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Rearranging the boxes on the organizational chart is not only as common as white bread, but it is also indicative of the need to have a big view of things — a strategy — as an anchor for the changes. Answering how things are organized, deciding who reports to who, and deciding who has responsibility for specific things are fundamental management duties. As you plan your recruiting strategy for the coming year, you may want to think about these issues in some depth. Before anything else, your recruiting function must be responsive to its stakeholders, which most likely includes the hiring manager, management in general, your fellow recruiters, HR management, and perhaps even candidates. Your prime stakeholders should be the focus of all your recruiting efforts. After all, any structure you put in place should be designed to provide your stakeholders with the best possible service, in the easiest way, at the fastest pace, and at the lowest price. Over the past few months I have fielded many inquires as to what is the best way to organize the recruiting function. Here are a few thoughts from years of dealing with this issue. I hope they help guide your own the thinking process.

The Central Approach

The benefits of centralized reporting are two: consistent procedures and processes and lack of duplication of effort (usually). Those who head up recruiting functions like a centralized structure because it simplifies and speeds up decision making. The downside is that decisions are only as good as the leader. Many key stakeholders may be left out of decisions and are not represented. Slower execution may result because of many chiefs and too few recruiters. Hiring managers tend to get upset over what they may perceive as high cost recruiting or recruiting that is not accountable. When (and if) this happens, the recruiting function responds by spending precious time defending itself and proving how good it is.

All of this detracts from the goal of finding and recruiting great people quickly. However, in a small company with a single division or product, or in a medium-sized company without complexity, I would recommend a centralized function, with the recruiters being physically located close to the hiring managers. This promotes communication and builds rapport. The recruiters should also be focused on working with one or two managers, or with a specific group of managers, so they can get to know and understand the competencies required in that area. With dotted-line reporting to a central organization, which recruits for the corporate positions and provides some economy of scale, this method works well. But in large companies with complex structures or many product groups or divisions, using a different structure will prove more effective.

While organizing centrally is the most common organizing method, companies often swing between a central and a decentralized approach over and over, trying each approach for a while and then switching back. They do so because neither is a complete solution and rarely does structure alone make the real difference in how effective a recruiting function is. Rather it is the combination of strategy, skilled people, and an effective structure that really make a difference.

The Decentralized Approach

A decentralized function is very responsive to hiring managers because the recruiters report directly to them or are in the same business unit. The recruiters are focused and often well respected by the managers they work with. However, decentralized functions sometimes have little insight on how the company as a whole is doing in regard to minority hiring or efficient recruiting methods, and can’t leverage scale to achieve cost reductions. Budgets are so decentralized that it is tough to get agreement from everyone on purchasing important software or other tools to aid in the recruiting cycle. In fact, decentralized organizations rarely have good applicant tracking systems or good data about past efforts. Time and money are spent ineffectively, but local folks are happy. Recruiter skills upgrading is neglected and no one really knows if a particular recruiter is good or not. Metrics are not consolidated or even tracked, in many cases. Of all the methods, the decentralized approach has the most potential downside. So how else can a function be organized? Is there a better way?

The Hybrid Approach

Long advocated by management theorists like Charles Handy, and exemplified most clearly by our own United States, a hybrid (or federal-style) approach to organizing works extremely well. In this approach, the various business units have their own recruiting functions and recruiters. These recruiters work directly for the product groups, but these product groups agree to allow a strong central recruiting function to exist and provide several services in common. This central group, analogous to how the federal government of the U.S. is organized, develops an overall strategy for recruiting, writes procedures for everyone to follow, tracks legal compliance, educates and supports individual recruiters, and collects and reports metrics to the corporation’s management team. Of course, they do all of this with the help of the people in the businesses, and this is how it differs from the decentralized approach. In the federal model, the groups come together and agree on what the central function should do because it makes sense. For example, it makes sense to have a single software system for recruiting. This can best be purchased and maintained centrally, but used in a decentralized manner. It makes sense to consolidate metrics, so the central group does this.

But whatever is done is by permission and with the consensus of the divisions. This is very different from other approaches. The beauty of this method is that the hiring managers remain in charge and have a great deal of control over the recruiting done in their function. Recruiters still get functional development and education and can vie for promotions and transfers internally. The company gets the benefit of consistently applied procedures. A central budget also allows the purchase of common systems. While there is no perfect way to organize, the federal model works better than any other that I have seen for large complex organizations where control of local resources is valued.

Although I have written about this topic before, it never ceases to amaze me when I talk to recruiters and managers how many of them still look at December as “downtime” for recruiting. I frequently hear phrases like, “No one’s in the office,” or, “No one changes jobs during the Christmas season” as excuses. But if you are a smart recruiter or recruiting manager, you will find that December is in fact a great time to recruit, for a variety of reasons. Now, I’m not talking about recruiting those high-volume active job seekers, because they do actually apply for fewer jobs during December. The target here are top performers, who are normally too busy to respond to job offers and recruiter calls. Some of the reasons to gear up recruiting during December include:

1. Thinking globally requires you to recruit globally. Although many people talk about the importance of global recruiting, only a handful of U.S.-based companies actually practice global recruiting. When you begin to think globally, you realize almost immediately that not every country in the world takes the entire month of December off to shop and attend holiday parties. In fact, in only a handful of countries does Christmas have the same impact on the business world as it does in the U.S. As a result, it’s essential that you continue to recruit in all areas, but especially in the geographic regions where others don’t slow down in December. In particular, focus your recruiting in countries like China, India, the Middle East, Africa, and Australia, which are excellent places to pick up great hires in December.

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Dear Hiring Manager: You probably only hire a handful of people each year and your recruiter usually does a reasonable job of getting decent people. Sure, sometimes you have to ask for more resumes than you initially got from the recruiter in order to find the right person, and sometimes you get frustrated because he can’t seem to find you anybody decent at all. And, once in while, you go outside to a headhunter. You probably say to yourself, “They’re expensive, but they know what they’re doing!” Now let me ask you a few questions. If you go along with me, you may discover how to work with your recruiter to find really great candidates, with less effort and less cost than you do now.

First of all, how do you define “decent” people or “the best”? Do you have some specific criteria that you use? Do you have any benchmarks or standards to compare against? How much time do you spend in the upfront process of figuring out the job requirements and laying out the things the person you want to hire will have to do to make you happy? In my many years as a recruiter and as a consultant, I find that this is the area most frequently overlooked or skimped on in the hiring process. Most hiring managers I work with are willing to spend a great deal of time in interviewing, often demanding that candidates go through numerous interviews. But they are less willing to give up time to talk to the recruiter about the position before any recruiting happens at all.

This is often different when they decide to use a headhunter. For some reason, when hiring managers decide to go outside, they find time to really think about the kind of person they want to hire. They spend time with the headhunter talking about job requirements, competencies, and past experience. The result is that the headhunter does a better job than the internal recruiter who didn’t have that conversation with you — and the results are proof of how important it is that the recruiter knows exactly what you want. But, again, my guess is that you’re running on your gut when it comes to defining what you want. You say to yourself that you’ll know the “best” when you see it. After all, you’ve been in your field for a while and can generally spot a loser. If you are lucky, you’ve had a recruiter at some time in the past who could always seem to get you the perfect candidate, but you’ve never asked yourself why they could do that or how. We all unconsciously look for certain traits in people and we are usually very adept at determining whether or not a candidate has those traits. What is unfortunate is that we almost never can articulate them. And even though we may believe that we are choosing candidates solely on the basis of experience and demonstrated skills, there is always our unconscious influencing the decision.

That recruiter who always seemed to find the perfect candidate was able to figure out what those unconscious traits were and use her interviewing and screening skills to bring you those kinds of candidates who also had the necessary technical skills and experience. You can help yourself hire better people, and at the same time help your recruiting staff, by simply heeding the following few tips about hiring. I also want to warn you that when you start to apply these tips, you may learn that many times you will find yourself rethinking certain positions — and maybe even finding out that some of your employees are a lot better than (or not so capable as) you thought.

1. Learn about the recruiting marketplace. Do you really know what the demand and supply is for the kind of people you are looking for? Most of us don’t have that kind of information handy, yet demand and supply are what makes it easy or hard to find the right people. Your recruiter, assuming you have a good one, should be able to help you the data you need around this. For example, nurses are in very short supply and no one, anywhere in America, has a surplus of them. This means that it takes longer to find candidates, that it’s harder to get them to say yes to your offer, and that they will get a higher salary than they did a few years ago. Other skill sets may be easier to find, but until you know it is hard to put together a realistic timeframe for recruiting. The more you and your recruiter can learn about the talent marketplace, the better able you will be to know when you’ve found a good candidates and what they should get for an offer.

2. Get to know your recruiter. If your recruiter is new or has not worked with you before, it will be impossible for her to know what you are really looking for. Even an experienced recruiter who knows your specialty thoroughly will have to get to understand those subtle traits that you find compelling. Let the recruiter spend a day shadowing you, and discuss with them how you mange. Let them attend a staff meeting or a briefing. The better the recruiter and you know each other, the more likely you are to see great candidates.

3. Get to know and nail down the skills and competencies of your best performers. Spend at least a day or two thinking about your best performers. Who are the people in your department you would like to clone, if you could? Try to put why you think they are so good into words. Here are a few questions that you can use: What does this person do on a regular basis that pleases you? What positive behaviors do you see regularly that you believe makes them successful? Are there stories you can tell about a time an employee did something you found exceptional or notable? Take some time to talk to the recruiters about past or current employees who you view as exceptional.

4. Working with your recruiters, develop an assessment process. One of the best ways to make sure that you and your recruiters are in sync on what kinds of people to look for is to put together a process for assessing candidates. You can work together with the recruiter to develop a series of questions or other assessment processes that will help you both decide on the traits, skills and qualities you need. These can become interviews questions and can also be used to measure how well the recruiting process is working.

5. Work with your recruiter to develop some metrics that will show how well you both are doing in getting good people. There are many possible metrics, but the ones that are the most important are those that relate to the quality of the candidates you see and ultimately hire, and the speed in which you got to see them. Establish some measures with your recruiter around quality — maybe measuring how quickly a new employee hit the productivity level you want, or how well they became a part of your team. By doing this you prove to yourself that you are getting the best people and you help guide your recruiter to those people. By taking just a few minutes from your busy day, and by working with your recruiter as a partner, you can improve the quality of candidates and the speed you fill your open positions.

An investment in effective onboarding is an investment in employee retention, morale, and productivity. Research at Corning Glass Works revealed that employees who attended a structured orientation program were 69% more likely to remain with the company after three years than those who did not go through such a program. Another study conducted at Texas Instruments showed that employees whose orientation process was carefully attended to reached “full productivity” two months earlier than those whose orientation process was not. More recently, Hunter Douglas found that by upgrading their onboarding process, they were able to reduce their turnover from a staggering 70% at six months, to 16%.

These changes also translated into improved attendance, increased productivity, and — not surprisingly — a reduction in their damaged-goods rate. At Designer Blinds, an Omaha based manufacturer of window blinds, upgrading the onboarding process played a central role in reducing turnover from 200% annually to under 8%! Because of the dramatic drop in turnover, they were able to reduce their recruiting budget from $30,000 to $2,000. A 2003 study by Hewitt Associates demonstrating the connection between effective onboarding and engagement revealed that companies who invested the most time and resources in onboarding enjoyed the highest levels of employee engagement. Both research and common sense tell us that it makes sense to invest time and effort into preparing employees to be successful at their jobs. If you want them to become productive as quickly as possible, why would anyone not do what it took to make that happen? If you’re going to spend all that money on acquiring them and paying them to come to work, why would you not prepare them to succeed? Despite the obviousness of this, many organizations approach new hire orientation with a level of professionalism and quality they would never tolerate in their daily operations.

Orientation as Nightmare

Rex Castle, senior vice president of human resources of State National Bank of Lubbock, Texas, captures the typical new hire orientation nightmare:

You come in and sit down in monumentally uncomfortable chairs and are bombarded with papers, rules, policies…you know those ‘this is how you get fired’ sort of comments. If it’s a big employer and a big group of new hires, someone stands in front of a PowerPoint slide show and reads the slides to you. Usually it’s an HR underling who is totally uncomfortable in front of a group and rarely, if ever, smiles. You sign and sign and sign more paper than you would if you were buying a house, and then you walk out thinking, ‘Man, I hope I don’t get fired, but at least I know how to get fired.’ And those are the good orientations. The poor ones are done by a harried manager on location and God only knows what it is the employee is receiving in terms of an understanding of policies and procedures.

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Few topics in the field of recruiting evoke such strong opinions as the subject of poaching talent, but it is a topic that must be explored further. In the United States, it is clear that a number of corporate recruiters shy away from poaching talent on the grounds that it is unethical to approach and offer possible employment to someone who is already gainfully employed by another organization, such as a direct competitor, despite the fact that the target employee could always just ignore the recruiter’s efforts or opt out at any stage in the process. Given that firms in the United States are typically the most aggressive recruiting organizations, having pillaged other countries for top talent in information technology, healthcare, and the sciences for years, you might assume that the dominant perceptions around poaching talent in the Unites States are similar to those of recruiters abroad. If you did do that, you’d be wrong!

U.S. Perceptions Exist in a Vacuum Two weeks ago, I spoke at ERE’s first European conference, to a crowd of recruiters representing some of Europe’s most recognized companies and a handful of U.S. companies with a strong global footprint. I opted to speak on what I consider the most aggressive recruiting tactic available to corporate recruiters: targeted talent poaching. Prior to arriving in Brussels, Belgium, I prepared for a negative reaction, based on previous experiences with this topic in the U.S. But to my surprise, the reaction wasn’t negative. In fact, one member of the audience spoke up and indicated that poaching had become par for the course, a comment that drew affirmation from the rest of the audience. This caught me by surprise, only because over the years I have worked with a number of European firms, and when compared to firms headquartered elsewhere, their hesitation to adopt aggressive approaches was by far the most resolute I’ve experienced anywhere in the world.

Reflecting on that experience, I realized that it wasn’t out of line with other global experiences I’ve had this year. Throughout 2005, I touched down in eleven countries, mostly in Southeast Asia and Central and Eastern Europe. The perceptions around poaching encountered in Europe could be seen in Australia and New Zealand, where the shortage of skilled talent has threatened the survival of dominant industries. One banking organization was so aggressive that it approached the spouses of targeted candidates while their respective partners were at work to recruit the spouse as a decision influencer. It seems as though the dominant position the U.S. has enjoyed for years in the political/economic landscape has perhaps made our recruiting organizations complacent. As migration to the global economy causes rapid wage inflation in underdeveloped nations such as India, China, and Eastern Europe alongside steady wage deflation in hyper-developed nations like the U.S. and Great Britain, it is clear that such complacency may tip the scales in favor of the developing nations as the war for talent escalates.

A Primer on Poaching

Poaching talent is the practice of proactively targeting and hiring top talent away from a competitor or top firm, with the specific intention of:

• Securing skills or capabilities faster than if you were to attempt to develop talent internally through training and development efforts

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Here are two basic principles of recruiting that you need to apply when targeting passive candidates, diversity candidates, or any type of candidates in high demand:

• The more competition there is for a group of candidates (like nurses, pharmacists, sales reps who always exceed quota, design engineers who were elected to Tau Beta Pi, diversity candidates, etc.), the more recruiting effort is required to attract and hire them.

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People who didn’t believe in the Internet as a sourcing medium 10 years ago started to look pretty foolish about five years ago. Likewise, some companies are still perplexed about accepting all of their new talent applications in a digital format, and, sure enough, research is starting to indicate that they too may look foolish tomorrow. But what comes after tomorrow? What do you have to pay attention to today to ensure your talent management practice is leading edge, and capitalizes on all the benefits of the latest technologies? To understand the answer, we will first review what companies have been doing when it comes to sourcing. We’ll see whether “we only accept online applications” is an acceptable practice for your company. What are other companies doing? Do you still have to accept talent applications on paper? Finally, we will contemplate where it will lead us tomorrow and what is the next strategic turn.

Sourcing

As the demand for talent intensifies, attention is again turning towards effective candidate sourcing methods. Many corporations have focused on retaining the high-value talent they already employ and are boosting the internal mobility initiatives in order to heighten employee satisfaction and reduce turnover through digital means. New web-based applications have even emerged that “webify” the standard concept of referral networks. The Internet and referrals represent the two most important sources for new talent and are supported by a digital medium. Agencies today often interact with organizations through portals that make this a digital medium as well, and of course job boards became a standard online classified medium. Nonetheless, the requirement for new external talent remains, and for growing organizations is under pressure.

Regardless of the balance of talent supply and demand, the need for speed and efficiency in managing candidates is clear. Notably, one key portal ó the corporate website careers section — has progressed. Throughout the economic turbulence and Internet technology developments, the corporate careers website has steadily grown in use and importance. It is today the main portal for candidates to interact with a corporation. According to our research, in 2000, 73% of Fortune 500 companies already had a direct link from their website home page to the careers section. In 2005 that number has barely increased to 79 percent and it is considered a standard practice. Although data does not indicate a major change, a closer analysis reveals an important evolution, specifically in the preferred method for accepting job applications.

Online Response Only

In 2000, only 27% of the Fortune 500 directed all candidates wishing to respond to job positions posted to the corporate careers website to a purely online response mechanism. But in 2005, 77% of the Fortune 500 do not give jobseekers the option of responding offline to job positions posted to the corporate careers website.

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About once a year I get the feeling that we aren’t making any progress in really improving our approaches to acquiring and retaining talent. Perhaps part of this discouragement arises because neither recruiters nor managers have put much rigor into defining what we mean when we talk about the quality of our employees. We bandy about the term “talent,” and yet we have no real definition of it. For many recruiters, talent is synonymous with “anyone who says yes.”

But what I mean by “talent” are those employees whose contributions are vital to our ability to produce our products or deliver our services. If we were to compare our firms to sports teams, I think we could understand talent better. When a sports manager speaks of talent, he is talking about those individuals on any team who score the points or block the other team from scoring points themselves, or who the fans and players identify as essential for success. Companies like Cisco Systems operate not unlike sports teams, in that they actually quantify the contribution individuals make to the sales and profit of the company. They know that above average performers generate more sales than average performers. McKinsey, in its Talent War 2000 study, has also documented this. Those surveyed by McKinsey were asked to assess how much more a high performer in a profit and loss position generates than a mid-range performer. They estimated the difference at 49 percent, and they concluded that the high performer should be paid 42 percent more for these results.

When you think about what 49% means, it is astounding. That means a high performer brings in almost twice as much business as an average performer or produces twice as much. If you as a recruiter could identify potential high performers, how much more bonus do you think you would get? How much better would your reputation be? If we were really serious about looking for talent, here are some of the things we would be doing as recruiters and as human resources professionals:

1. We would work harder than we do at identifying high performers. Together with high performers themselves, we could establish some indicators of success or of high performance for each position we recruit for. These could be the number of sales they have made in a month, the number of reports they have written that resulted in consulting assignments, the amount of revenue their group has generated, and so forth. This is hard work though. There aren’t a lot of benchmarks to go by, but we all know more or less who contributes the most to our organizations. Our task is to quantify those contributions.

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Murphy’s Law states that anything that can go wrong will go wrong. Obviously, Murphy was a recruiter. If he did something else for a living, he would have been a bit more optimistic. Whether you believe in Murphy’s sad bromide or not, as a recruiter it is a good idea to do all that you can to avoid becoming one of its victims. But in the last month or so, I have seen it happen: recruiters who have been around long enough to know better saying or assuming things they shouldn’t be saying or assuming. Almost verbatim, they are stated below. If you ever find yourself saying any of these things or making any of these assumptions, think again!

1. “This deal is a slam dunk.” I think not. Fast and easy deals are usually neither. If you think you are working on a slam dunk hire, go back to the drawing board and look at everything that can possibly go wrong. Look at the candidate’s commute, compensation, title, job stretch, and everything else that relates to the candidate, the job itself, and the fit between the two. If you still think it’s a slam dunk hire, have another recruiter grill you on the details. If there is something you are not seeing, it is better to find out before the deal falls apart than after.

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Any good recruiter knows that there are literally thousands of approaches that can be used to source, assess, and hire a great recruiter, and that the best approaches will vary depending upon what types of jobs you will need the recruiter to handle. Parts 1 and 2 of this article series provided specific ideas separated into different ways of approaching the challenge of hiring great recruiters; this section will wrap up with some miscellaneous approaches some firms have used. If you are fond of a particular approach that has not yet been mentioned, consider posting it to one of ERE’s discussion groups.

Other Miscellaneous Ways to Attract Recruiters

Some other individual approaches that can be effective in attracting recruiters include:

1. Write a white paper or case study about your firm’s recruiting practices.

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Sometimes you just don’t have enough money in the budget to attract a top person. The following compensation negotiation techniques will allow you stretch your budget 10% to 15% without paying extra. But be careful using them. They’re for professionals only. Without practice, you might wind up paying more or losing a good person for dumb reasons.

Long Term vs. Short Term

This technique is about reframing the decision so that it is about job growth rather than compensation. When a candidate says the offer isn’t big enough, start with this:

Are you making a long-term decision using short-term information? Compensation shouldn’t be evaluated by itself. When we put offers together, we try to shoot for an overall increase of 30% to meet a person’s short- and long-term career growth targets. The bulk of this increase, however, is not in compensation; it’s in job stretch and long-term growth. As we discussed during the interviewing process, this job offers at least a 15% stretch in the job, plus long-term growth of 5% to 8%. Coupled with our cash comp increase of 8%, this is a very attractive offer. Let’s review the job stretch piece just so you feel comfortable with this.

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The U.S. workforce is growing steadily older. From 1930 to 1970, the median age went from 26 to 28, an increase in age equal to about two weeks per year. From 1970 to 2003, the median age increased from 28 to 36, an average increase in age of roughly three months per year. This amounts to an increase in aging of about 600 percent. The increasing age of the U.S. population will continue for many years into the future, barring any massive shifts in people’s birth rates or longevity. The workforces of Japan and most European countries are aging much faster than the U.S. workforce. The workforces of China and India are also growing steadily older. The increased age of the workforce will have significant impacts in terms of the kinds of candidates available to staff future jobs.

People change as they get older, and these changes will create fundamental shifts in workforce capabilities. Few people over 40 could or would want to perform the jobs they had when they were 18. I used to bus tables back as a teenager. Though I like to think that I’ve stayed in reasonable shape as the years rolled by, returning to a job that involved carrying dishes 40 hours a week for a fairly modest hourly wage sounds neither physically, intellectually, nor financially appealing. Although people may deny it, with age comes some predictable and fundamental changes in our interests and capabilities. Staffing directors need to plan for the fact that employing older workers is not the same as employing younger workers. Future staffing strategies must pay greater attention to the interests, motives, abilities, and constraints typically found in older workers. Smart companies will consider the following factors as they make greater use of older workers:

1. Decreased tolerance for certain kinds of work or work demands. Many older workers, particularly those with highly valuable skills, are likely to be in a financial and personal position where they can exhibit considerable choice over how they want to spend their time. Such employees are more likely to demand work schedules and assignments that fit their interests, even if they do not fully align with the company’s needs. Companies looking to recruit older workers should take a hard look at whether the job opportunities they are offering are truly going to appeal to these workers. This will require a high degree of flexibility when it comes to designing jobs based on the interests of the candidates, instead of looking for candidates whose interests fit with the demands of the job.

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The phone rang in my office a few months ago. When I picked it up, a male voice asked, “How are you today?” Even before he identified himself, I knew I was speaking with an agency recruiter. After warily telling him that I was fine, he proceeded to jump into a monologue that did not involve commas, periods, or, as far as I could tell, any intakes of breath. He told me he had seen a web posting of an open position of mine and that he had the perfect person for the job. I actually happened to know the candidate he was selling me. The candidate was not qualified and did not have the work ethic required to succeed at my company. This did not deter the recruiter. He continued to push the candidate, suggesting that all we had to do was meet him and we would see he was perfect for the job.

After finally putting down the phone, it became apparent to me that this conversation was not the recruiter’s fault. The problem with his approach could be traced to the agency he worked for and its flawed incentive structure.

Incentives in Recruiting: Corporate vs. Agency

There are two prevailing methods that are used by corporations and agencies to motivate recruiters. Both are complete opposites when it comes to incentives. Unfortunately, neither method promotes the right activities for successful hiring. For the purpose of this discussion on incentives, I will refer to them as the Corporate Method and the Agency Method. The Corporate Method treats recruiters like any other employee. Corporations believe that since recruiters are in HR, they should be paid a straight salary and periodically receive bonuses, just like their co-workers in finance, IT, engineering, and other functions. The Agency Method, on the other hand, is based on paying a minimal wage (if any at all) and offering hefty commissions based on the number of people recruiters place at their clients’ companies.

The downside of these two methods is that corporate recruiters are given little incentive to aggressively recruit talent, and agency recruiters are given little incentive to build long-term partnerships with their customers. Neither incentive system promotes the recruiter activities that are necessary to ensure successful hiring practices for the companies served. In this article, I will focus on the problems inherent in incentives for recruiters working at agencies. Let me start by describing a successful hire. A successful hire is someone who joins a company, excels in his job, and stays for an extended period of time. In my previous article on talent suitability, I discussed how the key to a successful hire is hiring someone who is a strong match for the right job, group, and company — and where the job, group, and company are a strong match for that person. We do not pat ourselves on the back and say we have made a successful hire the week a new hire starts. The real determinant of talent suitability success is what happens weeks and months after someone starts. What you want are new employees who are productive and stay a long time. When it comes to addressing this issue, agency recruiting incentives are a disaster. Agencies pay commissions to their recruiters based on the number of people they place. Their recruiters typically get paid a percentage of the newly hired employee’s first year salary. Agencies will usually have an agreement with their customers that any new hire who leaves the client company in the first 90 days (in rare cases up to six months) will be replaced free of charge. Based on this incentive system, the Agency Method is detrimental to ensuring quality hires. It cannot build fruitful long-term relationships and can only survive by the “hit and run” tactics utilized throughout the industry. Let me explain. By focusing on quantity, agency recruiters work aggressively to fill as many positions as possible. If recruiters are working on 20 positions concurrently, they will focus on the positions that are fastest to fill and will typically ignore the more difficult or longer cycle positions. As an example, if one company makes slower hiring decisions than a second company, the agency’s recruiters will focus on the company that makes faster decisions, to the detriment of the more thorough customer.

Annie Rihn, head of recruiting at Zillow.com in Seattle, has engaged several local agencies to help meet the hiring goals of the pre-launch start-up. She says, “We offer a unique and challenging opportunity and have an incredible culture. But having a very high bar when it comes to talent standards has caused frustration for several of the agencies we’ve worked with. Some agencies are less motivated to work with us because they can’t get as quick of a hit. The few that have been most successful are clearly focusing on building longer-term relationships and feel much more like a trusted business partner.”

Agency recruiters usually make two other costly mistakes. First, because they are competing with other agencies, and sometimes the customer’s internal recruiter for candidates, they will call and screen candidates quickly, without much attention to detail, as they want to win the “race” for candidate submittals. Second, they will take an aggressive tack with hiring managers to get their candidates interviewed, making comments like “you must see this candidate,” or “he is absolutely perfect for the job.” If hiring managers interview candidates who have not been well screened and who are not “perfect for the job,” the agency recruiter’s credibility is ruined. But with the focus on quantity, not quality, and so many prospects out there, agency recruiters simply move on to the next opportunity. Another poor practice of the Agency Method is the 90-day replacement guarantee. There is absolutely no incentive in this guarantee to ensure the hiring manager and candidate have a happy and productive relationship over an extended period of time. If a recruiter is only worried about a new hire staying for 90 days, there will be minimal effort given to principles of talent suitability.

Fixing the Agency Method

So if talent suitability equals successful hiring, what concepts would agency recruiters need to embrace in order to improve?

• They need to build long-term relationships with their corporate customers. Customers want to work with their recruiters over an extended period of time, as it takes a while to learn the nuances of the job and the manager’s hiring expectations. Agencies who invest in their customers’ success over the long term are more profitable.

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Last week I reviewed some of the reasons it is so critical that recruiting directors focus on finding and hiring great recruiters. This week I’ll focus on the actual tools and techniques your firm should use to do just that. Obviously no firm will use every one of these tools, so the key is to scan through them and pick the ones that best fit your culture, your requisite timeframe, and your budget. Some approaches may seem to be too aggressive for your firm. But read on, because the toolkit also covers more conservative approaches. (Note: The tools and approaches with the greatest impact are generally listed first. While this checklist is designed for finding recruiters, it can be easily modified for any position.)

Poaching From Other Firms

The very best recruiters are employed at other firms where they keep their skills up-to-date. Those most relevant to your needs are most likely sitting behind a desk at one of your talent competitors. If you want great recruiters you need to become comfortable with hiring them away from other firms. If your recruiters are resistant to poach recruiters from other firms, fire them on the spot!

1. Ask candidate finalists you lose who the winning recruiter was. When you lose a candidate for a hard-to-hire position to a competitor, call them up and ask them the name of the winning recruiter. Do the same when you hire a recruiter from a competing firm (ask them on the first day who their former firm’s top recruiter was).

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Jim is the best recruiter at LNM, a division of a Fortune 500 company. Karen is a strong marketing manager who is not looking for a job. Jim found Karen’s name on ZoomInfo, and he is now cold calling her to explore the possibility of considering her for the position.

The Opening Jim: Hi Karen. My name is Jim Howard. I’m a recruiter with LMN and I’m leading a search for a senior-level marketing executive. Your name was brought to my attention as someone I should contact regarding this assignment. Since I have you on the line, let me just ask you very openly, would you personally be open to exploring a new career opportunity if it were clearly superior to what you’re doing today?

Opening Scenario One: No reluctance. Karen: Yes! Of course. (75% of candidates say this without qualifications.) Jim: Great. Before we get too serious on this, let me ask you a few short questions about your background. Then I’ll give you a quick overview of the position. Based on this, if it makes mutual sense to proceed, we’ll schedule a convenient time to talk later in more detail. (Here, Jim will start to conduct the work history review below. Very few candidates will object.)

Opening Scenario Two: Some reluctance. Karen: Yes, but tell me a little about the job first. Jim: Great. Telling you about the job could take some time, though. We have a very unusual selection process at LMN. As part of this, we conduct a formal job matching process to ensure every offer includes significant job stretch and job growth. This marketing position is a very important position for us, and job matching makes sure that both of us make the right decision. Why not give me just a two-minute overview of your background? I’ll then give you a two-minute overview of the current job, and if it makes mutual sense to talk further we can schedule another call later today or this evening. (Here, Jim will start to conduct the work history review below. Very few candidates will object.)

Conduct Work History Review After conducting a quick work history review (titles, companies, education, compensation, size of team), which usually takes about six to eight minutes, you’ll know whether the candidate is in the game or not.

Moving Forward And Getting Referrals If the person is not qualified, use the following technique to get referrals. Remember, at this point in the conversation you have not told the person much about the job. If the person is a good fit, you’ll want to arrange another call. See Scenario Two for how to do this.

Scenario One: Overqualified for the job. Get referrals. (If underqualified, just reverse this process.)

Jim: I’m very impressed with your background, but I think this job is not a big enough move for you. As part of our job matching process, we like to see at least a 10%-15% stretch for new hires. This makes it worthwhile for you to make the move. Regardless, I’d like to review your background with a few marketing executives and make sure that if something bigger develops, you and I can reconnect. However, someone who worked for you at a prior employer might actually be worth networking with. Let me give you a quick overview of the position. (Provide quick compelling elevator pitch about job and its importance. Then get two or referrals by asking the following.)

Jim: Is there someone you worked with in the past who you think would be qualified for something like this? I only want to target passive candidates who are not looking. We want to be able to offer 10-15% job stretch and growth, so we want to target people who need to be recruited. I’ll even talk with people who might know the right person, just to build up my network. Who are some of the best people you’ve worked with in the past? (Interact.) Who would you like to hire someday if you could? (Interact.) (The point of all this is that, in order to get names of top people, you need to first establish a professional relationship with the candidate. You do this by being vague about the job so the person doesn’t opt out, by conducting a work history review, and then by proactively asking for names of top people. If you restrict your phone calls to only top targeted people, you should be able to find three or four great candidates in a few days.)

Scenario Two: Qualified. Set up for next round. Jim: Karen, your background is very impressive. Let me tell you a little about the job and our unique job matching process. (Provide longer elevator pitch about the job, describing two or three areas of obvious stretch, like team size, budget, scope, scale, or complexity.) On the surface, does this seem like something worth evaluating in a little more depth? (Interact. If you conducted the work history and screening properly, 90% will say yes.) Jim: Let’s set up a phone call later today or tonight. What’s your cell phone or home number? (Get both!) I’d like to review your background in more detail during this call, and give you a thorough overview of the job. I also want to describe our job matching process. (Introduce candidate to job matching. You’ll use job matching to maximize the close rate of top candidates, minimize counteroffers, reneges, and no-shows.) Jim: I think we’re one of the few companies that formalizes the career selection process to make sure our candidates make the best long-term career move for them and that we select the best person for the job. Assuming everything goes smoothly, we both recognize that the only way you’ll accept an offer from us is if it’s a great career move. We’ve found ten factors top people use to decide whether they’ll accept a job or not. As I review each factor, could you tell me how you’d rank your current job? We’ll rank the new job the same way. If an offer is eventually made, this way you’ll clearly see if a move is worth making.

Job Matching: How to Compare Two Different Jobs

As Jim reviews the ten factors below with Karen, he asks her how she’d rank her current job on each of the following factors. You can do the same with your candidates. As the candidate learns more about the current opening during the interview and selection process, she’ll be able to determine if the new job is a strong career move. You can also use the idea of getting more information about the job as a way to keep the candidate interested in the job and coming back. At the end of the process, this will increase the likelihood of acceptance and minimize the chance of her taking a counteroffer or another offer.

1. Job matching and satisfaction. “Are you highly motivated to do the work, find it fulfilling and enjoyable?”

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The test vendor says, “This test was developed specifically for the banking industry.” You say, “Sounds good. I work for a bank. I’ll buy it!” Mr. Politically Incorrect says, “Bzztt! Nope.” Now, some vendors probably believe their own press and think their tests are validated for a given industry. But that does not make them correct. To understand why, we need to review the concepts of “validation” and “validity generalization.”

Validation

Suppose you took an employment test. Regardless of whether it was used widely in the industry, wouldn’t you really want to know whether its scores predicted job performance? Think about it. What do the following statements really mean about a hiring test?

• “Our test is validated for use in the XYZ industry.” What, for every job? Are all companies in this industry identical?

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Car manufacturers get daily, even hourly, updates on car sales from dealerships all over the country. This data gets fed into sophisticated supply chain systems that then predict how many cars need to be produced based on sales levels and the popularity of an individual model. This is then translated into component parts, and orders are generated to suppliers. Shipping information is sent to FedEx, UPS, and trucking companies, and accurate data is made available to customers about when products will be available. In fact, these systems are so good that it is a rare day when a product is not on the shelf when you want it, in the color and model you want.

But to get to this point, manufacturers have spent over 50 years developing the systems and approaches that makes this complex system possible. Every formal process you have heard of — from just-in-time manufacturing to Six Sigma — has its origin in trying to achieve the goal of efficiently and cheaply making products available you when and where you want them. This whole system is generally called “supply chain management,” and manufacturing firms have almost perfected today’s supply chains. Suppliers and users have established flexible, just-in-time supply arrangements for all kinds of products. Manufacturers can provide enough lead time to suppliers to ensure that only in the rarest of circumstances (hurricanes, earthquakes, and war) will there be any major disruption in production due to the lack of parts or raw materials. Manufacturers have honed their ability to accurately predict the need for parts, and suppliers have put in place rapid and highly flexible tools and processes to make whatever is needed.

The 21st century will see these same processes applied, albeit with many differences, to the supply of skills and talent. Talent is the new scarce raw material, and organizations are just now beginning to elevate the idea of predicting talent needs and ensuring a talent supply to a more central place in their thinking. IBM, Johnson & Johnson, and a few others firms are well along in putting into place the elements of a labor-based supply chain mindset. A recent article in Harvard Business School Weekly is worth a read to see how IBM is approaching this. Any talent supply chain has to deal with several dynamic forces simultaneously. These include the business cycle, changing organizational structure, evolving corporate strategy, technology dynamics, and regulatory changes. It will take more than just the recruiting function or even human resources to create the systems needed for labor-based supply chain management, but recruiters do have a major role to play. In the end, technology, finance, HR, recruiting, training and development and workforce planning will all need to work together to develop these processes. In this article I will lay the foundation and discuss the basic elements of a labor-based supply chain. In next week’s article, I will talk about some specific things you can do to get started. IBM has perhaps devoted the most public time to talking about this, and they have created an approach that works. This approach forms the basis of what I talk about below. They have been developing a labor management system that takes many of its practices from their success in manufacturing. By correlating success to skills and other selection criteria, constant improvements can be made in productivity and customer satisfaction.

Developing a Skills Taxonomy

A labor-based supply chain starts with developing a list of the skills required to meet your customer’s needs. Academics call these lists “taxonomies.” A skills taxonomy clearly defines what knowledge, abilities, and skills employees need to have. These, in turn, make it easier to assess candidates and current employees to see where there are strategic gaps. Technology can be harnessed to warn you when skills are missing or when, through attrition or retirement, specific skills are going below predetermined levels. For example, suppose that your corporate strategy is to supply financial consulting services to a specific industry. The first step would be to determine which skills are needed to perform that service and which are industry specific.

Once this has been completed, you can take stake stock of your current workforce to see which skills they have and which are missing or in short supply. Any skills that are lacking can be recruited from outside or developed internally, hopefully ahead of a crisis, which often leads to hasty hiring or incomplete development. But without any definition of needs, no assessment at all can be made. This often leads to poor decisions, inefficient practices, or employees being asked to do things they are not really qualified to do or to. Very few organizations have skills taxonomies, and even if they do, they are probably not dynamic or up-to-date — or even used at all. A really useful taxonomy is constantly being updated, correlated with success, and evolving as strategy and competition change. By identifying these skill needs, you can also emphasize to workers where they should spend time in development or where to focus development budgets. As your strategic planners look at opportunities, this taxonomy and skills survey can give them the information they need about how realistic or in what timeframe your organization could compete effectively in those area.

Measuring Success and Tracking Progress

The second step in this process of developing a labor-based supply chain is to put in place measures of employee productivity, performance, and quality. This means that standards have to be developed and measured against on a frequent basis. For service delivery people, the standards may be time, speed, or quality and will probably be a mix of all of these. IBM measures its consultants against all of these, as well as against customer satisfaction. By employing the right technology that tracks these on a regular basis, managers can get early alerts when performance falls below predetermined levels. Performance can be matched against the skills and abilities identified in the taxonomy, and the taxonomies can be updated if a skills are found not to correlate well with success.

For example, two consultants working on similar projects (perhaps even for the same client) may have different levels of productivity and customer satisfaction. By measuring and tracking these differences, and by matching the consultant’s skills to their performance, changes can be made in selection and development criteria. What is emerging is a more quantitative performance management process, based on specifics such as productivity and quality rather than on whether a manager likes you. As talent becomes harder to find and keep, productivity will become a key measure of employee value, as will other quantitative measures. I will address more about how to put something like this is place next week.

Integrating Technology

The third step is to integrate technology into this process wherever possible. Technology can be used to help attract candidates and to take them through the process of screening and assessing capabilities and skills. It can be used to track and measure success, to keep skills inventories, and to use those inventories for screening and matching. Technology can keep employee portfolios and make them available to hiring managers when they are looking for people with particular skills or abilities, and it can correlate skills to success. If technology is not deeply integrated into the human resources function, no significant productivity improvements are likely to be made. There are too many variables and too much information to be examined and related for a human to cope with. A labor-based supply chain is as much a change of mindset as it is an implementation of process and technology. It is about making a statement that human beings and their outputs can be measured and improved, at least to a greater level than we have ever done in the past. Next week I will discuss some specific steps you can take to being putting a version of labor-based supply chain thinking into your function.

Last year, I wrote an article examining some of the implications of the OFCCP’s proposed definition of an Internet applicant. Approximately one and a half years after issuing a proposed definition of electronic applicants, the Office of Federal Contract Compliance Programs (OFCCP) issued its final ruling on October 7, 2005. The definition will go into effect February 6, 2006, thereby giving organizations a bit of time to work out details as to how they will meet the standards in their electronic recruitment programs. The purpose of this article is to briefly describe the final definition, explain some key issues related to this definition, and discuss the implications for employers who are covered by the OFCCP.

Who Is an Internet Applicant?

In its final ruling, the OFCCP carefully considered public comments on the proposed definition, making a few changes in the final version of it. Although the final definition is quite similar to the proposed definition, there are some significant differences. The final definition states that an Internet applicant is an individual who meets the following criteria:

1. The individual submits an expression of interest in employment through the Internet or related electronic means.

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