The U.S. Department of Labor reported today that 388,000 (seasonally adjusted) new claims for unemployment were filed last week, a drop of 34,000 from the previous week. Reuters reported that the average of economists estimates was 415,000. The one-week peak came in March 2009 when 651,000 people filed for initial benefits.

Some economists questioned the accuracy of the numbers, pointing out that most state offices were closed for at least part of the week and that holiday travel and other factors may have deterred some from filing. Government economists said the seasonal adjustments takes those issues into account.

In any case, the critical issue is the overall trend in the numbers and, as one look at the accompanying chart for 2010 shows, it is decidedly down. Benjamin Reitzes, an economist at BMO Capital Markets, told the Associated Press, “If we can continue this improving trend, we’ll likely see stronger job growth in 2011.”

As the various measures of consumer optimism suggest, Americans are hopeful, but uncertain about the economy in 2011.

The Conference Board, a private business research group, said in its monthly confidence report, “Those expecting an improvement in business conditions over the next six months edged up to 16.6 percent from 16.4 percent, while those anticipating business conditions will worsen edged down to 12.1 percent from 12.4 percent. Consumers remained mixed about future job prospects. Those anticipating fewer jobs in the months ahead increased to 19.5 percent from 19.1 percent, while those expecting more jobs declined to 14.3 percent from 15.1 percent.”

Americans can be forgiven if they are skeptical of the future. The national unemployment rate is all but unchanged over the last 12 months. It stood at 10 percent in December of 2009 and economists are expecting it will come in at 9.8 percent for December 2010 when the government releases its monthly employment report on Jan. 7. If it does, it will be the second month in a row. In June, the unemployment rate dipped to 9.5 percent, then crept back up during the fall.

No wonder that consumer confidence has seesawed. A year ago, it stood at 53.6. This December, The Conference Board’s survey puts it at 54.3, nine points below its peak in May.

As challenging as the year has been, there has been improvement. A year ago, the Monster Employment Index (a measure of job offerings) was 115. In November, the most recent month available, it was 138. Job growth, as measured by the U.S. Bureau of Labor Statistics, went from a negative to a positive. In 2009, 11 of 12 months saw job cuts. This year, only three months had losses, and most of that was from the layoff of temporary Census workers. Economists expect that the December jobs report will show about 111,000 new jobs during the month.

CareerBuilder predicts that hiring will continue to improve next year. Its latest survey found 24 percent of employers planning to hire full-time, permanent employees in 2011, up from 20 percent in 2010 and 14 percent in 2009.

Those expecting to reduce staff declined to 7 percent from the 9 percent who expected to do that in 2010 and the 16 percent the year before that.

That’s the upshot of what a panel of recruiting leaders, consultants, and professors are saying. Their detailed advice for corporate recruiting leaders is in the December 2010 / January 2011 Journal of Corporate Recruiting Leadership.

For now, some highlights:

“Finding people in the right place with the right skills will not necessarily be easier in this over-saturated labor market. In fact, it may be more difficult.”  –John A. Challenger, Challenger, Gray & Christmas chief executive officer

Jeff Joerres

“While there is a sense of stabilization growing, don’t be fooled–now is the time to implement a robust talent strategy that fully accelerates an organization’s business strategy. Those who think short-term instead of looking at the bigger picture will find themselves talent-poor thanks to external forces and the velocity of change. Having the best business strategy in the world is purely academic if the company lacks the talent it needs to execute it…2011 promises to be an exciting year. 2010 was an improvement on 2009, and that upward gradient will continue. It has been a long uphill struggle and as we trudge on through the fog of uncertainty, it can feel as if the summit is not getting any closer. If we glance over our shoulder though, and see how far we have come since the beginning of the climb, we cannot fail to be filled with renewed confidence that the peak will be scaled and we can look forward to the fun part of the race where it is all downhill.”  –Jeffrey A. Joerres, Manpower Chairman and CEO

“Is all the economic news bad? Not by a long shot. Although the economy will be lurching forth, and there will be bouts of short-term bad news, we will not be back in the horrible markets of half a million job losses monthly. The 2011 economy should be decidedly better than that of 2008-09. Productivity is up, but firms cannot live on productivity gains forever. They will have to hire as output, albeit slowly, expands. Firms that start their recruitment the earliest will have their pick of the best and the brightest. Those firms will get not only talent, but also grateful team members.”  –Jack Worrall, Rutgers professor of economics and chair, College of Arts and Sciences

“The American labor market is digging out from a deep hole, and doing so at a snail’s pace, for two very fundamental reasons. The first reason is that there isn’t enough demand to warrant adding more people. And if that were the only problem, the solution would be simple: Jumpstart demand. In other words, government should spend enough money to get demand growing again. But the second argument suggests even if there were another round of stimulus spending, it wouldn’t work. This is because the workers needed to produce the goods and services in demand just aren’t out there. This is the mismatch between the skills the unemployed have and the skills required to fill new jobs.”  –Ken Goldstein, Conference Board economist

“Why hasn’t a lower-cost model for executive search emerged? In 1980, if I had engaged a search firm to conduct a retained search, the fee would have been 33-1/3%. Today, the percentage is exactly the same (or at least that’s the starting point for negotiation). Since the world is now flat, access to information costs almost nothing compared to 30 years ago. Every other industry has gone through cathartic change. So why does the search industry stay the same?”  –Erin M. Peterson, Aon Hewitt recruitment process outsourcing leader

Lorrie Lykins

“All bets will be off as we move in earnest into a post-recession economy. We can expect to see unprecedented hiring skirmishes between rivals and all-out coups as the war for talent heats up again. And potential candidates will be less passive in their job search approaches and negotiating as the pace of hiring quickens. While online resources will continuously offer employers new and innovative ways to connect with these potential candidates, the good old-fashioned art of schmoozing and networking will be more critical than ever.”  –Lorrie Lykins, i4cp (Institute for Corporate Productivity) managing editor

“Many candidates have a residual cynicism from the way they were treated during the recession. While poor candidate treatment by companies is nothing new, a person’s experience during difficult times tends to be magnified to them as opposed to when times are good. As a result, people remember how they were treated over the last couple of years, and I’ve seen employer brands suffer. I suspect companies will continue to try to rehabilitate their personal brands through improved candidate care…”  –Jeremy Eskenazi, Riviera Advisors managing principal

Sherrie Madia

“You will find stellar candidates who are not plugged in to social media. But will you need stellar candidates who know their way around the Web 2.0 space as social media continues to evolve across all areas of organizations. By integrating social media strategies into recruitment, research, and overall corporate impact, you will not only find you can make more informed and effective hires, but you will also reinvent your own corporate culture.”  –Sherrie A. Madia, Wharton lecturer

“It’s now time to engage all employees and create meaning that makes money. Recruiters need to stop worrying simply about their company’s survival, and start creating reasons why it should.”  –Dave Ulrich, Michigan professor of business

Susan Burns

“The competition for flexible ‘project talent’ will increase as organizations seek to achieve workforce strategies that are sustainable and adapt quickly and easily to shifting business needs. The influence of social technologies, ease of access to networks, and desire to connect has made talent a shared global resource. Keeping talent engaged and interested in your brand and business is not going to get easier.” –Susan Burns, Talent Synchronicity chief talent strategist

According to Bloomberg News, the decline was greater than the most pessimistic forecast of the economists it surveyed.

Some analysts viewed the decline with more than a little skepticism, considering the surprisingly robust sales numbers that are starting to come in.

MasterCard Advisors’ SpendingPulse reported that consumer holiday spending on everything but cars was up 5.5 percent over last year. The total for the 50-day period ending Dec. 24th was $584 billion, making it the strongest holiday season since 2005.

The University of Michigan/Thomson Reuters consumer confidence survey showed improvement in December, though most of the measures were close to where they were at the end of last year. Only the Current Conditions Index showed marked improvement, rising 9.4 percent over where it stood last year. Still, the report said, “Consumer confidence improved in December to its best level in six months and its second highest level since the start of 2008.”

Much of the difference in the two confidence surveys can be traced to opinions on jobs. The Conference Board found consumers more pessimistic in December about future job prospects. Those saying jobs are “hard to get” rose to 46.8 percent from 46.3 percent in November. But the Michigan survey reported, “Consumers reported much more favorable news about recent changes in the job situation, and more frequently expected the unemployment rate to decline during the year ahead.”

Meanwhile, the closely watched S&P/Case-Shiller 20-city composite home-price index said housing prices dropped 1.3 percent in October, for an annualized decline of .8 percent.  The decline was larger than the average in a survey of economists with six cities — Atlanta, Charlotte, Miami, Portland, Seattle, and Tampa — at their lowest levels since the bottom began falling out of the market.

“The double dip is almost here,” warned David M. Blitzer, chairman of the index committee at Standard & Poor’s. “There is no good news in October’s report. Home prices across the country continue to fall.”

The continuing decline in home prices has ramifications for recruiters who already have had offers turned down by candidates with underwater houses. Jason Warner discussed the impact of no equity and negative equity home ownership on candidates as recently as November, noting that “‘Go Local’ has become the strategy du jour.”

Challenger, Gray & Christmas, the global outplacement firm, reported that just 6.9 percent of job seekers who found jobs in the third quarter of 2010 relocated. In the same quarter in 2009, 13.4 percent relocated.

“The relocation rate has been low for four consecutive quarters,” the firm said, “averaging just 7.3 percent since the fourth quarter of 2009. The 6.9 percent figure in the quarter ending September 30 was the lowest ever recorded by the firm, which began its tracking in 1986.”

In a LinkedIn discussion on relocation a few months ago, Rob Dromgoole summed the situation up this way:

“2007 = high house values, relocation was much easier.

2010 = much more difficult due to low real estate values. Can you sell a role if someone loses money in a move? That’s tough.”

from the A. C. Clarke foundation

I ended Part 1 with Arthur C. Clarke’s third law, “Any sufficiently advanced (hiring) technology is indistinguishable from magic.” It’s a play on words, but describes the same reaction I get from almost everyone unfamiliar with the best-practices outlined in 1978 in the Uniform Guidelines on Employee Selection Procedures.

Typical question, “How do I know this really works?”

Typical reply, “You tell me. If instead of working from a job description and doing a casual interview, I thoroughly define job skills, then use a variety of hard-to-fake accurate tools that evaluate whether a candidate has those specific skills, what do you think?”

Selling

After assessing hundreds of salespeople and sales managers (i.e., observing a full complement of their sales and management skills), I began to recognize some specific trends (I’m a slow learner).

Although they vary somewhat with type and position, they break down into just four general groups: 1) not being smart enough (or, conversely, being too smart); 2) being poorly organized and unable to focus (or conversely, being too nit-icky); 3) having insufficient people skills to manage, coach, sell, service, or work in a team; and, 4) having the wrong (or no) motivations to perform. (In some jobs physical skills are also important, but I’ll skip those for now).

Did you notice these factors have less to do with the environment or how they are treated than with the individual? And, for the “give ‘em a chance crowd,” they are very hard, if not impossible, to develop. That’s why these skills are so important to measure pre hire. If someone wants to take a chance on a salesperson who is dull, disorganized, has poor interpersonal skills, or is wrongly motivated, then be my guest … just do it with your own money, not mine.

How Do These Elements Play Out on the Job?

Here’s a reality check. First, have you ever felt “you know ‘em when you see ‘em”? If yes, then you are not alone. Now be honest, are the vast majority of the people who you hire successful salespeople? If your answer is, “ummm, no,” then I think we can all agree the “know-em-when you see ‘em” technique does not work very well. You were snookered by an empty suit (just like everyone else). Now let’s move on.

Not being smart enough is usually seen early (i.e., during training when the candidate has trouble understanding the product or service) or it can be seen late (i.e., when the candidate cannot develop an account penetration strategy, ask the right questions to discover a problem that needs a solution, or cannot keep up with changing technology). Here is an example: suppose on a scale of 1 to 10, where 5 is average, your product or service needs someone with a mental horsepower level of 7. Do you think a person with a 5 could do the job? How about someone with a 10? Not matching a candidate’s mental horsepower to the job is a sure path to disaster.

What about personal organization? Anyone who has ever worked with salespeople knows keeping records and following through on commitments is not one of their natural strengths. But at what level does it interfere with performance: a 3, 5, or a 7? It all depends on the complexity and nature of the job. Aim too high on the organizational scale and you get analysis-paralysis. Aim too low and you get customer service and delivery issues. I’m sure you have seen as many examples as I have.

Then there is the whole problem of interpersonal skills. Do you think they are soft and unimportant? If a big tree falls in the woods, does it crunch slow-moving critters living underneath? Being an effective salesperson requires exceptional interpersonal skills, starting with trust builders; and, they continue throughout the sales relationship as trust maintainers. Have you ever read studies that show customer loyalty tends to increase after a problem is successfully solved? Doesn’t it make sense to you that solving the problem and maintaining trust had something to do with that? Here is some free advice: never hire someone who claims they can sell anything to anyone, unless you enjoy dealing with buyer’s remorse.

Last of all, we have the motivational pieces. In my experience, effective salespeople are driven to compete and succeed. It’s as if they have a leaky self-validation bucket that always needs re-filling. Are candidates going to tell you they don’t have the right motivations? Sure, right after you invest time, training, coaching, materials, price concessions, and let them burn through dozens of clients and prospects. Of course, if you hire someone with too much motivation, you get Attila the Hun (or if it’s a female, Attila the Honey). If you hire too little, you get soggy milquetoast. This goes for providing customer service and a host of other motivational factors as well. What about hiring a highly motivated person with inadequate selling skills? Good luck with that train wreck!

Hopefully, these examples have convinced you “know ‘em when you see ‘em” decisions might feel warm and comfy because they are supported by the balance of consequences (remember, P-I-C almost always trumps O-U-D; see part 1 for an explanation of these acronyms).

Salespeople are great at selling themselves, but only occasionally deliver the goods. As you can imagine, measuring sales skills takes more than a casual interview, scrutinizing a W-2, or selling a wastebasket. It takes a combination of job analyses and hard-to-fake tests, motivations, and simulations.

Featuring a troop of chimpanzees running an office, the three 30-second spots ranked in the top-10 best Super Bowl commercials. An online component called Monk-e-Mail went viral. In the first four months of the campaign, almost 30 million individual users visited the site sending millions of monkey-themed emails. Still today, the site receives visitors.

AdAge called it “history’s third-greatest human achievement, after only democracy and Velcro.” The Wall Street Journal named the Monk-e-Mail campaign the best of 2006. And it won a Webby for best viral marketing campaign.

Now, five years later, CareerBuilder is bringing back the monkeys.

The company won’t share any details other than to say there’s one 30-second spot. (The cost is about $3 million for a 30-second spot.) But somehow PETA, the radical animal rights organization, discovered CareerBuilder is using chimpanzees in its ad. It urged its members to email CareerBuilder CEO Matt Ferguson asking him “not to air this offensive commercial and agree never to exploit chimpanzees in future CareerBuilder ads and promotions.”

When PETA released a letter sent by actress Angelica Huston, its campaign attracted national attention.

Huston’s letter claims young chimpanzees of the kind used in commercials are “ripped from their mothers’ arms soon after birth.” Trainers employ “pain and punishment.”

“Can I please hear that CareerBuilder will not air a Super Bowl ad that features ape “actors” and that you will commit to never using great apes in future ads?” Huston asks.

CareerBuilder spokeswoman Jennifer Grasz said the company “supports the fair and humane treatment of all animals.” The American Humane Association was “on set during the entire filming to ensure the chimpanzees were treated with respect. This was very important to us.”

“During the production of our ad, we followed strict guidelines to ensure our chimpanzee stars were treated well and not harmed in any way.  We hired top trainers known to provide the highest standard of care for their animals.”

Monster hasn’t said whether it will return for a second year. Last year, its fiddling beaver video ranked 10th in the USA Today AdPanel voting. CareerBuilder, which has yet to replicate its Super Bowl success, came in 51st with its Casual Fridays commercial.

Unless they just fell off the turnip truck, everyone who hires a new salesperson, puts an employee into a different job, or makes a promotion decision hopes for the best, but knows success will be hit or miss. Meanwhile, in the weeks and months between “hire the wunderkind” and “fire the jerk!” opportunities are lost; legal challenges increase; costly decisions are made; recruiting expenses continue; and, customers are lost.

It’s just another day at the office.

The benefits of best-practice hiring and promotions decisions are obvious. Screen-out a higher percentage of unqualified candidates, and survivors will be better salespeople. Better salespeople have lower turnover, need less training, and are more productive. Lower turnover, less training, and more productivity quickly lead to more profitability.

We Owe it to Employees

It may just be me, but I think someone who spends a substantial amount of time working for an organization deserves more than sink-or-swim treatment. That is, employers should to whatever degree possible ensure that employees and managers work in jobs which they enjoy and are qualified. Is it right, for example, for a salesperson to be bounced from one sales position to another because he or she doesn’t have enough skill to sell beer at an all-you-can-eat pretzel festival? How about a sales manager who cannot coach and develop the people who work for him or her? Has anyone ever suffered under a self-righteous sales executive with an acute case of narcissistic entitlement?

Someone in the organization hired these people. Someone was supposed to know what the job required. Someone had the responsibility to ensure every incoming candidate had the right skills. So, unless the charter of every organization is to hire unqualified people, we cannot put all the blame on the candidate. He or she just followed sorry advice to get the job and worry about performance later.

Like I said, it’s just another day at the office.

Hiring and Promotion Decisions: Balancing Consequences

Sticking to same-old-same-old hiring and promotion practices is wrong-headed, but can be explained. We are all born pre-wired to seek pleasure or avoid pain. It’s called the balance of consequences. I call  it the Ow!/Whee! syndrome. Experiencing an Ow!/Whee! moment depends on whether a decision affects you personally or other people (P,O), is immediate or delayed (I,D), and is certain or uncertain (C or U).

When hiring decisions are certain and immediate, we have a strong incentive to act. For example, a promising candidate applies for a position. We naturally think “Whee! … an open slot is filled and I‘ll feel good”: personal-immediate-certain (P-I-C). Sometimes Ow! and Whee! can occur at the same time. In this case, wrong decisions can also be made (Ow!). But “it will not affect me, is uncertain, and probably won’t be seen for months” (i.e., Ow!-O-U-D). What happens? Whee! (P-I-C) trumps Ow! (O-U-D) every time and we make too many wrong hiring decisions.

Foggy Understanding

Understanding how our psyche affects hiring and promotion is critical. Personal, immediate, and certain hiring and promotion consequences almost always carry the day. So let’s look closer at the sales hiring-chain:

Sales Managers’ immediate consequences:

• Usually hates recruiting because it takes time (Ow!-P-I-C)
• Thinks he or she “know’s ‘em when they see ‘em (Whee!-P-I-C)
• Thinks best-practice evaluation is burdensome (Ow!-P-I-C)
• Seldom calculates the personal toll of long-term sales failures (Ow!-P-D-U)

HR/recruiters’ immediate consequences:

• Searching for qualified candidates is hard and takes time (Ow!-P-I-C)
• It’s easier to measure results by quantity than quality (Whee!-P-I-C)
• Best-practice evaluation is burdensome (Ow!-P-I-C)
• Other people suffer with the consequences of long-term failures (Ow!-O-D-U)

In both cases, the Whee! and Ow! of hiring or promoting even the most marginally qualified candidate is almost universal. So, if we want to bring best sales hiring and promotion decisions to the forefront, we need to clarify long-term consequences: that is, show how consequences are actually personal, more immediate, and more certain.

Lifting the Fog

For a sales manager, tipping the balance between PIC and ODU requires a personal understanding that a stable of salespeople where 80% produce 80% of the sale is easier to manage and more productive than a stable where 80% produce 20%. Of course, I’m referring to the well-known 80/20 rule. The manager must come to grips with the fact that “know ‘em when you see ‘em” leaves a lot to chance because critical sales skills are assumed instead of verified. The challenge is getting him or her to sit down long enough to calculate the personal cost of not following best practices … and the personal rewards of following them, for example:

• Needs to remember the real payoff of following best practices is less coaching time, immediate productivity, and significantly improved chances of success (Whee!-P-I-C)
• Also, a bad hire takes more personal coaching time, has delayed (if any) productivity, and his or her probability of success is dim (OW!-P-I-C)
• Over the long run, almost all organizations that develop best-practice sales hiring systems will be more productive, and turnover will drop (Whee!-P-D-C)

I won’t belabor the HR argument, except to ask them that while line managers make the hiring decisions, who feeds them raw material? If the best HR can offer to line management is placing ads and half-baked pre-screening, then how hard is that function to outsource?  If litigation often goes hand-in-hand with poor hiring, promotion, and termination practices, what can HR do to reduce the risk? Yes, there is a Whee! or two for smart HR folks that will happen when:

• They recognize that other departments will find them more valuable when they do a better job pre-screening (Whee!-P-D-C).
• The legal credibility and the potential for litigation expenses drops (Whee!- O-D-C)
• There are people who generate more revenue (Whee!-P-D-C)

Best practices are not actually rocket science or mystical, but, as Arthur C. Clarke, English physicist and author, stated in his third law, “Any sufficiently advanced (hiring) technology is indistinguishable from magic.”

Think of best practice as accurate skills-definition and accurate evaluation.

It’s worth reading.

The basic premise of the book is that many companies that win in the marketplace do so in ways that make their competition irrelevant. The name of the book comes from two concepts describing the competitive landscape in nearly all industries: Red Oceans represent the fiercely competitive arena where most companies compete. Blue Oceans are open and not filled with competitors — uncontested market space in other words, which help drive margins and market share while receding competitors remain in Red Oceans competing on price, value, and other replicable product or service traits.

The concept is the result of a decade-long study of 150 strategic moves spanning more than 30 industries over 100 years (1880-2000). In simple terms, the goal of Blue Ocean strategy is to not outperform your competition in a particular industry, but to create a new market:  a Blue Ocean.

There are a lot of predictions flying around about what will come in 2011 as it relates to recruitment. And I recommend that we all heed the probable changes that are likely to arrive as 2011 will surely mark an inflection point on what has been a relatively stagnant period in terms of human capital management and recruitment. But it’s not just ‘getting ready to do more of the same that will allow your company to win in the marketplace for talent. The truly game-changing strategies are the ones that will lead your company out of the spaces where most companies compete for talent and into the Blue Ocean of less (or un) contested market spaces for talent.

Here are some thoughts on how smart companies will arrive at a Blue Ocean with regard to the talent for which they compete.

I use a fictitious, software development startup company called XOX Software as the example, but you can substitute any talent acquisition effort in any industry in a similar manner.

Which Factors Do Recruiters in Your Industry Take for Granted that Should Be Eliminated? In our example, XOX Software is competing for software developers, just like every other technology company. Traditional strategy would suggest that it go head to head with Google and Amazon and Microsoft and all of the others, posting jobs on Dice.com and showing Facebook ads to people who work at those places, trying to entice them away. In other words, traditional recruitment competes in the same spaces for the same talent, applying traditional recruitment practices but trying to do them faster, more effectively, more broadly in order to get the talent that it needs. Blue Ocean Recruitment competes in ways that makes the competition irrelevant.

So in pursuit of Blue Oceans, XOX Software instead took a different tack: it thought through the recruiting efforts in its industry that everyone takes for granted, like posting to “the same job boards that everyone else post to” and using “the same standardized job descriptions that everyone else uses” and it stopped doing those too. And then it made a list of all the other recruiting tactics and approaches that the competition did (the things everyone took for granted in recruiting), and mapped them out and discussed the tradeoffs (both positive and negative) of discontinuing those efforts. And it started to run experiments, eliminating some of the de facto recruiter tactics, and gauging the impact. It was surprised at the results: as it began to eliminate the recruiting activities that most people took for granted, it found that it was actually eliminating waste in the system, and the game it was playing to compete for talent began to change.

The net result is that when it stopped posting to the job boards, the recruiters were freed up to do other things to generate candidates in non-traditional ways. And with that extra time it was able to find its way into other Blue Ocean activities beyond just candidate generation.

The next question that XOX answered was Which Factors Should Be Reduced Well Below the Industry Standards? So XOX Software looked at its talent acquisition efforts with the critical lens of reducing parts of traditional recruitment efforts in ways that would drive them below the standards in its industry. So it made a list of all the factors that, if reduced, would have a positive impact on recruiting outcomes. And it prioritized the list and began to focus on creating reductions in those areas. One obvious one was recruitment cycle time: It realized that Microsoft and Google and Amazon had arduously long interview cycle times when viewed through the lens of the candidate. So it cut theirs from 41 days to 14 days as measured from candidate contact to final decision. And it also reduced the process so that candidates only needed to make one onsite visit. It took some time and a lot of effort, but in the end it found it could interview, make a decision, and extend an offer before competitors could even get many of the candidates scheduled. The net impact was that for many candidates, XOX wasn’t even competing anymore. It was closing candidates it wanted before the competition could even decide they wanted to pursue the candidate.

And then XOX reviewed its remaining list of factors, that if reduced well below industry standards, would create better outcomes. Those included reducing the communication breakdowns related to its employee referral program to avoid the ‘Black Hole Issue’ (referrals went up by 39% within six months of doing so), eliminating steps required in the application process, and a host of others factors.

And after a short while, its recruiting yields improved. Hiring managers were doing fewer interviews but getting better results.

The next question that XOX Software asked was Which Factors Should Be Raised Well Above the Industry Standards? Things were then really starting to change in terms of talent acquisition, and by this juncture this list was both easy to generate but also to execute.

The first thing it identified was that the candidate experience should be improved to well beyond industry standards. So it created a Candidate Bill of Rights and had everyone in the company sign it. The recruiting process quickly became culture-defining because it treated candidates in ways that were so far above the industry standards. It even focused on small things,  like having the receptionist greet the candidate by name (“Good morning Mr. Johnston, we are excited to have you interview with us today … here’s my direct number, and should you need anything at all today just give me a ring …”) and making sure every hiring manager related the value proposition of working for XOX Software but did so in their own words, and also having each member of the interview team send a note to the candidate thanking them for interviewing and offering assistance if the candidate had more questions. It made a list of seven other things beyond these three examples that would create a remarkably different candidate experience, and began to execute on each one of them.

Beyond improving the candidate experience, it focused on other factors, including improving work life balance (ridiculously long work hours were pretty standard fare for software developers), and increasing professional development in a customized way for each employee based on their preferences.

And the key was that very few of the changes cost substantial amounts of money, but paid huge dividends, because it created Blue Ocean space in the War for Talent. XOX was not competing for the same talent in the same way … much of the competition for talent was becoming far less relevant.

The final step in the XOX Recruitment Strategy was coming up with the list of Which Factors Should be Created that Don’t Exist Today? This was a little harder, because it required really good listening skills and some brainstorming.

It started by surveying candidates to find out what things they wished they had in their careers but didn’t. And it surveyed employees.

And then it got really smart and surveyed employee family members to find out what spouses and children wished were different about the career dynamics that were created in the Software Industry. And it turned out that XOX Software learned some really interesting things, which led them further into a Blue Ocean because many of the changes were things that it hadn’t thought of, but could be implemented without huge expenses.

So as 2011 looms, there indeed will be changes, some predictable, some not. Most talent acquisition strategies  will focus on doing the same things faster, in more volume, sooner, and with greater reach.

But the standout recruiting results will come from Blue Ocean Recruiting: systematically working through the factors described above to change the game and compete for talent in a way that makes the competition irrelevant.

I’ve been thinking all year about something our accountant said when he visited us in February of this year to have us sign the final paperwork for our taxes.

During our meeting Bob had been moaning about how our 2009 business was off so much over 2008 and things just seemed to be dragging along interminably. I usually sit through our meetings quietly, ask a couple questions about tax issues I’ve read about, sign the paperwork, and leave the two of them to talk about guns or whatever it is two guys talk about.

This time was different. I joined into Bob’s alarmed cacophony, looking to someone anxiously for answers to something I’ve never experienced being in business for myself these last 35 years.

Steve listened keenly and patiently as he always does and relayed some news from some of his other clients who were experiencing the same frightening downturn. It helped somewhat to hear that we weren’t the only ones in a sinking boat.

As he prepared to leave and we walked him to the door still chattering nervously about the diminished state of our estate, Steve turned, looked at us (I think he was looking at me/Bob thinks he was looking at him) and quietly said, “You’ll figure it out.”

I felt better.

I felt like he had confidence in me and my ability to figure this thing out.

That alone is worth far more than the few thousand dollars per year that we pay him to keep us out of tax trouble.

You know what?

I did figure it out. I figured out that though these weren’t the best of times, these were still the times of our lives, and the lessons being handed out, although not easy, were valuable.

I realized that sometimes it’s the simplest of things that bring home the bacon.

Even though our sourcing business was off 87% in 2009 over 2008 and 2008 was 46% off 2007, it was still possible to stay in business. We filled some of the gap by doing things we didn’t do so much of when we were busy phone sourcing: things like building out company telephone directories for salespeople who find value in call lists where people have good-paying jobs and the ability to purchase goods and services.

It’s simple stuff that was time consuming and it sometimes felt inane, but it kept the lights on.

So did cleaning up the decimated databases of others who saw value in paying us to help them prepare for better times. In ordinary times databases age about 20% a year. During the extraordinary last three years we’ve seen databases age out/away at over 50% per year!

What else did we have to do? We spent the time we had doing something that brought in dollars; maybe not the greatest dollars, but dollars nonetheless.

Those dollars helped us through.

Of course we still had our dyed-in-the-wool customers who kept on doing what they know how to do best, and I can’t thank them enough (you know who you are!) for keeping the faith and continuing to use us even when I think some of them could have done what we do themselves.

As hard as it was through these hard times we invested in our business. We took advantage of lower prices and tax incentives that encouraged us to buy new phone systems, computers, office equipment, etc.

It wasn’t easy to do, but we believe in the future, and if you have faith, that faith will deliver courage.

The good news is that in mid-May, 2010 we surpassed all of 2009 revenue. 2010 has continued to deliver and it looks like 2010 will be up maybe even 150% over 2009. It’s not nearly what we did in 2006 and 2007 but things are headed in the right direction, and I’m happy to report it.

That’s encouraging and I hope it is for you, too.

I suspect though, that one reason we’re up smartly is that so few are left in the sourcing/recruiting business.

Many gave up, turned the lights off and went home. We didn’t.

A big part of that (for me) was because someone else had faith in us to figure the damn thing out.

I hope to make this piece a sister/companion piece to the “But That’s Not My Job” series. Much of what we did during this recent downturn wasn’t part of our ordinary jobs.

But we did it.

We figured it out.

So can you.

I hope you have a happy holidays and a prosperous New Year!

Kaplan Higher Education Corp. was sued Tuesday by the Equal Employment Opportunity Commission over its use of credit checks. The suit claims Kaplan denied jobs based on credit histories in such a way that it had a disparate impact on blacks.

The EEOC said Kaplan “engaged in a pattern or practice of unlawful discrimination by refusing to hire a class of black job applicants nationwide.”

“This practice has an unlawful discriminatory impact because of race and is neither job-related nor justified by business necessity.” The types of jobs at issue weren’t disclosed.

A company spokeswoman denied the charge, saying background checks are conducted on all potential employees. Credit checks are part of the screening for jobs involving financial matters, including advising students on financial aid.

A “disparate impact” case doesn’t require an employer to have intentionally discriminated against a class of applicants. Instead, discrimination can occur by the use of background criteria, experience, education, or other job requirements that appear neutral on their face but which more heavily impact a protected class of applicant. Unless the employer can demonstrate a “business necessity” for the requirement, it may be found guilty of discriminating. Even where business necessity can be established, a violation may still be found if there is another alternative available that is less discriminatory.

Labor lawyers and industry experts have been predicting that the EEOC is becoming more aggressive. Employment attorney Jon Hyman, who blogs at Ohio Employer’s Law Blog, warned last month that, “The EEOC is no longer an agency where charges go to die. Employers can expect more thorough investigations, quicker resolutions, and more aggressive enforcement.”

Nick Fishman, chief marketing officer, VP and co-founder of EmployeeScreenIQ, blogged about this same thing recently on ERE. In his look ahead at the background screening trends for 2011, Fishman listed the EEOC aggressiveness first, writing: “The EEOC is especially targeting ‘bright line’ hiring decisions that automatically exclude candidates with criminal records, arrest records that don’t result in a conviction, and/or poor credit.”

After reading about the Kaplan suit this morning, I called Fishman to ask about the issue and for advice about what recruiters can do to insulate their company against EEOC action.

He wasn’t surprised that the EEOC had sued someone over the issue. “They’ve become a lot more active in the last year,” he said.”We’re going to see a lot more out of them.” And, he pointed out, there is no way to protect against someone filing a lawsuit. However, no employer should be deterred from credit or background checks where the job demands it and there’s no intent to discriminate.

Fishman offered this guidance:

• Assess the exposure the company has for each job.
• Make sure there is a legitimate business purpose to conduct a credit check. Do the job responsibilities involve financial records or access to them? For a CFO position, the connection is clear. For a janitorial job, maybe not. Though there might be situations where a janitor has access by virtue of a master key to money or records.
• Have a written background policy for each position, including a description of the business purpose.
• If adverse credit information turns up, don’t automatically reject the candidate. Instead, ask about it.

Through conversations with clients and others in the industry, he has learned that employers these days are more sympathetic to credit problems. Even in the gaming industry, where many employees routinely deal with large amounts of cash, applicants with credit dings are getting more consideration than in the past, if for no other reason than credit problems are so pervasive.

Nevada, the gaming capital of the U.S., has the lowest average credit score in the nation. At 668, it’s 24 points below the national average of 692. No wonder, considering that Las Vegas has the highest foreclosure rates in the nation.

Two months ago, the EEOC held a public meeting on the use of credit histories as employment screening devices. It heard from a number of organizations including SHRM, which concluded its presentation saying, “SHRM has significant concerns with efforts to eliminate the ability of employers to consider relevant credit information during the employment process.”

Most of the speakers at the meeting represented private organizations and advocacy groups; however, the comments by Richard Tonowski may foreshadow just what the EEOC wants to see from employers using credit checks and background screening generally. Tonowski, the EEOC’s chief psychologist, summarized the day’s proceedings listing four distinct reasons why employers use credit checks.

These are:

• To identify productive employees, a use he said that has “little evidence” to back it up;
• To identify reliable employees. Conceding there is “some evidence” correlating good credit with reliability, he said, “Similar results might be obtained through personality tests or their close cousins, integrity tests.” Interestingly, these, he noted, may soon be examined by the EEOC for having a potential adverse impact on protected classes;
• To confirm employment history, which, though “a credit report can confirm basic information” the same  “might be obtained from background screening providers without the applicant’s financial details”;
• To identify those with incentive for major fraud or theft.

When used to identify potentially dishonest employees, Tonowski said, “This is perhaps the most problematic use, because — fortunately — serious crime is likely a rare event for most employers. It is thus hard to establish a predictive relationship between credit and crime.”

While hearing from the EEOC is enough to cause any HR professional to shudder, even if it decides not to proceed, private actions may be allowed. Two weeks ago the University of Miami was sued over the denial of a job to a black applicant because of a credit check.

The U.S. Army was one of the first organizations to pioneer video games for attracting potential recruits. A couple of years ago the Army launched its highly successful recruiting game called America’s Army, which has significantly helped raise recruitments. The Army has also created a multi-million dollar U.S. Army Experience Center located in Philadelphia where potential recruits, using computers and Xbox 360 controllers, explore different army bases and occupations using video games.

L’Oreal has launched Brandstorm, which is a competition across national boundaries to help candidates determine their marketing skills. Many other organizations have launched interactive games, including IBM’s game that has made the press recently with its free simulation, CityOne, an interactive game targeted at business leaders, city planners, and government agencies. The game allows players to react to a variety of crises and see how their decisions affect outcomes.

Realistic job previews, video tours, and game-like activities are becoming standard on leading recruiting sites because more candidates come and stay longer when the process of learning about your organization and your open positions is fun and engaging. Recruiters are learning from the game world that elements such as awarding points, giving out badges, showing progress toward a goal, or using an avatar increase results.

Gaming elements drive behavior, as many retailers have learned. Even when there is no formal “game,” we are often using the gaming elements when, for example, we participate in Frequent Flyer or other loyalty programs. Counting points is part of what makes Weight Watchers successful and millions play World of Warcraft  or Facebook’s Farmville for nothing more than gathering points or unearthing treasures. Whether the challenge is to collect points, win badges, score goals, or kill avatars, we alter our behavior in some way to achieve goals that are often intangible and not even important (e.g. collecting ears of corn in Farmville).

And game-playing is growing and attracting more people of all types. One survey found that up to 35% of C-suite executives play video games (even though this study was funded by PopCapGames.com), while 97% of 12-17 year-olds play them, according to the Entertainment Software Association.

Over the next decade, gaming concepts and technology will become a standard element in your recruiting strategy.  Websites will become more interactive and offer a more compelling reason to engage than they do today. More organizations will discover that their ablity to find and hire good candidates will be partly because they found ways to engage, entertain, and entice them to learn more about the organization and the job available.

Here are six ways you can begin to “play the game” of gaming.

1. Provide candidates who come to your recruiting site with rewards. Offer candidates rewards such as gold stars or badges when they have viewed a video, taken a poll, completed an assessment, or left a comment in your chat room. Encourage them to come back and get more points by learning more about your company. Provide a progress bar so they can see how much of their profile they have completed or how much of the recruiting site they have viewed. You have seen these progress bars when you first created a profile on Facebook and LinkedIn. Most of us want to have profiles that are close to 100% complete so we are motivated to come back and add details over time.
2. Investigate using virtual worlds such as Second Life. KPMG, IBM, and other organizations have experimented with virtual job fairs, interviews, and tours with varying degrees of success. Part of the issue with using virtual worlds is that the technology is very new and still has interface issues. On the other hand, it offers a glimpse of what I think will be a normal part of online life in a few years.
3. Develop video-based job tryouts. Shaker Consulting Group has pioneered developing job tryouts using video to provide candidates with a realistic idea of what it is like to hold a certain type of job. At the same time, these act as a way to screen candidates for those jobs. Organizations such as Starbucks, Key Bank, and Sherwin-Williams have used these with a high level of satisfaction.
4. Hold virtual job fairs. There are several tools that allow you to create interactive job fairs, including those from 6Connect and Unisfair. By using virtual job fairs you can offer more candidates an opportunity to discover what you have to offer as well as provide them with more in-depth information about your positions and organizations than you can at a face-to-face job fair.  By creating an interactive and fun experience, candidates remain engaged and spend more time with you than they would at a conference. It also gives you more time to assess the candidate.
5. Use Tests, Puzzles, and Simulation. The Secret Service of the United Kingdom has perhaps one of the cleverest simulations I have seen. You become an Operations Officer and have to digest information quickly and make decisions. The simulation shows you what is involved in intelligence work and gives the Secret Service a good assessment of your judgment and decision-making capabilities. Another fascinating approach is being used by Gild, a Tech Crunch disruptive startup that combines gaming and job boards. By using polls, short tests, asking candidates to solve problems, provide ideas or solutions, or by having them take part in multi-person discussions, you can learn a great deal about the candidate. They can learn about what you do in your organization, how decisions get made, and what issues arise. Generally this knowledge will lead to a candidate who better fits your culture and who is happier in the work they are doing
6. Develop a Full-Fledged Game. If you have between U.S. $50,000 and $3 million, consider developing a truly interactive game similar to those of produced by L’Oreal or the U.S. Army. Costs range from as little as a few thousand dollars for a Flash-based web-embedded solution to several million for a dedicated, X-Box controlled one. But, by creating a simulated environment where candidates can experience and actually get involved in the work you do, you can raise engagement and success to a new level.

There are few limits to what is now possible on the Internet. Technologies and techniques that were way too expensive or even impossible even five years ago, are now easily and cost-effectively available.  A new world awaits you.

Except that it’s LinkedIn offering it. And it’s a step better than what Monster and CareerBuilder offer. And, more to the point, it’s another step in the LinkedIn transformation from a business-oriented social network to … something else, like a job board for the 21st century.

The LinkedIn people don’t necessarily agree with that. Francois Dufour, senior director of marketing, LinkedIn Hiring Solutions, wrote to tell me that “LinkedIn is a professional network.” It’s “a platform for helping professionals manage their careers.”

“Whether you’re looking to hire or be hired, LinkedIn is becoming top of mind for a lot of people,” Dufour says in his response to my email about what LinkedIn is becoming. “Yet the reason we continue to thrive is that we offer so much more than a job board.”

True enough. Being public, a profile is a marketing and brand-building tool. Participating in groups and building a network furthers those objectives, as well as gives participants a place to get help with professional problems.

Traditional job boards have their discussion groups, but nothing even remotely approaching what LinkedIn has. Yet with what we’ve been seeing from LinkedIn over the years,  the camel’s nose is getting further and further into the job board tent.

Recruiters began sifting through the profiles years ago. So adding LinkedIn Jobs in 2005 was, as Jeff Clavier described it a “natural extension.” Since then, the network has refined its candidate sourcing tools, improved the targeting of its jobs listings, added company profiles in what might fairly be described as a response to Facebook and, in the last two months, LinkedIn has added Jobs For You and Referral Engine (which ERE wrote about last month).

Along now comes Resume Builder. Technically still in the experimental stage and without a release date (though it is fully usable), it’s another natural extension of LinkedIn. From what Dufour says, LinkedIn agrees. “We want the LinkedIn profile to be the professional profile of record, whatever the context – personal and professional brand-building,” Dufour writes in his email.

He rightly points out that, “We are a leading source of quality candidates for corporations…” Indeed the public nature of most of the profiles provides a higher degree of confidence in their accuracy than do the private resumes of a job board. And because of the value the professional groups and contacts offer, the sheer number of participants — 85 million a month ago —  is well beyond what any of the job boards has.

So Resume Builder — did I mention how cool it is? — is a good thing, right?

Not necessarily, says Gerry Crispin. Partner in the recruitment consultancy CareerXroads, he told my colleague Amybeth Hale that LinkedIn could end up rebranding itself as “the new job board of the 21^st century.”

Should that happen, he told her, then professionals who want the business connections, but don’t want to be thought of as job-seeking, will go elsewhere.

“You want to find people who are actively engaged in work,” Crispin pointed out. “What you find out about them is that they’re looking to improve their capability on the job. It (makes) them great for recruiting. But if LinkedIn focuses solely on the recruiting aspect, it will drive those other people (non-actives) underground.”

There’s a thin line there that LinkedIn is walking. It’s adopting some of the best of what the job boards have to offer, and has so far done it successfully. But, as Crispin observes, it faces a risk if it becomes thought of primarily as a job-search site.

LinkedIn’s Resume Builder doesn’t tip that scale. The difference between resume builders on job boards and on LinkedIn are all about their reason for being. You use a resume builder on a job board for job hunting.

The LinkedIn tool is a convenience. It takes the profile you already have and turns into a resume.

It may be a subtle difference, but it is a difference that recognizes all of us (OK, most all of us) are passive one day, receptive another, and active the fourth Friday in a row that the boss drops a project on you that absolutely, positively, has to be done for the meeting on Monday.

This all began in November of 2008 when people like then-staffing-chief and now Chief Learning Officer Don McLaughlin, the HR SVP Brian Schipper, and others realized it really needed to keep the talent it had as the company grew in areas like virtual healthcare and smart grids. In January 2009, Heather Yurko, Amy Buck, and a 30-person team of others in Cisco — from the compensation, staffing, operations, and other departments — ran a prototype test. If all went well, the program, called TalentConnection, would expand.

It went well, and it did.

Over and Up

Essentially what traditionally went on at Cisco was that to get a Cisco promotion, you had to move horizontally first, from one department to another. With the new plan, you could move two steps at once — to a different division, and up. Cisco had to change its way of thinking to make this happen, Yurko says, taking into account skills and experience more than knowledge of a given area.

She gives the example of Cisco’s technology group, which was where this 2009 pilot was done. If a program manager job was open in the technology department, instead of seeing which program managers were available, what Cisco would do under this pilot program is analyze what skills it would take to do the job well: working with multiple clients, for example, as well as balancing priorities, and having a passion for great customer service. Perhaps an account manager in a different division has these skills, and could move into the technology group, and up into this manager role, all in one fell swoop.

The initial pilot worked. From March through May 2009, nearly 80 percent of positions were filled by internal candidates, and the time to fill a position dropped by an average of 22 days. Satisfaction in the program ran high.

Yurko, who works out of the Research Triangle area of North Carolina, acted as a program manager, and Buck, working remotely from the Sierras in California, the executive sponsor. The 30-person team dissolved, and born later was what I’d call an “HR R&D group.” Cisco calls it a Staffing Innovation Organization; Buck is the senior director. Formed in July of 2009, it got the green light from HR leaders to move full speed ahead with expanded testing of the recruit-and-retain employees program.

Going Global

Turnover at Cisco runs somewhere around 5%. But the company has been watching various studies (from Deloitte, for example) showing that large numbers of employees will start looking for new jobs as the economy picks up steam. It also learned in a 2009 internal survey that 36% of employees did not know of additional opportunities within the company. It wanted to change the mindset at Cisco into one that Yurko calls an “open marketplace of opportunity.”

So this year Cisco ran a new and bigger pilot, from January to August of this year, using employees in the operations and finance departments globally, as well as some of the European sales staff. A lot had to be done, and tinkered with along the way, according to Yurko. Compensation had to rewrite policies. Employee engagement folks needed to alter their mindset and their messages — basically, the employee value proposition. Relocation policies needed to change also.

Cisco’s back-end system that manages employee resume-type information, from ADP, had to be modified (such as adding fields and new metrics to use in evaluating the program). Employees use the system to complete profiles and opt-in to receiving inquiries about internal jobs.

A big part of what has been happening, however, at Cisco, has been softer. It’s less about policies, and more about change. “A lot of active, ongoing, change management, organizational adoption training,” Yurko says.

Recruiters were and are encouraged to actively source Cisco’s employees. The Staffing Innovation Organization and others in recruiting and staffing and human resources have been talking to recruiters and managers about why this is important, why it’s in the long-term interests of the company. Yurko says the message is: “You may need someone to do a job, but you’re hiring someone for Cisco, not just your team.” She says that “moving from the concept of ‘my talent’ to ‘Cisco talent’ — we know this will be ongoing, for years.”

Anyhow, this 2010 pilot was deemed another success, like the one in 2009. But this summer HR leaders suggested that rolling it out to all employees needed to wait a few months, as a ton seemed to be happening at once at Cisco, from performance management to management training initiatives.

The program was launched worldwide this September, to all 70,000 employees (the exception being that if you’ve been on the job less than a year, you’re not yet eligible). The Staffing Innovation Organization now has 11 members, three added over the last couple of months. The TalentConnection program was mentioned briefly in the company’s corporate responsibility report. And after two months of this September’s launch, 33% of all internal positions were being filled by recruiters actively sourcing employees, as opposed to people applying directly to the role. Employee satisfaction with the recruiting process is on the rise.

This article addresses five questions raised in response to Part 1 of this series published last week. It addresses the best ways to assess candidate performance pre-hire and when to use references.

Question 1 — What are the most accurate indicators of past, current and future performance?

Finding accurate real world predictors of future performance is difficult but not impossible. Professional sports teams find that the best predictor of a new hire’s potential performance is their performance on the field in practice and preseason games — i.e., a work sample. Google looks at a multitude of factors that can be combined by an algorithm to successfully predict both future on-the-job performance and retention risk. The U.S. military and numerous firms in industries with extreme operational risk like airlines and chemical production facilities rely on sophisticated simulations to assess how a candidate would react in various situations.

There are literally hundreds of potential tools and approaches that can be used. Unfortunately, the vast majority of research on the subject is questionable at best.  

Rarely are academic researchers trusted to manipulate the assessment processes of organizations hiring in significant volume such that the process could provide valid data, and few if any organizations execute consistently without extreme oversight  Commercially sponsored studies are flawed in that they are executed to prove a tool or approach works, not to test the extent to which it works.

That said, most studies generally conclude, and I tend to agree, that work samples are often the best predictors. Based on my observations and learnings, I routinely recommend the following.

Most Accurate Tools for Assessing Current Performance

1. Temporary hiring — The best way to identify top performers is to hire them into the job as temporary workers, contractors, consultants, or interns. Interns often have the highest success rate among college hires because you can rely on their internship track record as a predictor of their ability to perform in your environment.
2. Actual work cases — next to “playing in the game” is assigning them a case challenge based on the real problems that the candidate would face shortly upon accepting an offer. The problem should be a real current issue, so that even if you opt not to hire the candidate, you benefit from their insight into the issue. An alternative approach that has been used by firms like Raytheon is to give them a “broken” or flawed process and ask them to find the errors and source of problems.
3. A verbal simulation — this approach takes advantage of the traditional interview time period and asks candidates to walk you through how they would tackle an actual work problem. Firms using this approach generally use a case that has already been solved (so that the interviewer/assessor is familiar with all of the relevant information the candidate may need to inquire about and knows the likely outcome of each solution step introduced).
4. Samples of current work — in roles that produce physical products, one of the best ways to assess a candidate is to assess samples of their current work. If you want to find out if a chef is any good, you taste their food. In some cases candidates may not be able to provide existing work samples from their current employer due to confidentiality issues.

Most Accurate Tools for Assessing Future Performance

1. Ask them to forecast — if you need to assess candidates’ ability to perform in the future, consider asking them to predict future opportunities and problems your industry or firm will likely face and the skills and competencies that will be required to address them successfully. Consider whether their vision aligns with or is more/less robust than yours.
2. Future work case — give the candidate a problem or opportunity that is projected to occur two years out. Ask them to “walk you through the steps” that they would take and the skills that they would need to resolve it.
3. Demonstrate leading-edge learning — the most important competency in a fast-changing world is the ability to continuously learn and stay on the leading edge of knowledge. Even if candidates and employees are successful performers today, it is unlikely they will remain top performers unless they are continuous self-directed learners. You can assess whether they have that competency by asking them specific questions about what are the leading-edge “next practices” in their area, who are the benchmark firms, the key thought leaders, and what specifically do they do every day to remain on the leading edge of knowledge.

Question 2 — When do you recommend using reference and background checks?

As I said in the first part of this article, it’s okay to use one or more reference and background checking approaches provided that you understand why you are doing so and that you have designed a process that can be consistently executed to limit exposure to the vast majority of limitations found in the typical traditional process. If you have read my stuff for a while, you will know that I look at references as future candidates, so getting current candidates to identify their network through any process is a win, even if it wasn’t the intended focus of the process.

Two good reasons that would make doing references essential:

1. A correlation with quality of hire — any time you have supporting data showing that at your company there is a positive correlation between a candidate’s on-the-job performance and retention after one year (quality of hire) and a scale-based recommendation output by your reference/background checking process.
2. When there is a legal requirement — when you are hiring for roles that require due diligence to confirm proper licensure, certification, education, etc.

Note that 99.9% of all murderers, bank robbers, and major evildoers are first-time offenders, so the fact that they haven’t done anything in their past doesn’t prevent them from future missteps. If you really believe that criminal, driving, credit, licenses, etc. are valid indicators, you need to check these elements periodically post hire to ensure that your employees maintain their initial pristine status.

Four not-so-good but still-common reasons to do them:

1. Covering your butt — the most common reason to use reference checks are to shield yourself from potential verbal lashings (after a new hire turns out to be a real turkey) by being able to say “but I checked their references.” In addition, in the almost miniscule chance that you’ll be called in a negligent hiring suit, having checked the references will get you a handful of minor points from the judge.
2. When you want a particular candidate no matter what — if the recruiter or the manager is dead-set on a particular candidate, I understand the common practice of assigning an inexperienced and positive-thinking person (overly positive people will seek out positive attributes until they find them) to do the reference checking. You can almost guarantee that they will come back with the desired “I found no problems” answer.
3. When you need another excuse to fire a bad performer — if you are reluctant to fire a bad-performing new hire, I have seen many firms purposely redo reference and background checks in the hopes that they can find a lie or omission that could be used as an excuse to terminate.
4. You yourself need job security and are a bit selfish — if your job involves doing reference checks and recruiting in general, it’s in your best interest to continue executing a time-consuming, flawed, yet accepted process. Avoiding more effective candidate assessment methodologies will ensure that a greater percentage of new hires will fail and therefore require replacement recruiting; in other words, provide job security.

Question 3 — Are reference/background checks accurate assessments of past performance?

First of all we must establish that there is little to no consistency in what is considered a reference check. I cannot say that no reference check focuses on past performance, but based on my observation of practices in place at hundreds of organizations, the vast majority come nowhere close to remotely gathering intelligence on past performance. For example, many of the following elements often focused on during a reference/background check are not indicative of performance:

• Job title
• Dates of employment
• Credit scores
• Criminal history
• Personality traits
• Attainment of a degree
• Knowledge of buzzwords
• Information relating to job performance in another era (skills and knowledge grow obsolete too!)

All performance can be quantified, but rarely would a reference checker be granted access to real records of output/productivity from another employer. While candidates could request copies of past performance appraisals, we all know that most view that process as being worse than reference checking with regard to validity!

Question 4 — Are reference checks predictors of present or future performance?

If traditional reference checks are weak ways of assessing performance and especially past performance, do they provide any insight into present or future performance potential? Again, the answer is a sad no. As typically executed the traditional, haphazardly executed reference check is not a valid indicator for the following reasons:

• The past isn’t today or tomorrow — the world has and continues to change, rendering information and skills obsolete at a fastening pace. Behaviors and actions that produced spectacular results yesterday may fail miserably if the environment changes, which we know it does.
• Your culture is different — what makes one successful in one environment will not necessarily do so in another. Top performers can easily become average performers under a new manager, and vice versa. A lot of factors influence a candidate’s ability to perform.
• They may have been bridled — a candidate with a poor “performance related reference” may have everything needed to perform in your environment, but been unable to do so in a previous environment due to lack of professional freedom, proper tools, poor management, etc.
• The individual has changed — skill and motivation levels change over the years, so how someone previously performed in a different state of mind may not be indicative of how they would perform in a different state.

Question 5 — Are the current vendor offerings in the areas of reference and background checking worth examining?

Technologies and service offerings in the HR/talent management space are evolving at a rapid pace. Many emerging offerings are not bound by the traditions and ingrained practices of the corporate world, and bring valid arguments to the table that all professionals should be aware of. The hottest tools under development today, and others that have been around for a short time, focus on providing organizations with a more comprehensive look into a candidate’s professional network. Tools leveraging a 360-type approach increase the size of the assessor pool, and thereby increase the degree of structure afforded the process and the probability that more qualitative data will emerge. I can’t say without firm specific evaluation that any tool would produce valid results in your organization, but some criteria that I would recommend using when assessing top vendors include:

• Proof — do they have proof demonstrating the correlation between reference process outcome and on-the-job performance in real client organizations that can be referenced themselves?
• Integration — do they integrate the many different checks (i.e. credit, work history, personal references, criminal, educational, license, driving, Internet etc.) into a single system?
• Metrics — do they have access to/knowledge of professional intelligence about the validity of component processes so that they can advise you using data on what practice improve/harm your candidate assessment efforts?
• Global — do they present a solution that can be used around the globe and that would not be limited in adoption by variances in culture or language? (The labor market is quickly becoming more global, so it is increasingly unrealistic to assume than a candidate’s references will come from the same region or cultural background as the candidate.)

Final thoughts

This series has introduced 30+ reasons to be wary of traditional reference checking processes, as well as a host of alternative approaches that could lead to much more accurate assessment of a candidate’s past, current, and future performance. As the EEOC increases its scrutiny and focus on this subject, everyone in the field of recruiting should learn to be cynical and test their efforts and solutions being adopted.

This seems like a rather odd conclusion to draw from what on the surface appeared to be nothing more than traditional inter-family holiday banter. So to elaborate, and in an attempt to prove my point, let me get back to the Thanksgiving repartee and how discussions involving turkeys relates to how hiring decisions are made.

While my nephew made convincing arguments about the worthiness of the President and his policies, these were from a point of view (POV) that the President was exceptional, and all liberal policies, whatever the source, are worthy. And while the evidence he presented was convincing, in-depth, and insightful, it was sought out with the intent to prove the worthiness of the main argument itself. The factual data I had to prove the opposing POV paled in significance. The only winning point I could make was to suggest that his initial bias was the driver behind his evidence gathering. With this bias, any counter-arguments or disproving evidence was overlooked, ignored, minimized, or not considered. Some minor agreement in the form of nodding and chin-rubbing was made on this point, at which time the turkey was served, at which time all arguments ceased — at least until Christmas.

Now for the link from holiday discourse to hiring. I’m going to suggest that most hiring decisions are made in the first few minutes of meeting a candidate, with the balance of the interview used to gather evidence to prove the interviewer’s initial biased judgment. There is real science and research to prove this point, but I know if I sought it out and presented it here, I would be accused of the same “POV drives the evidence gathering problem” I’m accusing others of — e.g., only seek out evidence that proves your point, while ignoring anything that refutes it.

If doesn’t take much more than casual observation to suggest that when you meet a candidate you like, you ask softball questions, rationalize away wrong answers, and accept minimal proof of competency. Then you boast about your interviewing prowess.

On the other extreme, if you are instantly turned off by a candidate, you ask hardball questions, amplify wrong answers, and seek out proof of your initial first impressions. Then you boast about your interviewing prowess.

Worse, in either case, you believe you’re blessed with some inner wisdom that allows you to determine competency and fit within five minutes. Unknowingly, your POV drove the evidence gathering, incorrectly validating your first impression.

If you want a more honest assessment, here’s a big interviewing secret that anyone can use to increase their assessment accuracy and eliminate 50% of all future hiring problems: stop doing the above. Instead let the evidence gathered objectively form the POV and the ultimate hiring decision. Following are some ideas on how to implement this rather quixotic idea of letting evidence drive the decision-making rather than the POV of your gut.

First, if you, or any of your hiring managers, are prone to this “POV drives evidence” gathering during the first interview, you might want to try out the exercise described in this 3-minute video. It’s pretty simple, and if done before every interview, you’ll uncover your POV and squash it into oblivion, or at least until the next interview. Even better, you’ll stop hiring underperformers who only make good first impressions, and hire a few more top people who were temporarily off their game.

If this doesn’t work, here are some other things you can try.

1. Reprogram yourself in real time. When you first meet someone, note your immediate reaction, positive or negative. I use plus and minus signs on a yellow sticky pad to do this, but the point is to become aware of your reaction to the candidate’s first impression. Then do the exact opposite of what you would normally do. For example, if you like the person, ask tougher questions, going out of your way to prove they can’t do the work. If you don’t like someone, ask easier questions, going out of your way to prove they can do the work. This will help you make a much less-biased assessment.
2. Don’t interview alone. Emotional reactions due to first impressions are diluted when there are more people in the room to absorb the impact. Also, structured panel interviews using one leader and multiple fact-finders tend to be more businesslike than unstructured one-on-one conversational interviews.
3. Conduct a phone interview first. I personally never meet a person in person unless I’ve conducted a 30-40 minute phone screen first. This way I already have a sense if the person demonstrates the achiever pattern and has handled projects comparable to the real requirements of the job.
4. Ask everyone the same questions using a structured interview. A structured interview — even one with dumb questions –minimizes the impact of first impressions, good and bad. A structured interview with behavioral questions is better, and one with performance-based questions is better still. The key is to ask the same questions whether you like the person or not. As Ben Bernanke said, even a bad plan is better than no plan. The same holds true for interviewing.

The key to all of this is to understand how your POV determines your approach to evidence gathering. This is not restricted to just interviewing. It happens when you’re conducting any type of analysis where you’re trying to justify an outcome you believe to be the correct one. This happens in business, politics, sports, and life in general. Developing a POV based on the evidence seems like the best approach, but somehow we’re innately programmed to do just the opposite. Of course, if this weren’t the case, think how boring family gatherings would be.

Happy Holidays!

For more podcasts, webinars, and articles on recruiting be sure to check out ERE.net!

Why? Simply stated: Because people need to know they’ve been heard and understood. Today’s top sales performers know that it’s more important to understand than to persuade.

So what does this have to do with recruiting? Good question. Perhaps you can begin by answering these three questions yourself:

When you make a cold call, how do you start the conversation?

Mistake #1:

Like many recruiters, you might be tempted to begin the call by talking about a “great opportunity” … “with our award-winning company.” But ask yourself this. “So what?” How can you be sure that your “great opportunity” is a match for this prospect? Or even more important, how sure are you that this prospect is a good fit for your “award-winning company”?

Instead, begin the conversation by asking some good situation questions that help you better understand the other person. By asking questions about them up front, you are better positioned to develop rapport that can lead to great decisions for both you and the prospect.

When talking with a prospect (or candidate) about a job opening, how do you describe the position?

Mistake #2:

As a recruiter, armed with your company’s new marketing materials, you might be anxious to list all of the wonderful benefits your company offers (e.g., profit sharing, exceptional training, advancement opportunities, work-life balance). Of course there’s nothing wrong with being enthusiastic about your “product.”  After all, that’s a key trait of top sales performers. But remember, people buy products for what the products can do for them.

Be sure you know what’s important to the other person before you recite the list of company features/benefits. Then, when you are discussing a specific position, target the features and benefits that directly relate to the needs or interests of the prospect or candidate.

When a prospect gives you a quick “no thanks” (e.g., I’m happy where I am), do you know how to continue the conversation, or do you tend to get flustered and unsure of what to say?

Mistake #3:

If you’re like many recruiters, you might be tempted to continue with your list of company benefits — hoping perhaps that something might just resonate with the prospect. But that’s sort of like two people who speak different languages trying to have a conversation. When I’ve been in this situation myself, seems like I just start talking louder (saying the same thing over and over again in English, of course). Doesn’t work.

But let’s face it. No one likes objections. Did you know that objections can be viewed as simply a lack of information? An open invitation, if you will, to ask questions?

In the “no thanks, I’m happy where I am” example above, the best questions to ask are the ones that begin with “why, what, or how.”

Here’s a simple two-step formula that might help.

1. Step 1: Begin with a quick affirmative statement such as, “That’s great to hear.”
2. Step 2: Follow immediately with a why, what, or how question.
3. After your quick affirmation, say, “I’m curious to know –what do you find most rewarding about being at [your current company]?”

But asking good questions can be hard. We’re often programmed to “have the answers” and seem “in control.” “Telling” instead of “asking” is often just an ingrained habit. After all, “telling” does work. It can be quicker to simply “tell” and move the conversation along, rather than ask questions and potentially lose control.

A Little Experiment

Here’s an idea to help you become aware of your own habits. You’ll need two things for this experiment: a tape recorder and a person who is willing to act as your “victim.” Then choose a topic that your “victim” knows a lot more about than you do. Perhaps a hobby or specific professional area of expertise.

Record about 10 minutes of the conversation between the two of you, where your objective is to understand the topic.

Next, choose another topic where your objective is to persuade the other person of something of interest to you. Again, record the conversation.

Finally, replay and analyze each conversation. Note the number of times you are telling and the number of times you are asking questions in each situation.

Who talked more? Did you “tell” more than “ask” — even when your objective was to understand? When your objective was to persuade, who talked more? Did you “tell” more or “ask” more? How do the two conversations compare?

So as you ponder the New Year — along with a possible New Year’s Resolution — how about making a conscious effort to approach your conversations with prospects and candidates in a new way. Stop “talking nice about your company”… and start asking questions instead. And remember, “telling” isn’t “selling.”

A small business that has been in existence for more than five years has a sizable advantage over a business that you start yourself if you can afford to purchase it.

Most people can’t.

In lieu of that route there are ways to start your own business that don’t require large outlays of cash and there is (probably) considerable cash already in your budget that you could use to start your business.

It’s surprising how little money one needs to get by on, but in order to reach a blissful state like this, one must be willing to reduce waste and expense. This does not mean you must sacrifice basic pleasures to change your lifestyle to a cost-cutting one.

Here are many things you could do without — that could be put toward purchasing/building that dream you have.

I want to say something here. I’ve heard some criticism that a series like this doesn’t really belong on ERE – that it’s better suited toward job seekers.

I applaud ERE for going with my temerity on this one. My answer to that is there are many, many recruiters thinking about change. Leaving one profession for another isn’t a bad thing; it may just be what’s calling you at this time.

I received an email after the first installment of this series that asked:

I would also be interested in knowing how one is supposed to work for themselves. It just doesn’t seem practical if you need benefits and all else, if you don’t necessarily have the money to open your sports bar (etc.), if you aren’t an entrepreneur, if you’re not in the right profession.

Working for one’s self is not for everyone. However, today’s challenges are demanding it from some of us.

You may be one of these and not sure about how to take this step.

Something like a sports bar is very capital-intensive and involves licensing authorities and many other factors that complicate it and make it probably not the best choice for a novice entrepreneur.

Believe it or not, it’s very difficult to make money in the restaurant business.

If it’s your first love, I say go with it but don’t say you weren’t warned.

My advice to you about what to do is to do something that you know more than a little something about that you enjoy doing.

Do something that makes your toe tap.

It’s just like finding a job. What are you suited to do and what do you enjoy doing?

If someone is paying you to do it now, there’s a pretty good chance there’s opportunity for you to make money at it going it alone.

You just have to figure it out.

Let me address the issue of benefits. The federal mandate about health insurance still seems to be up in the air, so let me address what you can do as an individual to obtain health benefits for your family because I know that’s probably one of the main reasons you work for someone else to begin with.

You can purchase it.

The United States tax code encourages entrepreneurship. If you’re self-employed, pay for your own health insurance premiums, and not eligible to participate in a plan through your spouse’s employer, you can deduct all of your health, dental, and long-term care insurance premiums for yourself and your spouse and dependents.

Now that we have that one put to bed, what else stops you? The amount your employer contributes to your 401(k)? Set your own up. Just about the best self-employed tax deduction of all of them is a self-employed retirement plan. There are several, and they’re particularly valuable for reducing your tax bill and racking up tax-deferred retirement savings for later. In 2010, you could feasibly contribute 20% of your net self-employment income (based on a maximum net income of $245,000 in 2010) plus a $16,500 elective salary deferral to a solo 401(k) for a total maximum contribution of $49,000.

Not only that, but with your own profitable business you’re not limited (when your employer doesn’t offer any kind of retirement plan) to the only-$5,000-a-year maximum annual IRA contribution you’re allowed to make as an employee.

Hoping for a pension that will see you through your old age?

Good luck with that one. Just as it’s too early to tell what’s going to happen with the health care reform issues, it’s too early to say what proposed pension reforms will be. Let’s suffice it to say that some are in danger of collapse as a result of some playing fast and loose with other peoples’ money.

This is all the more reason not to depend on anyone but you.

Just as any small business can fail, so can any big business.

Remember this. If someone is willing to pay you a salary or a wage, you’re not only earning enough money for that someone else who pays your own way, but you’re more than likely putting money into her pocket.

So why work for another?

There are many good reasons to work for someone else.

A person may not want the hassle (or risk) of working for themselves. After all, it’s kind of nice to walk through a door and leave your troubles at work.

Or is it? Nowadays work follows many people everywhere — on their Blackberries, pagers, laptops  – and continuous connection is becoming more and more commonplace these days.

I predict a major burnout on this one.

People will sooner (or later) wake up to the fact that no longer are eight hours a day being given over in return for pay but that their entire lives are being hijacked for a paycheck.

Radical, even revolutionary I know.

That’s me.

But will there be a backlash to the problem? It depends on the continued (and gathering) power of employers.

Don’t think employers don’t understand the power they hold.

Why is it, do you think, that you’re having such a hard time finding a job?

I predict the day when companies like IBM will be able to wave a sweeping arm over their workforces and say, “Everyone without a college degree: out!”

It’ll be sad indeed but that’s where we’re headed with the picky exclusiveness this recession is giving employers.

Let me ask you what your alternative is when you can’t find a job.

There was a big hint in the first article I wrote in this series. It was the fourth and fifth sentences. If you read carefully I said:

Guess what? If you’re not willing to do anything, anywhere, at whatever price, you may as well hang up your tool belt now.

Someone answered me when I asked them in an email what the alternative was when someone couldn’t find a job. He said:

Keep looking, keep trying to temp — keep trying to take new classes, and so on. I’m not saying it’s easy.

And so I pushed further. I asked:

And when the stop-gap money runs out, as it is for many, then what?

No answer.

That’s where many are today — the stop-gap has run out — and the unemployment insurance band-aid will only stay on for so long.

The wound remains exposed and bleeding.

His last words to me answering my questions were:

I’m not saying it’s easy.

And I didn’t say it would be easy either.

Very briefly, the following are a few good reasons why you might want to consider owning your own business:

1. Interest rates are low. Take advantage of them. It’s possible to fund your startup with credit cards. Be careful though and have a good plan as to how you’re going to pay off the debt.
2. Interest deductibility. If you fund your startup (or your business purchase) with a line of credit on your living space (you’ll be surprised what constitutes a living space) you can (still) deduct the interest. This deduction may not always be available (as it once was for credit card interest) so use it while you can.
3. Quality of life. I haven’t seen it written about, but I suspect small business contributes to the fabric of society. At least I’d like to think it does.
4. Paying toward ownership. You’re making an investment in your future each day you work to build your small business toward something you’ll eventually own that will have worth and value. It will eventually become one of your assets, able to be sold.
5. Equity. Building worth over time (see number 4) means that over time your business will fund future projects. If you do things right, you’ll be able to tap into your business to finance other opportunities.
6. Tax Advantages. Owning your own business will avail you of many tax advantages that working for another can never deliver. That last link will take you to a pretty good primer on the subject.
7. Independence. Never again will anyone ever tell you, “Your services are no longer needed.” Not only will you learn things about others you can only imagine you’ll learn things about yourself you never dreamed possible.

I’d like to hear from all of you the reasons you choose to work for someone else and the reasons you’ve chosen (or want to choose) to work for yourself.

I know all of them are valid and good.

I’m curious.

Other articles:

But That’s Not My Job; Part II; Part III.

Hodes started thinking about all this at the end of 2008, going into the beginning of 2009. It has spent the last three months developing a tool companies could put on their corporate career sites, giving job candidates a personal suggestion of the jobs that might be best for them.

Here’s how it works.

A job candidate goes to a company’s career site — or, perhaps its intranet if they’re looking for an internal job.

As you see in the graphic at left (click to enlarge), a candidate can choose to log in to that career site using their Facebook or LinkedIn logins. An algorithm developed by Hodes is used to examine the candidate’s current job, past jobs, skills, and so on, and recommend jobs on the company’s career site that fit the job-seeker.

At that point, the candidate can click on one of the job titles to learn more about the job, getting an expanded description.

Also — see graphic at the right bottom, and again, click to enlarge — they get a list of their connections and the jobs that would best fit for those people they’re connected to on social media sites. The candidate can click on a button to refer a job to a friend.

Kane Cochran, the director of digital innovation at Hodes, says that while a number of companies have built widgets for the use of social media in employee referrals, this is the first to marry career sites, social media, and referrals in a personal way, delivering jobs from a career site to employees based on their history and skills. 

I told Cochran I was skeptical about how this would work with Facebook; Facebook profiles, I said, have a lot less job information than LinkedIn profiles. That, he says, is changing, with more people putting more employment-related histories on Facebook.

While the tool is now available to all, Hodes will first focus on selling the tool to clients who currently use its IQ system, as well as clients who use its recruitment advertising services, and then broaden its sales out to non-clients.

It’s true. It’s true. Glassdoor actually has loads of reviewers who like where they work, are happy there, and are telling the world about it. Their favorite employer? Facebook by a nose.

The social networking site made the Glassdoor list for the first time with a 4.6 rating. Next was Southwest Airlines, which headed the list last year.

This is the third year Glassdoor has released a best-places-to-work list. Based on a survey of at least 25 company employees, the list demonstrates pretty convincingly that not every one who posts to the employer review site is angry, bitter, or unhappy.

“Through anonymous employee reviews and surveys, Glassdoor offers a unique look into the top U.S. employers and some of the factors that make employees at these companies more satisfied with their jobs,” says Robert Hohman, co-founder and CEO of Glassdoor.

To be sure, there are plenty of negative reviews on the site. “AA is not worth it unless you’re not planning on going to college or finishing high school,” says one reviewer about American Apparel, a company that rated a 2.7.

But Glassdoor has plenty more to offer than just a place to vent. The list released Tuesday night in California shows a consistency with other top employer lists. A comparison with the venerable “Best Companies to Work For” list, published in Fortune, shows the two lists share 11 employers in common. Even more companies might have made the two lists but for the fact that Glassdoor lists 50 and Best Companies to Work for has 100.

The methodologies of the two lists is also vastly different — companies have to apply and pay to be rated in the the Best Companies to Work for list. Glassdoor’s list is based on a survey. Here’s how Glassdoor explains the process:

“Glassdoor’s Employees’ Choice Awards rely solely on the input of employees, who provide constructive feedback on their work environment and senior management throughout the year via an anonymous survey. The survey addresses eight key workplace factors that include work/life balance, career opportunities, communication, compensation and benefits, fairness and respect, employee morale, recognition and feedback, and senior leadership.”

Besides rating the company, reviewers also rate the CEO, which Glassdoor turns into a ranking. Ken Powell, CEO of General Mills, topped the list with a perfect 100 percent score. The lowest scorer was Jerry Fishman, CEO of Analog Devices. However, his 55 percent was an anomaly. All the rest of the rated CEOs scored above 70 percent; in most cases, well above.

The complete Glassdoor list is here, and includes, where appropriate, the Best Companies ranking.