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As the holidays approach we all begin to realize that another year is coming to an end?? and what a year it has been! The year began with a lot of optimism and has ended with a great deal of uncertainty in the world. As 2001 approached, recruiters everywhere were still finding candidates hard to come by, but we began to see a shift in the employment market. There were more candidates to be found and fewer opportunities to fill. Was this an economic slowdown that we all knew would come? In hindsight, I think we can all answer “yes” to that question. As it turns out, it has been worse than a slowdown and many recruiters have lost their jobs. But the end of the year always gives one time to reflect and look forward to the next year with great anticipation. With the terrorist attacks in September and the official word from the government that the U.S. economy is in a recession, things in the recruiting world don’t sound all that bright. But I look at this news with great optimism and renewed energy. The U.S. economy enjoyed over 10 years of prosperity, something our country had never seen before. We all knew it had to end sometime, but no one knew when. As it turns out, the down cycle was this year. Bad news for many, but even better news for those who have worked even harder to make ends meet. We can all look forward to 2002 with great hope for the future. Here are some things that will propel the recruitment market back into forefront and help put America back to work.

• History repeats itself. You’ve heard that old saying before, but it is true. The history of our economy is that it is one big cycle. We have prosperous years followed by down years which keep our economy in check. 2000 was the last year in the prosperous cycle and 2001 has been the downturn that was inevitable. We need to look at this cycle as a positive evil that keeps our economy in balance.

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Dear Santa, Has it been a year already? What a difference a year makes! This time last year I was ducking phone calls from my clients and hiring managers because there was not enough time in the day to handle all the work. Assignments were like paperclips, there was always one laying around somewhere whether you were looking for it or not. Candidates acted like job offers were actually “offerings to a god.” Everybody knew it couldn’t last forever, but everybody acted like it would. It was a period of “damn the profits, full speed ahead!” Then it stopped. 2001 was not all that good. As a matter fact, it was terrible. Remember how I wanted a box of resumes two years ago? Well, you can forget about it this year. I could wallpaper my office with unsolicited resumes. I went to a career fair a few months ago to interview HR/staffing folks and candidates, for sort of a “Then and Now” piece I was doing. The organizer, an old friend, showed me a stack of resumes at the registration desk 18 inches high. He said, “Last year I would have kept these under lock and key to make sure some recruiter didn’t take off with them. Now they’re just something else to pack.” Last year I asked for good software tools to assist in automating and controlling the staffing search and the interviewing and hiring process. Well, you can forget that as well. HR/staffing departments and budgets have been slashed, reduced, or dismantled. Teams built up over the “boom years” with a investment of time and money were dismantled in the flash of an eye, or a memo. This year we’re reduced to fighting over budget line items like copier paper, white out, and postage. New software, training, or process upgrades in many places have been set aside “for now.” I am sure you read the papers and get CNN up at the North Pole (or maybe you don’t, which might explain how you stay so jolly.) This year, the economy, speaking professionally, went into the hopper. It began its slide in late 2000, but in the spring of 2001 the downward spiral accelerated right up to the present. Unemployment is up, the stock market is down, and people are too nervous to spend money they fear might not be replaced by another paycheck. You know what they say, “When Ma and Pa don’t buy a new refrigerator, computer companies ultimately have to lay off firmware engineers.” Then there was September 11th. We have a whole slew of names for that place and day:

• Ground Zero

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Two weeks ago I published a short survey here, and the response has been terrific! Dozens of you sent in your answers and thoughts, which I am analyzing. In January I will have completed the analysis of the results and will write them up for you in detail. This column highlights some of the key responses, along with a few of my own comments. While the results of this survey are by no means a scientific portrayal of what has been happening in recruiting over the year, they do provide a picture of how you feel and about what your organizations have experienced over the past twelve months. Let’s recap this year, briefly. We all entered 2001 with the same frenzied approach that characterized 2000. Most recruiters I talked to in January and February of 2001 were still hiring madly and were concerned with finding enough recruiters to meet the demand. The U.S. Army scrapped its 20-year-old slogan, “Be All You Can Be,” for a new one, “An Army of One,” aimed at Gen Y. The ER Expo (sponsored by our own Electronic Recruiting Exchange) was one of the most heavily attended recruiting events of the year, and it was held in March. But the end of the boom was in sight even then. Early signs of a slowdown were apparent. Columnists for the ER Daily, as well as other recruiting and HR-related magazines, newsletters, and websites, were already talking about the economic slowdown. Dot-coms had begun imploding and many more were to follow. By March there was general agreement that things were slow and that hiring was falling. By the beginning of Q2 things were getting worse. Dot-coms were failing everywhere and layoffs were up dramatically. Traffic was up on all job boards, showing that more people were looking for work. And by May, reports were coming out that college hiring was way down from 2000?? an early indicator of a slowing job market as employers try to grab and keep experienced workers. Candidates had clearly been able to dictate terms and negotiate offers in a more aggressive way than ever before throughout 2000, but by early June 2001, there were reports that companies were back in control of hiring instead of the candidates. I attended an IT recruiting conference in June that was barely attended at all, with speakers almost outnumbering attendees. Monster laid off 42 people, being early to start the process. This was my sign that the bottom had fallen. As we entered third quarter, everyone was aware that we were in a recession, and that the level of hiring had declined to almost zero for the high-tech industry. Techies.com reported that technical salaries were down 6% from January. Some sectors, including healthcare and services, were still doing well. Yet, FlipDog’s Job Opportunity Index fell 3.7 points in July. Most contract recruiters were laid off, and even the number of regular corporate recruiters was being scaled back. Daily headlines proclaimed the rising unemployment rate, the pink slip parties, and the quarterly losses of firm after firm. And then came September 11. Some Interesting Survey Results Your survey results reflect the pain of this past year. More than 53% of you said your recruiting staff had grown smaller, and 32% said staff levels had remained about the same. Only 15% of you said your staff had grown larger?? and that was largely in sectors like healthcare and the public sector where recruiting remains robust. Firms that have taken a strategic approach to automation and that have reduced or eliminated transaction-focused tasks have suffered fewer layoffs. In fact, those of you who are leveraging a smaller staff said that you were doing it through better use of automation, a focus on ROI and metrics, and the use of more flexible, less specialized recruiters who can wear many hats. The mix of skills that recruiters need is definitely changing. Many responders reported the need for recruiters with strong sales and marketing backgrounds, as well as experience in project management. These are skills that were rarely asked for prior to this recession. Other skills included a generalist background and a thorough understanding of the business environment and business strategy. These new skills correlated well with the courses and training you felt recruiters needed to have. Those courses which you felt would meet future needs best fell into three major areas: sales, technology and general business. There were several requests for courses on sales skills, including those on closing candidates. I will do an article in January on sales courses for recruiting, as this is an obvious area for improvement and one where many recruiters lack any training at all. The technology courses were, as might be expected, focused around the use of the Internet for searching and for finding passive candidates. There were one or two requests for courses that would teach a better understanding of how to leverage the website for recruiting and branding. The general business areas included strategic management, influencing and decision making, an understanding of legal issues in recruiting, and cross-cultural issues. What was somewhat surprising was that over 26% of you have no applicant tracking system at all, and another 15% use a homegrown system, some with apparently limited functionality. This is, though, consistent with other reports that show a very small penetration of ATS systems into the corporate environment. Whether this is because of lack of understanding of their usefulness, their seemingly high cost, or because of the poor relations recruiting often has with the IT department; it is an area for future research. The most heavily used systems were Restrac and Webhire, which 9% of you use, followed BrassRing with 6%. Other systems mentioned included PC Recruiter, Recruitsoft, Skillset, Peopleclick, Resumix and tools from Peoplesoft, Abra and Oracle. All the research consistently shows that there is no single product that dominates this space, which remains fragmented and misunderstood by most IT departments and many recruiters. Early in January I will provide a more detailed analysis of these results and I will use some of the information to write new columns in the first quarter of 2002. Meanwhile, thank you for reading my columns each week and for your comments and thoughts. While we don’t always agree with each other, our varied viewpoints help make us all better recruiters. I wish each of you a very happy holiday season, and I hope the coming year will be a peaceful and prosperous one. May you and your family enjoy a safe holiday and a Happy New Year!

It was with much trepidation that I met with Santa for our third annual review of his recruitment and retention programs. I had heard through the grapevine that Santa had met with some dramatic challenges in 2001, and that the stress had resulted in significant weight loss. Never believe what you hear. While 2001 was the most challenging year Santa faced since the late 1980s, he was as jolly as ever and his health appeared to be excellent. Santa’s first comment was that nothing could have prepared him for the challenges he faced in 2001. First, several of the B2B Internet companies that Santa put some venture capital into during 1998 and 1999 went bust. But losing the investment capital was minor compared to the impact it had on his supply chain. Just as he was placing significant orders for parts through these Internet companies, they ran out of money and folded. As a minority investor, Santa had not been kept informed of the everyday finances and operations of these companies and their shutdowns came as a complete surprise. Fortunately, Santa was able to place orders with his brick and mortar suppliers and did not fall too far behind schedule. Second, with the downturn of the markets and the shaky economic outlook, it was very difficult for Santa to manage his workforce plan. He anticipated that orders would be down for the 2001 holiday season, but he was not sure how low. His employee turnover rate was back to pre-1999 levels of five percent (Santa’s Workshop turnover is historically lower than most organizations). With the exception of his R&D group, which he always keeps well staffed regardless of the economy, hiring in 2001 was anticipated to be extremely low. As a matter of fact, for the first year in history Santa feared that he might have to have layoffs, something he wanted to avoid at all costs. Santa’s challenge was to balance his hiring needs for today’s economy with the outlook for the future. While he did not want an idle workforce, he did want to make sure that he didn’t get caught short when the economy turned around. To make his decisions, he not only analyzed his internal skill sets but also took a look at the predictors for future talent. He needed to develop a way of reducing costs today without hurting his ability to grow in the future. Fortunately, as a privately held entity, Santa’s Workshop did not have to answer to Wall Street. This allowed him the luxury of time to do the appropriate analysis of economic and demographic indicators, inventory controls, internal skills analysis, and employee development plans. He could make the best decisions for the entire organization without succumbing to analyst’s pressures. Analyzing demographic trends was easy for Santa. As a deliverer of toys to all the world’s children he was always up on demographics. Not only could he project the future of the available labor market years ahead of time, he also had insight into the interests of the world’s children. The world’s top economists like Milton Friedman, Abby Joseph Cohen, Robert Reich, and Gary Becker have consulted with Santa to prepare their analyses and trend reports. (Sadly, some direct marketing firms have tried to coax Santa to sell his demographic data. No need for concern, he has that info well protected.) Santa has made it quite clear that he is worried that companies are not preparing for the future. He’s known for quite some time that over the next 15 years the baby boomers that kept his elves busy making toys in the 60s and his workforce well staffed in the 80s and 90s will be retiring. He also knows that the absolute number of children that will be of age to enter the workforce over the next 15 years is diminishing. Even worse, the number of children that have interest in the sciences, mathematics, engineering, and accounting is going down. Requests for toys and books that are of traditional interest to children who pursue these educational directions have dropped significantly. As a result, maintaining a steady, highly skilled workforce is extremely important to Santa. Typically, when hiring slows, one of the first groups to be affected is the recruiting team. Fortunately, Santa has always viewed this team as talent managers, not just people that facilitate the hiring process. Instead of laying them off, he saw this as an opportunity to challenge them with reducing costs while improving efficiencies. He had them working on in-depth workforce analysis, streamlining processes, evaluating new technologies, and improving employee development programs. The first thing Santa’s recruiting director did was to get everyone up to speed on all the features of the workshop’s applicant tracking system. During 2000, Santa’s Workshop invested in a comprehensive ASP system that included most of the front- and back-end features they needed to streamline processes. The system included everything from automated requisition approvals to candidate prescreening questions to advanced reporting capabilities. When the system was implemented the recruiters were so busy recruiting that some of them simply did not take the time to maximize their benefit from all the features. While the technical support was always available, the ongoing support for day-to-day user optimization fell short, with the exception of the initial product training. Through the help of a consultant, the talent management team was able to uncover areas where their usage of the product could be enhanced. The changes made a significant difference in their ability uncover the better candidates faster, reduce their cycle time and redirect their advertising costs to the most effective resources. The changes included:

1. More thorough use of the current candidate database. They standardized the process so that, prior to posting any position, the recruiter was required to run their search criteria through the current database to determine if there were any potential candidates from previous database entries. While this seems very obvious, several recruiters were not taking this first step, missing great candidate opportunities.

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People who really know recruiting also know that the best way to understand the overall recruiting process is to visualize it as a subset of the common business practices of supply chain management, Six-Sigma quality and customer relationship management (CRM). Recruiting cannot reach its optimal impact, nor can it help drive a firm’s “performance mindset,” if it views itself in isolation. Instead, it must view itself as part of the entire people/productivity process. It’s not enough “just to recruit them,” it’s equally important to look at the next step, which is to ensure that top performers and new hires are continually placed in the right job. And after a period of time in any job, it’s also important to continually redeploy your employees into other “more appropriate” jobs. Unfortunately, we now know that two of the most common errors that managers make are 1) in placing the wrong people in the wrong jobs and 2) keeping them in these jobs for too long. Right Person/Right Job for Top Performers By “right person/right job” I don’t mean the traditional “skill fit,” but rather the underutilization of talent by putting top performers into inconsequential jobs and vice versa. Here’s a list of the 16 most common errors managers make in how they treat and place their top performers. The common errors are listed in descending order of importance (in terms of business impact). A placement error occurs if a manager…

1. Fails to identify a firm’s “mission critical” positions, and then fails to focus their energies on these critical positions (10% of all jobs)

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Online screening has received a great deal of attention lately, and after a recent experience I had with it, I couldn’t help but chime in. As part of project with my employer, many of us were given the opportunity to take an actual assessment to see what the experience would be like for a candidate. Being a skeptic when it comes to personality assessments, I put off the task. Then I attended a company meeting at which there was great buzz about the surprisingly accurate results for those who had completed the assessment. Being open-minded, I decided to play along. The results were amazing! Upon completing the online assessment, I received a detailed narrative, which outlined personal characteristics, strengths, areas for development, and career advice. The feedback was astounding. Those closest to me laughed outloud as they read my report. My husband is still cracking jokes about it! But what did I gain from this experience, aside from the obvious dose of humility? What I learned is that online scientific screening tools can be quite effective. So what do you need to know to select a tool, and how can it impact your hiring initiatives? There are three important considerations when selecting a scientific screening tool:

1. Understand the basis for assessment. In other words, is the tool based on years of research and validation? Confirm that the tool has a proven track record for accuracy in predicting performance and satisfaction on the job. Many tools have standard baseline measurements; you may also want to inquire as to whether or not custom assessments can be created to identify an even stronger match for you position and corporate environment.

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As organizations respond to the tough financial environment and a lessened (albeit temporary) demand for talent, many are considering outsourcing their recruiting entirely to third-party agencies. On the surface this is a hard strategy to attack. After all, it removes a large amount of money out of overhead, makes the costs of recruiting variable with volume, and still seems to provide the same kinds of people to the organization. With lots of people seeking work, management often thinks, recruiting can’t be very difficult. Many HR functions have been outsourced over the past five years. Some firms have outsourced payroll, benefits administration, service centers, travel, training and development, and even employee relations in a few cases. There has been a general transfer of the transactional side of HR to outsourcing firms or to automated systems. And, while outsourcing may in the end cost as much as having the function inside, it allows the organization to focus on its core value generation side and not get sidetracked by HR or administrative details. But, like so many pendulum swings, they often swing too far. I am a supporter of automating or outsourcing all transactional activities: these are the kinds of things that do not generate income and that tend to be administrative and routine in nature. For example, writing paychecks is not a job that generates revenue for the firm or in any way contributes to the bottom line. Yet, it has to be done and can be a tedious and time-consuming job. By outsourcing this to a third party, such as a bank, ADP, or Paychex, an organization can save the overhead of paying and supporting a payroll staff and keep costs down by negotiating cost-effective service agreements with the providers. The providers, on their side, are motivated to be as efficient and automated as possible to maximize their profits. So does it work for recruiting? My answer is that is can work for certain types of recruiting, but to treat all of recruiting as transactional and, therefore, non-value added, is a huge mistake. I predict that any organization that has fully outsourced its recruiting efforts will begin to pull some of it back inside within the year. If you look at the composition of your workforce, it is easy to see that employees fall into four major categories (see Figure 1): those of low value to the firm in terms of directly creating or producing revenue, products, or services, and who are relatively easy to recruit; those who are of high value to the firm and are relatively easy to find; those who are very valuable and very hard to replace or find; and those who have very unique skills or are of low value but very hard to find. Each of these groups should be treated with different tactics when it comes to recruiting.

Group I: The easy to find, but less valuable. This is the group that can be easily outsourced. Many of these people can be hired as temporary employees or can be part-timers. They are not strategic, and any recruiting organization that spends much time or money recruiting this level is wasting corporate resources. I have been at firms where as much as 70% of the time and budget for recruiting was devoted to recruiting this group simply because of high turnover. This is common at banks and at call centers. Group II: The easy to find, but valuable. Use your own internal recruiters for this group. These are the people who will soon be making a competitive difference for your firm. They are the inventors, engineers, star salespeople, and those who differentiate your organization from the others. To let a third party learn who these people are takes away any edge you might have. Because a third party placed them, the third party can lure them away some day when they have moved to the Group IV level. Using external recruiters here – unless you have great trust in human nature – is like letting the fox check out the hen house. Some firms do have strong strategic partnerships, with enforceable clauses regarding future hiring of these people, with third parties. Just be aware of what you are doing and do it with care and caution. Group III: The hard to find, but less valuable. This is a problematic group, because they have unique skills that are important to your firm and are very scarce. A good example of a person in this category would be a patent attorney or a top-notch management consultant. These are people who do not directly contribute to your organization’s products or services, but who can augment and supplement those products and services in unique ways. I feel that this is a group that is best hired as consultants or on a contract, rather than as employees. These are the kind of people you sign a retainer with and use as needed. There is no need to dedicate resources to recruiting these people, but you do need to know who is the best in the field. Group IV: The hard to find, and the very valuable. These are your gems, stars, “hipos” or whatever else you may want to call them. These are the people who, if they left, would significantly affect the bottom line of your firm. There may only be a few of these people – in fact, I would argue that in any company there are rarely more than a few dozen people who fit this category. Carefully chosen senior internal recruiters should recruit these people – always. It may be a perfectly sound strategy to use an executive search firm for some of these, but the smartest firms will look hard themselves before going outside. To simply outsource the recruiting function without thinking through these issues is folly.

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Top candidates are still the stars of the recruiting trade. They are also very different from ordinary candidates. And if you want to hire your share of these stars, everything you do ? the way you find them, interview them, and close them ? must also be different. Despite all the technological advances in recruiting, very little has changed over the past 20 years in what you need to do to hire great people. Here are some basic conclusions that are as true today as they were when I started in this business more than 20 years ago:

1. Stars don’t generally respond to traditional advertising.

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Last month I told you about how to hire military candidates by visiting the many bases and installations across the country. Today I want to tell you how you can visit many online “bases” from the comfort of your desk at work. The idea is that there currently exist many associations and schools of highly concentrated populations of military personnel. Specifically, your goal is most probably the alumni from the schools and the members of the associations. I’ve used the analogy before: if you want to fish for freshwater trout, you don’t go to the ocean. It is the same way with the military ? you must focus your efforts in the areas of high density in order to maximize your chances of success. First let’s take a look at a few associations. The Navy League is comprised of more than 75,000 members and has many opportunities for corporations to find military candidates. You can attend conventions, post your link on their site, and be connected with their career partners across the country. Or, how about the 150,000-plus-member Air Force Association and the U.S. Army Warrant Officer Association, both of which offer career services to members. There are also many more associations for marines, coast guard, army, navy, and other more narrow associations such as officers, engineers, retired, etc. As you can see, these and other associations cater to specific groupings of the military. So it may also be in your best interest to determine which part of the military is the best fit for the jobs you’re hiring for, and then target those associations first. In addition to looking at associations, the alumni from particular schools may also be useful. Check out the Virginia Military Institute or its alumni site at www.vmiaa.org. The alumni site has a very extensive “Career Services” link where employers can attend job fairs, post jobs, and take part in other career-related services. The Citadel is another great school to start developing a relationship with. Click on the “Alumni” link and transport yourself to a wealth of information and resources for recruiting. There is an alumni club for almost every state, contacts and email addresses for alumni from specific graduation years, and a full, online career services page for employers including corporate links. Consider also the SACC (Service Academy Career Conference) three times per year for all officers who have graduated from any of the academies and who are now entering the civilian workforce. Check out my April 5, 2001 article entitled How to Recruit Service Academy Graduates Without Paying a Placement Fee regarding these high-quality candidates. Take advantage of these great resources through a comprehensive, focused effort to recruit one of the best sources of skills and talent in the world ? the military.

This article, the first in a series, covers some of the dramatic changes human capital management has undergone during this last year. This series of articles is intended to highlight five new principles that need to be understood by anybody working in this field if they wish to act with insightfulness. When times are difficult, the CEO of any company looks at expenses. He or she sits down with the CFO and sees that over 65% of spending is on salaries…so salaries are cut by a huge layoff. We have seen many companies announcing important people reductions, from 15,000 at Deutsche Bank to 30,000 at Boeing. But most of the time that CEOs find themselves situations where they have to reduce staff, they don’t really know who to cut, why they’re making the cuts, or how it will change the future of the enterprise. The new economy and technology have created new principles of human capital that any organization needs to understand and internalize if it is to be a leader either in a downturn or in a growing economy. One of the fundamental new principles of human capital management is the title of this article: A Skilled Workforce is a Cash Multiplier. But what does that mean? The Knowledge Economy The new economy is often called the knowledge economy. Emerging from an industrial age, this new economy distinguishes itself by having a large amount of the value of the company lies in the heads of the employees rather than the tangible assets of the company. This realization was made very clear by a 1999 BusinessWeek article showing that the valuation of Microsoft was greater than the valuation of GM, Ford, Boeing, Lockheed-Martin, Deere, Caterpillar, USX, Weyerhaeuser, Union Pacific, Kodak, Sears, Marriott, Safeway, and Kellogg combined. Yet the only value at Microsoft resides in the heads of its employees! Another way to show the intrinsic value of intangible and human capital is to look at the historical evolution of the ratio of the S&P 500 between the market value and the book value. The ratio of book value to market value was approximately 1 in the early 1980s. In 2000 it had risen to about 6. Among those companies, current employees are now perceived as a key element, as is the ability to attract and retain talent. Faced with this issue, many academics started to review the data more closely and suggest some new models to give a better account of a corporation’s worth. Fortune magazine’s “Best Company To Work For” is also a sign of the times, showing more emphasis on human capital importance. But more than a tool to attract twice as many applicants and make the front page, it has also been shown that those corporations exhibit better financial performance than other companies*. Recruiting Excellence The challenge to any corporation for the recruitment and retention of outstanding talent has never been more profound. High-performing employees are the key for corporate success. At the individual level, a study from McKinsey & Company showed how high performers generate more results than average performers; corporate officers they surveyed believe the difference in impact for sales positions is as high as 67%**. As mentioned on a corporate level, studies from Hewitt, and Watson Wyatt have shown that recruiting excellence brings positive financial results. The Human Capital Index Survey demonstrated that organizations with excellence practices in recruiting have been linked to a greater than 10% return in shareholder value. Human capital management strategies do indeed make a clear impact on the corporate bottom line. On a more anecdotal basis, examples such as 3M creating the Post-it(r) out of a failed project to invent a super glue show that human creativity and fine awareness of business needs can create miracles. In light of those facts we can see why most financial reports start with something like “Our employees are our greatest assets, and they are the key driver of our future success.” It is also the reason why we see a skilled workforce as a cash multiplier. Most venture capital companies have understood this and repeatedly state, “We prefer a B idea with an A team to an A idea with a B team!” The Value of a Quality Workforce Unfortunately, by conducting mass layoffs large corporations forget this basic principle and cut A teams on projects that are not yet profitable, often wasting the potential to redeploy the A team on what they determine as their A project. This is the paradox of executive management today. The key consequence of a true understanding of this principle is an emphasis on a quality workforce. The definition of quality is the ability for an individual to increase the corporate value. Although a discussion of the legitimacy of this definition is beyond the scope of this article series, the strategies to achieve better quality can be understood and applied. To achieve the positive financial results that occur with recruiting excellence, corporations need to place importance on acquiring a quality workforce. * Are the 100 Best Better? An empirical investigation of the relationship between being a best employer and firm performance, Hewitt Associates LLC, March 2000. ** The War for Talent, McKinsey & Company, September 2001.

You have to wonder, why is it that every time there’s an economic slowdown, the RIF, redundancy, right-sizing, and layoff mindset takes over, and essentially predetermines that companies will not be adequately staffed or physiologically prepared for the next business upturn? After all, the next growth period always begins the day after the worst day in a recession. Possibly the answer lies not in economics, but in geology. The world is round today, but it once was flat. That’s right, it’s only in the last five hundred years that it became round. Now, I know all the geology majors out there are already shaking their heads. They believe the Earth was always round, and always will be. Well, it wasn’t always round. Until 1492, the people of the world believed their world was flat, and so it was. They planned their lives, their economies, and their perceptions around the concept, and all of the Earth’s possibilities were fixed and focused on that simple, incorrect, and all consuming belief. The leading minds of the time developed facts and formulas to confirm the belief that they existed on a “platter” and not a globe. All other beliefs, therefore, had to bend to fit into the core belief system. So not only was life impacted by one wrong idea regarding geology, but that wrong idea infected all their thinking. It’s not unlike making a simple subtraction error in your checkbook: every other entry after that is also affected. Nobody debated the point. It was understood; “the world is flat.” If you wanted to be a part of the medieval version of middle management or wanted to be considered “ye olde” executive timber, you better have agreed that the world was flat (Didst thou not see the memo?). The “flat world” was their “big picture.” We also have our own version of flat-world thinking in the 21st century: “If profits are lower, we need to lower headcount.” It exists because, like those who insisted on believing in a flat world and demons waiting beyond its edge for the unwary, no one has effectively challenged the belief, or rarely even tried. When those of us in HR/staffing do try and resist the momentum to RIF, layoff, or “right size,” it is usually with a sentimental or humanistic argument that makes us sound more like frustrated social workers and “goody two-shoes” than insightful business professionals with a reasoned and unique strategic outlook. When not being sentimental, we resort to speaking of all the effort “we” wasted staffing up, only to have it undone. Again, our business partners see this argument more as an exercise in whining and “me-ism.” They assume HR/staffing to be guilty of once again not looking at business from a profit-orientated perspective (“HR does do not see the big picture!”). So when the “flat world society” comes to the strategic staff planning meeting, recommending RIFs as the ultimate cure for a bad case of “recession,” why not try and counter with a study on the return on investment (ROI) supporting retention? (Bleeding and leeches were also once considered by main stream intelligentsia as the cure for “bad humors” till somebody said, “Hey, why not bed rest and plenty of fluids?”) Remember, there are no self-evident truths, there are only truths placed in evidence by activists. Developing a Counterpoint ROI is more commonly associated with justifying expenses generated by acquiring, purchasing, or investing in companies, services, products, or any other area of capital expenditure. It is in essence a structured justification proving that, despite the expense, a viable gain will occur if an outlay of funds is allowed. A good ROI also develops the hazards of alternative actions other than those proposed (Hey, don’t listen to me, but when we fail, don’t come crying to me either!”). The sum total does not always have to be a bottom-line cash result or gain, although that certainly helps in winning over the finance side of the table. To develop a counterpoint, you must first know what the intended result is of the action you wish to counter. Question: Why layoff good and productive employees? Answer: To save money! So to counter, you must prove it does not save money. Therein lies the disputed territory that few HR/staffing professionals ever challenge. The logic of layoffs is so simple, it must be true, “If I am $36 million short of planned profit and I lay off 600 employees making an average of $60,000 per annum, I will save $36 million. If I layoff another 200, I can still post an excess to planned profit.” (That Harvard MBA is really paying off. Why not lay everybody off and save a fortune!) Just as a “flat world” was universally accepted, this formula is rarely disputed. As a matter of fact, like the “flat earth” dogma, to oppose it, you are considered dangerous. Yet, despite universal acceptance, it is wrong. So, before we develop our “Round World ROI”, let’s do an old Benjamin Franklin close checklist on the pros and cons of layoffs to see if a case for retention can be developed: Pros:

Save on Payroll/Benefits Cons:

Severance costs

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It’s ironic that, at the same exact time that CFOs are instituting hiring freezes and demanding that we add “no new headcount,” there happens to be an abundance of top talent available in the marketplace. Smart managers take advantage of this feast and famine situation by utilizing a strategy that I call “talent swapping” to take advantage of the abundant talent without adding headcount. What Is Talent Swapping? The concept of talent swapping is actually very simple. It’s like in sports, where it’s a common practice to seek out a superior player and trade an average player for them. After the “talent swap” has been completed, you still have the same number players (no additional headcount), but you have dramatically improved your team by replacing an average performer with a top performer. It might seem strange on the surface to hire someone while you are simultaneously laying off others, but it’s actually an intelligent strategy. The process of talent swapping starts with the continuous sourcing of potential candidates. Even though you have no openings (and you might even have a hiring freeze), you continue to search out top talent. Obviously you can’t hold a position open while waiting for talent to become available. But when top talent does become available you need to act quickly to recruit it. And because of your headcount limits you need to first “release” one of your bottom or average performers and replace them with this newly available top talent. Why Does Talent Swapping Work? Talent swapping works because it doesn’t force managers to release bottom performers. In contrast, it actually allows managers to postpone firing decisions until top talent in their position becomes available. And even though in today’s tough economic times there is a lot of talk about the need for more “performance management,” most managers are still reluctant to fire anyone. It’s just human nature for managers to be reluctant to act. It’s important for a manager not to release bottom performers too early, because if you release a bottom performer at a random time there may be no top talent available in the market to replace them. As a result you’re liable to replace the bottom performer with an average performer, or possibly even another below average person. The key element of talent swapping is to wait and until you have a star ‘bird in the hand” before you replace a bottom performer. The Steps in Talent Swapping Talent swapping is easy to institute. The basic steps include:

1. When necessary, get the CFOs approval and buy in for the talent swapping strategy.

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Used properly, research is perhaps the most powerful tool in the world of marketing and advertising. Marketing departments use several forms of research to do everything from developing new products, targeting media buys and advertising campaigns, and developing powerful brands that build customer loyalty. But in the recruitment marketing world, where budgets are much tighter and the competition for talent can come from any number of industries, is research effective and affordable? For many companies, the answer is a resounding yes. In fact, research has the potential to have a greater, more far-reaching impact on their recruitment success than for their counterparts in product marketing. Branding in the Current Environment In the current economy, employers have the upper hand when it comes to recruiting most candidates. There’s not much a company has to say outside of, “I have a job that pays well,” to get hundreds of resumes (though mostly unqualified). And there are still several jobs out there that remain hard to fill under any economic conditions. Many employers are wisely using any downtime presented by the economy to put a powerful brand in place that will attract top talent when the tables turn once again. (And with the number of baby boomers nearing retirement age, believe me when I say it will.) In one of my previous columns on employer branding, I discussed how companies with strong employer brands would realize a huge competitive advantage when competing for top talent. Better-branded companies will spend less to find and keep the best employees, while companies without strong employer brands will be forced to lure candidates with higher salaries and added, often ridiculous, benefits. But as your marketing department will tell you, establishing a strong brand starts with meticulous research. Without it, any marketing efforts you implement will merely be guesswork. Why Knowledge Is Power Let’s examine what building your brand would be like without the benefit of research. You start with what you think are your best traits as an employer. Extensive benefits plans. Stock options. Cutting-edge technology. A casual culture. Open door policy. Tremendous growth opportunities. And the buzzword for the new millennium: stability. Put all those things together in a branding campaign, and you’ll sound exactly like every other employer out there. Therein lies the problem in recruitment marketing: most employers are completely undifferentiated from one another because they promote identical employment offerings outside of the job itself. Retention rates also suffer when employers use this flawed methodology, as advertising promises based on assumptions are less likely to translate into an actual employment experience for the individuals you do end up hiring. With research, however, you can directly ask specific types of candidates:

• What they look for in a company

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Will you help me ? and your fellow readers? This has been an extraordinary year ? a year of tragedies and events that were unimaginable. Because of the many changes that the recruiting profession has gone through, I am asking your help in preparing an end-of-the-year article that will attempt to summarize and capture some of the key transformations, changes, events, and trends that we have experienced as recruiters over the past 12 months. If you have a few moments, please look over the questions below and send me an email letting me know what you think about those that interest you. I will distill and summarize the results, and the week after next I will write a column that sums up 2001 and will try to provide some thoughts on where we are headed in 2002. There are quite a few questions, and I know many of you are too busy to answer them all. I would appreciate answers to any you have time for. If you would prefer that I call and talk to you, please send me an email and I will set something up. I would like to wrap this all up in the next week, so speed is essential. I will list all the organizations and people that helped in this endeavor (of course, only with your permission). Staff Skills and Size

1. Is your recruiting staff smaller, the same size, or larger than last year? Have you been affected by layoffs?

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In recent years cross-border and multinational recruitment has increased tremendously, be it recruiting foreign nationals to work in North America or locals for overseas locations and subsidiaries. It is clearly desirable that any global organization would want to adopt uniform procedures across all of its operating companies. But there are many potential pitfalls, especially when dealing with Europe and Asia. Of growing concern to legislators in the U.S. and most European countries is the use made of candidate data. The European Union is setting the agenda for cross-border use of personal data, and the United Kingdom has a long standing Data Protection Act which has been recently strengthened. For instance, it is not widely known that in the UK, a candidate’s resume may only be retained, either electronically or physically, for the specific purpose of the job applied for. The candidate must approve long-term retention of their details. In Germany, the position is worse: if a receiving company wants to retain the candidate’s details, the candidate must authorize in writing retention of these details. Without this written consent, the receiving company is required to return the candidates resume and any attached certificates (it is common practice in Germany for candidates to attach copies of all certificates for a job application). In Germany, it is not deemed sufficient to place a waiver on a job posting or advertisement to assume candidate acceptance of resume retention, whereas in the UK this is common practice. Hopefully this simple example highlights potential pitfalls that can arise from cross-border variations in legislation. My own experience, backed up by considerable research, would suggest that over 80% of the North American companies with subsidiaries actively recruiting in Europe are non-data compliant! This has serious legal and financial implications. Notwithstanding data protection issues ? which although complex, are manageable ? we are beginning to see greater attention being focused on where data is actually stored and used, and the legal ramifications of such cross-border use. We encountered this issue when working with a global corporation who had recently undergone a major implementation of an applicant tracking system. This corporation found that they were unable to use the system in their subsidiary in Northern Ireland because of the legal requirement in Northern Ireland to register the applicant’s religion. Similarly, the same company’s planned global rollout of their Internet/intranet job site would have been in breach of data protection laws in all of the European countries where it had job vacancies. A similar global ATS implementation highlighted another problem associated with attracting candidates outside of North America. Our client was experiencing severe systems degradation ? job searches were taking in excess of 10 minutes when they should have taken seconds. Our investigation identified that the system’s search index was corrupt, and that after resetting, it would be corrupt again! The cause was found in the applicant data: the company maintained a database of over 500,000 candidates, approximately 100,000 of which were from Europe and Asia. Because online applications are not common in some countries, hard-copy resumes had been scanned and entered into the system without rigorous quality assurance checks. Forty percent of these resumes (40,000) were corrupted with non-standard characters, which in turn were wreaking havoc on the search index. QA procedures in North America were better, but in total, almost 30% ? 140,000 resumes ? contained minor to major errors. The company had spent over $20 million to acquire half-a-million resumes that recruiters weren’t able to adequately access. A side effect of this in Europe was that the recruiters relied heavily on agencies to deliver candidates, adding $5 million in agency fees to the organization’s recruitment costs. A system designed and implemented to ensure best practice in the resourcing area, however, had precisely the opposite effect! What these examples seem to show is that when looking at best practices within your resourcing functions, it is essential to ensure that all elements of the function are considered. There is consensus that uniform procedures can streamline the recruitment process, and as we have seen with the introduction of technology-enabled recruitment tools, this process needs defining to provide maximum returns on investment. However, what we must be aware of are the wider implications of any process that is introduced. When your recruitment process stretches across more than one geographical boundary, it must be assessed in great detail before implementation to ensure your organization meets all the necessary legislation.

I keep hearing about Six-Sigma hiring. I guess it was only time before HR started using quality improvement tools. I just hope they are ready to discover that applying Six-Sigma tools to human performance will be like riding a tiger ? and just as dangerous. But first, a few definitions. Definitions TQM (Total Quality Management): There was a time when manufacturers would wait until the product was “ready to ship” before they would check for quality. This was very expensive. Then, about forty years ago, two different management gurus advocated breaking large manufacturing processes into several little ones. They argued that quality would gradually improve if manufacturers could identify and reduce errors at each step of the process. Reducing errors required accurate measurement and statistical analysis. Japanese manufacturers eagerly embraced TQM, and the world watched as Japanese product quality rose from among the worst to among the best. Out of control: A manufacturing process that produces wide differences in product quality. In control: A manufacturing process that has minimal differences in product quality. Variability: The term given to the amount of product quality difference. Six-Sigma: A bell-shaped statistical measure of distribution. “Six-Sigma” is a statistical measure of error. Small Six-Sigma numbers indicate a consistent level of quality (a good thing). Six-Sigma Assumption The whole value proposition of a Six-Sigma HR process is to improve profitability by improving personal productivity. For example, hiring research shows that a company with 100 managers/professionals earning an average of $80K each will lose about $3,484,000 each year from individual productivity differences (100 x $80K x 48% average productivity difference). If that kind of money were being lost in manufacturing, it would warrant immediate corrective action. But reducing Six-Sigma error in individual performance is another matter entirely. Measuring “People Quality” Measuring human performance is harder than measuring widgets. People metrics often include “fuzzy” data like turnover, units, dollars, opinion surveys, integrity, speed, or work accuracy. These measurements are often affected by dozens of unrelated factors such as economic trends, politics, delayed feedback from information systems, etc. The implication for HR is that, unlike weights and measures, human productivity measures are filled with error, making statistical analysis and feedback tricky at best. HR specialists unable to separate artifact from true fact will be unable to measure variability ? a critical part of knowing if your HR process is under control. HR Systems There are four major influences affecting human performance. These are:

1. Hiring systems

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If anything has ever kept a staffing director up at night, it’s worrying about an OFCCP audit. Or, worse yet, the fear of bad PR, or maybe even a lawsuit that may result from bad audit results. But the reality is that if your company truly believes in being an equal opportunity employer, then you have nothing to fear as long as you have in place (and are documenting) fair and consistent hiring practices across the board. Who is the OFCCP? Most staffing folks know this, but not all recruiters do. OFCCP stands for the Office of Federal Contract Compliance Programs. A very simple description of the OFCCP’s charter is that it ensures compliance with several Acts and an Executive Order, which prohibit discrimination in hiring or employment decisions if you do business with the federal government. It prohibits discrimination on the basis of race, color, gender, religion, and national origin. It also protects some veteran groups and individuals with disabilities against unfair hiring practices. By the way, the EEOC ? which stands for Equal Employment Opportunity Commission ? is a different agency that was established to enforce employment and pay discrimination. In its most basic sense, regulations of the EEOC apply to any company. This means that an individual can sue your company if they feel they have been discriminated against, period. The EEOC, however, does not perform audits to ensure compliance. For simplicity’s sake, we are only going to cover the OFCCP in this article. Who Needs To Follow OFCCP Regulations? Let’s face it. Hiring fairly is the responsibility of all recruiters and hiring managers. Not only is discrimination flat out wrong, it’s illegal. It’s also bad business! Who’s to say that the person you discriminated against wouldn’t have been the best employee your company ever had? However, OFCCP regulations really apply to companies who do business with the federal government, and can perform an audit on your company to verify compliance. If your company is ultimately found not to be compliant with the regulations, you can lose your government contracts, and with that you may find a watershed of lawsuits could ensue. “Alex, I will take “Applicant” in the Category “Vague” for $500 please…” During an audit, the OFCCP requires you to demonstrate that you have not discriminated against “applicants” seeking a job at your company. The fact that “applicant” is not clearly defined by the OFCCP makes this scenario a little problematic! To date, there have been no court decisions regarding a precise definition of “applicant,” although in McDonnell Douglas Corporation vs. Green, the U.S. Supreme Court said an applicant must prove that “he applied and was qualified for a job for which the employer was seeking applicants…” By this rationale, a candidate who applies for a job but doesn’t meet the minimum requirements is not an applicant. Only a qualified candidate becomes an applicant. Okay, problem solved! Well, not really. The real problem is that you have to prove the candidate did not meet the minimum requirements. (More on this later…) A New Definition Emerges Currently, the OFCCP’s definition of applicant allows employers a lot of leeway in creating their own recruiting, application, and hiring procedures. I have heard the OFCCP is revamping the definition of an “applicant” and the new guideline revisions are due out early next year (I have heard that before…). But don’t expect an instruction manual on “How To Avoid Lawsuits and Audits: A Step-By-Step Guide From The OFCCP.” (Now wouldn’t that be a nice gift for the holidays!) A well-informed OFCCP watcher recently told me that there is a push for a definition in which “a click does not an applicant make,” but there are no guarantees this will happen. Regardless of how the definition changes, consistency will remain the key element of ensuring compliance. The biggest hurdle that recruiters and HR professionals must overcome is developing clear policies that enable them to hire the best people, while reducing potential liability and limiting the number of “applicants” that must be tracked. In general, it is policies that are not clear that invite investigation from the OFCCP. Your best intentions (albeit a good place to start) don’t mean a whole heck of a lot when it comes to proving that you’re consistently hiring employees fairly. (Now, I know we could talk about good faith efforts, applicant availability, and all the other components, and I also know we can argue about the playing field not being level, but for the sake of this brief article lets just focus on compliance.) Play to Win, Don’t “CYA” Applicant tracking systems can be a great way to ensure compliance with OFCCP regulations. But take a step back and think about your reasons for buying an ATS. Is it because you truly want to track the progress of candidates and applicants through the hiring system because you want to hire the best people (fairly)? Or are you afraid of being audited by the OFCCP and want to cover your behind? It’s the difference between playing to win, and playing because you’re afraid of losing. You must play to win. What One Company Plans To Do A large (35,000-person) corporation I have consulted with has decided to put in place a strategic and consistent plan for tracking true applicants across their entire company. They want to ensure that any one of their divisions doesn’t get caught in a quagmire, so they are requiring that all divisions adopt these guidelines. As a rule, this company believes it will come to better business results and a higher quality of employee if it focuses on equal opportunity employment. They want to hire the best people, and they want to be able to showcase that they’re doing this by putting processes in place that encourage and enable this. They’ve decided that when they first receive a resume, associated with a job or not, it is considered only a candidate. Candidate, not “applicant.” In order to become a true applicant, the candidate must meet a minimum set of qualifications necessary to perform the job. They plan to determine whether or not an applicant has these minimum qualifications through an online questionnaire and a basic skills profile on their employment website. They intend to collect EEO information after they receive the questionnaire results. It is only after a candidate has shown they meet minimum qualifications that he or she is then ported from the “Candidate Relationship Management” database (which the company collected date for from the employment website) into the ATS (applicant tracking system). More testing and information gathering can be done at this point in order to choose (and track!) the right person for the job. There are, of course, a lot of procedural steps for this process that I have not outlined (i.e. how to capture candidates, and eventually applicants, without access to the Internet; what to do with resumes received not in association with a job; etc). However, due to lack of room in this article (and for fear of putting you into an even deeper sleep!) I will not outline all the details here. Knowing them would not necessarily help your company develop its own processes anyway. What Your Company Can Do To Ensure Compliance The best place to start is with good business sense. Make sure that there is a commitment from the top down to hire a wide range of people who can help make your company successful. If you can, you should also consider either hiring individuals dedicated to diversity hiring and OFCCP regulation monitoring or improving your own personal or in-house expertise. Knowledge will kill the fear and save you money. Next, it helps to have some automation in your processes and procedures, which mirror your intent and implement the ability to track them. I cannot give your company the Holy Grail for OFCCP compliance, but I can give you some food for thought when determining your company’s procedures. Be brave, all of these points below are things that are good recruiting and hiring practices for finding and hiring the best people, and also happen to be helpful in ensuring OFCCP compliance:

• Sourcing. Make sure that you are getting your candidates from a variety of places and can prove it. How can you ensure that you’re hiring the best people if you’re not using a vast array of sourcing methods? I would even recommend targeting certain areas that you may be lacking in your corporate make-up.

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The following is an actual example illustrating how to successfully make a business case in HR. It follows the format outlined in Parts One and Two of this article series. Space limitations prevent me from going into too much detail, but this outline should give you some idea of the basic approach taken in this example. Making the Case A business case is a logical step-by-step approach for selling a program or project to senior management. Unfortunately, HR people have a long but weak history in making business cases. The following is a narrative example ? with numbers ? designed to show you how it should be done. Beneath each question from the previous article are the details of the strategy taken in this illustrated example. Identify the Decision Makers You Are Trying To Influence 1. Who is the target audience? The CFO’s office processes and approves budget requests for additional staff during our hiring freeze. 2. What are their decision criteria? After reviewing the minutes of the budget committee meetings, we found that the CFO’s office only approves 45% of the proposals that come before her. After reviewing the trend analysis of the last 100 previous decisions over the last year, we identified the differences in the projects that were approved and projects that were rejected. It is obvious that successful programs are approved based on the following criteria:

• 50% of the decision is based on the calculated financial impact of the proposed project (where the minimum passing score is a 15% ROI and a revenue impact of at least $1 million).

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