This is a case study profiling the benchmark best practices and strategies at FirstMerit Bank. After a six-month study, I have found it to be the best and most aggressive recruiting function anywhere in the world. Having advised more than 200 companies in over 23 countries, this is not a statement I make lightly. The only other organization that has come close to accomplishing what the FirstMerit team has was the Cisco Systems “recruiting machine” established by Michael McNeal in the late 1990s. In addition to my assessment, their efforts were also recognized by a panel of recruiting industry thought leaders when they received the prestigious 2005 ERE Excellence Award for the Most Innovative and Effective Recruiting Process. FirstMerit earns these distinctions because their strategy and approaches are so aggressive that most corporate recruiters would shy away from even trying them ó and would most likely argue that they stretch the so-called limits of ethics in recruiting. The differences between the FirstMerit approach and that of most organizations comes down to the complete integration of two key recruiting concepts into every thing they do. The two key concepts that guide recruiting at FirstMerit:
- It’s a war. While corporate recruiters occasionally use the term “war for talent,” most act as if everything is business as usual, continuing to implement archaic recruiting tools and processes. In war speak, most corporate recruiters are walking into a jungle filled with the most advanced guerilla fighters using the latest weapons ó but they’re armed with homemade bows and arrows. FirstMerit, on the other hand, actually acts like they are in a real war, complete with both strategic and tactical battle plans (I’m sure, at least in part, that this is because their leader spent some time at the famed military academy, West Point).
- Competitive advantage. Most corporate recruiting functions do what they do in isolation. They view their job as hiring good people almost irrespective of what’s happening at other firms around them. In direct contrast, the FirstMerit team acts like recruiting is an intense “zero sum” competition between their company and all of the other companies competing for similar talent. It exhibits its awareness of what the competitors are doing by proactively “attacking” a competitor’s workforce whenever that company has a disruptive event such as a merger or layoff. Because the plan calls for victory in each and every skirmish, the recruiters at FirstMerit consistently change their recruiting approach to counter any new initiatives or safeguards implemented by a competitor. FirstMerit views recruiting a lot like an Olympic competition: Even though you win the gold medal this year, you need to realize that everyone will learn from your victory and raise the bar, such that the same performance at the next Olympics won’t even get you an invitation to attend.
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In this case study, I will highlight both FirstMerit’s talent acquisition strategy as well as its many best practices in recruiting. The Company FirstMerit Bank is a regional bank headquartered in Akron, Ohio, with over $10 billion in assets and more than 3,000 employees. It is important to note that one of the things that make their benchmark practices even more spectacular is the fact that these practices were developed and implemented in banking, one of the most conservative industries. In addition, they were developed in Ohio, which in general isn’t recognized for companies developing or implementing outrageous or aggressive HR strategies and practices. The courage and foresight of senior management to undertake such a leading-edge approach should make shareholders, stock analysts and employees proud. The Recruiting Strategy The FirstMerit recruiting strategy is the most business-like and aggressive strategy I have ever encountered. Through my research, I’ve been able to identify 10 key elements of the FirstMerit recruiting strategy:
- “Top line” orientation. Their recruiting strategy is based on the fundamental principle that all recruiting activity should have a demonstrable dollar impact on business results. They view talent acquisition as a revenue-generating activity.
- A recruiting culture. Rather than relying primarily on recruiting professionals, their strategy is designed to develop a company-wide “recruiting culture,” where literally every employee, former employee, and supplier is made aware of their responsibility to be continually trolling for talent.
- Warlike tactics. The FirstMerit strategy is based on the premise that there is now ó and will be for the foreseeable future ó a war for talent. As a result, everything they do is designed to be aggressive and superior to the competition. They track the giveaway/takeaway ratio, a metric similar to the turnover ratio in football, which compares how many employees FirstMerit takes away from a competitor versus how many of their employees they give away (lose) to the same competitor. The results for 2004 were staggering, with 107 takeaways versus only 51 giveaways. Year to date, 2005 is looking similar ó with 58 employees recruited and only 29 lost.
- A competitive advantage. The FirstMerit approach focuses on making sure that every recruiting process, strategy, and tool is superior to those utilized by their talent competitors.
- A leadership strategy. Another foundation of the FirstMerit strategy is that talent acquisition should not merely be aligned with corporate objectives. Instead, recruiting capabilities should actually partially drive them. They view talent acquisition as a mechanism to provide the company with a competitive advantage by increasing its business capabilities through recruiting.
- Talent relationship management. FirstMerit emphasizes an old school, high-touch relationship recruiting approach using a customer relationship management (CRM) model. They use the terminology of talent relationship management (TRM) because they believe (rightly so) that you should want to have relationships with talent, not just candidates. Although they certainly utilize technology, clearly the emphasis is on building relationships with targeted candidates.
- Continual “before need” recruiting. Rather than using the traditional reactive process to fill an open job, FirstMerit instead has implemented a “before need” hiring strategy that continuously identifies and builds relationships with prospects before requisitions open up.
- A poaching emphasis. FirstMerit’s talent acquisition strategy is primarily a “poaching” strategy. They focus 100% of their recruiting efforts on currently employed, already trained talent (the so-called passive candidates).
- Referral emphasis. Because referrals help build FirstMerit’s external employment brand while simultaneously involving all employees, referrals are a key element of their recruiting strategy.
- In-house recruiting. Because recruiting is viewed as a primary corporate competitive advantage, outsourcing executive search or other parts of recruiting is not part of FirstMerit’s strategy.
Recruiting Leadership Throughout my 25+ years in recruiting, I have met and worked with literally hundreds of recruiting managers. Other than Michael McNeal when he was at Cisco in the late ’90s, there is no one currently in corporate recruiting management like FirstMerit’s director of talent acquisition, Michael Homula. Perhaps it is his training at West Point that enables him to take the concept of “war for talent” and actually manage it as if acquiring talent away from other firms is a war, where the goal is to help your own firm and to hurt the enemy. If Michael were a cyclist, he would make Lance Armstrong look like an also-ran. His aggressive, business-like approach is a breath of fresh air and is the benchmark standard for others to learn from. Best Practices The second goal of this case study is to highlight some of the exceptional (and yes, even outrageous) recruiting practices that have been practiced at FirstMerit. Some of them sound so outrageous that you might not at first believe that they actually happened, but I assure you that they have. I hope you will use this list of innovative practices to energize your own efforts. But don’t wait too long, because the FirstMerit team has plans for the future that are simply breathtaking. Best sourcing-related practices:
- Send cookies when prospects are rethinking their life. By far the most creative, yet effective, sourcing tool FirstMerit uses is sending top prospects baked cookies and cards on their birthday and on New Year’s Day. The premise is brilliant. Identify the days when people are rethinking their lives and their careers (i.e. their birthday and New Year’s) and do it with the soft sell. They have found that if you contact these successful people on any regular day, you’ll get either no response or a negative one. With the properly timed cookie, however, almost everyone responds positively with a phone call! Their strategy and approach follow a typical customer relationship management (CRM) model. They gather all kinds of data on candidates, including decision-making criteria, spouse and family names, birthdays, and anniversaries. They are even developing a database system to make better use of this “one size fits one,” personalized approach to recruiting.
- Recruiting on their turf. Some members of the recruiting team wandered through a competitor’s offsite seminar wearing the competitor’s lapel buttons. In addition to a goal of getting a hire (they succeeded), the primary goal was also to build morale and energize the recruiting team. It also sent a buzz throughout the industry and their firm that? this team is serious about recruiting.
- Buy your own offer letter. This process requires some finalist candidates to provide three names of top talent at their current firm (with phone numbers and an introduction “to us from you”) as a “price” for their offer letter. The introductions must be made before the offer letter is given. The premise is to let everyone know, before they even start at FirstMerit, that everyone is expected to be recruiting 24/7. Even a candidate’s references are considered fair game as hiring targets.
- Recruiting an entire team. The talent acquisition team set as a goal to “get them all” at a competitor’s branch. With some cold calling, referrals, and relationship building, they managed to recruit an entire teller team away within a two-week period.
- Raiding during a traumatic event. Although their primary sourcing strategy is always premised on poaching away well-trained talent from other organizations, the recruiting team goes into high gear when a talent competitor is undergoing a disruptive event like a merger, acquisition, layoffs, a change in an incentive plan, or just a business downturn. The team holds phone-in parties to inundate the firm with calls to identify who is unhappy with the uncertainty or who is just frustrated with the merger or traumatic event. The team is supplemented during these critical periods with additional external name sourcers.
- Most-wanted “interviewless” hires. The recruiting team developed a “most wanted” list of the five best proven performers at their competitors. Then they developed some competitive intelligence about each of them and had a conversation with these “most wanted” candidates in order to verify that they were highly desirable. The team then sent each of them, without warning or an interview, an offer letter and a cover letter that stated that they could start in two weeks! (They were essentially given a free pass into FirstMerit). All prospects called back asking if the offer to start was for real, and they were told that it was. Each one of them independently asked whether it was true that they didn’t need to even interview, and in each case the recruiter responded by asking them if they wanted to interview. Not surprisingly, each said that they should if they were going to seriously consider a change (the precise response that FirstMerit expected). The recruiter then asked the prospects who they wanted to interview with and when (I have found that this is an excellent question for any top candidate). The net result of the strategy was that the process pushed passive, high-performing talent (who normally respond with a resounding no when asked if they would like to interview for a new job) into asking FirstMerit for an interview. Although the process is brand new, it has already resulted in at least one hire that they never would have gotten using standard recruiting approaches.
- Competitive intelligence mixed with recruiting. The director created a recruiting roundtable with the announced intent of learning and sharing. However, the quarterly roundtables had other purposes: competitive intelligence gathering (understanding the strategies and best practices of their competitors) and identifying, impressing, and eventually hiring the best recruiters in the region. They succeeded in all of these goals.
- Identifying the best sources. The recruiting team regularly uses metrics to assess the effectiveness of different sources. The team has found that candidate referrals, traditional networking, and identifying and building relationships with centers of influence (powerful and influential people within companies whom they have built a long-term relationship with) have higher on-the-job performance than even the traditional best source, employee referrals. For example, although the use of newspaper ads is quite common in FirstMerit’s industry, the company has almost stopped using them entirely. “Ads are the worst source,” according to Homula. “I would rather fish with a depth finder than cast a wide net. Using recruitment advertising is like casting a net into the Hudson River for fish: You might catch a few, but you’re likely to get all kinds of garbage.” Other successful “high touch” sources that FirstMerit has found to be effective include cold calling, taking talent prospects to lunch once a quarter using the soft-sell lunch, and getting key senior managers involved in the sell.
- Shopping in the mall for recruits. FirstMerit’s sourcing strategy for retail positions is based on the premise that you can’t hide great performers in customer-facing positions. In order to identify and assess these individuals, FirstMerit routinely utilizes a “mystery shopper” approach to recruiting. They send recruiters out to all retail stores and watch who services the customer the best. Recruiters purchase merchandise and then look for salespeople who can effectively upsell more clothes. Next, they return the merchandise they bought to see how the targeted individuals handle it. They do a lot of hiring from the retail industry because they have found that many retail establishments overwork and underpay good talent and that the sales and service focus plays well in banking. They have also had good success because the hours in retail are pretty bad.
- Shopping in other banks for recruits. FirstMerit also sends recruiters to bank competitors, where they sit with the new account person to open a bank account. They then note when the person says they will follow up with a call and wait to see if they do. They also check tellers for cross selling after they open a checking account.
- Job boards versus the phone. FirstMerit uses job boards in an interesting way. They look at job boards as an indirect way to reach their target candidates. For example, if they are trying to hire commercial lenders, instead of placing an ad for a commercial lender, they take the indirect approach and place one for a lending assistant (a lending assistant works directly for a commercial lender). Over time, they have learned that even though there is very low turnover in the lending assistant job (and thus even though they really try, there is a very low chance of getting a hire), lending assistants typically love to talk. So they use these job board responses to ask who the best lender is in the assistant’s bank. They then take the best lending assistants to lunch and ask them to identify the very best commercial lenders they’ve ever worked for. Even though it’s an indirect approach, they find it produces vastly superior results over using large job boards, because experience has shown them that the very best commercial lenders just don’t post resumes on job boards. As Homula states, “You can throw all the technology and job boards you want at the recruiting profession, but I am convinced the best weapon in the war for talent is the recruiter. Their best tool is their own creativity and innovation ó as well as the phone and their networking skills. I tell them to get off the Internet, stop doing Google searches, and start calling.”
Next week, in Part 2 of the FirstMerit case study, I’ll share of the company’s best practices, metrics used, future plans, and results.