a SLA are many, including:

They clarify roles and responsibilities by detailing what each person in the relationship is going to do, at what level of response, and with what quality. For example, an SLA might say that the recruiter will present a candidate who meets the minimum requirements for the job (attached to the SLA) 48 hours after receiving a completed requisition. The hiring manager might be required by the SLA to provide feedback on the candidate’s resume within 24 hours and make an interview decision within 48 hours. No more than four candidates who meet the requirements will be sought. Etc., etc., etc.

I am a strong believer in setting up internal agreements and understandings between line and service functions. By doing this, each side gets a better understanding of the other side’s capabilities and needs. The process of negotiating the agreements is a time when both sides learn from each other and build trust, which is the essential ingredient in long term success. Next week I will provide more insight from those who responded to last week’s survey, and I will provide some sample bits from any SLAs that are submitted to me.