Time to Hire

Ep 23: HR Economics Pioneer Maria Scarangella Unlocks Value in Talent Data

• Recruitment Process Outsourcing Association (RPOA) • Episode 23

Share episode

In this episode of Time to Hire, Lamees Abourahma features Maria Scarangella's keynote address from the 2024 Annual RPOA Conference. Maria, former GEICO executive, shares insights from her 37-year career in HR and operations. She explains how companies can measure the costs of hiring, training, and turnover to make better decisions. Scarangella reveals how she saved GEICO $94 million per year by focusing on employee performance and retention. She breaks down the connection between talent strategies and business goals. The episode includes details about her new HR economics course launching with RPOA in 2025.

Discover how to transform your HR department from a cost center into a profit powerhouse with Maria Scarangella's groundbreaking 4-week HR Economics certification program - the only course that teaches you exactly how to calculate, present, and maximize the ROI of every hiring dollar your company spends.

Mark your calendar for the 2025 RPOA Annual Conference in Chicago on September 28-30. The RPOA Conference is the ultimate gathering for top RPO executives, service delivery leaders, advisors, and technology innovators.

Find RPOA calendar of upcoming events at https://rpoassociation.org/Events

Follow Lamees Abourahma on LinkedIn

Follow Maria Scarangella on LinkedIn

Follow the RPOA on LinkedIn

Find out more about the RPOA

Whether you're a seasoned talent acquisition professional or just starting in the field, "Time to Hire" provides an invaluable platform to expand your knowledge, learn from industry leaders, and stay up-to-date with the rapidly changing world of recruitment.


Lamees Abourahma 

Welcome to Time to Hire, brought to you by The Recruitment Process Outsourcing Association. I'm Lamees Abourahma, and in this episode, we're thrilled to feature a keynote from the 2024 RPOA annual conference held this past October in Chicago. Our speaker, Maria Scarangella, is a seasoned executive leader with extensive experience in business operations and human resources. Currently, she serves as a consultant and executive coach for Fortune 500 companies, and her insights have been showcased in USA Today and Harvard Business Review. In her keynote, Maria will share a proven cost analysis model that every talent leader should have in their toolkit.

I'm excited to share that, in 2025, the RPOA will introduce a new certificate program in collaboration with Maria. For more information, visit the RPOA website.

Now, it's my pleasure to welcome a new friend of the RPO, a first-time speaker at the Time to Hire podcast. Maria Scarangella,

Maria Scarangella 

CEO Priorities & Business Challenges

I want to talk about how you can become strategic business partners and help drive the end business results. So, PwC did a study last year of 500 CEOs and asked them what they wanted and what was most important. So throw out some things of what you think their responses were, and 95% of the CEOs came up with the same outcomes, talent. What else? It was innovation. So basically, what they're saying is they're not sure what they want, but they need their organization to move forward. And if you think about your role, driving talent to the organization is key to innovation and becoming a true strategic business partner.

What gets in the way? Now, in the same organizations, a survey was done on the people who worked there, and most of them felt that innovation was not a priority. And what gets in the way is people don't know who's responsible. They didn't think the company had a good plan, and they also thought that they didn't have time to innovate.

Strategic Business Partnership Framework

So, from the perspective of your clients or your customers, you can really be a game changer in their organizations. If you can tie together people, data, and technology, you can have an impact on the bottom line. So Accenture, everyone's heard of Accenture, right? They found that they were promising eight to 10% improvements by people using their services and implementing their technology, but they weren't able to deliver that ROI. What they found was that they were too focused on the data and the technology, and they were leaving out the people part. When they focused on combining those top three people, data, and technology, they were able to show an 11% impact on the bottom line. There is no organization that's not going to accept an 11% increase to their bottom line.

So, I say that communication is the art of being understood because I think what you and everyone who's communicating really needs to understand is what's the value that my client is trying to achieve. How can I have an impact, and how can I speak a language that resonates with them? For human resource professionals need approval to have their budgets passed through the CFO; if you can link your conversation with their ability to get their budgets approved, you can smooth the process for acceptance.

GEICO Success Story

So I want to tell you a little bit about how I came to do the job that I do today. I spent 37 years at GEICO Insurance. Has anybody ever heard of GEICO and the gecko? I spent 11 years in different levels of HR, but I spent many, many years running operations. And in my second to last job with the company, I ran operations for seven states out of Tucson, Arizona.

So, I managed a $2.5 billion P and L. I was responsible for a million and a half customers and 2000 people. And when I was promoted, I was looking through my P and L, and I said, I called the CFO, and I said, I'm getting all of these allocations from HR and from learning and development and talent. And I said I am not getting the benefit from that. And he was like, Maria, either figure out how to do it or accept it. Because of the way that the company works, we're going to give you the allocation. You can either figure out how to take advantage of it or just accept the cost.

And that was, I mean, it seems kind of obvious, but it was a turning point for me, and I reached out to those departments. And for those of you who don't work as closely with big corporations, there are line departments that are driving the bottom-line results. And then there's all the support departments. HR is a support department. Anything related to talent is support, and it gets allocated to your P and L, which impacts your ability to make a profit. So I partnered with all of them, and I said, Okay, so if I'm spending the money, help me achieve my bottom line results, and I will advocate to you for the rest of the organization and tell people how you help me because, to me, I don't care about getting credit for that. My credit is growth and profit. So after doing that for about three years, Tucson, Arizona region, became the number one in employee engagement, lowest turnover, and highest speed to proficiency for new hires. But the most important thing is that we were number one in terms of growth and profit. And I was sending leaders to New York, Dallas, San Diego, and Florida, and I don't know if anyone is in the room. Has anyone ever been to Tucson? Okay, does anyone think of that as a talent hotbed? So, if you think about the outcomes and how you can drive those outcomes, you can have a significant impact.

So after doing that, the CEO of GEICO said, I want you to come to DC and lead talent for the whole organization, and I want you to take what you did in Tucson and do it for the rest of the company, for our 43,000 employees. So when I went there, the very first thing that I thought about was that I didn't want to lose my street cred as a P and L leader. So, how am I going to change this mindset? And the first thing I did was sit down with the CFO, and I said, Give me a few analysts, and let me figure out how we actually do drive the bottom line. We created calculations that I'll talk a little bit more about later, but understanding the cost and the value of every stage in the employee life cycle gave me the ability to see the opportunity that was in front of me.

So, does anybody know who that guy is who's handing me his wallet? Warren Buffet owns Geico. GEICO is a wholly owned subsidiary of Berkshire Hathaway, and every year, the senior leaders present our plan and our budget, and we get approval. So, as the talent leader, when I was doing my budget, I said, I'm not asking for a budget. And, of course, everyone in the room is like, That's ridiculous. So I said, No, I'm not. I'm not asking for a budget. I know how much our talent missteps cost us today. I'm asking for half of the savings that I deliver to reinvest in programs that I think are valuable, and the rest can go back to the organization. And Buffet said you're either crazy, stupid, or have a good idea, and we've got nothing to lose by trying what you want to do. I guess I'm a little bit of a risk-taker, so I'm going to get to the outcome. So they approved my budget and allowed me to initiate the programs, and my budget was a variable budget based on our savings.

The key part is being able to speak the language of the business. So, if you're using terms that resonate with the senior leadership in the organizations that you work with. Can you talk about your return on investment? Can you talk about the costs and the value of using your organization rather than working with another organization, and what differentiates you and helps them do their job? You're much more effective. So I do a lot of work with SHRM, and what I found is many of the people in HR can't tell you their cost of hire, their cost of an application, the cost of turnover, the cost of onboarding, and for them to be as effective as they can be, they need to know those metrics because the CFO is going to talk about the bottom line. And as money becomes more expensive, as interest rates go up, as there's a focus on efficiency, every dollar counts. And you're either helping them be more efficient and more effective in selling the services that they want, or you make their job harder. As someone who was on the purchasing end of HR products, I looked at it with my team, and unless you can give me a 10x return on investment, I don't want to take the chance and pilot it.

So, I want you to think about what it is like on the receiving end and what the process is for the CHRO or for the senior leaders in HR to get their budgets approved or get this expense approved. So, speaking in the language that they need to translate to get their approval is very important.

The other piece is talking about the bottom line and then being very purposeful with how you can help. You can help them achieve their ultimate goals and align with what they think is most important to their organization.

So, I was able to save the company $94 million per year. Our turnover cost when I took over was $195 million. That is a staggering number, and when I presented my first budget, everybody joked that our CEO's head was going to pop off when he saw that number because most people know turnover is expensive and hiring is expensive, but they can't tell you where their what their starting point is today. So, without knowing that, it's much harder to make decisions on how you spend your money; we reduced the cost per hire by 3.6 million, the cost of training by 54 million, and the cost of turnover by 37 million. That was pretty staggering. I didn't realize that we'd be able to do that much that quickly. But when you start looking at the actual dollars and cents, you make very different decisions.

Strategic Framework for RPO Leaders

So I would say for any customer that you work with, you should know what are their organization's two main goals. And it's funny because when I do this work with HR leaders, they'll talk about a lot of goals, and they have hundreds of KPIs. It's very easy to understand. What are the two main goals? What's the CEO's bonus based on its growth? In profit, it's EBITDA and revenue growth, and it is very clear. Organizations know what the ultimate goals are, and then everything can get aligned with those two ultimate goals. And if you think about it, even in your own organizations, as you're leading your own companies, there's a lot of activity that doesn't help you achieve those main goals. Think about it this way: everything you do either takes you one step closer or one step further from those things. There's no There's no neutral space.

So, I'm not going to ask you to do this, but I think it's important when you have introductory conversations with your organizations and the HR leaders to understand what is most important to them. And what is their organizational purpose? What are their ultimate goals? Why does their department exist? And then, what business results can you drive as you partner with them? And I can tell you that there were a lot of smaller companies that we worked with that we made better. I always look at it as a partnership. If you help me make my organization better, I want you to receive the benefits as well. So if we can partner on this, we both get better, and we both get what we want from the relationship. And it really is a relationship, and there's so many vendors in every space, and it's getting to be more and more, so you have to differentiate yourself. What's the additional value that you can bring? And it really is a strategic partnership.

So, what we did to start with was create the metrics for each stage in the employee life cycle. And I know you're here talking about RPO, but hiring has a downstream impact. It is not a one-and-done; as a corporate customer, they want to know that the person that they're hiring is going to be with them long term, is going to be successful, is going to be able to perform the job. So, thinking about the downstream impacts is really critical. So what is the cost of an application, what's the cost of hiring, what's the cost of onboarding, what's the cost of training, and what is the cost of leadership development? What's the cost of performance gaps, and what's the cost of turnover? If you understand all of those costs and how they interact with each other, you can provide solutions that help solve the long-term problem.

Performance Management Approach

And if people think about the cost of a good performer versus an average performer versus a poor performer, there's no point keeping that bottom quartile. I like to quartile people, so you can, and sales is a perfect example. And you all probably have salespeople that work for you, right? Logically, you or instinctively, you probably know who your top salespeople are, but do you know the difference in cost between your top salespeople and your bottom salespeople? And a lot of people spend time on their bottom salespeople because you're trying to get them just to that basic level. I quartile our salespeople and said, Okay, these are our rabbits. First quartile, they are the trendsetters. They're going to drive. They're going to always be creative. They're always going to find that new solution. They're going to figure out how to get the sale. The second quartile, our good, could use a little bit of insight from the rabbits, and you can get them to that first quartile. The third quartile needs much more development. Fourth quartile, whether it's a skill or a will or whatever it is, it's not worth the effort to try and get them to that next level.

And if you look at the dollars and cents that are driven between those if you can get your second quartile to the level of the first, you can get your third quartile to the level of the second; you don't even need that fourth quartile. You could pay the same salary dollars, get a 25% improvement in performance, and increase your margins. A lot of HR leaders don't necessarily think of it this way, so I work with them and try to change their thought processes. They can have a much bigger impact on their organizations by saying, I'm not going to just talk about engagement, or I'm not going to just talk about time to hire. Those are important, secondary, and tertiary metrics. I'm going to tell you, as CFO and Chief Revenue Officer, how I can make your job easier and help you achieve results. By changing the role of the CHRO, they become a much more critical part of the organization because they're not just talking about Talent on the day that Talent is discussed at the board meeting. For those of you, many of you have sat through board meetings. How many people have sat through a board meeting? Okay, day one is about what went well last quarter. What are you driving for the next quarter? How are you going to increase EBITDA? How are you going to drive more revenue? What are the critical issues that we need to watch out for? And day two is Talent. Depending on how well day one goes, it may be at the end of the day on day two, Talent is woven through every conversation. It should not be a separate, distinct factor, and it's becoming more and more important as companies are looking at more efficient ways to grow because there are a lot more choices of how we use our people.

So, for you to be ahead of the curve and all of the changes that were spoken about in the first session, you have to think about how you're not just a provider of hires. You want to be part of the conversation and a partner with your clients so that they rely upon you. When it comes to a talent decision, you're the first one they call because you give them value beyond just filling a slot. And the world is changing quickly, and if it's being automated, where's the additional value? The additional value is in strategy. It's in alignment, and it's helping them make better decisions for their organization.

Future Developments

So when I retired after being with Geico for 37 years and hadn't planned to work, I started to get a lot of phone calls from different people. So, I started doing executive coaching, and I realized that my thought process on this was much more unique than I originally knew. I had been kind of isolated because I was with the same company for 37 years. I built the model and have been using it with clients for the last two years. We're in our final stage of patent approval. We're going to build a technology solution, but what we do is partner with organizations to help them define their costs at each stage in the employee life cycle. And we're able to do that with their own data. So we create an infrastructure for them to be able to define their costs at every stage, using their own data, which helps them drive their decision-making, and they're able to be very thoughtful about their spending strategy. So, starting with where they are today, we will evaluate. All the costs, and then, as they make purchases or work with vendors, they do it in a way that they evaluate how it impacts each stage and what the decision to make. I also help my clients build out a strategy for pilots. So, we're going to pilot with multiple organizations. This is the starting point for where we are today. This is the spend. This is our expected value, and how do we ensure that we get that value?

So, as a partner, they're helping their partners get better because they're saying it's not delivering what we expected. How can we refine it and improve it so that we get that value and then design strategies for how to achieve that? So, the solution for my model allows organizations to have a strategy, to have a framework, and to show true value added for any decision that's made. I hadn't thought about it from the vendor side when I started this journey, but I've been working with a lot of vendors on how to use this information and thought process to truly deliver value. It is really very valuable for you as a vendor to teach your clients how to use your services.

Lamees Abourahma 

Before we continue, I just wanted to take a moment to inform our listeners about a new certificate program in HR economics. The four-week virtual course presented by Marie Scaringella is designed for talent acquisition leaders and RPO providers. The course will demystify the true costs involved in recruiting, hiring, onboarding, and developing employees. Participants will gain practical skills in calculating unit costs at each stage of the hiring process and linking these expenses to organizational performance. Additionally, the workshop will provide strategies for presenting financial data to business leaders making a compelling case for adopting or extending RPO services. Visit the RPOA website for more information.

Maria Scarangella 

The next part of the process, once you have this data, is to go through everything that you're doing to say, what do we stop doing? Because it really does not add value. Is it taking us a step closer to achieving our goals, and if it's not, let's stop doing that activity? What should we outsource? Because it's not as cost-effective? What should we automate? And what's the true value? Add that our staff delivers that we should keep doing. There is so much more outsourcing that is happening in corporations now because specialists can be much more efficient. So, if you can be efficient, especially at this time, think about it: Right now, there are a lot of people who are not hiring and have been reducing staff. If you're in that discussion, the first conversation for HR is that we're reducing our staff. We don't need recruiters. So, they eliminate their recruiters, and it is hard to get that process started again.

RPO is the perfect solution because you have the flexibility, and I, as a corporate leader, don't have to go through that emotional review of who we are going to lay off. Who are we going to? Are we going to retrain this person? It's much easier to outsource.

So, when you use the model, you create a new mindset and allow people to think very differently about the decisions that they're making. It's very data-driven. They're able to get buy-in from the other business leaders in the organization as well because they're seen as a strategic business partner driving the. With the ultimate results, you have a very clear financial impact. And when you manage a P and L, every dollar matters. And I was in a very low-margin business. I don't know how many people are familiar with insurance; it always seems like you're paying too much, and you don't want to buy it. But the margins are four cents on $1, so every penny makes a difference, and it's a commodity. Yes, it could be on a different piece of paper for State Farm or Geico, but you're buying a piece of paper that says, When you get in an accident, someone's going to cover you. So there's really not much differentiation, and price really drives value. So, if you're in an organization with low margins, I can tell you that that corporate person is constantly looking at how to drive down expenses. 

Then, it allows for a spending strategy that's based on the return on investment, and you give leaders a way to show they're contributing to the bottom line and become a competitive advantage for their organization. And if you think about the perspective that I started my story with, where I was calling the CFO, saying I'm getting all these allocations, I'm not getting the benefit. That is the mindset of a lot of leaders. So, being the solution helps you solve their problem as well, and it helps elevate them within their organizations.

So this really is a flywheel process because you can't solve all the problems at once. It is about identifying the biggest areas of opportunity, creating a pilot, analyzing the early results with your partner, to be able to say, Okay, we see there's a benefit here. It looks like we still have an opportunity here. How do we adjust? And getting information about not just the hire but what's the quality of the hire. How long is it taking them to become a proficient person? If it is, you're hiring, you know, at GEICO, we used to hire classes of 20 for sales service and claim there's a variation in performance. How do we use data to talk about improving the quality of hire? How do your placements perform at six months, at a year, and get people to start thinking about you being associated with that performance one year out, rather than whether they showed up and what the cost per hire was? Cost Per hire is critically important. But I'll give you an example. So our cost per hire when we first started was about $1,200 per person. Our cost of this was for our customer service rep. Our turnover cost for that same person was $40,000 because it's not just their salary, and we would look at it based on the time period. So if we lost someone within the first three months, we got nothing; if we lost them at the end of six months, we got someone who performed at 50% from three months to six months. If we lost someone after the first year, it would cost us about 54,000, because we invested in their training, their development, and if we lost someone after four years, the opportunity costs were phenomenal because you replaced them with someone who can't add value, really add value for the first six months. So hiring is such a critical decision for organizations, and when you can start showing them that the people you place with them retain longer, perform, get to the performance. Metrics: The quicker you become a really valuable partner, the way beyond the fact that they show up.

So, I really want to stretch your thinking and think about the longer-term value that you add to an organization. And I can tell you that when we would start using a vendor, we would typically pick three or four, figure out who delivered the most value, and then that person that delivered the most, we would sign multi-year contracts because it's hard to go through that. It's time-consuming to go through that process, and you want to work with someone that you trust. So, if you're able to differentiate yourself by showing the true value that you add, you have a long-standing relationship opportunity.

New HR Economics Course

So, it's just a little minor plug, and I'm not going to spend a lot of time on it, as we're patenting our patent pending model, which hopefully will have a utility patent approved by the end of the year. We're doing certifications. An interesting thing is that we've been hired by some of the private equity firms to work with the companies that are owned by them to upskill their HR leaders, and we put them through this cohort program that allows them to learn the model and understand the thought process, and we will offer that as well to this group, so it gives you a chance to use the model, understand how it works, and practice with real clients if they allow you to do that. These are just some of the clients that we work with, and the shameless plug of cost because you have to ask for the sale. We do our HR economics; we do strategic planning and a significant amount of executive coaching.

Key Takeaways for RPO Providers

So, what I would like you to take away from this session is a different perspective on how you can interact with your clients to really add value. Have a strategy to deliver greater results and build long-term stability with your clients, especially during this time of change as they more and more are being automated, so you need to differentiate yourself by the value that you bring that's beyond the bot and then think about the opportunity to upskill You or your teams. Well, thank you all very much. It was really nice to see everyone. Thank you for your time.

Lamees Abourahma  
I hope you enjoyed this episode of the Time to Hire podcast from the Recruitment Process Outsourcing Association. Give us a review wherever you listen to the podcasts, and remember to check out the HR economics course presented by Maria Scarangella in collaboration with RPOA. As always, stay connected, stay engaged, and stay informed of what's happening in the talent and recruiting world by tuning into The RPOA, the place you go for RPO™