After recent announcements by Facebook and the rise of networking platforms like MySpace, LinkedIn, and Ning, social networks are once again gaining momentum. Usage is accelerating, new audiences are being drawn in, and new applications are being developed that can help us all better manage our lives and contacts. Recruiters stand to benefit most from these trends, and here’s how.

One of the biggest challenges in online recruiting has been a lack of detailed, regularly updated and public information on candidates. Social networks have the ability to change this, and we’re still in the early-adopter stage. There are signs that social networks are growing up, expanding their audiences beyond the earliest adopters, and increasing their usefulness to recruiters.

Reviewing the Major Players

Each social network has its pros and cons for recruiters. Here is my take on each of the major players in the space.

LinkedIn

LinkedIn now has a bigger population than Sweden, according to the site. That is at least more than nine million people, although no statistics are available on how many people on LinkedIn are blond-haired, blue-eyed, and eat Swedish meatballs. Recruiters regularly report that LinkedIn is their most effective recruiting tool for a range of difficult-to-fill, experienced, and niche positions.

The beauty of the LinkedIn model is that it has created an environment where professionals can come and look for work, without appearing as though they are looking for work. In other words, they’ve found the holy grail in recruiting: the semi-active and passive candidates.

They excel with more experienced and niche candidates. The environment feels almost like a resume database, although their versions of resumes are supercharged by personal recommendations from past co-workers that can often provide insight into how good a person really is.

Of all the social networks, LinkedIn has the clearest opportunity to cut into the job boards’ domination of online recruiting and perhaps one day become the de facto standard for how people find jobs and build/publicize their resumes.

To accelerate this process, I would recommend that the company focus on user education and functionality (how you use your network to find a job, for example, as not everyone is a natural networker). In addition, learn ways to draw people into the community and give them incentives to update their information, establishing themselves as a member of the recruiting community through outreach, events, and educational whitepapers.

Facebook

Facebook is currently growing the fastest of any network and now has over 30 million profiles.

Perhaps the most interesting feature of the site is the News Feed, where you see all of the things your friends are doing within the community, groups that they belong to, applications they’ve downloaded, or just messages they’ve posted: it’s like word-of-mouth on steroids.

Facebook recently opened up their code base for other developers, which will rapidly expand their user base since other applications you use regularly and are tied into Facebook will effectively drive traffic for them.

The growth of Facebook is an outstanding development for recruiters, as Facebook does a much better job than MySpace of structuring information and helping you search for people with an advanced search interface. Still, they don’t nearly get the depth of peoples’ experiences and recommendations like LinkedIn does.

In addition, a good portion of Facebook’s new members will likely be the more professional, college-educated crowd that recruiters crave (unemployment among college grads is close to 2%, according to the U.S. Bureau of Labor Statistics, less than half the rate of the rest of the working population). The reason new members are likely to be professionals is that Facebook started as an exclusive community for college students, and new members tend to be brought in by existing members.

If Facebook wants to play in the recruiting community (and I’m not sure if they really do, as it’s just one opportunity among many), I suggest that they allow users to expand on their experiences, give people tools to refer jobs to their friends (although this is more likely to come from an outside vendor that integrates with Facebook), provide ways to search and view profile summaries (vs. entire profiles with lots of irrelevant information for a recruiter), and let companies “pay to play” to get their jobs into the news feeds of their relevant users.

MySpace

MySpace passed the 100-million profile mark last August, with 230,000 new profiles being added every day.

For recruiters, however, MySpace is not the most user-friendly environment. There are too many 15-year-olds, not enough ways to find specific types of people, and not enough relevant data. Plus, it is buried within an interface that changes dramatically from profile to profile and has the added effect of blowing out your sound system on every other page.

That said, it’s still the biggest untapped directory of profiles on the Web. They’ve started to gather peoples’ job titles and some of their experiences, but until they can bury some of the noise, they won’t be useful to a majority of recruiters out there for anything except name research and the occasional instant message.

The Next Stage

Social networking is growing up. The fastest growth categories on many of these sites are people over 35 years of age, and there’s a pretty even distribution between men and women. There’s been a very funny ongoing commentary online about this phenomenon, which culminated in a widely distributed New York Times article called “omg my mom is on facebook!” Expect adoption of all of these tools to increase even more dramatically over the next year, as there’s now an army of developers focused on expanding what you can do with these tools.

On the horizon, there are new players to watch like Ning, a niche social networking platform that allows you to build your own social network around a topic that is interesting to you; Second Life, which is more of a virtual world but with some social networking and interactive capabilities useful for recruiters; and my former employer Jobster, which has recently launched some social networking technology on their job-seeker site.

Some clear opportunities exist to make searching for candidates using these tools easier for recruiters and for the networks to help candidates find employers, vs. employers doing most of the work. Recruiters would be wise to embrace these social networks soon by building their LinkedIn networks, engaging in the Facebook community, and trolling sites like MySpace and some of the newer players for candidates who you won’t always find in resume databases.

Eventually, social networks may the best tools at our disposal.

Making the move from a cost center to a profit center is a daunting task that most talent management and recruiting teams don’t attempt. Yet when the economy shifts, and it will again, this might be the most important thing you can do today to ensure that your budgets don’t get cut, your staff doesn’t get slashed, and your department isn’t decimated.

The Human Capital Business Strategy

“Our people are our most important asset.”

This clich? has been used everywhere from Apple to Enron, often as lip service to employee-retention initiatives. I have yet to see a company really step up in their annual report and demonstrate that people really drive the business.

Most of them look something like GE’s annual report, which to its credit devotes a good deal of paper to human capital, but wraps it all up under this image of their business strategy:

It’s significant that “Great People and Teams” are actually on the list, as many companies can’t even say this. But notice that it’s in the lower-right quadrant of the diagram, buried behind execution and financial discipline. Personally, I think the diagram at the beginning of every annual report should look more like this:

GE makes approx. $42 billion per quarter in revenue, so obviously they’re doing something right. But what is the return on their human capital, their most important asset? They and many other companies and talent management departments are missing that consistently hiring and developing the best people drives revenue and profits for the company. This, like the return on any other asset, is quantifiable.

After all, it’s the Great People and Teams that drive all of the other elements. Who comes up with the processes that drive growth? Who identifies the businesses that are leaders rather than followers? Who’s responsible for execution and financial discipline? It’s the great people and teams, that’s who.

As such, talent management has one of the biggest potential impacts on corporate profits of any department.

Making Money with Human Capital Initiatives

Is sales really the only department that can talk like a profit center? Sales can only sell what the product teams create, and time and again it’s been shown that top sales people drive significantly more returns than their peers.

What about product development? Don’t the product teams create the product that the company sells in the first place? Without them, would profitable lines of business be possible? Of course not, but this only provides another example of how human capital drives profits, as great ideas come from great people, as I outlined in the Talent Story of the iPod.

In talent management, your impact on all of these things is usually indirect at best, which is actually pretty good when you add it all up. You don’t create the products that sell billions, you don’t actually do the selling, and you don’t set the company’s business strategy about which markets to go after. But within this framework, you can make a significant impact on top-line revenue and bottom-line profits by ensuring that the resources are in place to execute on the business strategy, identify new revenue streams, and ensure the company operates at maximum efficiency.

If the company’s goal is expansion, who you identify and hire for key sales roles can have an enormous impact on how quickly and how broadly the company and its revenues can expand. If the goal is operating efficiency, getting seasoned operations talent in place (whether internal or external candidates) can change the fortunes of your company. If the goal is innovation, talent management can have a direct impact on whether you’re positioned to hire and breed innovators. See my recent article on Idea Recruiting and Fast Company’s fascinating article on Innovation Scouts.

If You Don’t Measure it, You Won’t Improve it

Your impact on corporate performance is indeed measurable.

A statistical technique called regression analysis is one excellent way to measure your impact. The guiding principle of an effective regression analysis is to isolate certain variables (i.e., more effective talent management practices) in order to better measure their impact.

An example of this is focusing on a specific group of employees who can be tied to revenue, and implement initiatives or programs targeted toward these individuals. T-Mobile did this some time ago in their sales recruiting efforts, as have scores of other companies like Sunglass Hut. Microsoft is even beginning to experiment with this technique in its workforce-planning efforts.

These are just a few of the ways you can demonstrate your impact on revenue and profits:

• Improving the selection process for revenue-generating employees by implementing online assessments. This works particularly well for salespeople.
• Increasing the return from your employee referral program; referred employees stay longer, produce faster, and perform better.
• Ramping up proactive sourcing efforts to identify game-changing, high-impact employees who drive higher returns for the company.
• Implementing an idea or innovation recruiting initiative that yields products or services that your company sells.
• Targeting internal mobility/continuous recruiting initiatives to top performers and subsequently reducing the turnover rate of these individuals, who drive significantly more revenue and profits than their peers.
• Implementing “source optimization programs” to ensure that the top-performing sources of hire as measured in revenue generated are optimized and used more often.

You can, of course, continue to operate as a service provider that handles a largely administrative process. You can also choose to focus on reducing costs vs. generating revenue, or reducing the time it takes to hire average talent vs. taking more time to hire top performing talent.

But with outsourcing, a potential economic downturn if gas prices go any higher, and an increasingly competitive global business environment, I wouldn’t suggest it.

Passion is perhaps the most important component of performance. Blogs are providing a new window into what drives individuals that we’ve never been able to see on a resume.

In the course of building my own teams and recruiting for other companies, there was always a certain intangible quality I sought that was one of the strongest indicators of on-the-job performance.

In the interview process, you could see this intangible quality in their eyes when they talked about what mattered most to them. In the offer stage, you could see it when they answered “hell yes” to your job offer (vs. acting wishy-washy about it, which is usually time to pull out). And on the job, you could see it in the zest they applied toward the tasks at hand.

When I found someone with that certain “spark,” I could count on that person to go above and beyond traditional job duties, work harder and smarter, stay later, and think creatively to develop solutions to the challenges at hand.

Why Passion Has Been Hard to Find

What makes recruiting so difficult at times is that poor performers often have great resumes. Identifying someone with passion from looking at a resume, which is very likely to look and sound very similar to any other resume out there, is close to impossible.

In one instance, a past co-worker sent in a resume to a company I was working in. His resume looked outstanding, but I remembered from working with him that he never showed up on time, couldn’t stay organized or on task, regularly flaked on his co-workers and left them hanging, and was eventually fired for performance reasons. I knew from people who had previously worked with him that this was a pattern that had manifested itself throughout his career.

Yet here was his well-formatted resume that looked outstanding?on paper. I knew he could fake his way through the interview process, and maybe even provide references from people who were less affected by his poor performance.

It was in that moment that I understood how disastrous hiring decisions get made. Which is why a resume actually means very little to me, other than to ensure that a candidate has a stable work history (not a job-hopper, although my definition of this has changed over the years) and is achievement-oriented.

I actually prefer the resumes you might find on a site like LinkedIn, where an individual can manage their reputation as well as their experience summary. Yes, the comments that are put on their profile are moderated (i.e., the candidate can choose what goes on there), so you take them all with a grain of salt.

But you can often get a window into how passionate they are when their past co-workers use words like “visionary,” “above and beyond,” and “thought leader,” while also sharing specific experiences they had with an individual. The level of detail is what I usually key in on; I’ve found that poorer performers’ recommendations are more generic, like “this person was great to work with.”

What Blogs Tell You About Passion

Today, TechCrunch estimates that there are over 50 million blogs on the Web. Some of these are targeted toward family and friends, while an increasing number are work-related.

Just look at a blog like SystematicHR, written by an HR consultant at a major consulting firm, to see how a person’s passion for their work can be demonstrated on a blog. This is not a personal-glory blog like many of the ones you see out there. This person is clearly so passionate about the issues facing modern HR departments that he feels compelled to blog about it on almost a daily basis. And the intelligent content he produces is helping shape the dialogue and thinking about how we mobilize our workforces, tap into new talent pools, and apply technology toward our business challenges.

At the recent Talent Unconference, I had the pleasure of meeting the individual responsible for this blog, who I’ll keep anonymous. It didn’t surprise me at all when I saw that same intangible spark that I had always looked for on the face of and in the conversation with this individual.

What This Means for Recruiters and Recruiting Departments

Clearly, just having a blog isn’t enough to determine whether someone will be a top performer. But it is an indicator, which means that there could be implications for recruiting departments that want to capitalize on this growing phenomenon.

Eventually, recruiters may become as good at quickly identifying top, emerging thinkers in the blogosphere as they are at scanning through piles of resumes for specific keywords and skill-sets. They may become as adept at doing a blog search on Google Blog Search as they are at mining active candidate resumes on Monster and CareerBuilder. Any strategic media research projects to identify potential sources of talent might start including blogs that employees read.

With a degree of irony, many of the candidates are beginning to consider their blogs as replacements for their resumes. As you can see by the responses, a few employers are starting to take notice. Like many new technology trends, some of the earliest adopters are in technology-related industries.

This will change and expand over time. In the gaming industry, both Electronic Arts and Red 5 realize the passion that bloggers bring to the table and are both becoming skilled at finding top candidates’ blogs in their industry.

Most recently, Red 5 launched what was perhaps the world’s most innovative recruitment marketing campaign targeted partially at an audience of smart bloggers they had identified.

At Microsoft, recruiters and other employees are encouraged to blog to spread the word about careers at the company and to evangelize new products. A new entrant to the recruiting space called Blogging Systems is helping employers like MetLife and Boston Scientific create communities of talent and interact with other bloggers.

If you’re looking for top performers, blogging may help recruiters identify candidates with a passion for what they do, which can translate into more returns for your organization.

Blogging is not the only indicator of a potential superstar employee, as the content being produced needs to be intelligent and not all-consuming for the blogger. But in a competitive market for talent, every potential advantage in identifying top talent needs to be explored, and the recruiting potential of blogs and bloggers is still relatively untapped.

Today’s entrepreneur is finding that it’s harder than ever to attract top talent. In the early days of the dot-com bubble of the 1990s, big employers were rightfully scared of startups hiring their people away with promises of unimagined riches, half-day ping-pong tournaments, and lavish parties. It was like summer camp with stock options.

Yet one day the bubble popped, and now startups are feeling the pain. To many employees, working for an established bigger company just makes a lot more sense. And this isn’t just a stability issue anymore. Big companies pay better, on average, and the potential jackpots of an IPO or merger/acquisition now rarely exceed the typical pay disparity.

IPOs have been weak and except for big bets like YouTube, MySpace, and a few select others, acquisitions aren’t making too many people independently wealthy either. In other words, the risk is very often not worth the return, which makes some of the best performers shy away from new ventures.

What can a startup do to level the playing field for top-performing talent? Here are some of the ways you can win the war for talent.

1. Recognize the importance of great talent. This sounds relatively obvious, but I talk to dozens of would-be and ex-entrepreneurs who tell me that not only is getting the right people on the bus quickly the most important thing they can do, it usually ends up making or breaking the business. Case in point: most of the failed startups I’ve spoken with blame their failure on not getting the right people on board fast enough. Jim Collins’ Good to Great should be bedside reading for every startup. It’s no accident that the lessons on hiring the best people come up in almost every chapter. Not long ago, I analyzed the implications for recruiting in a Good to Great Staffing article. And almost every business success story over the last several years has started with a human capital success story. Just take a quick look here for some examples and inspiration.
2. Build a differentiated employee value proposition for key roles. Most of the people you want to hire will already have a job. But a differentiated employee value proposition can make the job materially better than the one they currently have. This means that you have to understand their interests and what they’re not getting in their current roles and create a unique value proposition that sets you apart. For a new way of thinking on this topic, read Dr. John Sullivan’s recent piece on treating this process like a product management discipline. Just like in product management, connecting with your audience of potential “customers” to understand what motivates them, where they don’t feel they’re getting value out of their relationship with their current employers, and what would push them to consider another employer is an important first step in this process. Once you’ve determined what you can do to woo them (usually some combination of options that include pay structure, work/life balance, benefits, culture, and equity) you may realize that getting the best people on board actually doesn’t fit into your business plan. Which is why I suggest going through the talent-planning process as part of your original business plan, and something that I advise VC firms to insist on as part of their due-diligence process. If there’s nothing you can do to get the right people on board at the right price, the odds of success are miniscule.
3. Get involved in every hiring decision and recruiting initiative. As the CEO or founder of a startup, you have another, almost equally important job: director of recruiting. Steve Ballmer has famously said he was Microsoft’s first head of recruiting. To an extent, he still thinks this way. In almost every presentation he gives, he talks about the value of talent and innovation at Microsoft. At a recent IT conference hosted by Gartner, he said, “You innovate or you go away,” and dedicated much of his speech to discussing the recruiting successes they’ve had over the past year as evidence that Microsoft is positioned to beat their competition. If you talk to staffing professionals at Microsoft, they’ll tell you that Steve still gets very involved in and pays a lot of attention to what’s happening in staffing. In the beginning stages of your company, no one will be better at selling top talent on the vision your company has in store than you, the founder of the company. Don’t delegate too much of this process: interview every potential hire and reach out to people who you might want to bring on board. As the CEO, you’re much more likely to get more return phone calls than anyone else in the company. People are not only flattered by you approaching them, but they get more out of the conversation. In addition, referrals are one of the primary ways that startups grow; encouraging and measuring/optimizing the number and quality of employee referrals can help you bring high-quality talent on board much more quickly. If you want to see a CEO who gets this, look no further than the unbelievable recruiting tactics that they’re using at Red5Studios. Their CEO really pushed the envelope and made an investment in their most valuable asset by thinking about recruiting like a marketer would and attempting to wow their target audience of game developers. Not everything has to be this elaborate or expensive (a simple phone call will usually do the trick), but it’s further proof that a little personal attention goes a long way.
4. Build a strong talent pipeline. Hiring game-changing talent usually takes more time than hiring average talent. Which means that you’ll need to approach recruiting almost like a sales function, with a decision pipeline built out that lines up with what it takes to get a top performer on board at your company. Don’t do the knee-jerk thing and go out and buy an applicant tracking system to manage your hiring process. For a startup, CRM is actually much more important than applicant tracking. Unless you’re a government contractor, your compliance needs will be miniscule, and a CRM like Salesforce.com, Sugar, or Entellium will allow you to more easily customize how you manage your sales funnel while keeping notes on the people you do end up interviewing. Some of the traditional ATS vendors like VirtualEdge are also experimenting with CRM offerings, and you can expect to see more in the future. Taking a pipeline building approach also means reaching out to people before you need them and having a process for continually building relationships and engaging them. This is critical for several reasons beyond just the time investment required to bring top people on board. For instance:

• If your revenue suddenly spikes and you need people, the immediate reaction for a startup is very often to hire anyone who can do the job and take the load off of your current staff. This is where you run a real risk of triggering a negative chain of events or even a death spiral that can be tough to escape. I’ve seen many companies hire sub-standard performers at this stage that cause incredible, often irreparable disruptions to the culture, the quality of work, customer satisfaction, retention of key players (top performers hate working with below average ones), and ultimately, revenue.
• If your company hits some hard times, you’ll inevitably lose some of your best talent. Having a group of people who you’ve engaged with about career opportunities before you needed them will be a valuable asset that can help you weather the storm, and could in fact end up saving your company.

5. Be nimble in your recruiting. The hiring process at most big companies takes a minimum of 45 days. Your hiring process should take five days. Big companies often take weeks to get back to even the best candidates. You should make a habit of immediately responding to candidates. These large organizations are also tied to requisitions and job descriptions, whereas you can work with a great person with a non-traditional background or without the exact qualifications you originally required to make a fit happen.

Bringing top talent on board is the most critical, and often the most difficult, task for a startup. Startups aren’t the destination employers for top talent anymore, and it’s a candidate’s market right now. But the good news is that you don’t have to be a big company to win the war for talent if you can play to your strengths and invest the time necessary to hire top performers.

Video resumes and video interviews are here. Yet some employers, afraid of the legal ramifications of reviewing videos of people in the hiring process, are curling up into the fetal position and taking steps to avoid them altogether. Here’s why you should do the exact opposite and fully embrace them.

I recently had a conversation with a director of recruiting at a large organization who said that he had just put a policy in place to reject all video resumes. “And why would you do that?” I asked.

“Because I don’t want the EEOC or OFCCP breathing down our necks and want to be protected if we are ever sued for discrimination,” was his response.

As I’m about to illustrate, legally protecting yourself from video resumes or interviews would require locking all of your recruiters and hiring managers in a broom closet with a copy of the Journal of Corporate Recruiting Leadership.

I also fully expect pigs to fly well before the EEOC or OFCCP can develop sensible regulations that address the unique challenges presented by these new tools. This is exactly why you should embrace them for all of the benefits they can provide to hiring managers, recruiters, and candidates.

What Videos Can Do for You, Your Hiring Managers, and Candidates

Within the discourse on video resumes, I think we’re really talking about two different things here: video resumes and video interviews.

A video resume is something that someone uses to talk about their experiences as part of an online resume. It’s essentially an advertising tool for the job seeker. A video interview is something that an employer initiates to get a better feel for a candidate’s competence to do the job.

In short, a video resume can help you learn more about a person than you can on a resume, without expecting the candidate to undergo formal questioning or having them take the time to answer questions you design.

This may sound superficial, but sometimes you just know that someone’s not going to work out; every recruiter I know tells me stories about candidates who looked great on paper, sounded just great over the phone, but were loony tunes in person.

Recruiters won’t ever have time to sort through hours of video, but if videos are tied to resumes or profiles that provide more structured data, the unstructured video portion of their profile helps fill in some details that the resume wouldn’t (for example, if it’s a job that requires executive presentation skills, can the person deliver information on themselves confidently and credibly?).

Video interviews, like those provided by HireVUE or (coming soon) InterviewStudio, can save you the time and expense of flying in candidates for interviews, lengthen your memory about the interviews you had earlier in the hiring process (people who interview later in the process usually have a better shot than those who preceded them), and provide a more courteous experience for candidates, who can avoid flying all the way across the country for roles that they’re destined to bomb in the interview process.

There might be some shades of gray in between, such as a video resume that includes answers to stock interview questions. See The Vault’s recent contest winners for an example, most of whom treated the opportunity to create a video resume as more of an interview than anything. To be fair, the contest was for investment bankers, and we all know the danger of getting too personal or cocky with your video resume in that industry.

Why Your Recruiters Can’t Avoid Them

Video resumes can be anywhere, which is why your recruiters and hiring managers simply can’t avoid them.

Video resumes can pop up on YouTube or any number of sites like The Vault, Resume Movie, TalkingCV, personal websites, or even Jobster, which was recently one of the first major career sites to allow video resumes within profiles.

Unless you keep your recruiters off the Internet altogether, which would be foolish given the number of great candidates out there and the fact that some recruiting inevitably happens on home computers, you really can’t keep them from seeing video resumes.

So your range of options for regulating this phenomenon are:

• Discourage people from sending video resumes. But candidates are famous for taking whatever advice you give them and doing the exact opposite in large numbers.
• Don’t accept video resumes. You can write whatever policy you like on this, but someone, somewhere is still going to receive a video resume. I’m not a rule breaker, but if I got one I’d look at it. Curiosity is a powerful thing.
• Tell your recruiters to close their eyes. You might even give them a video resume blindfold that they can put on anytime they accidentally click on a link.

All of these policies are clearly unenforceable. The underlying fear here is that people in your company will discriminate against someone because of race, age, gender, and any number of other, more superficial factors not related to this person’s ability to do the job.

Well, there are plenty of other opportunities to do this, like job fairs, networking events, chance encounters with candidates, blind dates, and of course interviews just to name a few. You might as well outlaw recruiting if your goal is to eliminate all places where a subjective and discriminatory judgment could be made.

Why the EEOC and OFCCP Can’t Regulate Them

Any time a new technology comes out, you can bet dollars to doughnuts that someone in the recruiting industry will immediately start asking about how this will be viewed by the EEOC or OFCCP.

I know that risk avoidance and mitigation are necessary parts of our business, but come on, people. I’m not saying we shouldn’t look before we leap, but let’s not let it get in the way of figuring out how a new technology can add value in our recruiting process and to our constituents.

I would argue that video resumes simply can’t be regulated by the EEOC or OFCCP. It would be rather foolish for them to try. Any attempts at regulations are also likely a long way away. Keep in mind that these are the organizations that took 12 years to define an Internet applicant.

The OFCCP’s much-publicized recent guidance in the Internet-applicant arena sent companies scurrying to figure out how they start tracking every single search their recruiters perform. This is close to impossible given the number of sources a recruiter may search, from their own applicant tracking system to Google, Windows Live, or Yahoo!, at home in their pajamas late at night while watching The Matrix trilogy.

I can only imagine their guidance on the definition of a video-resume applicant. Any link to that video must be captured in the applicant-tracking system; a transcript of what the individual said must be documented along with their gender, ethnicity, race, and clothing preferences; and all websites with videos that recruiters visit (at home or at work) must be retrievable at any given time.

Whether you like it or not, a candidate might one day (if they haven’t already) use a video resume in a lawsuit against your company. They could argue that, because their video resume is out on the open Web, your recruiters might have seen it and their appearance, gender, ethnicity, etc. is why they didn’t get interviewed or offered the job. It would be quite hard to prove that your recruiters never saw it.

Perhaps there’s some good that can come out of this. Instead of focusing on how we restrict access to information that could allow someone to discriminate, perhaps we could focus on educating our employees on how to use this new medium and why we shouldn’t discriminate against anyone in the first place.

Here to Stay

The digital world we live in is like the Wild West: hard to live in at times and even harder to regulate. With social networks, personal blogs, and now video resumes, we’re reaching a level of transparency that a lot of people may be uncomfortable with.

But all of these phenomena are here to stay. It’s how we use them that will make a real difference on whether they positively or negatively impact the recruiting industry.

Over the last decade, we’ve seen a wave of innovation that the world has never seen. And this decade will move even faster. In an innovation economy, recruiting can play a central role in how new ideas are developed and taken to market.

According to Ray Kurzweil, recipient of the National Medal of Technology and a member of the national inventors’ hall of fame, “we’re about to experience a merger between humans and computers that is so rapid and so profound that it represents a rupture in the fabric of human history.”

His chart of the major paradigm shifts over the course of human history illustrates a change trend that he calls “The Law of Accelerating Returns.”

It shows that with each passing year, big changes in human history are happening faster and faster.

One might argue that this merger on some levels has already taken place. The Internet has already dramatically changed the way we access, process, record, and communicate information.

Technologies like the iPod and the BlackBerry are making our access to this information more portable than ever. New venues like social networking, blogs, and multimedia online role-playing games like Second Life are even changing the way we interact with each other. One day, your entire life may be digitized.

The adoption of new technologies and communication tools has had an additional side effect: business is moving at an accelerated rate. The barriers to starting a company, launching a website, creating a product, or publishing a book have come down significantly.

Consumers are smarter than ever, knowing in almost real-time the range of options that are available to them. New products continue to come out at an incredibly fast rate. For example, Apple’s first generation of the iPod was conceived, developed, and launched in under six months. Competitive advantages don’t tend to last very long. As soon as you hit the market with a product that gains adoption, there are very often a wave of imitators in your wake.

As I referenced in my article The Talent Story of the iPod, success in this environment all starts with human capital.

Recruiting’s Current and Future Role in the Innovation Economy

Gaining an advantage in this hyper-competitive environment comes down to two things: ideas and execution. For companies like Microsoft (at $7 billion per year, it spends more on R&D than most countries) and Google (it spends $500 million per year on R&D), developing new ideas are built into their DNA. For companies like Dell and more recently HP, the idea is the execution (i.e., they use innovative manufacturing and operational techniques to gain an edge).

Even in manufacturing-centric companies like Boeing, innovations are now the primary driver of business success. If not for the new thinking that drove the creation of the 787, Airbus might still be beating Boeing in its commercial airplanes business.

In recruiting, we’re focused pretty squarely on the execution side of the business (i.e., hiring individuals with 10 years of experience in X role, with Y skill-set to handle Z responsibilities). We test individuals based on cultural fit, somewhat correctly assuming that to execute certain projects in our companies, individuals will need to have a specific type of personality, level of drive, and an ability to interact well with others.

Yet great ideas don’t always require pedigrees, long resumes, or executive compensation packages, and they can come from anywhere, even the mailroom. Creative people don’t always get along with or fit in with others. Michelangelo had a notoriously difficult personality, complete with violent mood swings and a quick temper, but his work was so great that people still hired him. Visit an advertising agency, a game or movie studio, or other highly creative company, and you might feel like you’re on another planet, one where body-covering tattoos, piercings, and unusual hair colors are more norm than exception.

Recruiting has the potential to take a more central role in what I call “idea recruiting.” The premise of idea recruiting is that finding great ideas as much as we find great employees will drive business success.

To this end, companies like Xerox are experimenting with incubation funds and even building a presence in Second Life, where members build virtual businesses (with real dollars) based on their creativity.

College recruiting, which had all the activity of a ghost town for a few years after the dot-com crash, is another great place to find ideas and build relationships with high-potential students you may one day hire.

It’s worth remembering that Bill Gates and Paul Allen dropped out of college and set up shop in their garages. As an example, Boeing launched The Boeing Challenge on Facebook as a way to build their employer brand while capturing potential interns and entry-level hires.

But there’s another missed opportunity here: finding disruptors before they either find you or join forces with one of your competitors. For example, Kraft is trying to join forces with innovative minds outside of the company with its Innovate with Kraft website.

Intel, recognizing how fast new technology products are being developed, is trying to build a business by identifying Web 2.0 innovators early in their development cycle so they can be positioned to big rewards down the road. There are dozens of other examples of idea recruiting:

• World Bank Development Marketplace
• X-Prize Foundation
• Staples InventionQuest
• GoldCorp Challenge
• Bayer Material Science Prize
• Netflix Prize
• Innocentive
• Innovation Challenge
• Google’s Code Jam

Clearly, many of the people identified through these challenges could be outstanding future employees. The question then becomes: does our company have an environment conducive to innovation, where innovators, disruptors, and new ideas can thrive?

While many of us have “innovation weeks” and similar things in our companies, most job promotions are reserved for people with political skills. Very often, disruptors are either shunned or shown the door while yes-men advance rapidly. We’ve all seen this happen.

At its heart, this is really an employer-branding exercise. Do you have the right employment value proposition to attract and retain the radical innovators who can take your business to the next level? Revamped internal mobility initiatives and performance-review processes are essential to building an innovation culture.

The game in business is changing. Let’s start thinking about how we hire and promote the people with the best ideas, not just the best resumes.

A fundamental shift in recruiting values is now taking place inside organizations around the world. At the center of this shift is a focus on more proactive recruiting tactics in order to help drive a higher return on investment from recruiting and develop talent pipelines ahead of demand.

In a reactionary, requisition-driven recruiting model, overhead metrics such as cost, efficiency, and speed are adequate measurements of a recruiting department’s value to the organization. Cost-per-hire, staffing efficiency, and time-to-fill are still the primary metrics used in most organizations when recruiting reports to the business.

How much money did we save this year? Did we decrease our time to fill? Is the requisition load per recruiter at an optimal level?

These traditional metrics, while still important measures of overall efficiency, are not effective measures for a proactive recruiting team. In fact, they could ultimately reduce the effectiveness of such a group by necessitating that team members are incented to act in reactionary ways, such as:

• Filling a need as fast as possible with the wrong person vs. waiting or working harder to find the right person for a mission-critical role
• Waiting for requisitions to be open to identify and build relationships with mission-critical talent, at which point it might be too late
• Screening and sorting quickly vs. networking to find the best person

Outbound Recruiting Metrics

Most proactive recruiting teams operate more like a sales force than a traditional recruiting force. That means that they measure outbound activity (establishing relationships and making presentations) just as much as inbound activity (taking sales orders or, in this case, making hires).

Realizing the importance of each task, as well as the different competencies required, many companies have split their sales organizations in half to have “hunters” focus on finding new business and “farmers” focus on strengthening and mining existing business relationships.

Similarly, some recruiting organizations have established central sourcing groups or recruiting strike teams that focus on specific, game-changing positions. One major software company I’ve worked with has assembled a recruiting strike team to woo senior software architects, the true visionaries and innovators in its business.

The sales cycle for these individuals can be five years or more. Therefore, they’re not measured on the number of jobs they fill as much as they are on the number of qualified individuals they identify and the relationships they create.

A recruiting team that is measured on outbound activity will build the equivalent of a sales funnel, or a series of stages in a relationship that may culminate in a person getting hired at your company. The time it takes to move people through these various stages will be measured and optimized over time, while reasons that candidates decline to move forward will inform recruitment marketing and branding efforts.

Some of the stages in a typical recruiting funnel include:

• Candidate identified
• Unknown level of interest/have not contacted
• Connection established
• Not interested
• Contacted
• Willing to listen to opportunities
• Willing to refer others
• Interested in opportunities
• Passed on to hiring team
• In the hiring cycle for a specific opportunity
• Hired
• Rejected (would hire in future)
• Rejected (do not hire)
• Declined

Some recruiting managers have taken to calling this progression “suspects, prospects, and applicants.” In other words, there is a difference between people who have been contacted and those who have not, and making that initial contact is really the beginning point in a long-term relationship. In a sales force, this is the equivalent of a lead versus an assigned contact, and a few proactive recruiting teams have begun to make this distinction part of their operational model.

Some organizations expect that end-to-end in-house recruiters can be proactive in the course of doing their job. I don’t believe this is a scalable model, as most in-house recruiters have a rising plate of requisitions and enough administrative responsibilities to keep them occupied.

In addition, the competencies required of proactive recruiters are much different than those of so-called “A to Z” recruiters, who very often either hate picking up the phone to make an outbound call or hate dealing with hiring managers and the hiring process. Proactive recruiting teams will excel in turning a passive candidate into a more active one.

Reporting to Your Business Leaders

Increasingly, sourcing or strategic recruiting groups are built up by business leaders with critical human capital needs. They often look for people outside of the recruiting industry to drive them, sometimes with disastrous consequences.

In these cases, selling the value to the rest of the organization can become somewhat easier because of the executive endorsement or even because the funds come directly from that business leader’s budget.

The risk is that the sponsoring business leader leaves the company, so you’ll want to make sure that you hedge your bets and build political capital with other executives.

But what about when a recruiting team identifies and tries to push through a proactive recruiting initiative or team? In an industry that values quantity over quality, proactive recruiting is not always an easy sell to business leaders who usually know very little about what lurks behind the curtain in recruiting.

In this case, alignment to business goals, revenue generation, and mission-critical roles are the real key to making an initial business case and justifying your existence on an ongoing basis.

While every employee is important, let’s face facts: some employees are more important than others. One of the most common mistakes I see in proactive recruiting efforts is taking a “boil the ocean” approach (i.e., falling into the trap of becoming a reactionary candidate generation team for all of the openings in an organization).

If the economy or business needs take a turn for the worse, the ax will eventually fall on your team because you’ll become an unnecessary luxury. Creating a sustainable proactive recruiting model that allows you to move up the value chain requires discipline. Stick to the core reason why proactive recruiting teams succeed, and remember they focus on the positions that drive the highest value for an organization and are thus an inseparable part of business success.

If the business needs senior software architects to take it to the next level, then prepare your business leaders for a two- to five-year sales cycle to close a candidate, educate them on the funnel you need to build to support the business, and prepare for a potentially enormous return on investment.

If you’re looking for senior financial consultants, expect a somewhat shorter sales cycle and smaller return on investment per head, but what you do could make an even larger impact over time. If you’re in healthcare, hiring a heart surgeon can help accelerate the building of a new practice or the expansion of an existing one, which can drive an extraordinary amount of revenue.

In any of the examples above, your business leaders will need to understand your methodology; the metrics you are trying to optimize in your sales funnel and why; the number of hires at this level that your group will be responsible for over the next two or more years; and most important, the overall impact on the business your team is having.

When you focus on strategic positions, this impact becomes relatively easy to measure. Continuing with the examples above, a senior consultant will generate revenue; a software architect will bring products to market successfully; and a heart surgeon will generate revenue and save lives. Other measures of quality, while at times subjective, can also be very powerful if presented in the right context of business success.

The recruiting industry is in the middle of a profound transformation. The traditional measures of efficiency and quantity are giving way to new measures of effectiveness and quality. The move from a reactionary to proactive discipline is underway, and how you measure your effectiveness can drive business performance and ensure your survival for years to come.

Just when you think you’ve mastered the Internet, along comes a new generation that is changing the way we use the Web. It will be incumbent on today’s recruiting innovators to rethink and shift their recruiting tactics in response to the changing dynamics of the Web’s second generation.

Ten years ago, leading companies identified that the habits of their target audience were rapidly changing. The Internet, once an exclusive haven for techies and geeks, was now becoming an indispensable resource for everyone from college students to experienced professionals.

This shift enabled a virtual revolution in recruiting, with large recruiting teams, high costs, and long hiring cycles giving way to faster, more agile recruiting departments that could do much more with less and more quickly.

This shift to online recruiting began with next-generation job seekers: namely, college students. Today we can see that the college audience is once again proving to be a bellwether audience signaling times of change ahead.

From the way they use the technology to the way they interact with and create social circles, their changing behaviors are behind the increasingly rapid evolution of the Internet as we know it.

Is There Really a Web 2.0?

We’ve heard hot buzzwords before like push technology, convergence, and custom portals. Not much materialized from these concepts except that fledgling businesses without viable business models raised large amounts of venture capital, threw lavish parties, and ultimately, crashed and burned (some in spectacular fashion). We fell in love with a sock puppet, but not enough to buy pet supplies from him. We watched the Furniturewarehouse.com Bowl on national television. If you were lucky, you saw Celine Dion or KISS at an IPO party. If you were unlucky, you bought stock in said party-thrower. And a few winners survived.

And now comes “Web 2.0.” Terms like user-generated content, tags, social networks, contextual targeting, and mass customization have emerged. Sites like MySpace, YouTube, del.icio.us, and Digg have become overnight sensations. There are 50 million blogs, with two new blogs getting created every second.

Websites are becoming much more dynamic and immersive than ever before, threatening to turn the “world’s biggest library” into the “world’s biggest form of interactive entertainment.”

I believe that Web 2.0 is a convenient, easily understandable phrase that represents a much broader set of changes happening online. Yes, there are some technological changes underway allowing new sets of innovations. There are some new (and recycled) approaches to business problems that would have never been possible without the level of online participation that we see today (for perspective, 75% of U.S. households are online, and it took only five years for the Internet to reach 50 million people vs. 38 years for TV and 13 years for radio). The Internet and the technology and processes behind it are maturing.

More important for recruiting is that the audience is changing. They’re using the Internet in entirely different ways than the original Web generation did. Some of the changes happening with this new generation include:

• The Web is a hub of social interaction. It is no longer just an information resource, which results in this generation forming fewer close friends and more “weak ties,” or people they do not know well, but unite with around common interests.
• Privacy is no longer an issue. This generation seems quite comfortable publishing all of the gory details of their lives online. Some of these details will shock you. Get used to workers who are perfectly functioning members of the work world, but who perhaps make decisions in their personal lives that you find appalling.
• More time spent online than watching TV. During this time, they visit dozens of sites vs. congregating in just a few, hopping from social networks to friends’ websites to blogs and music-sharing sites like Last.fm.
• The Web is always on. This generation is always connected and never sitting in one place long enough to get their attention. They work faster but have a myriad of distractions to keep them occupied before, during, and after work hours, and they expect their employers to be okay with this as long as they’re working hard and producing.
• An inherited Gen X cynicism. This generation may not trust the marketing messages they’ve been bombarded with throughout their lives. As such they are harder to communicate with through traditional and mass media.

The Next Generation of Job Seekers

Job-seeker behavior and expectations are also beginning to change. The implications on how companies find and connect with people will be significant. While some of the old habits of previous unwired generations carried through to the first generation of Internet users (i.e., writing a great cover letter will get you that job!), the new Web generation will completely redefine the job search and bring new expectations to the workforce.

Here are a few examples of the changes underway:

• Because they don’t trust marketing messages, the “culture section” of your website or the employee testimonial will no longer add much insight into the work experience. Instead, they will use their broader set of connections to give them new, more honest insights into what it’s like to work at your company or even for a specific hiring manager.
• How you use technology will have a bigger impact on job-seeker perceptions of you as an employer. They won’t have patience with bad websites and user experiences. If something is broken on the website, the company will be perceived as broken and not worth working for.
• Many job seekers, growing up in the level playing field that is the innovation economy, will often expect to be judged by their ideas, not their experience. Resumes will become irrelevant (or at best, a meaningless formality that describes your work history, not who you are). View this discussion on Robert Scoble’s blog to see what I mean; it’s the inspiration for the title of this article. If this attitude exists, outside of the system or not, think about whether you could even interview someone like Robert with your current process.
• You won’t find as many candidates you’re interested in sitting in big databases. Instead, you will find them commenting on blogs, in user forums, on social networks, in niche sites, or reachable via opt-in and permission-marketing techniques.
• To gain credibility with passive candidates, you will need to be more educated on who they are and how they think. They will expect that you have read their blogs, seen their portfolio, or viewed recommendations from co-workers and supervisors who have vouched for their intelligence and work ethic. If you don’t do your homework, they won’t return your calls or be receptive to your offer. And once again, you can’t always expect a resume from a passive candidate.
• You can no longer control or restrict information, nor would I suggest trying. If your work environment is terrible, people will hear about it. Someone will blog about it, comment on it, or IM others about it. You have no choice but to treat your candidates, employees, and alumni well and encourage them to talk about their experiences.

If you think that these trends are only applicable to students, think again. Ten years ago, we thought that the newspapers would still remain the dominant media and the Internet would be a niche player in online recruiting.

Today, the Internet is poised to overtake newspapers in the job-classifieds market in the next five years. We already do what we thought only IT people would do. Soon, I predict that we will all be doing the things that this new Web generation does.

This was incredibly time-consuming back then because the Internet was still in its infancy. Today, the Web is a treasure trove of resources to help you identify the most logical markets for your recruiting strategies. Data is now available on everything from migration trends and job growth to housing prices and industries - all of which can combine to give you a much clearer picture of where to target next.

Where Talent Will Move or Stay When building a regional or relocation recruiting strategy, knowing which markets are gaining or losing the most people is a great starting point. Markets that are losing high numbers and percentages of people are the most ripe for targeting. Many economic factors, including housing prices, costs of living, job availability, climate, and crime rates, factor into which areas have the highest migration rates. Beginning at the state level, domestic migration to southern states continues to increase, with residents in Western and Northeastern states (including many retirees) beginning to move south seeking more affordable housing and better standards of living.

According to a recent USA Today article, one of the dominant trends is movement away from our biggest cities. States like New York, Illinois, California, and Massachusetts demonstrate the impact that this new urban flight is having, although they make up for this population outflow with international immigration.

view full-size image The percentage of people entering or leaving each state due to domestic migration is also a great tool to identify areas where it is possible to have some recruiting success. Midwestern states like Kansas, Iowa, and North Dakota score highly on this list as potential target states. Delaware, South Carolina, and Idaho, among other states, score much lower on this list.

view full-size image At the city level, the U.S. Census Bureau’s data demonstrates the impact of out-of-control housing markets in some of our biggest cities. Metro areas with the biggest net migration to other areas from 2000 to 2004 were New York, Los Angeles, Chicago, San Francisco, and Boston. The biggest beneficiaries of these migration trends were Riverside-San Bernardino, California, Phoenix, Tampa, Atlanta, and Dallas. As you’re putting together your next recruiting strategy, housing prices remain a huge indicator of where the population will move next and the areas from which it will become easier to pull talent. The areas mentioned above are pricing many people out of their market, and in other cases, individuals are pocketing the money they have gained from their houses and moving elsewhere.

The net impact of talent migration for a recruiting team is as follows: Without a phenomenal job offer, targeting candidates in a lower cost-of-living area like Texas if you live in a high cost-of-living market is nearly impossible. However, all is not lost. “Weather recruiting” - hitting specific markets when the weather is unbearable, like Texas in the summertime or the Northeast and Midwest in winter - can be a highly effective strategy, one which I have used successfully for many companies.

Understanding the Job Market, Part 1 The job market in a metropolitan area is another reason why people move from one state to another. A poor economy and weak job market often translate into an excess talent supply. The Milken Institute, a non-profit economic think tank, is an excellent source of data on local economic conditions and job growth. Its analysis of the 200 largest cities and 179 small cities is one of the most useful resources on the Web to evaluate the economic health of a potential target market. Not only does it provide sortable data on job growth, wages, and population, but it also gives an indication of the high-tech industry base in a given city. Its data confirms that some of the hottest talent markets are in Florida, Nevada, North Carolina, and Arkansas (thank you, Wal-Mart). A harder to use but equally valuable resource is the U.S. Bureau of Labor Statistics site at http://stats.bls.gov.

About as detailed as it gets, the BLS site’s most useful statistics are its tracking of regional and metro area unemployment statistics. The most current release shows that unemployment rates are high in states like Michigan, Kentucky, and Alaska, and low in states like Florida, Virginia, Utah, and Nebraska. The metro rates of unemployment are also very revealing - at times an indicator of economic health in attractive climates (like Cape Coral-Fort Myers and Fort Walton, Florida) and at other times an indicator of markets that have a hard time keeping their local talent (like Sioux Falls, South Dakota and Fargo, North Dakota). The month-to-month statistics on the metro area unemployment rates are perhaps the most useful component of this chart, giving one an idea of whether the economy in each metro region is expanding or contracting.

Understanding the Job Market, Part 2 General job market data like job growth and unemployment is useful, but not if you can’t find the specific types of individuals you seek. In my hometown of Seattle, for instance, the strong high-tech market means that there are relatively large numbers of programmers and software engineers (approximately 85,000 of them, to be exact), which is reflected in the BLS data on occupations and wages by metro areas. There’s not much of an entertainment industry here, which is also reflected in the low numbers of Agents and Business Managers of Artists, Performers, and Athletes (only 50 of them in Seattle compared to 2,610 of them in Los Angeles). Occupational data is also an important indicator of whether the types of individuals you seek live in a given market. For example, you can see which metro areas and states have high concentrations of recruiters and which pay the highest wages. It will take you a little while to navigate, but the “customized table” function allows you to view an Excel sheet with detailed data by city. This data shows that New York and Chicago have by far the highest numbers of recruiters (over 10,000 in each city), followed by Los Angeles, Boston, Philadelphia, and Washington, D.C.

The biggest gap in the BLS statistics is in industry by state. If you’re looking for pharmaceutical employees, you’d want to know that the areas you’re targeting have high concentrations of employees in this industry given its specialized nature. The U.S. Census Bureau has very general statistics on industry employment by metro up to 2004 that are relatively helpful, and this data can often be supplemented by state departments of labor, a helpful list of which can be found here.

Finally, your own knowledge of competitor locations and the types of individuals they employ in each location are incredibly important. One of the best resources for this type of data is each organization’s career website, which can give you an idea of what types of employees they recruit and in which locations they recruit them.

Putting it All Together Using a combination of your knowledge of regional job markets, industry concentrations, migration patterns, and costs of living and your competitors, an organization can begin to create an effective regional recruiting strategy. The tools provided above can help you strategically identify and whittle down your target list. Now it’s up to you to create a message that speaks to the selling points of your area relative to your target markets and learn from your experiences along the way.

The Ultimate B Player Talent Strategy: The Oakland Athletics

It has been said that “one person’s trash is another person’s treasure.” Michael Lewis’ Moneyball: The Art of Winning an Unfair Game is a perfect testament to this. Even if you’re not a baseball fan, this is an amazing story with valuable lessons for anyone in talent management. In his best-selling book, Lewis documents the practices of Major League Baseball’s Oakland Athletics, who with a $45 million payroll have stayed competitive against the league’s richest teams, some of whom outspend them by a 4-to-1 or even 5-to-1 margin. To illustrate this, here’s a side-by-side comparison of the A’s (who spend an average of $55 million or less per year on payroll, making them one of the lowest-spending teams in the majors) versus the New York Yankees’ (whose payroll is now over $200 million per year, the highest in the league) regular season records over the last six years:

In baseball as in life, money can’t buy you (or George Steinbrenner) happiness. The additional $150 million per year has bought the Yankees less than two wins per season, although the Yankees did win a World Series in 2000. Nevertheless, this is nothing short of remarkable considering how little the A’s spend on their payroll.

How have the A’s done this? By approaching baseball’s talent pool like one would approach an economic marketplace. In the A’s view of the talent marketplace, there are bargains to be had in the players that few other teams covet. Most teams try to find the “five-tool” players - individuals with a combination of speed, power, hitting for average, strong throwing arms, and fielding - and pay a premium for players who have the potential to develop all of these skills. The conventional wisdom to identify five-tool players is to look at statistics such as stolen bases, home runs, average, and fielding percentage. The net effect of this approach is that teams often overpay to get great players (i.e., Alex Rodriguez’s $250 million contract). Meanwhile, the Oakland A’s are looking for entirely different types of individuals. The A’s roster is primarily made up of slow (sometimes even pudgy) players who can get on base a lot. One of the key statistics they look at is a high number of walks, which they covet based on the premise that statistically, what’s really important isn’t necessarily that you get a hit, but rather it’s that you get on base, even if you do it by walking. Until recently, no other teams cared much for this skill (walking).

It is rare that the A’s overpay for a player because the market for the players they seek is relatively soft. There are some interesting parallels to the recruiting industry in this analogy. One parallel is the conflict between the baseball purists and traditionalists versus the new, data-driven upstarts. Just like the generation of metrics-focused general managers that the A’s Billy Beane has spawned, there’s a wave of new metrics in recruiting that defy the conventional wisdom that recruiting can only be measured as a cost center with soft returns. Another parallel I see here is how the A’s look at the market for talent a bit differently than its competitors. In effect, while the Yankees look for the elusive and expensive Harvard MBAs with the coveted packaged goods background, the A’s may have a few of those on their roster but are also looking for non-traditional or other consulting backgrounds from B schools to round out the team. In the A’s talent marketplace, talent is considerably less expensive, less competitive, and easier to find because of this approach.

The Ultimate B Player Talent Strategy, Part II: Enterprise Rent-A-Car

Enterprise Rent-A-Car is the college talent market’s version of the Oakland A’s. Much like the A’s, Enterprise has identified opportunities to target talent that other teams usually ignore. And just as the A’s look at a different set of statistics (on-base percentage versus batting average), Enterprise looks at different performance indicators - it’s your attitude and presence more than your GPA that will get you the job. Its innovative strategy starts with where and how it recruits. You won’t often see a big presence from the Enterprise college-recruiting team at an Ivy League school.

If you’re the valedictorian of your class, you probably have better initial options than a career starting behind the rental counter (to be fair, there are other jobs at Enterprise that might suit you). But, if you didn’t attend an elite school or have a perfect GPA, Enterprise provides viable career options, including the opportunity to run effectively your own business and share in the profits with a multibillion-dollar company behind you.

Another important part of the strategy is its employment-value proposition (something Enterprise’s Marie Artim talked about in the June Journal). Enterprise’s management training program and pay-for-performance models are exactly what its target audience wants in a first job (research is a powerful tool here). They combine to give the company an enormous edge for B players in an industry littered with C and D players. By focusing on talent that other companies overlook and by providing a compelling employment-value proposition, Enterprise has raised the bar on the types of individuals who work in the rental car industry (which is one reason why I won’t rent a car from anyone but Enterprise). It’s no wonder why it’s the largest rental car company in North America. Designing a “Blue Ocean” Talent Strategy

While you’re buying Moneyball, I also suggest you purchase Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant by W. Chan Kim and Ren?e Mauborgne. One of my key takeaways from this book is that it’s often better to swim for the “blue ocean” of unexplored market spaces than it is to swim in the shark-infested “red oceans” with all of your competitors. In the talent market, most attempts at workforce and talent planning are red-ocean strategies. They are focused on reacting to the future business needs of the company and the headcount needed to support them. With this type of limited forecasting model, you’re bound to end up competing for the same scarce skillsets as hundreds of other companies. A disruptive talent strategy will also look at the supply and demand economics of the talent marketplace and identify places where better or lower-tier talent can be inserted into the mix and the risks and rewards for doing so. It will identify the places where no one else looks for talent, and leverage the resources unique to your organization. This often requires developing rather than purchasing talent, and should absolutely defy some of our conventional wisdom of just targeting A players.

It’s quite fashionable these days to bash HR departments for all of their failings. Last year, Fast Company magazine infamously took this to an extreme, pasting the headline “Why We Hate HR” on their front cover. The shock and outrage from the inflammatory tone of the piece continues to this day (60% of readers “hated it” according to Hammonds), yet there has been widespread support for the points he brings up (91% of people polled during a recent online interview with Hammonds generally agreed with him). Hammonds’s silver lining here is that “HR is the corporate function with the greatest potential - the key driver, in theory of business performance. In a knowledge economy, companies that have the best talent win.”

One look at the New York Times article (registration required) on Microsoft and Google’s grapple for supremacy confirms that talent has driven corporate performance since the beginning of the industrial age. Yet, what constrains the function from getting respected in most organizations is a focus on being good at “administrivia,” and not “the more important strategic role of raising the reputational and intellectual capital of the company.”

Secede or Die?

Most of the bigger complaints in the article are aimed at the people who manage issues like pay, benefits, training, performance management, and retirement. Does that mean recruiting is really just guilty by association? Not exactly. Some of the same criticisms could apply to many recruiting departments as well: using efficiency-focused, rather than value-focused, metrics that demonstrate business impact; restrictive bureaucracy, often driven by fear of legal repercussions and compliance; a focus on activities versus outcomes; and a push for short-term cost efficiency over longer-term value. Yet, in many other cases cited in the article, recruiting is merely guilty by association.

In fact, several recruiting leaders I’ve spoken with are as frustrated with HR as the rest of their company - the policies, the restrictions, and the myopic thinking. What was surprising to me was that, among the talk of employee engagement, benefits, and mentoring programs, recruiting was rarely even mentioned in the article. So here’s a radical thought. Instead of being HR’s red-headed stepchild that’s locked away in the basement (only to see the HR team take all the credit for the big accomplishments of your team), it’s time for truly strategic talent management departments to secede from HR. To stop sitting at the “people-people” table and start sitting with the “businesspeople.” To take the initiative and show the business impact of effective employer branding, referrals, strategic sourcing, and talent-supply-chain management. To think and act like a profit center, not a cost center. And, to report directly to the CEO or vice president of corporate strategy, not the VP of HR. As the HR outsourcing tide continues to rise and swallow anything in its path, secession may be the best possible option for recruiting and talent management - perhaps the only functions in HR that a company should not fully outsource if it wants to maintain a competitive advantage in a knowledge-based economy.

The HR Death Spiral

As part of the HR silo, it is inevitable that recruiting will be vulnerable to HR outsourcing initiatives. Today, many companies (94% of them, according to a Hewitt Associates survey of large employers) are already examining how to reduce the administrative costs of HR by outsourcing administrative-heavy functions like compensation, benefits, and retirement. It’s still somewhat rare that recruiting falls under that same axe - partially due to the poor product offerings in this area from HRO vendors (who often repackage their same broken internal recruiting processes and tools), and at times to a realization that staffing is in fact a very strategic business function that is best done by in-house experts in each organization. But the writing is on the wall.

According to the same study, by 2008 many organizations plan to expand outsourcing initiatives to cover other HR activities like learning and development, health and welfare, global mobility, and, yes, recruiting. The real rub, however, is that companies that want to get strategic about talent are starting to hire businesspeople from outside the staffing world to run departments. This is a growing trend I have seen across the country. Other organizations have gone the other way, bringing in HR managers with little to no recruiting background to run staffing as part of a rotational program.

To avoid any of the above fates, I highly suggest you read Kevin Wheeler’s recent article, “Will Your In-House Recruiting Be Outsourced?” and John Sullivan’s excellent profile of Valero Energy (both of which fall into the “I really wish I’d written that” category). Both are excellent reminders of the type of thinking that will be needed for recruiting to become a vital business partner inside a company. It is unfortunate, but I have yet to see a convincing case study of a company systematically tying recruiting initiatives to increased revenue and profit, although I am hopeful that several exist. You will be forever judged by your current accomplishments, not by your potential. By becoming an inseparable part of your company’s business strategy, your job is likely secure. If you’re limited in your ambitions by ineffective or even hated HR leadership, it’s time to build your secession plan.

Because of the increased competition for recruiting talent (economists would be wise to watch the ERE job board (for signs of economic life), companies start hiring rookie recruiters to fill in where experienced recruiters left off. Team productivity often suffers, but in the long term, new blood ends up being a great thing as it becomes less difficult to implement the new approaches necessary to deal with new realities. The ripple effect is just starting to hit other professions and the general media. The Seattle Post-Intelligencer recently posted a story about starting salaries for lawyers from top schools creeping above $135,000, with multiple-offer scenarios becoming common again. Another sign of a heated talent market in an early stage is the level of competition for MBAs. When economies are having trouble, there are MBAs with three to five years of experience in the available labor pool. During a swing like we’re in now, it’s less likely that you’ll be able to find an affordable MBA who isn’t “fresh off the boat.”

According to a recent survey from the MBA Career Services Council, the national job market for MBAs is growing quickly, with higher starting salaries, more jobs, and more employers competing for the same talent. Consulting, financial services, consumer products, and healthcare industries lead a rise in hiring across almost all industries. Signs of Trouble There are many signs that companies have not seen the writing on the wall and aren’t taking the steps necessary to prepare for an overheated talent market. In a candidate’s market, your organization may have a very rough ride if you:

• Have not optimized the candidate experience. Companies still expect candidates to fill out broken and painful online application forms that take up to 30 minutes to complete (if they’re successful filling it out at all). Recruiters in these organizations know that they lost more than 40% of their online applications once they implemented their new applicant tracking systems, but they didn’t cry about it when they had hundreds of people coming to them. If it ever really hits the fan again and you see multiple counteroffers flying around, you’ll wish that you had taken the time to think of your candidate experience like a customer experience.
• Don’t offer flexible or virtual-work arrangements. This will be a necessity if the economy heats up any more than it has already. The free-agent nation that was predicted has really evolved into one where virtual work-teams dominate, driven by the increased interconnectivity of our workforces and our ability to get things done from anywhere. Given the choice between a great person 1,000 miles away and a mediocre one five miles away, I know which one I’d choose.
• Have implemented overly-restrictive policies in reaction to the OFCCP or EEOC guidelines. When legal departments set your recruiting policy, you’re in big trouble. The government Internet-hiring guidelines set this year have opened up a Pandora’s box of legal meddling in recruiting issues, forcing many organizations to be overly cautious in how they find top talent and giving them a competitive disadvantage. I’ve been shocked to hear even some of the smartest recruiters I know tell me, “I’m not allowed to do anything except push this button and wait for responses.” With any legal ruling, it’s not the ruling itself that necessarily presents a challenge ó it’s how your own legal department interprets them that can be the rub. When the economy really picks up steam and the labor pool declines, these “scared sheep” will be forced to stand up for themselves, defy their legal teams, or develop workarounds. But by then, it may be too late.
• Still have a reactive recruiting process. Related to the above point about “button pushers,” many recruiters have become very comfortable with this model. One staffing director confided to me recently that “most of the recruiters I’ve had to hire in the last five years are glorified administrators and job-board managers, not real recruiters.” In a hot talent market, these recruiters don’t survive for very long, and a sales/talent hunter mentality ó ideally embedded within a central sourcing model for larger organizations ó is an essential survival skill.

We’ve just started to get the early returns on a much more competitive market for talent. For now, only the early adopters who are in touch with market trends have taken the actions necessary to prepare themselves. I had the distinct honor the other day of meeting a health care recruiting team that is setting up a proactive central sourcing group that will be building strong talent pipelines for the future (the average age of a nurse is 48 years old). Other groups I’ve met with are really thinking hard about how to apply the principles of networking and customer relationship management to their recruiting processes. A sales and marketing mentality is starting to work its way into the fabric of the top percentile of recruiting teams. The job market is already as hot as it was in early 2001, but there’s still time to prepare yourself for potentially hotter days to come.

• David Gebler, a noted and respected ethics expert and president of Working Values.
• Heather Hamilton, staffing programs manager at Microsoft, and a former staffing firm recruiter. As you may recall, Heather put out a very well-written opinion piece about the topic.
• Michael Homula, director of talent acquisition at Quicken Loans and a former staffing-firm recruiter who was cited in recent articles on aggressive recruiting tactics — and the only staffing director I know who reports to the CEO.
• Jeff Hunter, an industry veteran and current director of talent technology at Electronic Arts, who has also published strong and well-articulated opinions on the subject of ethics.
• …and me, Dave Lefkow, a former staffing-firm recruiter, recruiting manager, industry consultant (the genius who forgot his wallet in Seattle but somehow made it to San Diego with no ID). In the past, I’ve vehemently defended ERE’s right to publish materials on inflammatory ethics-related topics.

Even though it was the last topic on the agenda, the room was packed with roughly 200 people. And despite some opinions to the contrary, I believe we had a diversity of backgrounds — three former staffing-firm recruiters, industry veterans, a current staffing director, a staffing programs manager, and a technology director. Notably missing ó and I’m sure ERE learned from this experience, being the first panel on this topic — was a current third-party recruiter. Audience participation in the discussion was highly encouraged, although I would estimate that 80 to 90 percent of the audience consisted of in-house recruiters. It’s also worth noting that we did not position ourselves as ethics experts, but just participants in the community discussion around this topic.

Launching the Panel

David Gebler opened by discussing what ethics are and are not. Ethics are not to be confused with morals. Instead, they are a set of standards that guide our behavior. To illustrate this point, he gave the example of the mafia as an organization with structured ethics but few morals. In the mafia, there are very clearly defined standards and guidelines for behavior related to stakeholders (although there are few when dealing with people outside of this circle). Simply because they have ethics does not make them moral, however — quite the contrary. David also warned of the danger of not defining where boundaries are, as demonstrated by Enron and WorldCom. Contrary to what you may assume, ethical lapses are not always examples of bad people doing bad things. Very often, environments are created that allow and sometimes encourage good people to behave badly. That’s how small problems can multiply into big ones. The steroids scandal in baseball also shows that not defining or operationalizing ethical guidelines to reduce gray areas can have negative consequences.

The Discussion

All of the panelists were in agreement that the conversation we are having on ethics in recruiting is long overdue. Publicly, there was very little disagreement among all of the participants in the discussion (audience or panel). There seemed to be universal agreement that lying to get information was not ethical, potentially illegal in some cases, and not behavior that was encouraged ó although there were participants that admitted doing this in the past. In retrospect, I realize that not everyone really agrees on these topics, in principle or in practice. For various reasons, I don’t think that anyone in the audience or on the panel felt comfortable publicly admitting to things like ruse tactics. It’s quite possible that some of their private opinions and activities might tell a different story. After the panel, one attendee said he was emailing his team during the discussion ó and they responded that employing some of the disputed tactics were what they did every day. So here’s a possible suggestion for the next panel to broaden the discussion: Invite an individual or two to the panel who will go on record advocating controversial tactics, or have people anonymously and privately record their feelings to discuss with the panel. While David Gebler was responsible for moderating the panel, there was very active audience discussion. Some of the highlights from the discussion:

• Heather Hamilton and Michael Homula agreeing on something!
• Michael Homula defending his record but admitting mistakes.
• Steve Fogarty at Waggener Edstrom Worldwide on a third-party recruiter working for a competing PR firm, who told the receptionist that he needed to speak with the biopharma PR team about a potential RFP, and when connected, immediately discussed job opportunities. We didn’t hear the end of that story; hopefully, Steve can comment at the end of this article on the actions taken by the employees and the net result for that recruiter.
• Where ethics stop and bad taste begins.
• Whether an industry-wide set of ethical guidelines would help or hurt the industry.
• Recruiting from partners, or even just asking them if they know people.
• Nancy Gray-Starkebaum of NGS Talent brought up a very interesting point: Is it disingenuous for us to slap non-competes on our own employees, but recruit directly from competitors who don’t have non-competes?
• CEOs who call third-party recruiters or name-gatherers to “do their dirty work” ó the work that they see as unethical for their own recruiters to do.
• Much talk about the effect of deceptive tactics on a company’s employer brand and a recruiter’s reputation.

I sincerely hope that we on the panel gave people different and interesting perspectives on these important issues. I could give you the actual opinions we had on each of the topics above, but I won’t for a simple reason: I don’t think it should be up to others to tell you the difference between right and wrong or good and bad behavior in your recruiting efforts or your organization. As David Gebler aptly pointed out, ethics involve making value decisions between positive and negative outcomes as they relate to your unique situation.

My Final Takeaways

As we speed towards an innovation-driven economy where attracting and maximizing the return on human capital is a business imperative, recruiting is assuming a much more visible and important position in most organizations. As such, this is an ideal time to rethink the core values that guide our recruiting teams’ behaviors. I applaud ERE for bringing the ethics issue to the fore, and hope that more people begin the exercise of defining their boundaries as a result. As a point of reference, I asked how many people in the 200-person audience had defined a clear set of ethical guidelines for their recruiting staff: I counted three people who raised their hands. The conversation on ethics in recruiting has clearly just begun.

Whether you recruit in San Diego, California, or Lima, Ohio, you know how important location is in recruiting. It has the potential to be your greatest asset or present your greatest challenges. In order to make a potentially life-changing decision like changing locations, candidates will look at quality of life, cost of living, and the base of other companies and future opportunities available in your area. Where you live has a huge impact on who you can recruit. In the global talent marketplace, the United States has always been seen as the land of opportunity. U.S.-based companies have been able to ride this wave to recruit the best and brightest from around the world. Our leadership position has been particularly strong in math and the sciences: With 5 percent of the world’s population, the United States employs nearly one-third of all scientists and engineers. Half of the Ph.D.’s in the United States are foreign-born. Half of Americans who have won Nobel Prizes in physics and chemistry were born abroad. We are therefore highly reliant on immigration to produce our best and brightest. Yet there is strong evidence that we are losing our lead and that global recruiting is about to get more difficult.

Is America’s Edge Slipping?

If you want a glimpse into the possible future of global recruiting, I would suggest you read two books with somewhat similar sounding names: Flight Capital: The Alarming Exodus of America’s Best and Brightest and The Flight of the Creative Class: The New Global Competition for Talent. These books are great supplements to the equally excellent The World is Flat, by Thomas Friedman, which focuses primarily on the global outsourcing trend and how technology is leveling the playing field in the global marketplace. In the first (and most recent) book, Flight Capital, author David Heenan explores how rising economies in places like China and India are resulting in “boomerang migrations,” or expatriate workers who are returning to their home countries. It stands to reason that workers would prefer to do work in their homelands, close to their families, and within more familiar environments and cultures.

Our increasing globalization and new opportunities in their native lands make this possible. According to Heenan, “on its present course, America’s nation of immigrants will become a nation of emigrants.” In particular, the book focuses on knowledge workers in math and the sciences. If we lost our edge in math and sciences, one might reason that our advantage will always be in American ingenuity and creative thinking. But even this “creative class” is at risk, as author Richard Florida argues in The Flight of the Creative Class. Somewhat controversially, he argues that other governments like Canada, Scandinavia, and New Zealand provide less repressive environments that might be more attractive to creative thinkers — and shows how the loss of even a few creative geniuses could have a significant impact.

Immigration, Emigration, and the Skills Gap

Many of us in the recruiting industry are rightly concerned about the Baby Boomers retiring and the potential for large skills shortages. For decades, immigration has not just been a source of very specialized talent; it has been a magic bullet of sorts for any skills gaps. Without serious shifts in U.S. government strategy and policy, immigration actually has the potential to be more of a problem than a solution over the next several years. Due to security concerns following 9/11, the United States has enacted the tightest immigration laws in recent times, reducing the number of H1-B visas from almost 800,000 in 2000 to approximately 80,000 in 2005. Emigration is also a very real threat, and not just with math and science experts or creative talent. The brain drain of U.S. citizens might reach all the way up to the executive suite. According to a study by the Association of Executive Search Consultants, over 50 percent of U.S. executives surveyed would relocate to China, and approximately 35 percent would go to countries like India or Russia, all of whom would be hungry for the experience these executives have building and operating successful companies here in the United States.

The Government Responds

In the President’s most recent State of the Union address, we heard about an interesting program that lays out a new workforce plan for the United States: the American Competitiveness Initiative. The proposed initiative lays a foundation for increased spending in R&D and education plans designed to help us build rather than continue to acquire our math and science workforce. The program includes:

• Increased spending and tax credits for R&D.
• Math and science education initiatives.
• Teacher training in math and science.
• A program for math and science professionals to become adjunct faculty at the high-school level.

And almost as if in response to the books mentioned above and China’s growing share of the global economy, part of the competitiveness proposal is to reform our nation’s immigration system to allow us to more easily hire highly skilled workers from around the world. But will they want to come?

A New Challenge: America’s Employer Brand

The competitiveness proposal is a great workforce planning step for our country. But the biggest challenge facing anyone in a global recruiting role is America’s employer brand. According to Flight Capital, “countries from Iceland to India are launching bold initiatives to lure top talent away from the United States.” Compounding this problem is the fact that our image in the world has slipped in recent years, as demonstrated by the Pew Global Attitudes Project. In the future, it may be much more difficult for recruiters to sell international talent on working in the United States. Our quality of life remains very high — among the highest in the world, if not the highest — yet other “Third World” economies are catching up fast. I spent a week in Malaysia several months ago, and was stunned to see the infrastructure they have built and the work they have done in attracting leading companies and investments. Countries like Taiwan, Singapore, China, Israel, and Ireland can boast of similar success stories. Meanwhile, other countries are beginning to more aggressively poach from our talent pool. The Contact Singapore program, designed to help the country poach top global talent, reports that recruiting efforts have gotten easier with recent security concerns. The Irish Development Authority is running recruitment ads in the United States, while also holding the equivalent of job fairs in locations like New York City. And countries with their own demographic challenges, like Japan, Germany, Canada, the UK, Spain, and Australia are all beginning to open up their borders to and actively seek out new immigrants.

To compete in the global marketplace for talent, you will soon have to sell the United States as a location as much as the company you work for and the jobs you have available. This will require that global recruiting teams think even more like marketers than ever before, and learn how to position the United States against other cultures and countries. It will also necessitate a more aggressive approach to global recruiting that pools the resources of less powerful individual employers and government agencies in order to counteract the aggressive tactics of other countries. Continuing to sell the employment value proposition you have established to foreign workers you have already recruited will also be of paramount concern in the years to come.