The sheer volume of potential directions to follow is confusing, daunting, and at times, just plain overwhelming. While some organizations have stuck a stick in the sand and are pushing forward with a defined approach, the majority of efforts currently underway will fail for one key reason: they rely solely upon a small handful of individuals attempting to maintain visibility in a sea of content growing exponentially.

Relying upon a social media coordinator, online brand ambassador, or a team of recruiters dedicating only a portion of their desk time to social media initiatives dooms such efforts to stumble and underperform. Such efforts produce corporate fan pages on Facebook, where the only comments ever visible are sanitized “PR” posts and boring job announcements! (I actually viewed one such page last week where the only wall post visible was a notice from the organization’s legal department advising visitors to the page not to post negative comments!)

Delivering an engaging, interactive, authentic, and personalized experience requires a scale of participation that the limited resources of the recruiting function simply cannot provide. The alternate approach, the one most likely to drive success, is an employee-centric approach that relies on your employees to build and manage relationships and the recruiting resources to coordinate, influence, and support their efforts.

The 12 Most Common Social Media Strategies

Most recruiting managers fail to think strategically when they develop their approach to social media recruiting. In fact, if you want to test someone’s depth of knowledge of social media recruiting, simply ask them to list the range of strategies that corporations can pursue. Most recruiting leaders will respond that they either don’t know enough about social media yet, or ramble off how they are adapting historical marketing efforts for delivery via social media.

As a corporate advisor, I’ve seen what a lot of organizations are up to, including initiatives already live and others currently in development. To help frame the discussion about this topic moving forward, I’d like to categorize the efforts into the following strategy categories:

Limited Scope Strategies

• The “laissez-faire” social media recruiting strategy — a do-nothing strategy where efforts are not managed or coordinated.
• Reference-checking strategy — a strategy that employs social media solely as another source of information during the reference-checking process.
• Post-and-pray strategy — a strategy that leverages social media as nothing more than another channel to broadcast employment opportunities to.
• Employer brand management strategy — a strategy that focuses on using social media to evaluate and influence the perception of the organization as an employer by distributing content about the employee experience via social media channels.
• Hybrid strategy — A hybrid strategy recognizes a need for different approaches to drive different types of activity supporting unique aspects of the organization. It uses components of nearly all strategies presented here.

Broad Scope Strategies

• Centralized social media recruiting strategy — a common strategy that employs recruiters as the sole agents of the organization and relies upon them to carry out full-spectrum activities including direct sourcing, relationship recruiting, employment marketing, employer brand assessment, and employer branding.
• The employee-centric recruiting strategy — a powerful “full spectrum” approach that exponentially increases the visibility of the organization in social media by using all employees as the agents under the direction/influence of the recruiting organization. (This strategy is the primary focus of this article.)
• The “talent community” strategy — a variation of the employee-centric strategy that has a longer-term focus on building communities and relationships based primarily on professional learning.
• Outsourced management strategy — A strategy that employs a third party such as a marketing or PR firm to manage a significant portion of the effort.

Organizational Strategies

• Banned social media strategy — a strategy that seeks to minimize the impact of social media for better or worse by blocking or severely restricting access to social media throughout the organization.
• Social media committee strategy — this strategy recognizes that where social media is concerned, the needs and wants of numerous organizational stakeholders may cross and seeks to coordinate efforts and more effectively marshal resources.
• Distributed social media strategy — a strategy that provides organizational guidelines on social media usage, but that permits units/groups within the organization to plan, develop, and execute initiatives without oversight.

Organize Your Employee “Army”

Few would argue against the fact that implementing a program to manage and increase the organization’s presence on social media is a hot topic among managers and executives. While the most advanced work is being done in customer service functions, marketing, product development, and HR leaders nearly everywhere are at the very least exploring the possibility of using this new channel of communication.

The majority of early efforts by recruiting leaders struggled to produce meaningful and measurable results, but from experimentation comes innovation and learning.

The primary driver of failure among early adopters wasn’t lack of interest or individual effort, but rather lack of scale!

Social media erupted as tools to facilitate interaction, and interaction in too many aspects of one’s life can be time consuming and exhausting! Fortunately there is an answer to this problem: don’t do it alone. Use employees to build relationships, and then take advantage of those relationships! It’s the same principle that makes employee referrals the No. 1 source of hire at most firms. Both programs rely on harnessing or leveraging other people’s time (OPT) to contribute to recruiting results. Because the ratio of employees to recruiters is extremely lopsided, using employee’s time results in a quantum increase in network size, visibility, and professional relationships that can drive future recruiting successes.

The added benefit: employees are better able to communicate in ways and on topics more valuable to their peers, which makes it easier for them to build successful relationships.

Microsoft’s industry-leading long-term community-building approach, which relies heavily on employee efforts (highlighting employee blogs, displaying ERP advertisement on employee profile pages, etc.), illustrates the direction that recruiting managers should take. Large firms like Google already rely heavily on their employees, and smaller firms have resorted to this employee-centric or employee-centered approach because they simply don’t have a significant recruiting team.

Before you waste a lot of time and effort and become frustrated, shift your recruiters away from doing most social networking and instead toward orchestrating and managing it. Organize your employees, managers, corporate alumni, and even your vendors to become an “army” of social media brand builders and recruiters.

A Close Tie-in With the Employee Referral Program Is Required

The foundation of any social media effort that is employee-centric must be a seamless tie-in with a world-class employee referral program. Without a direct connection, the majority of great prospects your employees identify will never make it into your recruiting process. Nothing frustrates your employees more than putting maximum effort into identifying a superstar who is interested in your firm and then finding out that the organization that asked for their help failed to follow up.

The handoff from employee to recruiter must be smooth and seamless so that the candidate isn’t “dropped” or doesn’t feel like they have been transferred from a caring and highly interested employee to an uncaring recruiter or recruiting process from hell.

To ensure that the back office is ready for your social media effort, audit your referral process for major flaws and ensure that social network referrals are processed in a way consistent with social network users’ expectations. The employee referral process should also be modified to allow employees to provide online profiles in lieu of traditional resumes when they’re not available. You might also add a feature that offers a small reward to network contacts who refer highly desirable names to one of your employees who are part of their network.

Up next week, I’ll discuss why recruiters cannot and should not be on the front lines of your social media army, and offer some tips on how to engage employees in your effort.

The Yankees are perennial winners (many call them a dynasty) not because of their superior equipment, IT processes, or their financial or marketing prowess, but rather their extraordinary recruiting and talent management strategy.

Discover How to Learn From Other Industries

If you are a corporate recruiter, you might think that it’s silly to learn lessons or emulate practices from professional sports, but you would be wrong. Ignoring the many valuable lessons the sports industry provides could cost your organization millions! While sports analogies are not loved by all in HR, it’s hard to find a CEO who doesn’t like them or who has not used them in their memoires.

All leading organizations strive to learn and improve by benchmarking against other organizations in and outside their industry.

The New York Yankees, like Sony, Disney, Apple, the Los Angeles Lakers, and GE (NBC), are a corporation that produces an entertainment product. They book revenue by selling a wide range of products and services that extend far beyond the playing field. As a corporation, the Yankees operate under the watchful eye of shareholders, unions, customers, and regulators.

In my experience, the key resistance factor that keeps corporate recruiting leaders from applying sports lessons is not whether they would work, but rather a lack of courage or aggressiveness.

The most common excuse offered is that the scale of recruiting solutions employed by professional sports simple doesn’t align with that possible in your typical organization. While it is true that even the smallest Fortune 500 company dwarfs the Yankees with regard to employee count, most organizations are organized into organizational units much more on par, making the application of approaches at the unit level more than feasible.

If you expect to generate a quantum increases in performance, seek out successful practices in places where few others would think to look. Then, you must have the courage to adopt some approaches that, at least initially, will make some in HR cringe.

16 Lessons That Corporate Recruiting Leaders Can Learn From the Yankees

Listed below are numerous recruiting and talent-management approaches used by perennially successful sports franchises. These ideas are relevant and have been applied by leading talent management organizations:

1. Make the business case for great recruiting — the Yankees have built the strongest business case for great recruiting anywhere! Almost everyone agrees they have an abundance of extraordinary talent in literally every position. They routinely have the highest player salary expense of any MLB team. But the team owners are willing to pay such extravagant amounts because player personnel executives have successfully made the business case demonstrating a huge ROI in attracting the very best players. Although it’s expensive to recruit and retain top talent, the Yankees have calculated that the benefits far outweigh the costs. In fact, they have learned a valuable lesson which is that the most costly mistake that a team can make is to “save money” by placing an average player in a key position.
2. Recruit top talent away from competitors — while many teams try to build their talent pool by recruiting and developing entry-level talent, the Yankees have learned the value of tracking and then recruiting away the top talent from other firms. Rather than seeking out “hidden talent,” they instead continuously identify obvious top performers on other teams and directly recruit them away (we call it poaching). Direct poaching has an added advantage in that it helps your team immediately, while simultaneously hurting your competitor.
3. Stars attract other stars — The Yankees have learned that working alongside other star players and having a significant chance at winning a championship are at least as important as money is in attracting top performers. Corporations should also focus on attracting noteworthy talent because they are a key attraction factor for top performers with many career choices. Firms should also publicly boast about their successes so that they build up their external image as a winner and an industry leader.
4. Prioritize your positions — an important lesson to learn is that all positions do not have an equal impact. In reality that means that a starting pitcher or the cleanup hitter might be five times more impactful on the team’s winning percentage than a right fielder, a first baseman, or the batboy. Corporations need to realize that if they can’t recruit the best for every position, they need to focus recruiting resources on the 20% or less of that can be classified as high-impact openings.
5. Prioritize individuals — a related lesson to learn is that top performers need to be prioritized and treated differently. Top performers might produce five times more than the average player, so as a result, they are given more playing time, are put in critical games, and sometimes they are even shifted into the most critical positions. For corporate recruiting leaders, this means that first of all they need to focus their recruiting resources on top-performing departments and managers. It also means that they must shift their best recruiters to priority candidates and also to change their recruiting approach and temperament dramatically when they encounter a star candidate. It’s a mistake for corporate HR to even attempt to treat all employees the same.
6. Identify their decision criteria — in sports, the relative bargaining power of top talent is immense. If you don’t realize upfront that the power has shifted toward them, you won’t win many recruiting battles. The Yankees have learned that it’s not enough to simply plan to attract the very best, you need to institute a sales approach where you identify and then meet each of the factors that cause the top player to accept a job. It’s equally important for corporations to stop acting arrogantly, as if they possess all of the power in the hiring relationship. At least for talent that is in high demand, they need to realize that the candidate is the one who holds most of the power. This requires corporations to develop a more candidate-friendly recruiting experience and in addition, a formal process to identify and then to completely meet each one of a top performer’s job acceptance criteria.
7. Global recruiting is required — if you look at the significant percentage of Yankee players who come from Japan, the Caribbean, and Latin and South America, you would realize almost immediately that it’s a mistake to recruit exclusively in your backyard. Corporate recruiting leaders must learn they can’t just recruit locally; maybe as much as 50% of your talent must be global.
8. Recruit team players — over the long run, you can not win unless everyone works together. In addition to raw performance, every individual must demonstrate the capability of working alongside with and developing others on the team.
9. Hire them, so your competitor can’t — rather than hiring just enough to fill your needs, follow the Yankee approach, which is to occasionally hire top talent just to prevent your competitors from having it. The goal is to get an “unfair” talent market share.
10. Recruit rather than train — no one would even attempt to argue that Alex Rodriguez became a star as a result of classroom training offered by the Yankees. In fact, rather than taking the risky approach of relying on training to develop skills, the Yankees almost exclusively recruits individuals who are already fully trained, proven performers who only need minimal guidance and coaching in order to excel.
11. Performance over loyalty — the Yankees are notorious for attracting the best, but they are equally famous for heartlessly dropping those who fail to live up to the required performance levels. The best organizations make it clear to all that they put current performance first and thus they use a what-have-you-done-for-me-lately? approach (in lieu of rewarding loyalty or tenure). Assume upfront that a certain percentage of new hires and employees will fail to produce. This approach requires that you have a quality of hire measure and then a strong performance tracking system. In addition, have the courage to admit when you’ve made a hiring mistake so that you can quickly swap your mistakes for new outstanding recruits.
12. Lose your tolerance for hiring mistakes — if there is a differentiator between sports recruiting and corporate recruiting, it would be the fact that in sports, every talent decision is highly visible. Unlike corporations, if you make a significant recruiting or retention mistake, it will be made visible and amplified by countless newspaper headlines, sports talk shows, and bloggers. The visibility of their personnel errors forces them to develop recruiting processes that are significantly more precise and error-free than their corporate counterparts. Becoming more precise, more data-driven, and recognizing failures early on are also excellent goals for corporate recruiting leaders.
13. Continuous workforce planning is needed — even before the Yankees won the World Series this year, they already began the process of workforce planning for next year. The process includes internally identifying surplus or duplicate talent, potential voluntary turnover, and individuals whose performance is declining. External planning requires identifying and courting desirable external talent at other teams for vacancies or to swap for current players in order to improve the overall performance at a particular position.
14. Continuous recruiting is required — even though the down economy has affected revenues at the Yankees, the recruiting effort hasn’t been impacted at all. The lesson to be learned is that recruiting needs to be a continuous process that is independent of the short-term revenue fluctuations. Organizations must adopt a long-term funding model that allows an increase in recruiting when top quality talent is available. The recruiting process for key jobs must also start a year or two ahead of when you actually must-have the talent in order to build relationships and to more accurately assess the talent. If top talent unexpectedly becomes available, you must have a “speed hiring” process so that you can hire it immediately, even if you don’t have an open position.
15. It’s not the location — many corporations argue that they can’t recruit the best because of their physical location. Yes, the Yankees are located in New York, but so are the New York Mets, a team that stinks almost every year. In fact, both Pittsburgh and Philadelphia won sports championships last year in spite of not being located in a most-desirable city. The key lesson is that if you have great players, great managers, and a great product, you can attract the best to any location.
16. Great managers are also needed — the Yankees are equally as willing to recruit great managers because they realize that top talent can only get you close to a championship. They realize that if you want to win continuously, you need a great manager to integrate and manage the egos that many top performers develop.

Final Thoughts

Have you ever noticed that in the sports world, recruiters are treated as heroes? They have huge budgets, and their managers spend a great deal of time and resources on the continuous identification and recruiting of top talent. Everyone on the team knows who recruited Michael Jordan, Kobe Bryant, or A-Rod.

In sharp contrast, the typical corporate recruiter is rarely respected and woefully under-resourced.

I hope that the recent recession has taught every recruiter that getting a significant increase in budget, or respect, will require that you dramatically improve both your business case and your observable and measurable business impact.

You can’t reasonably expect more than a 5% to 10% improvement if you limit your benchmarking and copying to the firms that are similar to yourself. A dramatic improvement in results might require you to examine practices that are dramatically different than your current ones. In short, if you want to have a “major-league impact” you might need to study the recruiting practices of the major leagues!

It’s hard to argue against the statement that social networking (i.e., Facebook, Twitter, YouTube) is an extremely hot topic in business. But I have yet to find a single CFO or senior executive willing to fully fund a comprehensive social network recruiting strategy based merely on the fact that it’s a hot concept.

Even when budget is made available, most organizations need to develop measures to help direct spending into the right efforts that will provide them with the highest recruiting impact and ROI. There is no escaping it: making a compelling business case must become a priority for social network recruiting champions.

In this article, I’ll provide an outline of the four basic business case steps covering how to secure funding during these tight economic times.

Business Case Step #1: Identify the Potential Benefits of Social Network Recruiting

Provide targeted executives with a list of potential benefits and then simply have them select the ones that (if proven) would be compelling enough to positively influence their decision. Have them eliminate benefits that, whether true or not, wouldn’t influence their decision.

With that guidance in hand, design a process that focuses on proving only those benefits that were selected as highly compelling.

The following is a list of 20 potential benefits and business impacts that can result from effective social network recruiting. They are grouped based on their general level of impact on cynical executives:

Highly Compelling Benefits

• Hire quality — the program may result in hires who perform better on the job and have higher retention rates.
• Candidate quality — those who frequently use social networks may be the highly desirable early adopter; this source may identify higher-quality candidates who can then be presented to hiring managers (including those who are more technically savvy and more innovative). Note: even the simple act of listing the primary source (that generated the resume) on the top corner of every resume will, over time, educate hiring managers and eventually lead them to demand that recruiting shift their emphasis toward the sources that appear most frequently on top of the resumes that end up on a hiring manager’s short list.
• ROI — the dollar value of the program’s benefits may far exceed its cost, and the resulting ROI may be significantly higher than other recruiting programs.
• Vacancy days — because of the high usage rates and the short response times on some social network communications channels, revenue-generating, and key positions may be filled faster, resulting in fewer costly vacancy days in key positions.
• Higher offer acceptance rates — using social networks to attract and communicate with candidates may result in higher offer acceptance rates among finalists.
• Hidden candidates — it may identify qualified candidates who cannot be found or successfully messaged using other sources.

Often compelling benefits

• Employer brand — using social networks may increase your visibility and may significantly improve your “we get it” leading-edge employer brand image among targeted prospects (even if the image-building it doesn’t result in immediate applications).
• College impact — because of the high social network usage rates among college students, it may directly impact the number and the quality of college hire and entry-level candidates.
• Communications responsiveness — because there is less spam and in most cases you must be invited before you can send a message, using social networks to communicate may result in higher response rates and/or in more immediate responses when you send messages to prospects and candidates.
• Message impact — messages sent over social media channels may be perceived by the receiver as being more authentic or have a higher level of credibility and believability than traditional corporate mechanisms. The relatively low cost of sending messages over social networks may also allow your firm to increase the number of messages that it can afford to send. Together, these two factors may result in more effective messages that directly increase applications.
• Job visibility — using social networking sources may ensure that your job openings will be seen and read by a larger number of qualified candidates.
• Candidate diversity — it may provide your firm with a higher percentage of qualified diverse candidates in managerial and professional jobs.
• Global candidates — it may provide your firm with a high number of qualified candidates who reside outside of your headquarter’s country.
• Cross-fertilization — the methods, tools, and approaches that are developed using social networks for recruiting may be directly transferred to other business functions like marketing, customer service, product development, etc. So these functions may find that their social networking results will be directly and measurably improved as a result of the collaboration.

Occasionally compelling benefits

• Candidate volume — social networking sources may provide your firm with a high volume of qualified candidates.
• Lower dropout rates — you must build relationships with your “friends” in order to maintain them as part of your social network. Fortunately, social networks make it easy to build relationships quickly. Once built, it’s not surprising that this relationship may result in more applications, but it may also lower the candidate dropout rate throughout the hiring process.
• Competitive advantage — using social networks may provide your firm with a significant competitive advantage over other talent competitors. The net result may be that you can win more head-to-head battles with competitors over top talent.
• Benchmarking and learning — the time that your employees spend building relationships that may lead to recruiting successful candidates may also help gather benchmark information and improve employee learning.
• Increase sales — because using social networks directly improves your visibility and your firm’s “we get it” image, it may also influence the sales of your consumer products among those that equate product quality and being a desirable employer.
• Cost per hire — the recruiting-related transactional costs may be lower compared to other sources.

Business Case Step # 2: Identify And Counter Additional Resistance Issues

Merely convincing decision-makers that the program has significant benefits isn’t enough on its own to get funding. Unfortunately, almost all executives have some often-powerful preconceived issues that must be successfully countered. In the case of using social networks, these roadblocks almost always include issues related to:

• Employees “wasting” numerous work hours on social networks.
• Protecting the release of company information and secrets.
• Maintaining a single corporate message when you can’t control what your employees say on the Internet.
• Privacy-related issues.

At the very least, demonstrate to the COO, CFO, CIO, PR, and the corporate counsel that their potential concerns are overblown.

Start by showing that other benchmark firms that are allowing their employees and recruiters to use social networks are realizing benefits far greater than the potential costs. Next, present external research data that shows how employees use social networks for professional purposes. While studies that determine what percentage of social network traffic is professionally versus personally relevant are rare, informal studies among organizations piloting looser controls on social network activity found between 40%-65% of activity posted during work hours was professional in nature; the majority either requesting or sharing information from/with peers.

Additionally, show skeptical managers that you have developed a formal process for identifying, countering, and burying undesirable information on the Internet. Educate them that, in a connected world, they have already lost complete control of what is said about their firm, and that strategies that involve doing nothing are tantamount to giving up entirely.

Show the naysayers examples of what’s already out there. Show them how having numerous active employees on social network sites, talking positively, will directly counter the existing negative information and actually increase the number of positive messages that people can easily access.

Business Case Step # 3: Use Logical Arguments to Gain Agreement on Some of the Remaining Benefits

After narrowing the list of potential benefits to the most impactful ones, make every attempt to get executives to accept the likelihood of some of the benefits based exclusively on logical arguments. Whether you write a report or provide a PowerPoint presentation, minimize the number of benefits you have to prove with hard data.

With social network recruiting, executives might accept your professional judgment on benefits like its effectiveness on college recruiting; the value of cross-fertilization; the availability of global candidates; and the employer branding impacts.

Business Case Step # 4 – Prove the Remaining Benefits with Data

Out of the 20 possible benefits that you started with, you are likely to have to prove the actual impact of at least five of them with data. I will outline each of the five data collection methods in the remaining bullet points. Please note that the methods are listed from the least convincing to the most convincing data collection method.

Using existing data

• Provide benchmark data — in some cases, executives will agree that a program will likely provide the level of expected benefits based on external research data. The data might come from consulting firms or industry associations. However, the most convincing research data generally comes from either direct competitors or from firms that your executives admire. The goal is to convince executives that if, for example, using social networks at IBM reduced time to fill by 38%, a similar result could be expected at your firm.
• Look for existing internal efforts — on occasion, especially in large firms, you will find that some group, facility, or region has already tried your new approach without corporate approval or knowledge. In the case of social networks, you would attempt to identify and then use the results produced by any “rogue” group as an indication of the benefits or results that a company-wide effort might obtain. Because the data is internal, it is more likely to be accepted than external benchmarking data.

Limited data collection required

• Use your own employees as a baseline — assume you are trying to prove that social networks provide the capability of identifying “hidden candidates” who could be found in other sources. Start with a list of your own top performers in a particular job and then search traditional sources like job boards, attendees at professional conferences, and Google searchers to see what percentage can be located. You then do a search of their names on social network sites. By comparing the two results, you can find out whether your best employees who are “hidden” or not available on traditional sources can in fact be found on social network sites. You can use a similar approach to identify whether social networks contain more diverse candidates. You can use a third-party to see if messages to your own employees have a better response rate if they are sent via social network channels (compared to traditional voice or email).

Providing new data

• Run a small pilot sample — in order to gather performance data to prove that a program produces certain benefits or results, it’s sometimes necessary to run a small pilot project. Pilot projects are widely used in other business areas and they have a high rate of credibility. In the case of social networks, you could suddenly allow a single recruiter to begin using social network tools and you would then attempt to identify any improvement in their performance (comparing their baseline performance to their performance after using social networking tools). You can also run a pilot on a single job to see if the baseline performance on key metrics improves. If you have the resources, you can run a pilot in a complete business unit or facility and then compare the before and after results. Unfortunately running pilot projects may require some level of approval and it will cost some money (but much less than a full-scale rollout).
• Use a split sample — the most convincing form of proof that doesn’t require a companywide implementation is to use a split sample. It’s the same approach that is used by drug companies to convince regulators that their product is effective. For example, say you wanted to prove that social network recruiting produced higher-performing hires than traditional recruiting methods. You could start by identifying a team of recruiters who recruited exclusively for a single job family. You would randomly separate this small team of recruiters into two groups. Nothing would change for the control group, while the second group from the team would be trained how to use social network recruiting tools. They would be required to use social network recruiting as a major segment of their recruiting for all of their jobs over a six-month period. The initial on-the-job performance of their new hires after three and six months would be compared to the performance of the new hires from the recruiters in the control group. If the performance of the social network recruiter group was significantly better, you could say with a high level of credibility that using social networks improves the quality of hire. Continuing to measure the performance differential over time would provide additional data to support the program’s ability to improve the quality of hire.

Final Thoughts

Managers of recruiting functions seem to struggle continuously to obtain more budget and resources.

Most, unfortunately, rely too heavily on building relationships in order to maintain or increase their funding levels. If you’re tired of the up-and-down funding cycle, maybe it’s time to master the science of building an effective business case. It’s sad that recruiting is still struggling to prove what we already intuitively know (i.e., that recruiting top talent into key jobs has a huge dollar impact).

We have one of the largest impacts and ROIs of any function in the corporation, but we fail miserably at presenting it in such a way that a CFO would find it believable.

For a minute, assume the role of a senior executive who has just been handed a business scorecard containing performance numbers in five critical business areas. After looking at the numbers below, would the data make you cringe?

• 70% of users are dissatisfied with the process.
• 50% of customers regret their buying decision.
• 46% turnover among new buyers.
• 46% failure rate of process output selections.
• A mere 19% are unequivocal successes (less than 1:5).

It’s Time to Face the Numbers and Facts…

Almost any senior executive would be alarmed upon learning that users were dissatisfied, failure rates approached 50%, and a significant percentage of your customers regretted their decisions.

Obviously, if the numbers listed above came from an important profit-impact function (supply chain, finance, customer satisfaction), everyone would be screaming for a complete rethinking of the entire process.

Unfortunately, the above metrics represent failure in the recruiting and retention elements of the talent management function. I have encountered no other business function that more completely avoids defining and measuring process failure than talent management.

Selection decisions are often about as accurate as a coin flip.

–The Recruiting Roundtable

Talent Management Failure Metrics Are In*

Here are more details on the five numbers provided above.

This data can be taken together as a clear indicator that we might have numerous failures in talent management:

• 70% dissatisfied — 70% of the external customers (applicants) and 28% of the internal customers (hiring managers) indicate they are dissatisfied with the hiring process (Source: Staffing.org).
• 50% customer regret — 50% of the processes users (both managers and new hires) later regret their “buying” decision (Source: The Recruiting Roundtable). In addition, 25% of new hires later regret taking their new job within one year (Source: Challenger, Gray)
• 46% turnover — 46% of new hires leave their jobs within the first year (Source: eBullpen, LLC) and 50% of current employees are actively seeking or are planning to seek a new job (Source: Deloitte).
• 46% failure rate — 46% of U.S. new hires must be classified as failures within their first 18 months (fired, pressured to quit, required disciplinary action, etc.) (Source: Leadership IQ). In addition, 58% of the highest-priority hires, new executives hired from the outside, fail in their new position within 18 months (Source: Michael Watkins).
• Only a 19% success rate — only one out of five of the process output can be classified as unequivocal successes (Source: Leadership IQ).

Some additional data points to consider include:

• 66% regret hiring decisions — Nearly two-thirds of hiring managers come to regret their interview-based hiring decisions (Source: DDI)
• 50% new executive turnover — nearly half of new executive hires quit or are fired within the first 18 months at a new employer (Source: Corporate Leadership Council).
• Newly promoted executives don’t do much better (40% of newly promoted managers and executives fail within 18 months of starting a new job (Source: Manchester, Inc).
• Less than 50% are qualified — a majority of managers surveyed (59%) believe that less than half of all candidates they interviewed were qualified (Source: eBullpen, LLC).
• 65% lie on resumes — the key data source that we rely on to source and narrow down applicants contains untrue information more than half the time (Source: The Risk Advisory Group )
• Resume-sorting failures — Of all the “perfect resumes” sent out by mystery shopper candidates, only 12% were actually scheduled for interviews (Source: Hodes’ Healthcare).
• Bottom performers produce less — hiring and retaining below or even average performers have real opportunity costs because top performers can increase productivity, revenue, and profit by between 40% and 67% over average performers (Source: McKinsey & Co.).

* Note: I have purposely chosen publicly available sources that cite these research results. To find the material, you may use a simple Google search, but please don’t contact me for detailed references.

The samples in each case varied, but what if they were an indication of how poorly your organization’s talent-management function was performing?

Only 30% of organizations measure quality of hire, and only a handful specifically define and measure recruiting process failure. It’s time to adopt a business process management approach; start to measure successes and failures in the same way that other business processes already do.

Plan B, of course, is to ignore this warning and to continue to assume that existing processes are either error-free or on par with the Six Sigma standards of production, quality control, and customer service.

My Goal Is to Get You to Pay Attention

You can conjure up arguments about the validity of the research done by outside consulting firms, but that’s not the point. The key learning is to take a moment and ask yourself these key questions:

1. Have you clearly defined what “hiring failure” is? What failure rate is acceptable?
2. Can a process be properly designed so that so many that are involved in it do not have remorse or regrets about their decisions?
3. Is it ever acceptable to have a process where the dissatisfaction rates exceed 25%?
4. Has the time finally come where you bite the bullet and calculate the quality of hire, failure rates, and the ROI of your function?
5. Is it time to move beyond simply calculating output metrics (i.e., 22% are dissatisfied) and in addition to begin to use metrics to identify why your failures occur?

After viewing these research numbers, I hope you’ll agree it is time to rethink most talent management processes and metrics.

Do not concern yourself with the accuracy of any particular external study; their primary value is simply to stimulate you to do your own research within your own firm to find out if these problems and failures identified by others are currently occurring.

Action Steps to Consider

There are a handful of firms (DaVita quickly comes to mind) that have adopted a business process approach to their recruiting function where they clearly define and target failure.

If you’re interested in adopting this approach, here are some action steps to consider.

• Clearly define failure — include top candidates you failed to identify or attract; top candidates who dropped out early; the quality of candidates you didn’t hire; offer turndowns; good hires but bad initial placements; poor-performing new hires; legal costs; delayed time to initial productivity; dissatisfied or disillusioned candidates; frustrated hiring managers; and early turnover among new hires.
• Adopt a business process management approach — work with experts in supply chain, CRM, Six Sigma, etc., to learn about business process improvement tools and approaches.
• Shift to data-based decision-making — shift away from the approach where you assume that things are working; instead, rely on hard data to meet decisions and to continually improve every key process.
• Mystery shoppers — use mystery shoppers to identify process problems.
• Change your assessment approach — a significant portion of recruiting process errors occur because of an over-reliance on subjective tools like interviewing. A superior approach is to increase the use of validated skill assessment tools and to ask candidates to solve real problems.
• Conduct failure analysis — whenever you have a major process failure, use a failure analysis/root-cause identification approach to move beyond symptoms and to identify the real underlying causes of the failure.
• Assume failure — even when the process is made more objective, there will still be significant number of failures. Accept that fact and develop a process that allows you to identify those failures early and to minimize your losses.
• Calculate the cost of each error — work with the CFO’s office to calculate the costs and the business impacts of all major errors.
• Assume that all sub- processes are suspect — assume that bad hiring decisions are a result of poor design features in a multitude of sub-processes including job descriptions, resume sorting, interviews, reference checking, hiring manager monitoring, and onboarding.

Final Thoughts

Throughout my career, whenever I have had the opportunity, I ask recruiting and talent management leaders a simple, straightforward question:

If you hired 100 people, what percentage would turn out to be failures?

Not surprisingly, 99% of the time all I get in return is a blank look. In direct contrast, if I ask the same question on failure rates to those who lead other business functions like supply chain, production, sales, customer service center, etc., I get an immediate numerical response coupled with the costs associated with each increased percentage point of errors. It is my hope that the data referenced in this article will cause you to increase your focus on identifying failures and failure rates in each of your major sub-processes.

Despite many successes, it’s time to admit that a major employer branding principle is no longer true: that corporations can own or control their employer brand image.

The premise was that corporations could proactively put together a plan to win awards as excellent places to work, secure mention in news pieces and editorials, participate in case studies, and be talked about at industry events. Because corporations were coordinating nearly all of the information that made them visible, it was possible to heavily influence how they were perceived.

It was a practice that made firms like Google, Starbucks, GE, IBM, Microsoft, and HP famous as great places to work. However, that was then and this is now.

While it is still possible to heavily influence perception with well-managed efforts, significant growth in social media, peer-to-peer content publishing, and online rating services have shifted a majority of the power away from the corporate employer brand manager to the masses. The shift in power renders all but the most strategic and well-executed efforts virtually ineffective.

To those who actively engage and publish their story, their perception is reality, even if the experiences that led them to their perception are not common. Their points of view are often emotionally charged, personal, and therefore, significantly more trusted as fact by those you need to influence than corporate, generic dribble.

Odds are, the people most influencing your employer brand are people you have never met.

Other People Now Own Your Employer Brand Image

Control provides comfort to senior talent management executives, and for years, they have been comfortable. No matter how much the employee experience differed from the overly positive perspective they sold to candidates and organizational stakeholders, they could get away with pushing out their message.

While many product brand marketers learned long ago that if the experience with the product didn’t match the brand positioning, consumers would revolt, few in HR were paying attention. Many HR leaders may ignore or discount the facts, but the truth is that a fundamental shift has occurred, and like it or not, the years of putting forward a brand identity not tied to reality are over. Some organizations have been successful in silencing organizational critics through threat of legal action, but the majority of attempts backfire, ultimately making the criticisms even more visible.

The New Owners of Employer Brands

The new owners are a complicated mix of individuals who use a variety of communication channels to influence your brand without your knowledge, consent, or guidance. The array of contributors grows more complex daily, and the most prominent groups of brand influencers include:

• Bloggers – blogs have been around for quite some time, and while it used to hold true that only 1:100 people active online were contributing original content, a vast array of new online services has significantly reduced that ratio. Today, thousands of independent-minded individuals are posting comments about their day at work, their boss from hell, the idiot that just got hired, the stupidity of HR actions, the lunacy of senior leadership, and all those little liability secrets corporate security would like to keep buried. They communicate without fear and without purpose. Psychological studies have shown that we are nearly three times more likely to consume negative information than positive information (there is a reason the nightly news focuses on the negative), which means that we are significantly more likely to share the bad stories versus the good ones. We are also prone to exaggeration and sensationalizing, but rarely does that fact get considered when folks are reading peer-produced commentary about life at XYZ Corp.
• Social media users – Social media isn’t a regional thing, it isn’t an economic thing, and it isn’t a political thing. It is, however, a technology concept that is enabling a fundamental shift in how people learn and communicate. From sites like Facebook and MySpace in the United States to QZone in China or Hyves in the Netherlands, millions of people are sharing the details of their daily lives with friends, family, coworkers, and virtual strangers. In minutes, users can spread facts, rumors, pictures, or innuendos to thousands and thousands of individuals around the world. Negative videos like “Comcast sucks” that would have in the past been seen by only a handful of close friends are now seen by millions. Social media users can exert phenomenal pressure by using the grapevine to highlight stories many organizations would rather people not hear about.
• People active on Twitter – Twitter deserves special attention among the social media outlets because it is so instantaneous. Just as political events in Iran were instantly Tweeted about, so are the negative experiences of your employees, and even your customers. Individuals being laid off can now provide a “blow-by-blow” account of the badly handled termination process and share their pain instantly with thousands.
• Texters on mobile phones – these individuals utilize this omnipresent 24/7 channel to both receive and send news about your firm, its employees, and your practices.
• Commercial websites – there are numerous “what your employees are saying” sites like Vault, the forums at Indeed, or glassdoor.com, that specialize in sharing messages about what it’s like to work at a firm with individuals considering employment. While most make some attempt to validate that the comment contributors have worked or currently work for the organizations in questions, not all do. Prominent firms like Coca Cola, Best Buy, and Starbucks have been targeted by unfriendly “anti-firm” websites that exist merely to spread a combination of real, half-truths, and untruths about the firms.
• Industry and profession-specific forums – current employees, former employees, investors, and individuals who have merely read about your firm can post questions about what it’s like to work at your firm (or answer them) on numerous and quite active professional association website forums or independent listservers.
• Internet groups – Google, Yahoo!, Facebook, Twitter, and LinkedIn allow individuals with similar interests to form groups that can help to connect individuals who share common interests and likes/dislikes about your firm.
• Internet show hosts – there are numerous Internet voice and video casts (some associated with traditional media outlets and others that are just independent). These shows frequently include interviews with individuals who, without your knowledge or permission, say both good and bad things about what it’s like to work at your firm. Videoblogger and avid social network user Philip DeFranco demonstrated the power of the approach to take on even the most powerful litigation-bound employer, Wal-Mart, in response to fine print in Wal-Mart’s self-funded insurance plan that allows the employer to cease damage awards received by plan participants.
• Social bookmarking service users – individuals who tag a story with a “Digg” or related online bookmark can proactively increase the visibility of any negative story, whether you like it or not.
• Search engine managers – these individuals differ in that they probably don’t have a particular bias toward or against business or any particular firm; however, the design of search algorithms influence what type of messages about your firm that others can readily see.

Individuals who are likely to be the most active in shaping your employer brand on these communications channels include:

• Current employees – hundreds or even thousands of your employees who sometimes innocently and sometimes purposely post Tweets or wall postings provide insight into what it’s like to work at your firm. Even something as innocuous as a LinkedIn profile might lead some to make assumptions about your firm as an employer.
• Former employees – you may have thought they liked you, but what they say after they leave is more likely the reality. From disgruntled alumni to employees recently laid off, the information collective is alive with former employees recounting their experience.
• Vendors – those current and former vendors who have had both a positive and negative business relationship with your firm can now easily spread their perceptions and experiences over the Internet to anyone that will listen.
• Anti-business types – individuals who are looking for opportunities to blame corporations for a variety of economic and environmental problems are quite active on the Internet. Some are actually quite effective in not just spreading Internet messages but also in creating mass letter-writing campaigns and even actual face-to-face meetings or protests.

Peer-Produced Content Is More Credible

If you were to fact-check most blogs, Tweets, or YouTube videos, most would be considered fallacious. Yet survey after survey shows that most individuals in general (and net-generation individuals in particular) believe peer-produced content over traditional news or print media content.

You can bemoan this fact all you want, but statements on your corporate website, in your employment ads, or in press releases will almost always be viewed as less credible than a comment from a blogger who is passing along an innuendo that might have no basis in fact.

Messages from Others Are Extremely Hard to Counter

As Internet users become more prolific, the ability of corporations to monitor and respond to every channel is significantly diminished. If several hundred people outside the organization are producing content, like it or not, there is little your small team can do to match that scale (short of building a brand army of employees inside the organization to push positive commentary).

Responding to negative commentary online isn’t a good idea, as your response makes the original content both more visible and more charged.

Final Thoughts

Given the bleak picture and the almost daily erosion of control over your brand image, you might consider just giving up, but I urge you not to make that mistake.

While you no longer control your employer brand, you can become more aware of your actual brand — especially the negative comments being posted about your firm. Learn to use tools like search engine alerts, blog search sites, and Twitter archive searches. Use search engine optimization techniques to ensure the content you want to be most visible becomes most visible, and work to hide negative comments.

Smart brand managers can use employees who are active on the Internet to increase the number of positive brand messengers. Develop plans to influence key opinion leaders by making more authentic and candid (read: less perfect) stories and examples available to them. I’ll cover the approaches you can use to proactively influence your brand in coming articles.

If you have corporate experience operating an employment branding function, I solicit your additions on this loss of brand control topic. Also, if you have questions you would like answered on corporate employer branding, you are encouraged to post them in response to this article.

In many organizations, the subject of prioritizing positions and people is a highly political one. While many accept that certain roles may exert greater impact on the organization, treating people in those roles differently is a challenging and often avoided activity.

If your organization is looking for truly strategic HR, delivering highly targeted or personalized retention solutions is essential.

Category III: Targeted or Personalized Approaches

This last category, in contrast to the all-employee approach, focuses retention efforts on high-priority individuals and jobs. Once prioritized, it then personalizes or customizes treatment to fit the individual needs of the targeted employee. The primary success measures for this category are turnover rates among targeted individuals and the average time-to-fill high-priority roles voluntarily vacated.

This category of retention strategies often has the highest ROI because it allocates manager time and retention resources to only a small percentage of employees.

Potential Problems with “Targeted” Strategies

Treating all employees the same is an approach that quells the masses but upsets top performers and key innovators who routinely deliver elevated contributions.

Historically, many organizations have opted to upset as few as possible, settling for highly stable organizations versus highly productive ones. Highly targeted strategies will reduce turnover among the targeted group but may actually cause momentary spikes in turnover among bottom and average performers, but is that a bad thing?

15) Regional customization strategy

• Goals of the strategy – improve retention rates throughout dispersed organizations by varying retention approaches based on the unique problems and needs of each region.
• Prioritization process – regions with high turnover rates and those with unique turnover causes.
• Identifying turnover causes – relies on local employee surveys, local exit interviews, and manager experience to identify local turnover causes.
• Treatments for countering turnover causes – offerings depend on which levers work best in each region. However, best practices and common problems are shared across regions.
• Benefits/weaknesses – because turnover rates vary significantly in different countries and regions, resources and treatments are targeted for maximum impact. Problems occur in organizations that prefer headquarter control, have weak metrics, and a one-size-fits-all management strategy.

16) Personalized retention offerings to prioritized employees

• Goals of the strategy – this strategy has the highest potential ROI of all strategies because it uses fewer resources and concentrates them where they can have the highest impact. After prioritizing retention targets, this strategy then personalizes retention treatments to meet or exceed the individual needs of targeted employees.
• Prioritization process – a corporate-wide prioritization effort is undertaken to determine which individuals would hurt the firm the most financially by leaving (i.e., top performers, innovators, those who occupy mission-critical roles, those who could significantly help competitors).
• Identifying turnover causes – because only a smaller percentage of your employee population is targeted, prioritized individuals can be interviewed or surveyed before they even consider leaving to identify what frustrates and motivates them. Should a targeted individual quit, a delayed but more accurate post-exit interview can be used for this small group to identify the real reasons for their leaving.
• Treatments for countering turnover causes – prioritized employees are surveyed to determine what is possible within the firm: what they would want more or less of to be more productive and less likely to leave. Treatments could include coaching, mentors, greater compensation, and stretch assignments for skill development.
• Benefits/weaknesses – focusing retention efforts on high-priority employees allows limited resources to be targeted and to maximize their impact. The process of prioritizing and identifying individual retention issues and treatments requires some HR time and expertise. Prioritizing and its associated “special treatment” of targeted individuals may also create some us-vs.-them animosity.

17) Flextime/flexplace strategy

• Goals of the strategy – increases retention rates through flextime and remote work with a significant impact on both retention and productivity.
• Prioritization process – key employees are identified and those in jobs amenable to flexible work are offered flexible work options with metrics for tracking their productivity.
• Identifying turnover causes – relies on interviewing or surveying targeted employees to identify those who find this flex option a positive retention factor.
• Treatments for countering turnover causes – work offerings include flexible scheduling of work hours and location up to 100% remote work.
• Benefits/weaknesses – because most firms don’t offer flexible options, key people are less likely to consider moving to other firms without them. The flexibility can reduce commute stress and costs, strengthen the family, reduce the firm’s real estate costs, and in addition, increase productivity (firms like Best Buy have realized up to 35% more productivity). Managing remote workers requires effective flex-work processes and managers who can manage their workers without needing to physically watch over them. Not all workers find this option desirable.

Less Frequently Used Strategies

Although not as widely used, these targeted strategies are among the most powerful:

• Free-time strategy – made famous by Google’s 20% Time, it provides employees in designated job families the opportunity to select their own projects during a percentage of the work week. In addition to retention, it can also have productivity and innovation impacts.
• Challenge/exposure strategy – this approach increases the opportunities for targeted employees to be challenged with exciting stretch projects and rotations. Employees interested in increasing their exposure in front of executives are also provided with an exposure plan to increase their visibility.
• Right job placement – the most restrictive of all strategies, it focuses on a handful of high-value employees. Each of these individuals is continually placed in their ideal job with an ideal manager, level of innovation, teammates, motivators, etc.
• Show them their impact – this education strategy focuses on improving retention rates of key employees who are unaware of the significant impacts of their work. It proactively “walks them downstream” in order to see the impact of their work by meeting and interacting with users and customers.
• Boomerang strategy – takes a long-term view of employment by assuming that you will lose some top employees. It sets a goal at the time of departure to ensure that employees leave happy. Post exit, the manager and the recruiting function maintain a relationship with key employees and then attempt, over time, to recruit them back to the firm.
• Diversity tailoring – emphasizes the tailoring of retention efforts to the unique needs of your diverse employee population.

Final Thoughts

Whether you believe that an economic recovery is already occurring, just around the corner, or off in the distance, you can not disagree that top talent will always have options. Focusing on retaining capable talent is a better alternative than suffering through a vacancy and spending resources to replace someone you could have kept.

The longer organizations postpone formalizing a retention strategy and adequately resourcing it to drive results, the greater the chance they will lose valuable resources.

It is my hope that by taking a step back and by viewing this complete list of potential retention strategies, you can better see the limitations of some strategies and realize greater opportunities for the future, when turnover rates explode.

This is true because retention is not yet a distinct discipline, and because most retention managers and consultants laser-focus on their favored approach.

In order to provide you with a big-picture view of the available strategies, I’ve used my extensive experience and research in retention to compile a comprehensive list. It provides a brief overview of each of the major retention strategies that corporate leaders can employ.

Classifying Strategies Based On Their Primary Retention Lever

Retention strategies are best classified based on the primary lever (or treatment) that the firm uses to motivate employees to stay (the other option is to classify them by the causes of turnover that the strategy is trying to counter). Typical retention levers include pay, benefits, engagement drivers, promotions, and development actions.

Individual levers can be combined into thousands of situation-specific solutions. The following list of strategies has been separated into three broad classifications: laissez-faire, all-employee, and targeted approaches.

Category I: Laissez-faire Approaches

This group contains decentralized, do-nothing retention strategies. The primary success measures impacted by this category are departmental turnover rates and average time-to-fill for positions vacated voluntarily.

1) Individual Managers Own Retention

• Goals of the strategy – the goal is to get the manager (who knows the employee best) to “own” the retention process and to select the best approach for each unique situation.
• Prioritization process – it is left up to the individual manager but most do not prioritize.
• Identifying turnover causes – it relies on employee self reporting and exit interviews.
• Treatments for countering turnover causes – vary with the individual manager but exclude the use of corporate-controlled approaches like increasing benefits, promotions, and across-the-board salary increases.
• Benefits / weaknesses of the strategy – giving managers ownership of the retention process means that they will likely pay more attention to it. Unfortunately, managers are not retention experts, so they will likely learn by trial and error. Managers will also frequently rely on their emotions rather than more effective data-based approaches.

2) React with a counteroffer or a retention bonus – this strategy involves waiting until employees announce that they’re leaving and countering any outside offers that can reasonably be matched. Incidentally, if you don’t also fix what is wrong with the job, it is unlikely that a counteroffer or a retention bonus will work long term.

3) Rely on effective recruiting – under this strategy, no formal action is taken to reduce turnover. Instead organizations focus on developing excellent employer branding, recruiting, and talent pool processes that provide talent on demand.

4) Do nothing – this strategy, by far the most common, starts with the assumption that turnover is normal, and involves taking no organized action.

Category II: All-Employee Strategies

This group contains the most commonly used formal strategies. Their popularity is largely driven by ease of implementation. It is assumed that the same-exact causes of turnover are shared by all employees, and that all employees must be treated equally. The primary success measures under this category are average turnover rate and time-to-fill for positions vacated voluntarily.

Yet with rare exception, blanket treatments fail miserably.

Not everyone with a fever has the flu, and treating everyone as if they do will result in some ill people dying.

Blanket treatments are expensive and erroneously propose that employees in general leave for the same reasons, regardless of the employees’ performance rating, job family, or location. In reality, blanket treatments do more harm than good because they send a message to top performers and innovators that their elevated levels of contribution do not matter.

5) Improve employee benefits

• Goals of the strategy – this popular strategy attempts to tie employees to the company over the long term using “benefit handcuffs” because surveys show that better benefits can be both a powerful retention and recruiting lever.
• Prioritization process – none unless benefits vary between different job classifications.
• Identifying turnover causes – it relies on traditional exit interviews to identify whether weaknesses in benefit offerings are driving turnover.
• Treatments for countering turnover causes – the benefits that are offered vary with the firm but improved health coverage, more time off, educational benefits, better work/life balance, and better on-site amenities (i.e., food, exercise facilities) are common choices.
• Benefits / weaknesses of the strategy – improving employee benefits can have significant retention impacts on lower-paid employees and those with either medical conditions or large families. Benefits are generally not taxed as income, so employees get more “net” value from them than from salary increases of the same cost. Unfortunately, improving benefits for all employees can be very expensive. Top performers and innovators may be more concerned with on-the-job opportunities than benefits. Also, individuals might stay because of the excellent benefits but could remain less productive because their job situation hasn’t changed at all.

6) Improve training and development

• Goals of the strategy – to improve retention rates by focusing on providing more learning and employee-development opportunities.
• Prioritization process – none unless access to training and development opportunities vary between job levels.
• Identifying turnover causes – it relies on traditional exit interviews to identify which areas of training and development have the highest impact on retention.
• Treatments for countering turnover causes – these vary with the firm but improved soft skills training, leadership development, job rotation opportunities, and technical skills training that prepare employees for promotion are often choices.
• Benefits / weaknesses of the strategy – improving employee training, learning, and development can have significant retention impacts on your firm’s top performers because of their keen interest in continuous learning. Training and development, in addition to being a retention lever, also directly helps the firm by improving the capabilities of its employees. On the negative side, training and development activities are expensive and they take time away from the job. Providing training and development to build skills but not following up with sufficient opportunities to use those new skills may actually contribute to increased turnover.

7) Increase compensation

• Goals of the strategy – this strategy assumes that the causes of turnover captured during exit interviews (compensation matters most) are valid, so it focuses on increasing compensation in order to prevent turnover.
• Prioritization process – no prioritization unless the increases in compensation are tied to job levels or individual performance.
• Identifying turnover causes – it relies on traditional exit interviews to identify the weaknesses in the compensation process that are driving individuals to accept outside offers.
• Treatments for countering turnover causes – these vary with the firm but options generally include across-the-board salary increases, cost-of-living adjustments, increasing the compensation “percentile” target for the firm, adding performance bonuses, increasing 401(k) matching contributions, and offering stock options or stock.
• Benefits / weaknesses of the strategy – improving employee compensation can have significant retention impacts on those employees primarily driven by money. Stock options (because they must be held) may act as a “golden handcuff” to tie individuals to the firm for a significant period. Unfortunately, increasing compensation is extremely expensive and even more so if it’s not tied to increases in performance. Giving every employee an equivalent increase in compensation may actually anger top performers and thus actually increase turnover among the best.

8) Improving employee engagement

• Goals of the strategy – the goal is to improve retention rates by focusing on the factors that increase employee engagement.
• Prioritization process – none.
• Identifying turnover causes – it does not connect exit interviews with engagement measures. It relies exclusively on employee engagement surveys and then it assumes that low engagement will eventually drive turnover.
• Treatments for countering turnover causes – offerings depend on which areas within your engagement survey are scored low. Most efforts to improve engagement scores involve increasing communications, building trust and reinforcing values.
• Benefits / weaknesses of the strategy – engagement surveys are relatively easy to administer but they are not inexpensive, if you count the employee’s time in filling them out. Unfortunately, there is little statistically credible corporate data directly connecting improving employee engagement scores and decreased rates of turnover. Most engagement processes are anonymous. So a firm cannot directly connect an individual’s low score with the fact that they quit (or even connect their stated reasons why they quit and their low-engagement areas).

9) Speeding up career progression

• Goals of the strategy – this strategy attempts to improve retention rates by focusing on providing more enhanced career progression (lateral movement) and more opportunities for promotion.
• Prioritization process – none, unless efforts to speed up movement are targeted at particular job families.
• Identifying turnover causes – it relies on traditional exit interviews to identify whether the speed of career progression or promotion impacts retention.
• Treatments for countering turnover causes – common offerings include improving the internal movement process to speed up lateral transfers and global assignments. Many also give preference and emphasize internal promotions over external hiring. Offering additional short-term projects for growth, developing new job titles, and creating new career tracks to speed up promotion rates are also frequently used.
• Benefits/weaknesses of the strategy – improving the speed of career progression can have significant retention impacts, especially on top performers who no longer need to leave the firm in order to get promoted. In addition, increasing internal movement and promotion rates further helps the firm by developing more leaders. Unfortunately, creating new career tracks and promoting more individuals significantly raises your salary costs and can also make an organization “top heavy” over time.

Less Frequently Used All-Employee Strategies to Consider

10) Employer branding – this powerful but more difficult-to-implement strategy emphasizes building your external image by encouraging individuals and the media to say good things about what it’s like to work at your firm. The underlying premise is that employees will want to stay at a firm that is perceived as a great place to work. The visibility of factors contributing to an organization winning an award or being recognized as a well-managed firm often influences internal perception as much as it does external perception.

11) Blocking strategy – this strategy, rather than focusing on overcoming the causes of turnover, emphasizes putting up recruiting barriers and blocking external recruiters from even contacting your employees.

12) Communications focus – this approach emphasizes improving internal communications, opening up access to information, and improving transparency so that everyone feels like they are an owner of the firm. Information would be provided early on during onboarding, during the performance appraisal process, and periodically throughout their employment.

13) Casino approach – this approach was championed by Google and emphasizes making the physical work environment so attractive that it by itself becomes a retention tool. The approach is modeled after what casinos do to keep customers inside from thinking about the outside world. It can also serve as an attraction tool as employees talk to their colleagues at other firms about the free food, the gym, shuttle bus, and on-site events.

14) Fixing bad managers strategy - this approach focuses on the most common cause of turnover: bad managers. It emphasizes the politically charged task of identifying and fixing weak managers through employee surveys. It has been employed by benchmark firms like Dell and FedEx.

Next week in part 3, look for Category 3 to learn about the most effective retention strategies, which are targeted at specific individuals and deliver a differentiated or personalized solution. Here was part 1 from last week.

Study after study has confirmed the notion that many employees would have left their employers months/years ago had the option to do so been viable. The economic downturn, combined with the mortgage crisis, has forced many frustrated, disappointed, and unmotivated employees to stay put. The trend is not a new one and is consistent with past downturns.

While turnover rates are at an all-time low, they most certainly cannot be taken as an indication of a firm’s status as a desirable place to work.

Just as in years past, when job opportunities become more prevalent, employees will exercise their right to demonstrate just how much they appreciated the treatment they received throughout reductions in force, furloughs, clumsy mergers, travel freezes, and budget cuts. The level of animosity among many will render most traditional retention approaches ineffective.

Some studies indicate that as many as two-thirds of employees are ready to go. Unfortunately, few corporations are preparing today to handle the dramatic increase in voluntary terminations that will come tomorrow.

While few organizations completely decimated their staffing functions, the majority have cut back to the point where capability has been negatively impacted. Strategic programs that deliver retention have been cut, and in most cases, no one is held accountable for retention solutions. It might seem outrageous, but unless you consider the phrase “let’s keep them all” to be a retention strategy, it’s a fact that most HR and recruiting executives can not even list common retention strategies, let along devise their own.

Retention Is One of the Most Poorly Managed Goals in HR

It’s hard to argue that retaining key employees isn’t a high-value activity, and I can’t say that I have ever visited an organization that would argue otherwise. In fact, most HR leaders and recruiters talk a lot about the importance of retaining the very best employees that the organization has invested so much time, money, and development resources in. Unfortunately, talk is where most HR organizations end when it comes to formalizing retention efforts.

Among organizations that force-rank satisfaction with HR deliverables, retention often ranks high in importance but extremely low in execution. In fact, it’s often lower than compensation and benefits, if you can imagine that!

Its perennial position at the bottom of the list qualifies it as the most poorly managed staffing activity. However, its position at the bottom should come as no surprise, since few organizations can identify who’s in charge of it, what is the strategy, and how retention efforts are measured and evaluated.

These three factors are the reason behind most organizations’ poor retention performance:

Reason #1 — Who is in charge of retention?

In many organizations the answer to this very basic question is no one! Rarely does the organization’s design for the HR function include a role(s) charged with designing, developing, and executing retention programs. When such a role does exist, rarely is it positioned at level with enough resources and power to make a difference (i.e., Senior Director or VP).

When it comes to organizational design, nothing says “low importance” more than lack of budget or executive-level leadership at the helm. Some might argue that all are responsible for retention, but merely listing it as one among many responsibilities essentially guarantees a mediocre enterprise-scale effort.

While great managers may assume ownership of retention activities in their group, because there is no clear support organization, their approaches will largely be ad hoc in nature and inconsistently leveraged, opening the door for anyone disgruntled to scream discrimination!

Reason #2 — The real costs of key employee turnover are not reported.

Retention metrics in most organizations begin and end with overall turnover by period. Absent are metrics that measure the business impact of turnover and specific goals to mitigate predicted impact. If your retention function doesn’t measure and report these five key metrics, chances are your efforts are under-managed:

• The cost of turnover. Reporting a percentage turnover rate seldom excites executives, but converting that turnover rate to a dollar impact on business performance can establish the visibility on talent issues needed to transform a good recruiting function into a great one.
• Top performer/key employee turnover. Often called regrettable turnover, this measure prioritizes the jobs and individuals based on the degree to which their leaving hurts the firm.
• Competitor win/loss ratio. This metric is simply the ratio of the number of top performers you have successfully recruited away from a competitor compared to the number of top performers who voluntarily terminated to join a competitor. If a top performer quitting goes directly to a competing firm (vs. retiring), it raises the costs because it hurts the firm while aiding a competitor.
• Preventable turnover. If turnover is occurring for silly or preventable reasons, the percentage of cases where that is true needs to be reported and fixed.
• Percentage of “at risk” employees. The best firms proactively identify high-priority individuals who present a high risk of leaving during the next one or two years. Reporting the percentage of target individuals at risk alerts managers helping them put into place proactive programs attacking retention issues before they get out of hand.

Reason #3 — What is the name of your retention strategy?

The economic impact of losing 10% of the workforce each year in a major corporation amounts to tens of millions of dollars. With that amount of money and disruption involved, retention is clearly a strategic issue. To develop a competitive advantage around a strategic issue requires a strategy that is measurably superior to that of your competitors.

Unfortunately, it’s rare for organizations to develop a formal retention strategy. To make matters worse, most HR executives don’t even know the common retention strategies in use that they could adopt.

Before launching into a comprehensive list of common retention strategies, note that all retention strategies fall into one of three categories and usually contain five common elements.

The Five Common Elements of a Retention Strategy

1. Goals of the strategy. This element identifies the goals and specific results the strategy should produce.
2. Prioritization process. This element specifies the methodology that will be employed to determine which (if any) employees should receive priority treatment.
3. Identifying turnover causes. This element specifies the methodology that will be employed to identify the primary factors that “cause” employees to leave.
4. Retention solutions. This element contains a catalog of proven counter measures or solutions that can be employed by managers to halt or reverse a trend of turnover categorized by common cause.
5. Success measures. This last element covers the process for selecting retention metrics and reporting the results.

The Three Categories of Common Recruiting Strategies

Retention strategies usually fall into one of three categories, but world-class organizations often employ a hybrid approach that uses different strategies for different groups within the organization based on their role in achieving wildly important organizational goals. The three common categories include:

• Laissez-faire approaches. This group contains decentralized retention strategies that rely almost exclusively on operating managers to solve the retention problem.
• Comprehensive approaches. These approaches attempt to retain all employees by improving the treatment, pay, or benefits of all employees. These approaches are also called “peanut butter” strategies because they attempt to spread the improved treatment evenly across all employees.
• Targeted or personalized approaches. This category concentrates retention efforts on high-priority individuals and jobs and then customizes the treatment as much as possible in order to fit the individual needs of the targeted employee.

Next week, part two will continue with the top 15 retention strategies in use today.

Note: If you have corporate experience operating a retention function, I welcome your comments on critical factors that can make it more/less effective. In addition, if you have questions that you would like answered on corporate retention strategies, please post them in the article comments section following this article.

However, if you view recruiting as a marketing and sales job (as I and many strategic recruiting leaders do), knowing what channels brought the prospect to the organization and what messages led to conversion (talented individual > applicant > candidate > hire) are by far the most critical bits of data the function can collect. Without this information, it’s extremely difficult to scientifically budget for sourcing or build strategic sourcing systems capable of impacting organizational performance.

Luckily, however, there is a simple approach that ensures much more accurate and helpful information that doesn’t rely on transaction-minded recruiters documenting the source of hire.

If you rely on weak sources, chances are you’ll get weak results.

Why Source of Hire Data is Almost Always Wrong

There are numerous reasons why corporate efforts to capture accurate source of hire data are almost always doomed to failure. Some of those reasons include:

• Recruiters don’t care — not all recruiters are involved in selecting the sourcing tools they will have access to or even using them in general, so coding applicants is an activity that realizes little apparent direct benefit. Even recruiters who do source or play a role in their organizations’ sourcing strategy tend to be overconfident that they already know which sources work and don’t need data to inform them. Other recruiters are just old-school and will use the same sources over and over no matter what. Unless recruiters are made aware of how identifying source of hire accurately is critical to their success, no one is going to spend a lot of time on capturing it accurately.
• Conflict of interest — while some recruiters may care about scientifically validating which sources produce which results, the truth is that capturing data that makes the recruiting function more efficient is seen by some as identifying ways to make line recruiters less necessary.
• Not asking in a systematic way — most corporate recruiting processes are relatively flexible and give the recruiter a lot of leeway in determining source of hire. It’s rare to find a process that forces recruiters to specifically ask candidates which source most influenced their decision to apply. In other cases, the way the question is posed to candidates is so inconsistent that it dooms the reliability of the answer.
• Not segmenting clouds the data — many organizations that do collect source of hire data do so in such a way that the value of the data becomes so diluted it is virtually useless. For instance, can you segment your source of hire data by manager perception of candidate quality (used to validate their assumptions) or by post-hire performance rating? Knowing how top and bottom performers approach the organization is much more valuable than knowing the most common source, or how the average employee is found. Further, knowing how sourcing effectiveness varies by job family or region is essential.
• Technology forces bad choices — many corporations use applicant tracking systems to capture the source of hire data at the time of application. Although this is a good concept in theory, studies show that asking prior to hire doesn’t always yield the accurate answer, but rather the answer the applicant thinks might result in the best result. When recruiters enter applicants who have come via internal channels or who have been direct sourced, they tend to choose the first source in the drop-down list available. Few systems send validating questions periodically to confirm applicant data downstream, so errors in the front of the process produce bad data at the end of the process.
• Forcing a single source — it is common for active candidates to use any and all sources available to apply to an organization, while passive candidates may first be exposed to an opportunity via one channel, but ultimately apply via another. Few data-gathering approaches identify how the opportunity was first encountered, what channels influenced a decision, and what channel ultimately produced the application.

Perception Isn’t Always Reality

Periodically testing assumptions or perceptions is key to being a good leader. In 2007, we surveyed more than 15,000 hiring transactions, comparing the pre-hire documented source of hire to results from a post-hire candidate experience survey. The results were shocking, even for those of us who tend to be cynical. Only 26% of the time did the post-hire result match the pre-hire entry.

Further, the variances were much higher with certain sources than others. While recruiters and recent hires generally agreed on the percentage that resulted from employee referral and events, they radically disagreed on the percentage that resulted from the corporate career site, job boards, and even third-party recruiting partners. In the 2007 study, only 12% of new hires attributed the corporate career site as their source of introduction, while the pre-hire data attributed the career site with 57% of hires.

Gathering Valid Sourcing Data the Quick, Cheap, and Easy Way

Sales and marketing professionals have for years used a simple solution to accurately identify the “real reason” why people make the decisions they do. They ask after the decision has been made.

After a product has been purchased or a job offer accepted, the prospect has no reason to lie. The answer will not influence the process. Telling a salesperson that you only came to their dealership because you are interested in a car that only they have in inventory is a fact that could impact the dealer’s willingness to negotiate.

Shifting data collection to follow completion of a transaction removes any value of manipulation.

Additional Reasons Why Asking Post-Hire Is a Superior Approach

• As new employees, new hires may respond more thoroughly to questions out of a newfound sense of obligation to help out the new employer.
• Post-hire collection instruments can be built to collect smaller fragments of data over time as part of the onboarding process, allowing for both better collection activities and validation efforts.
• You’re only capturing data from the highest-quality applicants; in other words, those you actually hired.
• The risk-adverse worried about privacy issues might be more than willing to provide this type of information post-hire once they are made aware that the information will be used exclusively to help recruit high-quality teammates for them to work with in the future.

Action Steps to Implement a Post-Hire Source Identification Process

Consider the following tips when designing and implementing a post-hire source capture process:

• Ask during onboarding — while recruiting doesn’t always own onboarding, recruiting should be permitted to use the onboarding process to collect information from new hires. Ideally, a recruiter can ask the questions and probe for more information in person, but surveys work almost as well. Work with the onboarding team to ensure that the source of hire questions are always completed. If recruiting does not own the onboarding process, using secret shoppers to occasionally test that recruiting-prescribed activities are being completed as desired is advised.
• Email a questionnaire — if an onboarding option is not available, send a questionnaire or survey invitation via email to the individual before they start (because they are new, they are likely to spend some time on it).
• Ask when the candidate accepts — because recruiters administer the selection and offer presentation phases of the recruiting lifecycle, a possible alternative is to include an acceptance criteria survey in the actual offer acceptance process. After thanking them for their acceptance, ask for their help in improving the process of identifying future top-quality candidates like them.
• Educate the new hire — the first thing you want to do is educate the new hire about the importance of the process and how capturing the right sources will result in them eventually working along-side some other great hires. Educate them about the different factors that you’re most interested in; company awareness factors (employer branding factors) and how they learned more about the company/opportunity; what specific sources made them aware there was a current job opening; and what factors triggered their decision to actually apply.
• Ask the right questions — after “when you ask” and “who you ask,” the next most critical factor in getting useful data is what you ask. The following are the minimal questions I recommend. You shouldn’t limit respondents to one answer, but rather allow them to choose all that contributed to their decision to apply. Consider providing them with a detailed list of answers to choose from, based on the sources used and past new-hire answers along with a few blanks. When multiple factors are identified, ask them to rank them in descending order of the importance.

Recommended Questions:

1. Which source made you aware of our company as a desirable place to work?
2. What factors about our company or opportunity best got your attention?
3. Which source or factor made you aware that we had a current job opening in your field?
4. What factor or source convinced you to take action and apply for a job?
5. Were there any sources that provided information that discouraged you from considering our firm or applying for a job? If yes, what were those negative factors?
6. What were the key factors that convinced you to accept this job and what aspects or factors of the hiring process had no value or discouraged you?
7. Who else is exceptional at your previous firm that we should consider hiring?

Note: other powerful recruiting questions that you should be asking can be found here.

• Improving the accuracy of your current system — if you choose not to adopt a post-hire approach or if you decide to run tandem data capturing processes pre and post hire, it is still important to improve your current data capture process. Run a validation study that collects post-hire data for a limited time and compare the data received from the traditional approach to that collected. If both processes produce similar results, there’s no reason to change your approach. If you continue letting recruiters enter the data, spot check or use a random validation study to periodically check the accuracy rate of their entries. One recruiter throwing bad data into the system can throw off all of the results. Merely knowing that there is a chance that entries will be checked periodically will drive most recruiters to improve their accuracy. Adding a reward for accuracy will further improve results.

Leveraging Source of Hire Data

Collecting data and doing nothing with it should be a cardinal sin in a corporate setting.

Recruiting leaders need to develop a formal process at least twice a year to review sourcing data and adjust sourcing processes accordingly. Adjustments should include dropping bad sources, modifying recruiter training, shifting budget allocations, and determining the impact of sourcing changes on new-hire retention rates and job performance.

Final Thoughts

There are some in the recruiting profession who look down on sourcers and the sourcing function as something that’s necessary but not mission-critical. In contrast, there is nothing more important than great employer branding and placing the right message in the right communication channel to drive the desired action by the right people.

If you recruit basketball players for an NBA team from elementary schools, you’ll never win a single game, but if in contrast, you recruit exclusively at NBA All-Star games, no matter how bad the rest of your recruiting processes, you will have some great hires. I go by the axiom that “great sourcing is everything.” If you believe so too, you will act immediately to eliminate actions that lead to unreliable sourcing data. Using a post-hire source capturing approach is cheap, quick, and much more accurate than pre-hire source identification. It’s a slam-dunk.

As always, if you have tried this approach and want to make others aware of your success, or have questions/suggestions you would like others to focus on with regards to improving the process, please post them to the comments section following this article.

Having related business units working closely together, rather than operating as independent silos, almost always increases efficiency, reduces errors, and improves overall results.

There’s no better example of what integration can accomplish than the modern-day supply-chain organization, which used to operate as four independent functions (purchasing; inventory management; warehousing; and shipping).

The integration of these functions into a single function with cross-activity analytics and shared goals turned an “overhead function” into a profit center at companies like Wal-Mart, Toyota, and Dell. The customer-service function also demonstrated the value of integration when it created single points of contact for customers using “customer contact centers” capable of addressing a wide range of customer needs from technical support to warranty registration and billing inquiries.

The result of all these innovations was a dramatic increase in customer satisfaction and loyalty/retention. City governments also strive to increase capacity, reduce errors, and save scarce resources when they closely coordinate police, fire, ambulance, and hospital services for handling emergencies.

When executives contemplate what function would benefit the most from breaking down silos and driving integration next, talent acquisition is almost always on their list. Given that numerous organizations are currently engaged in process reengineering efforts and that the budgeting cycle for 2010 is just around the corner, what better time could there be to start integration efforts?

While recruiting continues, requisition loads per recruiter are down and non-essential programs are on hold in many organizations.

Despite the temporary relief from massive requisition loads, executives are crying out for strategic moves and the application of new technologies seen by nearly everyone as relevant to talent acquisition. Growth of social networks and past experience with employee referral programs have led several executives in high-growth Fortune 200 firms to question whether traditional talent acquisition functions even make sense anymore.

One progressive CFO worked with talent acquisition leaders to develop a finance function-specific ERP with aggressive features that produced 80%+ of the function’s hires last year.

The Definition of Integrated Talent Acquisition

Integrated talent acquisition is an organizational design strategy whose primary goal is to break down barriers between like activities and bring economies of scale and quality management to the function.

It emphasizes the coordination of efforts, increased sharing of information, and group communications across several functions to increase speed, quality, and to reduce costs. The coordinated functions often include a mix of corporate functions including HR, finance, operations, business development, and outsourced service providers. In some cases, when the business itself is largely dependent upon the organization’s ability to acquire, develop, motivate, and retain talent, organizations have fully integrated activities across all functional boundaries into a single seamless process with accountability, shared analytics, and shared rewards.

Talent Acquisition Is Mostly Uncoordinated

It’s hard to make a strong argument against integration because working more closely together is so obviously a good thing, but that doesn’t make it common!

All too often, HR leaders are selected who rose to power vertically through a single function, most often training and development or HR operations, but occasionally talent acquisition.

The bias of said leaders creates a highly political environment where survival pretty much depends on “building your own empire” and masking reality to prevent easy replacement.

(I’ve even heard HR referred to as “Balkanized” – which is certainly not a compliment.)

It’s rare to find a talent acquisition function that’s truly integrated. In most cases, the “sub-functions” of talent management operate as semi-autonomous units, while in other more extreme cases the sub-functions operate as completely independent silos. I can’t begin to tell you how often I am met with blank stares when I ask talent acquisition professionals in companies with a formal talent management function to tell me what the function does!

You can quickly tell whether talent acquisition functions are currently integrated by simply looking for the signs of close integration, which include shared metrics, interdependent rewards, cross-departmental rotations, cross-functional teams, and periodic joint meetings.

Problems Caused By Lack of Coordination

Few talent-acquisition functions are closely integrated. Some of the problems caused by this lack of integration include:

• Lost during handoffs. With independent functions all handling a small piece of what it takes to find, court, hire, and onboard a new hire, it is very plausible that candidates may be inadvertently “lost” when they move from one phase of the process into another (for example, when finalists are handed off to a background vendor, some may be lost at either end of the transfer process).
• No way to identify the origin of errors. When a macro level process is broken up into many smaller pieces, each owned by someone else, identifying the source of errors or delays in the overall process is nearly impossible. An example might focus on delays in time to fill. Without an integrated process, shared analytics, and single-point accountability, determining which sub-process (sourcing, assessment, background verification, or offer generation/presentation) produced a delay could be impossible.
• Mixed terminology. As candidates are passed off between sub-functions, they are confused with different terminology and confusing acronyms, not to mention differing levels of service and an array of contacts.
• Lack of understanding or knowledge. Because one function doesn’t trust or even know what goes on within another function, certain activities may be needlessly repeated, increasing recruiting costs and time to hire. Other activities may unknowingly contradict with each other. (For example, references may be called more than once, or two business units may make totally different offers to the same candidate).
• Sabotage. It’s not unusual for some sub-functions to actually despise or even “hate” other talent-management functions. Some individuals can try to proactively hurt or sabotage other functions, while others just try to make them look bad (so that their function looks relatively better).

Talent Acquisition Activities That Should Be Coordinated/Integrated

There are many arguments that can be made for including or excluding talent-acquisition activities from the integration process.

The following list represents those activities that, at a bare minimum, should be coordinated (more formal criteria comes later in this article):

• Employer branding
• Workforce planning and forecasting
• Requisition management
• Experienced recruiting
• College recruiting
• Compensation (offer generation)
• Background verification (reference checking)
• Employment marketing
• Internal movement and job-posting programs
• Relocation
• Onboarding
• Retention and performance management

What Are the Keys to Integration?

If you are going to coordinate related activities, there are certain impactful things to “encourage” the different functions to work more closely together:

1. Joint reporting relationships. When you integrate, all the functions report directly to the same manager. When you coordinate, the reporting lines may be advisory or a dotted-line relationship.
2. Cross-training. Individuals are cross-trained to do multiple jobs. In addition, this training allows them to be redeployed for either short- or long-term assignments in other areas of talent acquisition or HR. Webinars and training sessions from every function in the overall process are available to all.
3. Shared communications. Shared newsletters, memos, and websites allow every function to know what’s happening in other related functions.
4. Cross-functional teams. Requiring inter-related teams to form cross-functional management and problem-solving teams can dramatically improve the workflow. Jointly funded projects can also improve cooperation.
5. Build influence skills. A great deal of HR work is now done by individuals who do not report directly to you … so the ability to influence others becomes critical. As a result, team leaders need to be trained in how to influence individuals who can’t be “forced” to cooperate.
6. Joint meetings. Periodic joint meetings (in-person and virtual) improve mutual understanding and increase the number of discussions about problems created by “other” sub-functions.
7. Inter-departmental rotations. Periodically rotating talent among interdependent departments improves communications, understanding, and cooperation. The rotations can be short-term or permanent.
8. Shared rewards. Performance rewards tied to the success of related functions can dramatically increase cooperation. For example, part of one function’s bonus pool is tied to offer acceptance rates so there is an incentive to provide reasonable offers to the recruiting function.
9. Common metrics. If all related functions in the hiring process are measured on their contribution to “time to fill,” they are all likely to focus on it and to work together with others to improve the overall metric. An integrated error reporting system would ensure that process errors could be assigned to the appropriate owner of that step in the process. Survey a sample of hiring managers and new hires to get their experience of what process parts were integrated and which ones were disjointed.
10. Wiki best-practice sharing. Providing in-house wikis that allow individuals from different functions to help build a shared talent-acquisition knowledge base helps increase ownership in talent acquisition by all. It also leverages the power of the crowd to ensure processes consistent with goals from every perspective. Individuals should be recognized and rewarded for facilitating the sharing of best practices between the different functions.
11. Shared forecasting and planning. When related units share forecasts and plans, they are much more likely to see the same upcoming problems and opportunities.
12. Shared database. Requiring the different sub-functions to use (and add to) the same database can dramatically improve understanding and information flow. Requiring all sub-functions to shift to databased decision-making can also improve quality and consistency.

Indicators That Disparate Functions Should Be Integrated

Integrating every function can actually be counterproductive, in that you can end up with a large, unwieldy bureaucracy. Instead, you should carefully select, using predetermined criteria, which activities should be closely integrated. There are several criteria that, when present, indicate that related sub-functions should be integrated.

Those criteria include:

1. Customer expectations. The first criteria for determining when functions should be integrated is whether the customer or user expects “a continuous process.” For example, when asked, hiring managers universally agreed that the requisition, recruiting, hiring, and onboarding processes should all be integrated. Candidates would also agree that it’s frustrating to be continually “handed off” to a different function throughout the process of becoming an employee. What this means is that whenever the customer expects “a seamless process,” senior managers need to work to provide that integrated process.
2. Significant “handoff” errors. When poorly coordinated functions “handoff” a user to the next step or function in the process, there is a markedly increased chance of errors occurring during the transition. If errors are costly, the inter-functional communication must be nearly perfect (like at the handoff point between the recruiter and the compensation offer specialist, where miscommunication can lead to extremely low offers that have no chance of acceptance). Independent functions with different terminologies and unique acronyms can dramatically increase misunderstandings. Formal integration certainly improves communications and makes handoffs smoother because a single manager oversees the inter-related functions.
3. Significant inter-dependencies. If the output of any particular sub-function is highly dependent on the quality of the inputs from the function that precedes them in the process, they are dependent. For example, sourcers depend heavily on accurate position descriptions that outline all criteria that will be used to screen candidates.
4. The need for simultaneous operations. When related operations are “linear” (meaning that a follow-up step doesn’t begin until the previous step is completed), there is less need for integration. However, when you want to minimize “slack time” and keep your workforce fully occupied, it’s critical that several functions operate simultaneously. For example, when you’re processing the firing of one employee, you can begin sourcing a replacement. Obviously, it’s hard to manage overlapping, simultaneous operations without close coordination.
5. The need for speed. In any case where speed is essential for process success, coordination can certainly help to identify roadblocks and unnecessary delays. Wherever speed and responsiveness are important (as they are in hiring), at the very least, a coordinated effort is necessary.
6. The need for cost efficiencies. Operating numerous independent sub-functions is simply more expensive because each must have its own manager, metrics, and policies. Overall process costs also increase when two functions unknowingly repeat the same task because of poor communication. If you want administrative cost-savings, eliminate duplication and overlap through integration and coordination.
7. Physical separation. If the interdependent functions are physically located away from each other, the distance will cause less-natural interaction. The reduced frequency of interactions among employees means that lower levels of trust and understanding develop among the employees of these separate functions. Obviously, effective coordination and integration can help to prevent any “us vs. them” mentality from developing.
8. Shared technology. Whenever two separate functions share the same database or software, integration ensures more consistent data-entry and database maintenance.

Final Thoughts

The concepts of coordination and integration have a proven track-record. Merely spending a few hours with managers of the supply-chain or customer-service function can get you all the insights and tools that you need. Yet some will fight because of their insecurities or political agendas.

The best way to overcome resistance is to identify the biggest complainers and whiners; keep the ones who put the good of the organization ahead of their own private agendas. After integrating talent management, don’t stop there.

Work with the rest of HR to integrate the three primary areas (buy talent, build talent, and increasing productivity) so that all aspects of talent management and the business act as one.

In fact, the best way I know to learn about radical new approaches and innovations is to examine the best practices from organizations operating completely outside your industry. I call this practice of adapting “unheard of” practices from other industries parallel benchmarking.

It is known as parallel benchmarking because you are learning from completely different industries that still, however, share a parallel problem. The practice that I am suggesting that your firm consider is from baseball and involves “trading” surplus talent with other firms.

If you want to make dramatic improvements in business practice, you need to study how best-performing firms in completely different industries attack your problem.

If you want to go beyond merely talking about outside-the-box solutions, consider changing your approach and focus on “likely to be laughed at” talent-management solutions like those emerging around Twitter and YouTube, and developing a “talent trading” program.

Almost all firms at some point have a surplus of employees that results from changing business conditions. Unfortunately, the typical approaches for getting rid of surplus employees are cost-containment approaches that provide no payback to the firm.

The most common approach, where corporations lay off surplus talent, is a lose-lose approach. You release talent and get no remuneration for it, despite having invested in it for years via salaries and training. At the same time, you also incur huge costs because you pay for severance, outplacement services, and damage to your employer brand reputation.

But what if there was a solution where instead of releasing talent, you could exchange or “trade” talent with other firms and get something of value in return? Now that would be a talent-management breakthrough that would make any CFO smile.

Trading Employees Is Not Uncommon

Firms routinely loan employees to initiatives with their strategic partners and joint ventures; not-for-profits periodically exchange talent when their funding priorities or levels change; and federal agencies exchange employees on both a short-term and permanent basis using interagency exchanges and loans.

The military also periodically exchanges talent among the different branches of the services in order to fill talent needs or to acquire knowledge or best practices.

While the practice is common in each of these instances, the benchmark industries to study with regards to the practice are professional sports and entertainment, where trading is a required business practice.

Sports Trading Is a Perfect Model

If you managed the Yankees or Manchester United and you had an excess of skilled players in a particular position, you would make a deal and trade that talent to another club for players in a skill area where you had a significant need (or for cash). In professional sports, managers who simply release talent are considered as failures because they got nothing in return.

In Major League Baseball, for example, trading between teams in the same league and between different leagues is such an integral part of the talent-management process that trading isn’t given a second thought. Incidentally, the most desirable and high-impact trades don’t involve “losers,” but rather, top performers. These sports franchises are just like any business enterprise — they are for-profit corporations striving to maximize their talent ROI by always getting something of value … for something of value.

A Business Example: The Value of Trading Employees

Let’s assume you were a computer firm like Apple, and you wanted to get into the music business by developing a music player. You could train your current employees who have computer backgrounds, but that would be time-consuming, expensive, and difficult because no one at your firm really knows the music industry.

At the same time, another firm, like Sony, that was going through tough times might have surplus talent with extensive knowledge of the music industry. Because Sony might be interested in gaining a better understanding of Internet video transfer and the process of innovation at Apple, Sony might be willing to trade some of its excess music talent for individuals involved in the Internet video transfer or innovation process at Apple.

Because the traded employees from Apple’s video-on-demand set-top box division would be going into a high-priority area at Sony, they might be excited and willing to accept the trade. The Sony employees facing a layoff would probably be thrilled, both with the chance to be sought out by experts and with their renewed job security at Apple.

Advantages to the Corporation

In addition to the obviously higher-talent ROI, there are other benefits that can accrue to an organization that develops a trading process, including:

• Expanded talent acquisition opportunities – mutually agreed-upon trades can be easily made with large customers or strategic partners. In contrast, direct recruiting from them is simply out of the question because it would damage the relationship. As a result, trading gives you an opportunity to acquire talent from organizations that were previously off-limits.
• You may get the entire team – in recruiting, you acquire individuals who are independent and haven’t worked together as a team. However, in cases where a company is closing down a facility or a particular area of business, trading might provide you with an opportunity to acquire or “lift out” an entire intact team. Bringing on a cohesive unit might enable them to get up to speed almost immediately.
• Acquiring best practices – because you’re trading with high-performing firms, not only do you get talented individuals but with them, you also get the opportunity to better understand and learn the best practices of the “sending” firm.
• High-quality talent – because poor performers are generally excluded from trades, if you make accurate trade assessments, you will be getting quality, trained talent. This talent’s shortcoming is that the firm has a surplus of talent or skills in that particular area (using a basketball analogy, you’re getting a talented seven-foot center merely because the team already had one more seven-foot center than they could carry on their roster). Trades can also include a “return” clause or a penalty if the traded employee turns out to be less than they were billed as.
• Delaying is possible – in the case where an organization doesn’t currently need more talent of any kind, the two exchanges of employees need not be simultaneous. The “sending” firm can delay their selection and receipt of their talent to a more opportune date (an employee to be named later).
• Fewer negatives – there are fewer retaliation issues and legal problems associated with trades because they are negotiated and all of the parties involved have agreed. In contrast, direct recruiting from competitor firms can result in back-and-forth raiding, which can generate lawsuits and drive up salaries.
• Fewer turnover surprises – employees may see layoffs coming and go to another firm with little notice. In contrast, if they see that you’re actually trying to help them find a better opportunity at another firm, they may be a little less active in their job search. And with a trading process, you have sufficient advance notice of who is leaving and when, which makes it easier to prepare for any vacancies as a result of lost talent. When large-scale raiding is going on, corporations need to put significant resources into retention.

Questions about the Process

If you’re skeptical, you probably have some questions about the trading process.

Here are some typical questions and their answers:

• Who would want these surplus employees? – in baseball for example, the highest quality talent are the most frequent trade targets. Surplus in this case merely means you have too much of it, not that there’s anything wrong with it. In almost all cases, these are valuable employees with important skills; they just happen to have skills (or work in a job) where the firm has more than enough labor available. In the case of a facility closing, these may be exceptional individuals who are just not willing to relocate.
• Why not just recruit them away? – traditionally when a firm sees “talent” that it wants at a firm, it merely attempts to recruit that individual or team away. Unfortunately, recruiting can be expensive and time-consuming. If your firm has a weak recruiting team, it won’t be able to acquire the same quality of talent as it could get from trading. It’s also important to remember that if you focus exclusively on recruiting individual talent, you still have done nothing to limit the millions in losses that occur when you lay off surplus talent that you’ve invested in over the years, without getting a penny in return.
• Won’t employees refuse the trade? – obviously your employees could refuse the trade because employees cannot be “owned” by their employer. But it’s important to note that it’s fairly common for key baseball players to have formal “no trade clauses.” However, all that these restrictive causes really mean is that you have the burden to make a convincing case to the employee that the new situation will be better for them. In other cases, obviously employees who are facing layoffs wouldn’t require much convincing, while others could be given a bonus for accepting the trade. Incidentally, traditional recruiting of “currently employed individuals” always includes a significant “convincing” element (to convince them to leave one firm for another), so that same convincing process just needs to be adapted to this trading approach.
• Who should be involved in the trading effort? – normally the trading process should be managed by the recruiting function. You should start by making the business case to get managers and the CFO on board. The trading process itself requires managers and a personnel function that can accurately identify surplus talent within your own organization. It also requires a trading team with the capabilities of assessing the quality and the value of talent that is located within other organizations. The head negotiator must be capable of putting together a “win-win” trade, where both teams and the player are clearly convinced of their direct benefit. Managers should be rewarded for successfully trading away surplus talent and for acquiring excellent talent in trades.
• Who should we offer in trade? – firms should develop surplus talent or redeployment lists that “look forward” at the firm’s talent needs at least one year out. In addition, a component needs to be added both to the workforce planning and to the performance appraisal processes to identify individuals who we cannot afford to keep or retrain. The retention, redeployment, and development teams should also be asked to identify individuals that are likely to leave (and thus offered for trade) because of the restricted opportunities within our firm.
• What should we ask for in return? – obviously the key to a great trade is that both sides perceive that they are getting great value (and this is even more important when trading with customers or strategic partners). The key to success here is to work with your trading partner to get them to pre-identify what they would consider to be the most desirable talent and skills. If you target firms that are in trouble and they can’t handle more employees, the trade might include a significant cash settlement rather than an equal “talent for talent” trade.
• Which firms should we trade with? – start by looking at “best practice firms” within your own industry. Then look at “parallel industries” that use similar technologies, that have similar customers, or that have equal or faster innovation and growth rates. Also target firms that are seeking to expand into your industry.
• Are there typical “sports trading” options that I should utilize? – many managers are big sports fans, so they almost instantly understand the “sports trading” mentality, and because sports coaches are experienced in arranging difficult “trades” for outsiders, it’s a good idea to try some “sports” trading options to improve your trading success. Here are eight ideas to consider:

1. 2 for 1 exchange – propose a two “B” players for one “A” player exchange.
2. For a player to be named later – propose accepting a surplus employee now in exchange for an opportunity to have one of equal value (but unnamed) at a later date.
3. Offer a slate – instead of offering a single employee trade, instead offer a slate of candidates from both firms.
4. Pay a fee – offer to accept a fee in cases where the firm is willing to accept your talent but it has little desirable talent to offer in return.
5. Delay the transfer – offer to keep the traded employee on your payroll for a limited period of time until the “receiving firm” is ready to orient and train them.
6. From major league to AAA – if you are a well-known firm, seek out second-tier firms or smaller sized firms that would be thrilled to get anyone from a top firm for the prestige or in order to learn their best practices.
7. Ask for deal sweeteners – when negotiations are stuck, directly ask their team to propose a list of potential “deal sweeteners” to move the negotiations on. Also try to identify in advance any deal-breakers.
8. Best practice for talent – offer the firm the opportunity to learn one or more of your firm’s “best practices” in exchange for their surplus talent.

Final Thoughts

Large-scale layoffs are a negative ROI business practice because you are giving away a resource in which you have invested millions. Not only are you giving them away, but you have no control over where they go.

In fact, released employees might go directly to your competitors, further compounding your losses. A better approach would first provide you with some control over where they go, as well as provide your firm with a direct quid pro quo for this released investment.

Initially, the idea of trading surplus talent with other companies might seem outrageous, but the practice has proven to be a winner. If you want to make a quantum leap in performance, it only makes sense that you need to make a quantum change in your business practices.

As crazy as it might initially sound, if you’re in a labor-reduction mode, a formal talent-trading process may be the highest ROI activity available to you!

I’ll demonstrate why there is a confluence of factors that make this a “perfect storm” of opportunity if you implement a countercyclical hiring strategy.

I’ll start out with three analogies that show how this current economic lull is an outstanding opportunity to fill your forecasted senior management vacancies that will result from baby boom retirements.

Analogy #1 — Understanding the Perfect Time to Buy

Any manager who has participated in a significant volume of corporate purchasing negotiations realizes that there are economic and competitive factors that make a particular period the “perfect time” to get the best deal. The “best deal” means a procurement opportunity where, with little effort, you are likely to get the best quality, the broadest selection, and at the lowest price.

The five factors that provide a “perfect deal” opportunity include:

• No competition — when your competitors aren’t buying.
• High availability — when the available quantity or volume of the product is high so that sellers have a surplus.
• High-quality — when the quality of the product is high.
• Low cost — when the cost is low (because of the high supply and the low demand).
• Low supplier power — when the weakened bargaining power of the seller has made them more open to concession in terms.

For many markets, it’s a “once in a generation” perfect-storm opportunity when these five factors occur simultaneously. While many nations do not have a labor shortage, many including the United States do have a talent shortage.

If your organization has struggled in the past two decades to find top talent to fuel growth initiatives, this temporary respite in competition for labor should be leveraged to the hilt.

Procuring high-quality talent at low cost and with minimal effort would certainly make you a hero among senior managers with mounting volume of work to be completed.

Analogy #2 — Understanding the Perfect Time to Acquire Exceptional Sports Players

Let’s assume for a few minutes that you run a professional sports team. You would quickly realize that the best time to build a sports franchise by recruiting enough star players to give you the capability of winning the championship would be when most of the following “five factors” are present:

• No competition — the other top teams aren’t recruiting, so no one else even bids on top talent.
• Talent costs were low — because no one is actively bidding, the costs of acquiring any available talent would be low.
• High-quality talent available — an opportune time to recruit would be when there were a number of genuine superstars available and in addition, there was also a large volume of high-quality talent available across all of your key positions.
• The players lack power — whenever there is a lack of competition and few open positions, even exceptional players become amenable to considering and accepting job offers that they would not have previously been considered.
• Everyone is recruitable — and most important, all in the case where all no trade clauses have been made null and void, you could literally “take” any player from any team without any remuneration or legal restrictions.

Actions that you would take when most or all of these factors occurred would include:

• You would over-hire players — should this “perfect storm” confluence occur, the opportunity would undoubtedly excite both you and your managers. It would probably also cause you to expand your recruiting, so that you would “load up” with talent, even in positions where you were already satisfied with the talent you currently had.
• You would designate “evergreen jobs” to ensure you never have a shortage of great players. For these few roles, you would continually recruit and hire exceptional talent whenever it was available at a reasonable price. The logic would be simple. In the sport of baseball, you could never have “enough” pitchers with an ERA of under 3.0. If you “own” all the talent, your competitors can’t. If you had “surplus talent” in key positions, you could just adopt new approaches to take advantage of the available talent.
• You would make immediate “opportunity hires” — if the team that you managed was a professional golf team, you would have previously assessed all of the top talent in your league. As a result, you would not need a lot of time to decide who you wanted to hire and who you didn’t.
• You would directly “raid” other firms when they are weak — unlike in professional sports, there are no restrictions on recruiting away top talent from competitors, so you would develop an active poaching process to take their best players when their team was at its weakest.

Analogy #3 — The “illogical” current corporate recruiting strategy

In 99.9% of all corporations, if Tiger Woods (or his equivalent in business talent) walked into your recruiting office and you did not have an open requisition for his specific position, you would literally send him away. Because the economy is down, corporate recruiting is stuck in cost-cutting mode. It isn’t doing any significant sourcing or hiring and the CFO may in fact have already decimated the recruiting team.

Most would classify this current time period as “bad times” when you lay low to avoid getting the recruiting budget cut even further. You certainly wouldn’t view this as the best time for recruiting in a generation.

All the Factors Point to a Great Time to Recruit

The purpose of these three related analogies is to demonstrate the identifiable factors that make it a perfect time to buy. You might be surprised to learn that whether you’re buying products or sports stars, the factors that make it “an ideal time to buy” are strikingly similar.

Currently, top talent is abundantly available; at no other time in recent economic history has the pendulum swung so far toward the advantage of the employer.

Unfortunately, most corporate recruiting leaders haven’t taken advantage of this opportunity. Perhaps the leaders in corporate recruiting are too close to the situation to actually see the tremendous opportunity that is facing us today.

Because revenues are down, today isn’t the perfect time to do large-scale hiring, so implement select “surgical hiring” where you selectively build your organization by hiring a relatively small number of exceptionally talented individuals for your key positions.

In the following section I’ve provided the most important factors that should cause you to begin countercyclical hiring.

The Perfect Time for Recruiting

• Competitors are out of the market — almost no one is in the talent market right now. Most firms have instituted a hiring and/or a budget freeze, which means the competition for talent is ridiculously low. They won’t need to enter into a single bidding war for top candidates when the talent competition is out of the marketplace. In addition, you might feel relatively alone among corporate recruiters, if you choose to visit college career centers.
• High-quality talent is available — in some downturns, only low-quality talent is laid off by corporations. However, during the current downturn, because of a large number of recent mergers, facility closings, and the complete elimination of some major firms, the amount of extremely high-quality unemployed or underemployed talent available around the world is at an all-time high. Even currently employed top talent who have jobs haven’t been treated very well during the downturn, and a record number of over 60% of these fully employed individuals are open to new opportunities.
• Costs are low — the lack of competition and the down economy have forced the price of available talent in almost all positions back down to reasonable levels. New referral approaches and Internet and social networking recruiting tools have also reduced the cost of recruiting talent. Taken together they have dramatically decreased the cost of adding talent.
• Talent is amenable — the lack of available job opportunities has “shifted the power” away from talent and toward corporations to the point where top talent will consider job opportunities and options today that they would have rejected as little as two years ago.
• The coming retirement wave — the dramatic reduction in stock prices and 401(k) values has temporarily postponed the upcoming wave of retirements. Despite this delay, these retirements will come eventually and if the economy turns around suddenly, firms may very soon be faced with a tidal wave of retirements. Because large-scale retirements may begin in as little as a year or two, now’s the perfect time to “stockpile” and develop possible replacements for your most experienced managers and technical talent.
• The coming retention problem — if your organization is among the many that have undergone layoffs, frozen hiring, reduced budgets, and maybe even cut salaries through the use of furloughs, the odds are that your current employees are overworked and stressed. This less-than-perfect treatment coupled with the fact that many of the “new generation” of employees have little to no loyalty to a single firm will result in a dramatic increase in turnover as soon as more external opportunities begin appearing. Obviously, you should begin retention efforts immediately but it may not be possible to remove the “bad taste” that your current employees experienced. Expand your recruiting efforts to find replacements and realize that new hires are likely to be more loyal than most employees because they are now seeking security and they would certainly remember the fact that you “saved them” during a period when no one else would even look at their resume.
• Remote work is more feasible — the unwillingness of some talent to relocate has limited a firm’s talent options, but the increase in knowledge work coupled with the currently available technology makes it possible to allow top recruits to work at home with no loss in productivity.

Other advantages to countercyclical recruiting include:

• There are benefits if you “begin looking early” — the competition in the market for products and services has not slowed down in the slightest. As a result, companies are now planning numerous new technologies and processes to increase their productivity. By hiring now you provide new hires with enough training and development time to be up-to-speed as these new technologies come online. Hiring individuals before you need them also gives them a chance to adjust to your corporate culture. Hiring a surplus of talent will provide you with an opportunity to “release” employees or new hires who can’t meet productivity goals. A final advantage of beginning your recruiting search early is that even if you merely stretch out the time period over which you are actively looking for talent, you automatically increase the odds that one or more top individuals will become available during the extended search time.
• So what if you hire too many? — can you imagine a sports team having too many stars of the caliber of Tiger Woods, Kobe Bryant, or A-Rod? With this exceptional talent, you could more easily beat your competitors. I once saw a general manager at Agilent Technologies respond with astonishment when an HR manager suggested that it would be a problem to have a “surplus” talent in our number-one, high-impact position. The GM responded without hesitation that “would be a nice problem to have.” If we had too much talent in that position, “we would just try new things because of our increased capability.” I hope that you can see that, yes, there would be some added costs in “over hiring” but the opportunities and benefits would far outweigh those costs.

Update Your Recruiting Strategy with These Seven Elements

Hopefully the analogies and the eight factors listed above have convinced you that now is the time to rethink your approach to recruiting.

If so, there are seven major elements related to countercyclical recruiting that you need to consider adding to your current recruiting strategy:

1. “Pre-need hiring” — this approach is where you build relationships and hire talent before you actually need it in order to provide ample time to develop and acclimate to your culture .
2. “Over hiring” — over hiring is where you purposely hire more talent than you immediately need in order to prepare for an “upturn” in demand. Alternatively, you can also use this as a stimulus to “swap” poor performing current employees with high-quality replacements.
3. Build a talent pool — a “talent pool” is a group of highly desirable talent that you identify, assess, and build relationships with over time, so that when an opening occurs, most of your sourcing and initial assessment is already done.
4. Opportunity hiring — this approach involves quickly “pull the trigger” and immediately hire superstars (that you have pre-identified and pre-assessed) immediately as they become available.
5. Most wanted list — this element is a combination of talent pool and opportunity hiring. Under this process, at the beginning of the year you select the top 25 (up to 100) most desirable individuals in your industry. You essentially “prequalify” them and you then spend the rest of the year trying to recruit them. As soon as one becomes available, you make a hiring decision.
6. Employer brand re-building — odds are that if your firm has undergone layoffs, furloughs, mergers, or bankruptcy that your external image as a “top place to work” has been severely damaged. Add to corporate actions the fact that numerous opportunities for employees (current and former) to share their perspective online have popped up in recent years and it becomes clear that nearly every organization needs an aggressive strategy to manage their brand perception online.
7. Approaches for identifying when your competitors are recruiting – “countercyclical” recruiting is where you recruit talent during times when other firms are out of the talent market. If you are not sure who is recruiting actively, have an intern check your competitor’s websites to see which jobs they are recruiting in high volume.

Final Thoughts

A handful of firms (Google, Slide, Microsoft, Principal, and HP) have to be recognized because they understood both the need and the opportunity to continue hiring during this downturn, even though they too may have been cutting their workforce.

However, the majority of recruiting directors haven’t taken advantage of this once-in-a-lifetime recruiting opportunity. I can only identify two major reasons for their lack of action.

The first is that they have just failed to be strategic and instead had a misdirected focus on cutting recruiting costs, rather than the more impactful strategic focus of increasing corporate revenues.

The second more palatable reason is that they understood the opportunity but they just didn’t have the capability of building an effective “business case” with senior management. That latter reason in one I’ll tackle in a future article.

Instead, recruiting directors should design a unique “executive referral program” that encourages executives to make referrals for your high-level openings.

You might think a separate program is unnecessary because high-quality referrals should flow naturally from your executives as part of their job, but such an assumption would be a mistake. Instead, make every executive an “executive talent scout” by developing a specifically targeted executive referral program that periodically mines recruiting leads from your senior leaders. Such a program can produce amazing sourcing results without the need to pay either a referral or an executive search fee.

An Alternative to Executive Search

The explosion of social networking sites like LinkedIn and Facebook make it incredibly easy for almost anyone to identify and build relationships with talent for executive positions. As a result, now’s a great time to bring executive recruiting in-house.

Unfortunately, many executives are not well-versed in leveraging such tools to optimize their networking efforts, nor are they well-practiced at periodically scanning their networks for talent that may be a great fit for the organization outside their own downstream.

Encouraging your executives to provide referrals by crafting a program that improves upon their networking skills and proactively pulls recruiting leads from said networks for open executive positions is a cheap and effective way to augment or replace the use of third-party executives.

Focus on Referrals From Top-Performing Employees

While any well-designed employee referral program should excel at producing quality hires, programs that specifically target proactive referrals from top performers consistently produce the highest level of results. Unfortunately, many organizations prohibit their top performers (who happen to be managers or executives) from participation in referral programs. If your firm truly promotes based on ability, it only makes sense that your senior managers and executives are “top performers.”

It’s imperative that your corporate referral effort include two specific subprograms: proactively approaching your top performers working in key jobs, known as a “give me 5” program; and getting referrals from senior managers and executives through a high-touch “executive referral program.”

Why Executives Are a Powerful Referral Source

Successfully filling executive positions has the highest impact on the organization of any recruiting activity. Well-connected executives are likely to know, and thus be able to refer, more “outside” executives for these critical positions than anyone except a few superstar executive recruiters.

Executives are excellent referral sources because they generally have the most extensive networks of any employee group, save for your salesforce. Executives tend to travel more frequently, participate in benchmark studies, attend industry events, and assume leadership roles in professional associations and community boards.

Not only do your executives build extensive contacts through such efforts, they also build trust relationships (that are essential in recruiting). In addition, because of their work within professional organizations and their mentoring activities, executives are also likely to have extensive knowledge of “upcoming” talent in the industry.

Elements of a Benchmark “Executive Referral Program”

There is no standard format for executive referral programs, but some of the key components include:

• Proactive approach –- a critical design element of any top performer referral program is that you must proactively ask individuals for “names.” They might know the best people but never find the time to refer them. Although traditional referral programs rely on employees to take the initiative, executives are different in that they are severely time-challenged. Start by filling the calendar with regular times to approach them throughout the year. Then have your designated executive recruiter contact them during slack times of the day (usually early morning or late evening). Also try to convince them to look through their PDA, mobile phone, and email contact lists for names that fit your criteria. Encourage HR generalists and other senior HR managers to pump them for names during regular interactions and especially after they attend major industry conferences and events.
• Immediate response –- the No. 1 success factor for long-term success in any type of referral program is responsiveness. The same holds true when it comes to executives referrals. If they make a submission and you don’t respond immediately, the odds are that they will not make another. When an executive gets disenchanted, they will spread the word quickly among their peers, and participation rates will drop. Because a high volume of referrals automatically kills responsiveness, it’s critical that you proactively limit the number of referrals to a few high-quality names per cycle per executive. In the same light, if an executive makes a referral and the person doesn’t get selected, contact them and let them know precisely why.

Define Your Referral Targets Clearly

• Define your target jobs -– executive referral programs focus on getting your executives to refer highly qualified individuals for other executive jobs. Make sure that there is another process to handle “I have a friend” referrals for regular job openings.
• Educate them about “who” to look for -– Accepting or rejecting referrals is a highly political action, so the key is to start out with clear guidelines and targets. In particular, educate them about the firms to target, those that produce executives, and senior managers considered to be desirable skill-wise and compatible with your corporate culture. Have them seek out executives with skills and experience in the areas of innovation, technology, and international business. Encourage them to bring back the names of top individuals from conferences and benchmarking sessions. Also encourage them to provide you with information on how this referral’s skills and experience fit your firm’s needs. Whenever an excellent executive referral is hired, provide a summary of their qualifications to all executives so that they can better understand the level and the type of candidate that you’re seeking.
• Educate them about who to exclude –- Make it clear that you want executives to proactively seek out talent and not to automatically make referrals of individuals who approach you looking for a job. In addition, the program needs to have guidelines that discourage the referral of individuals they have not had the opportunity to directly observe in a work-related setting. In the rare case where a friend or family member might have superior qualifications, require your executives to provide clear evidence of their experience working with them and how their qualifications are truly superior. If an individual submits questionable individuals, give them immediate feedback, and if it is repeated, exclude them from the program for a period of time.

Improve Participation Rates

• CEO support –- get the CEO to publicly announce support of the program in front of every executive and establish his/her expectations for participation. In addition, CEOs also need to actively provide names. To drive ongoing support, periodically make other executives aware that the CEO has found time to make executive referrals.
• Other executive support -– get the entire executive team to agree to respond rapidly to any referral in their functional area; the initial response should be within 48 hours.
• Set a quota or target –- sometimes you can increase participation rates by increasing expectations. Consider setting a “target” referral goal for each executive. If you can’t get the CEO’s approval for formal targets, consider setting “expectations” by providing but not requiring a suggested target number of referrals each quarter.
• Recognize them -– executives are well-paid individuals, so standard referral bonuses might not have a large impact. However, you might find that recognizing their success and sharing it with other executives and the CEO might significantly spur their participation.
• Reward them –- most executives do not require a bonus to make a referral. However, if rewards are offered for making executive referrals, provide an option for the executive to “opt out” of the bonus and instead donate the money to a charity of their choice or the standard corporate charity. You can also make providing successful referrals part of an executive’s bonus formula, succession plan participation, or criteria for promotion.
• Add to job descriptions –- add to the job descriptions for all new executive positions the fact that they are expected to both encourage referrals from their employees and to make executive referrals themselves.
• Track and report referral rates -– executives are almost always highly competitive individuals. As a result, tracking and broadly reporting the forced-ranked performance of all executives will spur any slackers to increase their participation.

Implement Critical Program Features

• Assign a recruiter -– designate an individual recruiter to focus on executive referrals, answer questions, and seek out opportunities to talk with executives in order to gather names.
• Encourage a social media presence –- a good percentage of all referrals at least partially originate from social media sites. Executives, because of their title alone, can easily attract many followers on social network and social media sites. Encourage them to open profiles but also provide them with templates, coaching, and samples so that they can get up to speed quickly. Periodically assess their profiles and online activities and coach them on how to improve.
• Candidate experience –- any executive referral must be provided with an excellent candidate experience both during the initial referral and during the hiring process. Like or not, executives almost always feel that they are special, so you need to treat them exactly that way if you expect to land them now or in the future. Referrals need to be surveyed and metrics need to be kept to ensure that every aspect of the candidate experience process is positive and responsive.
• Fast-track assessment –- part of responsiveness includes assessing potential hires differently than most candidates. That means that you must contact them quickly and arrange for a candidate-friendly assessment process.
• Candidate feedback -– if an executive recommends someone, assume they are high-powered individuals with significant egos. As a result, you can’t just reject them out of hand as you might a standard candidate. Instead, provide feedback and guidance as to why they were not selected. If you frustrate the candidates they refer, your own executives will stop participating in the program.
• Define who can make referrals — In order to increase responsiveness, limit who can participate in this special program. In most organizations, the number of qualifying executives and senior managers should be less than 25.

Miscellaneous Actions

• Make it a database -– in addition to focusing on filling immediate executive openings, set as a secondary goal to build and continually add to a “who’s-who” database of all desirable executives. This means that top candidates not immediately hired remain in the database so executives and recruiters can build a relationship with them over time. There also needs to be a relationship-building process using CRM methodology to keep in touch with individuals who don’t fit a current need but you might want to hire in the future. This database can also be used for benchmarking, product evaluation, and learning, as well as recruiting.
• Names-only option -– many executives know the names of other high-potential executives but they don’t automatically have copies of their resume and often they’re too busy to find the time to acquire it. Where possible, develop a process where they can merely provide names, and a recruiter will do the follow-up work necessary to capture the updated resume.
• Conflict-of-interest issues -– avoid the common assumption that allowing executives to make referrals will result in a conflict of interest (meaning that they will refer and hire individuals just for the reward). In my experience, the exact opposite is true and most executives will go out of their way to avoid this perception. Educate them in the program literature about the few cases when it’s inappropriate to make referrals and always offer the option to refuse the reward or to donate it to charity.
• Use metrics -– implement tracking metrics to identify the effectiveness of executive referrals. Especially focus on metrics in the areas of candidate quality, candidate diversity, new-hire on-the-job performance, new hire retention rates, and executive referral program ROI.

Final Thoughts

Despite their extensive track record of success, employer referrals have been limited in scope. It’s a missed opportunity not to use them in expanded areas, including university recruiting, recruiting contractors, and for executive search.

Like it or not, the expansive growth of the Internet has changed the world of sourcing and candidate relationship building forever. Where executive sourcing used to be the exclusive realm of a few highly trained external executive recruiters, it is now possible for others to supplement their work.

Now is the time to expand the scope and effectiveness of your employer referrals program (note: if you’re interested, I have a book on improving referral program effectiveness). Act now before your recruiting workload increases and you won’t have the time.

The following options address those circumstances and are grouped into options for moderate cost reduction and small cost reduction.

Moderate Cost-Reduction Options

Reducing hours: this is another “pay reduction” approach where you reduce the hours of work for selected non-exempt workers. The percentage of hours reduced might vary by individual; it’s similar to short-term furloughs, but hours are reduced as opposed to whole days.
• Effectiveness — medium if focused on poor performers and low-impact jobs.
• Benefits — workers might view it as OK because it’s a stopgap to avoid layoffs.
• Potential problems — hourly employees often live on the edge, so this might result in higher turnover. Employees “fighting” over available hours may cause work disruption. Top performers who have choices may go elsewhere unless the need to reduce costs is an industry-wide phenomenon.

Cut benefits: reducing corporate contributions to pensions/401k or increasing employee-paid health care costs. Sick leave or vacation can also be cut.
• Effectiveness — medium
• Benefits — most employees don’t notice the reduction in the short-term. The key is to identify high-cost benefits that few use and most wouldn’t miss.
• Potential problems — if it gets media coverage, it can hurt your brand image. It disproportionately hurts families and older employees. If you cut sick leave, it may cause sick employees to come to work and spread diseases.

Hiring freezes: where you eliminate the hiring of new employees into vacant jobs.
• Effectiveness — medium with many negative consequences
• Benefits — if you have lots of open positions, this can result in significant salary and benefits savings. Less business impact if only surplus positions go unfilled.
• Potential problems — it will lead to major income reduction if revenue generating jobs are not filled quickly. Major workforce disruptions can occur if the vacancies are in key and non-”surplus” positions. Top talent opportunities may be missed and managers may keep poor performers who they were considering releasing because they are better than having no one. Many freezes are really sieves where the hiring freeze is frequently circumvented. Some managers hire the same candidates under contract, resulting in no net cost savings.

Pay cuts: where you cut employee or executive salaries by a certain percentage but you do not reduce the days that they work.
• Effectiveness — medium if you focus on managers and executives
• Benefits — managers and executives will usually tolerate these cuts because they are more highly paid.
• Potential problems — it may lead to major workforce disruptions, especially if layoffs occur anyway. It may drive top performers the way because everyone was treated equally. It may not be possible under union contracts. Most will have an expectation that at some point these cuts will be restored. In tight economic times, any reduction in income may cause families living on the edge to lose their house, and so on.

Small Cost-Reduction Options

Forced vacation: where employees are forced to take accrued vacation in the short-term to convert to balance sheet costs.
• Effectiveness — medium
• Benefits — because of accounting rules, it reduces corporate liabilities.
• Potential problems — The dollar impact may be low if employees don’t accrue large amounts of vacation. Can result in work disruption when many employees take vacation simultaneously. May disrupt families by forcing vacations during unusual time periods.

Pay freeze: under this approach, salary increases are eliminated.
• Effectiveness — low with negative top-performer impacts
• Benefits — since not all individuals expect a pay increase each year, it might have less effect on employee morale.
• Potential problems — the amount of labor cost reduction might be small. Top performers (those most likely to get a pay raise) may become frustrated and look elsewhere because they feel they’ve earned a pay increase.

Promotion freeze: where all promotions are frozen.
• Effectiveness — low with significant negative top-performer impacts.
• Benefits — in companies with few promotions, cost reduction will be minimal.
• Potential problems — it will frustrate and likely cause turnover among top performers.

Other Cost Reductions

Many firms use a misguided “save people first” approach to cost cutting, so they attempt to reduce travel, subscriptions, conferences, equipment, telephone costs, etc., before they try any of the above approaches. That may seem like a good idea, but reducing the salesperson’s minutes on a mobile phone might reduce sales more than the initial cost-savings.

In addition, a carpenter can’t really do his job without a sharp saw, nor can a programmer without her latest software tools.

The key is to use reduction approaches where the impact on productivity and innovation is considered and measured along with initial cost reduction.

Final Thoughts

As you can see from this checklist, the highest-impact approaches with the least-negative impacts on top performers are reducing contingent workers, surgical layoffs focused on poor performers, expanded use of productivity improvement tools, better use of technology, and the long-term outsourcing of work where the level of work fluctuates significantly.

On the other end of the spectrum, voluntary buyouts and furloughs to reduce salary costs have the most negatives associated with them.

The most important thing to remember is that you should set specific measurable goals before each action relative to both the short and long term, then check to see if those goals were actually met. In many cases, you’ll be surprised to find that some of the approaches have so many negative unintended consequences that you will not have decreased cost due to negative impacts on productivity and top-performer turnover.

The end result of such whimsical action is well established; most labor-cost-containment strategies seem to be effective in the short term, but fail big time when it comes to meeting longer-term goals. It’s not uncommon for cost-containment strategies to negatively impact the organization long term, as the costs of containment paired with the cost of recovery exceed the short-term savings produced. That said, cash flow can be difficult to manage and even as the economy starts to recover, chances are organizations are going to need labor cost-containment options. If you want a more effective and well-thought-out approach, read on.

A Recurrent Need
It used to be that reducing labor costs was something that organizations only needed to do during tough times, but these days it’s a process that might need to be done on a regular basis. As the need becomes more recurrent, the demand for more options will surface. Like all things in life, cost-containment options have positive and negative impacts. The key for organizations battling volatility in the market is to use the right approach at the right time and to avoid options that present more negatives than other choices.

Before you begin determining what makes sense for your organization, note that in today’s business world, labor costs involve a lot more than the salaries and benefits that your organization provides “employees.” In recent years the landscape of labor types organizations employ to get work done has grown substantially more complex. In a modern organization it is not uncommon, for example, for at least 20% of the work done in the organization to be completed by labor not on the payroll. Managing the workforce strategically requires a holistic view of labor that includes employees, contingent workers, consultants, outsourced service providers, strategic partner labor onsite, and interns.

Focusing Your Efforts With Established Goals
For too many organizations the only goal ever stated when cost-containment efforts are introduced is short-term improvement of cash flow. Because the longer-term impacts of such efforts are rarely considered and monetized, moving forward strategically is difficult. If your organization must pursue such actions, it is critical that a broader set of goals drive the decision making process about what options to employ. Possible goals to consider include:

1. Reducing labor costs (a given)
2. Reduce labor benefit costs
3. Reduce the possibility of key employee turnover
4. Maximize the chances of “released” workers returning upon recovery
5. Minimize worker distraction from the cost-reduction process
6. Restructuring of work/workload
7. Increase employee productivity
8. Reduction in force of employees with obsolete skills
9. Reduction in force of employees with unstable history of performance
10. Reduction in labor cost without increased costs of employee separation (severance/legal)
11. Reduction in non-employee labor costs
12. Minimize damage to your external image and future recruiting capability

A Checklist of Labor-cost Reducing Approaches
I’ve been advising firms for over two decades on how to reduce labor costs or increase productivity, and have documented a number of options organizations can consider. The following is a list of the options available, categorized into those that provide significant, moderate, and minimal cost reduction.

Significant Cost Reduction Options
Cut contingent labor — jobs and work that is pre-designated as “contingent” is cut, or contracts are not renewed. Allows for rapid short-term increases and decreases in labor costs.

• Effectiveness — high, if the organization has planned for contingent labor to be used as a buffer to economic conditions.
• Benefits — significant cost savings if low-impact jobs are made contingent. Contingent workers know up front that they may be eliminated. Fewer legal issues exist when releasing contingent workers. Managers are more willing to make the decision to release contingent labor.
• Potential problems — requires that you designate a significant percentage of your work to be done by contingent labor. Managers often resist making “their” jobs contingent.

Permanent surgical layoffs — Releasing a percentage of the workforce with no immediate intent to bring them back. Surgical layoffs are targeted, while traditional “percentage of the workforce” layoffs tend to focus on employees with low seniority.

• Effectiveness — high, only if surgical and targeted toward low-impact jobs and low performers.
• Benefits — in addition to labor cost savings, you can maximize the current and future capabilities of your workforce if you do surgical layoffs. The most effective layoffs target jobs that don’t generate revenue, have a low business impact, eliminate skills sets that are no longer needed and cyclical work that can be outsourced to vendors that can handle a fluctuating workload.
• Potential problems — selecting employees based on seniority can result in the loss of top performers and individuals with key skills. Many firms offer severance packages, dramatically increasing the overall cost of the layoffs. Rumors related to future layoffs can distract your employees, impacting productivity. If you don’t also “change the work,” the remaining workload can stress your workers and increase error rates. If you lay off a large percentage of your workforce, certain federal (WARN Act) and state regulations may require you to notify regulators in advance. Some managers hire back released workers as contractors, resulting in no cost savings. Often low-wage jobs are cut instead of high salaried positions. Negative publicity from large-scale layoffs can hurt your external employer brand image and impact future recruiting ability.

Productivity improvement practices — rather than focusing on costs, improve management processes, tools, and managers so that your current workforce produces more output at a higher quality. Tools might focus on job rotations, turnover reduction, work restructuring, workload re-assessment, identifying barriers to productivity, and rewards for productivity.

• Effectiveness — high
• Benefits — you don’t lose the talent that you’ve worked so hard to recruit and train. Better people-management practices increases output and improves product and service quality. Firing bottom performers has a high ROI and top performers appreciate the focus on performance. Many workforce productivity improvement tools are inexpensive.
• Potential problems — managers may resist change. Your HR department might not have a focus on worker productivity nor a toolkit to increase it.

Substituting technology for labor — where you substitute software or hardware for labor.

• Effectiveness — high, although the initial costs of any equipment or software may be high.
• Benefits — a significant percentage of “people work” can now be done remotely on the web, with software, hardware, or robots. Technology can work 24 hours a day and doesn’t get sick. Leasing can reduce initial costs.
• Potential problems — there may be workflow disruption in the short-term during installation. Technology management and maintenance costs must also be considered. Unions and current employees may actively resist any substitution of technology.

Outsourcing work — where work formerly done by employees is shifted to outside vendors that are willing to adjust their costs based on the changing workload.

• Effectiveness — high, when work that frequently fluctuates up and down in volume is outsourced.
• Benefits — a shift to a more permanent level of flexibility in labor costs.
• Potential problems — you lose direct control over the work. When you add the need for a vendor profit margin, the overall labor costs might increase. Vendor reliability and maintaining quality are also issues.

Long-term furloughs in select industries — where you release employees, but you intend to bring some back when business improves. You generally maintain a relationship with individuals affected while they are on furlough. Furloughs are commonly used in the airline and transportation industries.

• Effectiveness — medium in industries with high-volume roles
• Benefits — enables medium to long-term containment of labor costs in industries where people are extremely loyal, like the airline industry, where employees get used to the pattern and learn to find secondary jobs while waiting for you to call them back. Unless you have that high level of attraction, long-term furloughs are the same as long-term layoffs.
• Potential problems — employees on furlough might fail to return if the furlough is too long. Industries without a history of long-term furloughs will have difficulty with this approach.

Plant closings — were you close an entire facility or plant, and you shift work to other facilities.

• Effectiveness — medium
• Benefits — all labor costs are eliminated for the associated facility.
• Potential problems — your firm’s capacity to produce is also eliminated. Unless you are willing to pay for relocation (and even then some will not move), you will lose some top performers and individuals with key skills.

Seasonal furloughs — where you release employees during traditional slow periods. These furloughs are often during seasonal periods and may be repeated at the same time each year.

• Effectiveness — high, when you hire individuals who understand and accept the pattern.
• Benefits — if your employees easily adapt to the pattern (especially if your employees hold a job for extra income), most will return each time. This process works better if you hire individuals who understand and can accommodate this pattern and if you tell them when they will likely be allowed to return.
• Potential problems — individuals who need a continuous income stream probably won’t return. Top performers will likely look elsewhere first.

Short-term furloughs to reduce pay costs — this approach asks/tells employees to take several whole days off each month without pay. The days can be free or picked by the organization. The net result is that employees receive a 3 to 10% pay cut.

• Effectiveness — low with many work disruptions
• Benefits — employees may in the short-term see it as a positive thing that they are keeping the job and they get some days off, even if they are unpaid.
• Potential problems — may shock employees and cause major schedule disruptions. Employees may see it as a trick way to institute a pay cut. It does not generally reduce the need for future cuts. Top performers may leave because they know they can demand full pay at other firms. Exempt employees may not be able to legally have their pay cut if they work any hours during the furlough period. Union contracts generally prohibit pay cuts of any kind without union approval. If you promised employees an annual amount of pay, you may face lawsuits.

Voluntary buyouts/early retirement — where employees are given the choice to accept a severance package to separate prior to plan. Often rewards for early retirement are part of the plan.

• Effectiveness — extremely low
• Benefits — managers avoid having to make tough decisions
• Potential problems — top performers and key employees may accept the package, resulting in you paying your best people to leave and perhaps go to competitors. Too many or too few employees may accept the offer.

Next week, I’ll add to this list with lower-impact options for organizations seeking moderate or minimal cost-reduction options.

For more information on the benefits of building an executive search function internally, see my article from last week entitled “The Benefits of Internal Executive Search and Why Now Is the Perfect Time to Make the Move.“

Selecting the Appropriate Strategy or Model

Models abound in talent acquisition, so when it comes to recruiting executive level talent it should come as no surprise that organizations can pursue a wide range of approaches. In addition to the major approaches listed below, some organizations opt to position the executive search function outside of the core talent acquisition function or HR, opting instead to have it report directly to the executive committee. The six major models used by organizations with established executive search practices include:

1. The comprehensive model — this model establishes a full life-cycle recruiting process focused on executive hiring within the organization. The individual/team charged with executive recruiting is responsible for all aspects of competitive intelligence gathering, sourcing, screening, assessment, and closing.
2. The hybrid model — this model consolidates responsibility for recruiting higher volume executive roles with an internal function while continuing to use external service providers for lower volume roles or roles requiring a unique expertise.
3. The final stage model — executive recruiting is a process, and like all processes different stages consume varied resources. The final stage model offloads the resource intensive stages of the recruiting lifecycle to research organizations willing to unbundle sourcing from the rest of the process, freeing up internal resources to focus on relationship building, screening, assessment, and closing.
4. The inverted model — outsourcing isn’t new to the recruiting profession; a majority of corporate functions outsource some aspect or another of the process already. However, for many organizations executive recruiting has always been outsourced while non-executive recruiting was executed internally. The inverted model flips those conditions, outsourcing the recruitment of lower-level professional and wage-labor roles to service providers while transitioning the core talent acquisition function to focus on high level professional, managerial, and executive leadership roles.
5. The competition model — under this model, searches for executive level roles are allocated to a selected mix of internal and external recruiters at the hiring manager’s discretion on the premise that the competition will more rapidly strengthen the internal team.
6. The TA specialist (gradual change) model — this model, by far the most common, allocates a portion of executive searches to specialists within the core talent acquisition team who have prior executive search experience, or that possess a unique combination of skills and knowledge relevant to the search. As more and more searches are executed internally, the TA function gradually assumes responsibility for internal executive search.

Benchmark the Best Firms
The second step should be to benchmark some of the major corporations that have in the past used internal executive search. This research should include understanding how they made the business case, what benefits they anticipated, and what outcomes were both in line and out of line with expectations. A list of potential problems and characteristics of an outstanding internal search function should also be put together. Some firms know to execute executive searches internally include:

• Cardinal Health
• PepsiCo
• Keane, Inc.
• Research in Motion
• Key Bank
• Sodexo
• Kohl’s Department Stores
• Target
• MetLife
• VMware
• Microsoft
• Wachovia

Build the Business Case for Internal Executive Search

The next stage in developing your plan should be to build a convincing business case that convinces the executive committee that the internal function would be capable of producing superior results, not only from a financial perspective, but also qualitatively. Work with CEO players within the executive committee including the CEO, CFO, COO, and CHRO to develop a long list of potential benefits and drawbacks of bringing the function in-house. With the list developed, work with the CFO to monetize those list items he/she determines to be the most financially relevant. Elements of the business case should include estimates of:

• The program’s projected ROI
• The performance differential i.e. a prediction of the difference in quality the internal function will produce compared to that of external service providers (measured via the candidates post hire on-the-job performance)
• The cycle time differential between internal and external searches. Where possible, work with the CFO’s office to monetize the value of any predicted time savings.
• The candidate diversity differential — i.e. a prediction of the difference in diversity rates the internal function will produce compared to that of external service providers.
• The retention differential — i.e. a prediction of the difference in retention the internal function will produce compared to that of external service providers
• The process success rate — i.e. the improved position fill rate as a result of dropping external firms.

Note that this strongest business cases converts typical HR results measures into dollars. For example, if you state that the turnover rate will be 5% lower, it won’t be as powerful as stating that the higher retention rates increase revenue by $17 million.

To build a strong business case you will need access to real data that is difficult for critics of your solution to criticize. The best way to garner such data is a pilot study that uses a “split sample” approach (like in drug testing). Leveraging this type of pilot would require that an equal distribution of searches be allocated to an internal and external service provider simultaneously. You then compare to see which one produced the best results. You can also do a side-by-side comparison, where both providers are used to source candidates for the same position.

Compile a List of the Top Arguments for Sticking With External Executive Search
It’s important to compare the positive aspects of moving the function inside with arguments for maintaining the status quo. Do your research with benchmark firms and work with your current vendors to compile a list of counterarguments for sticking with the current external approach either completely or in special cases.

Some of those arguments should include:

1. They are more aggressive — there’s just no question here: executive search recruiters are at least 50% more aggressive than the average corporate recruiter. Of course you can hire executive search types for your internal team, but if that isn’t an option, you might find it impossible to convert most corporate recruiters into executive search experts.
2. Privacy capability — executive search firms have a long history of protecting the names of potential candidates from people who don’t need to know. Obviously, a well-designed internal search function can also have privacy process that allows candidates to drop out of consideration without public record.
3. Hire just when you need them — rather than retaining a continuous staff of internal executive recruiters, you need only pay for these services when you have an opening. It’s also hard to maintain recruiter skill level internally if you have infrequent openings.
4. More global capability — some larger firms have a much broader global capability than you could ever develop internally. If you truly need to do a significant amount of global hiring, you’ll find that using agencies will continue to be the norm in many regions. Many of the top candidates only know that system, so using another one might confuse them.
5. Superior closing abilities — in my experience, executive search professionals are markedly better at selling difficult candidates and closing the deal. In the same light, if your firm has a bad external employer brand image, external professionals also excel at overcoming that issue.
6. You only pay with a placement — if you use contingent firms, there’s no fee unless you hire someone the provider introduces.
7. Manager relationships — whether you like or not, executive search firms are good at building relationships with managers. It’s important not to be naïve: if you try to drop a major executive search firm, be aware that they will put tremendous pressure on your executives to stop HR in their tracks.
8. Candidate relationships — if you need candidates immediately but they require a long-term trust relationship in order to be sold, executive recruiters with their long-established relationships may be the only option.
9. A mixed approach is possible — obviously you can build and maintain an internal search function but still occasionally hire an external search firm when their unique capabilities are needed.

Compile a List of Potential Problems with Operating an Internal Search Function
One of the key practices that distinguish individuals’ great at execution versus the average performer is the time they spend identifying potential problems they may encounter and devising potential solutions in advance. Executive searches play out in a high-stakes world where political maneuvering is the norm, so recruiting leaders attempting to move executive search in-house need to be even more aware than ever before what problems they may encounter and be able to enact feasible solutions in rapid succession.

Possible issues include:

• Quality of recruiters — executive sourcing and search requires recruiters of much higher caliber than most corporate functions are built on today. This will create political issues between this function and the broader talent acquisition function. Great executive recruiters leverage tons of competitive intelligence about the business and the industry to become business experts first, recruiters second. Maintaining recruiter aggressiveness may also be difficult once external executive recruiters are brought in house.
• Political issues within HR — the nature of executive recruiting will create a close connection between the individuals executing internal executive search and the executive team, often a stronger connection than that between the operating committee and the HR leadership. This can create jealousies within HR.
• Sufficient compensation — executive recruiting requires a compensation model that can be difficult for those outside the function to tolerate. Imagine an executive recruiter two layers deeper in the organization than the VP earning three times the VP’s annual income.
• Managing recruiters — executive recruiting isn’t a routine activity, which can make those managing the function suspicious as to what those in the function are up to. Executive recruiters may disappear for weeks while sourcing and gathering competitive intelligence, producing little to no visible activity, and then dump a mass of activity all at once. Traditional recruiting managers and your regular recruiters might not understand this process.
• Budgeting — budgeting for executive search is not as simple as budgeting for a defined systematic process. Great recruiters tailor the process and candidate experience to the search. While broad parameters can be established, traditional analytics and budgeting processes may prove to be woefully inadequate.

Select Program Metrics to Demonstrate Performance
Metrics are simply measures that help you and others determine if your actions have led to a situation where you have accomplished your goals. For each program goal you establish in your plan, you need at least one metric that all parties involved agree is indicative of performance related to that goal. The top internal executive search metrics that I recommend include:

1. Quality of candidates presented — what percentage of all candidates introduced meet or exceed the defined requirements. Alternate measures could include the diversity rate of candidates introduced and the percentage introduced that have previous experience at “targeted” benchmark firms.
2. Quality of hire — as measured over three years by job performance scores, number of new products developed or projects completed, amount of bonuses (as a % of salary), number of promotions, 360-degree evaluations, or other job-related measures.
3. User satisfaction — ratings of both candidates and the executive committee.
4. Average tenure — the average tenure of executives sourced via the internal function.
5. Time to fill — the time it takes to fill the position in days from the initial contact.
6. Improved candidate information — the quality of the information provided on the candidate (job switching decision criteria, interests, and dream job requirements).
7. Legal issues — the number and the cost of legal issues related to executive search.

Each of these metrics should be compared to the past performance record of external search firms.

Final Thoughts
Recruiting managers are always seeking the “Holy Grail” when it comes to being more strategic. It doesn’t take a rocket scientist to figure out that recruiting for higher-level positions like the CFO and the director of product development will have a strategic impact on the firm and make the TA function more visible among the executive committee. With that in mind, the decision to move the most impactful recruiting inside is an easy one. Of course there are some risks involved, but taking large risks and acting proactively are part of being a strategic leader.

In many organizations, executive search fees consume double-digit portions of the recruiting budget, yet produce results only 45% of the time. Few budget items are more costly and ineffective, but the motivations behind this shift are not solely monetary. Executing executive searches internally dramatically increases the business impact of the talent acquisition function and raises the visibility of talent acquisition as a key contributor to business performance significantly.

After all, what else in recruiting could possibly impact business results more than bringing in a high-quality, innovative executive capable of delivering market-changing increases in efficiency and effectiveness?

The increase in “face time” between talent acquisition and the executive committee further increases the function’s ability to sell the vision of the organization and sustain operations when budgets get tight. In the following section, you will find numerous arguments supporting the shift.

When you add up all the positive benefits, it’s hard to argue that there will be a better time to explore this strategic move.

Changes in the Business Environment Make It a Perfect Time to Act

Economic factors always play a role in determining the feasibility and desirability of business decisions. Some of the economic factors that make this a perfect time to bring executive search in-house include:

• Many organizations have time to focus on building new initiatives. Cost-containment efforts and hiring freezes coupled with reluctance by organizations to eliminate their talent acquisition functions have contributed to a situation where many recruiters are on the payroll but working on many non-recruiting related activities. As hiring volumes are not likely to increase dramatically for at least 8 to 12 months, many organizations have the time to plan and build a robust executive search function internally.
• Available executive recruiters with proven track records. Executive recruiters are in a different league than most corporate recruiters. The great ones often know more about their client organizations than the senior-most HR leader and are viewed by candidates and executives just as much as coaches as they are recruiters. As the economics of third-party search models continues to erode, a significant number of recruiters with proven track records could be enticed to join an organization.
• Executive search openings will become frequent. Historically, the demand for external executives was sporadic, a condition that contributed to a strong argument against building executive search capability in-house. However, increased volatility in global markets, double-digit growth in emerging markets, changing workforce demographics, increasing rates of knowledge obsolescence, and years of pent-up frustration among executives chained to jobs that no longer motivate due to economic conditions will drive a significant increase in the demand for external executive hires as turnover skyrockets. Left unmitigated, the demand for external assistance in recruiting organizational leaders could chew up a majority of existing talent-acquisition budgets.

Changes in Recruiting Tools/Approaches Also Make Now a Perfect Time

In recent years, the Internet has brought a phenomenal amount of transparency to labor markets around the globe. That transparency has enabled many innovative recruiters to gain access to a wide range of cheap but effective recruiting tools that render closed databases of candidates such as those maintained by third-party agencies much less valuable.

Some of the changes in recruiting that make now a perfect time to shift executive search back in-house include:

• Finding executive prospects is now much easier. Finding the names of potential candidates is no longer a challenge. A majority, if not all, of the most visible leaders in an organization are visible externally both on user-maintained websites like LinkedIn and other white collar social networks and system maintained databases like ZoomInfo and Jigsaw. Even the corporate homepage of individual firms now list their executives. In addition, most executives in public companies receive stock as part of their compensation, making it easy to find their name and job title in financial disclosures required by the SEC.
• Building relationships with prospects is easier. Executive recruiters are masters when it comes to building relationships, the key to which is not trading solely on the value of a job opportunity to a candidate. Great executive recruiters use competitive intelligence so that they can deliver value to a candidate during each and every interaction, be it via email, phone call, or face-to-face meeting. Social media tools like Facebook, LinkedIn, Ning, and Twitter, combined with CRM methodologies, make sustaining longer-term relationships with larger masses of professionals much easier. In many respects, these tools have brought executive recruiter type “tickler files” out into the public.
• Search firms aren’t as strong. If you read the business news, you already know that executive search firms have been going through a great deal of turmoil themselves in the past few years. As a result, many have built sourcing functions offshore, shed high-cost relationship builders, and replaced knowledgeable account executives with younger, more sales-oriented professionals who know little about the nuances that characterize an industry. They have added other value-add services to help defray the impact from declining search revenues. Combined, all of these factors result in former powerhouse agencies producing results that most corporate functions can match or exceed at a fraction of the cost.

Factors to Consider When Determining to Shift Executive Search Inside

If you decide to begin a formal assessment as to whether or not it’s a good idea to build an internal executive search function, start with a simple “business case” checklist of factors that can impact organizations, including the benefits and opportunities that accrue to organizations executing executive search in-house and the problems that can occur when using executive search firms.

Benefits and Opportunities Resulting from Internal Search

• Increased sales, partnership, and CI opportunities. No firm wants to lose sales and partnership opportunities. Recruiting for executives requires you to “sell” a large number of influential executives inside and outside your industry on the value of your firm. When you use external executive search, relationships “belong” to and are retained by the external search firm. However, if your own recruiters build these relationships and sell your firm effectively, it’s possible that a significant number of those candidates not hired will hold a more positive image of your firm, and as a result may consider becoming a customer or strategic partner with your firm. The benchmarking and candidate assessment work that is now done by your own recruiters might also yield competitive intelligence that can be used to benefit your firm. The dollar value of this benchmark information and potential sales and partnership opportunities need to be added to the positive ROI of an internal function.
• An opportunity to build a competitive advantage. All high-impact business functions need to provide their firm with a distinct competitive advantage. When you develop your own search function, you have the opportunity to build a truly modern, technology-driven global function that could provide your firm with a distinct competitive advantage. Search firms are generally forced to offer the same services to all clients, so using them seldom provides a major competitive advantage.
• Internal recruiters know your firm. In the past, one of the advantages of search firms was that over time, they got to know your firm, its needs, and its culture. Unfortunately, the downturn has dramatically changed how many third-party search providers operate, reducing their ability to be as knowledgeable as they once were. In addition, in the fast-moving world of business, it is nearly impossible for any outsider to keep up with changes in organizational needs.
• Referral programs can produce amazing results. Traditional employee referral programs routinely produce hires who are better performers and have higher retention rates. Referrals produce these results because top-performing employees tend to know a high percentage of the harder-to-find, “not actively looking,” currently employed top performers. Referrals also work because colleagues are often more willing to talk to their peers at other firms about opportunities, than to recruiters of any type. Although it’s a surprise to some, referral programs focused on executives can have even more dramatic results, in part because executives have much broader networks than the average employee. As a result, specially designed executive referral programs can produce amazing results without the need to pay a referral fee (many such programs donate a reward to a charity of the executive’s choosing).
• A chance to build up HR’s image. Using external search firms for the most critical jobs further reinforces an already weak HR image that they can’t handle the really tough, high-risk assignments. Stepping forward and becoming accountable for the most visible and high-impact recruiting jobs provides HR with an opportunity to build its internal brand image. If HR wants to increase its visibility and impact, it must change its focus toward recruiting at the top of the organization and outsource recruiting at the bottom, rather than vice versa.

Problems That Can Occur When Using Executive Search Firms

• Using executive search might increase your turnover. Research at one major firm revealed that individuals hired through executive search firms have a higher turnover rate than executives recruited by their own internal recruiters (possibly because search firms naturally attract “actives” that are more interested in continuous opportunity and their career than in building a legacy at any one firm). In addition, exposing your executives to executive recruiters might have a separate set of turnover consequences, even though no ethical firm would use the relationships they build with your own firm’s executives during a current search to recruit them away.
• An increased chance that the hire will be a bad “fit”. During all searches, the longer the recruiter is in direct contact with a prospect, the better they will get to know them. This longer relationship makes for a more accurate assessment and a better fit. On the contrary, if you only see the outside candidates in one or two interviews toward the end of the recruiting process, the chances of making a major hiring error increase dramatically. With an internal function, all of that “assessment time” is owned by people living in your culture, thus improving your chances of hiring someone that fits.
• Losing candidates you never see. External recruiters create an initial list of qualified candidates that you never see, and they do 100% of the “selling” to those on that initial list. Because you’re not involved in any aspect of this initial selling, you can never know whether you are losing great candidates because these external recruiters are doing a bad job selling.
• “Bidding” for candidates is expensive. It’s only natural that large executive search firms “shop” top candidates to many different clients. This exposure to many potential clients allows their top candidates to be bid on, like highly valuable auction goods. This competitive process gives their candidates an opportunity to accept a much higher monetary offer, which simultaneously increases the search firm’s income. This means you will pay significantly more for candidates who are externally bid on. In contrast, passive candidates you directly source might only be interested in your firm, and may be up to 25% cheaper than high-demand executive-search candidates.
• Avoid restrictions on candidate availability. Search firms often have agreements not to recruit from their clients. This might seem to be a benefit on the surface, but it also means that large executive search firms with many clients in an industry will have a smaller candidate pool to offer you because they can’t include employees from their current clients. Even though these individuals might be willing to change firms, you’ll never know it because no one will tell you about these restrictions. Internal search allows you to recruit from literally every firm (perhaps with the exception of major customers) and thus it automatically provides you with a broader talent pool.
• Performance issues. Failing to fill all of your open positions is a potential problem with retained firms. As a result, you need to do your research to make sure that the percentage of “unfilled searches” by your retained firm isn’t notably higher than it would be if you were to use internal search. A similar comparison needs to be done for “time to fill,” because external firms can be slower. The last but most important factor to compare is the performance of the hire (on-the-job performance and retention rates). One major corporation that did this external/internal comparison found no performance improvement, slower hiring, and significantly higher costs from external search.
• Cost of recruiting. Some executive recruiting fees have been reduced during the recession but are still markedly higher than corporate recruiting cost per hire. If you hire a retained search firm, you pay even if they fail to fulfill the search. If you hire a contingent firm, you may pay more indirectly, in the time wasted by your managers sorting through mediocre resumes that contingent recruiters might send them in the hopes that one will “stick.”
• Absence of performance metrics. If your CFO or CEO demands every process have performance metrics, you’re probably going to have to develop them yourselves. In my experience, external search firms are notoriously bad at providing business-impact metrics. If you don’t believe me, search their website and invariably you will find numerous “word arguments” but not a single quantified result or dollar impact.
• New clients may occasionally get a preference. Firms that are desperate for attracting new clients may steer their very best candidates toward those clients with whom they hope to sign new contracts. If you’re a long-term client, you have to include that risk as part of the equation.
• You may select the wrong firm. Unfortunately, there is a wide variation in the “quality of service” delivered by search firms. If your vendor assessment process is inaccurate, you could be stuck with a weak firm. In contrast, if you build your own internal function yourself, you have more assurance that you will have an excellent team.

Next week I’ll expand on this topic with an article that focuses on developing a plan to bring executive search inside. If your organization has done this and you have lessons that you would like to share with your colleagues, please feel free to send me a note via email and I’ll make sure your learnings are incorporated.

Most people in recruiting and talent management are just so busy that they don’t have time to step back and build programs or marshal line managers to participate in programs that successfully let them see the “big picture.”

As a result, many organizations are just starting to emerge from another painful cycle of rapid hiring followed by large-scale layoffs.

I call this phenomena the “war for talent” followed by the “war on talent.” Unfortunately, many organizations can look back at their history and see that for decades they have been repeating the same cycle over and over.

This “war for talent/war on talent” is unnecessary and expensive. In my view, it’s time to forever break that cycle through more effective workforce planning.

The topic of workforce planning is hot these days (it will be a major topic at the fall ERE Expo) because more and more executives have started openly discussing their desire not to repeat the painful “war for talent/war on talent” cycle. This binge and purge is extremely expensive, and it damages the firm’s employer brand image, stock performance, and innovation capability.

If you’re going to end this vicious cycle, focus both time and resources on workforce planning and in particular, upturn planning. While news reports may have left you thinking things are not getting much better, many organizations report that they are anticipating 200%-plus growth in requisition volume compared to last year by Q3 end.

If you work in talent management and you were surprised by the last economic downturn, don’t reaffirm your lack of competence by being surprised by the next upturn. Even the most pessimistic economists predict an upturn; the only question is when. Regardless of when it occurs, the upturn will provide talent management leaders an opportunity to make the talent management function look good.

By developing a turnaround plan and having your processes in order so that when the upturn does occur, your firm will be poised to act quickly and take advantage of the talent opportunities available.

Workforce Planning Defined

“Workforce planning is an integrated and forward-looking process and set of action plans that are designed to predict what will likely happen with regards to talent supply/demand in the organization and what prescribed actions will be required by managers to avoid or mitigate people problems, take advantage of talent opportunities, and to improve the ‘talent pipeline,’ so that the firm will have the necessary ‘people capabilities’ to meet your business goals and to build a competitive advantage over other firms.”

The workforce planning process for specifically addressing the economic turnaround is often referred to as a “explode out of the box” turnaround plan.

10 Talent and Workforce Planning Opportunities

No manager wants to be blindsided by the future, so the foundation element of any decent workforce planning effort is forecasting. However, take a broad view of forecasting, looking beyond the availability and demand for labor to identify highly probable upcoming talent problems and opportunities as well. Accurately forecasting upcoming problems and opportunities gives managers ample time to prepare solutions for problems and to build the business case for taking advantage of talent opportunities.

Most professionals involved in workforce planning successfully identify upcoming problems, but few take the time to identify and prepare for upcoming opportunities. Great businesspeople are always seeking out new opportunities, so realize that when the economy turns around and corporate revenues increase making investment dollars available, some outstanding opportunities will present themselves.

The top 10 talent opportunities that will occur just as the turnaround begins are:

1. A broad talent pool. Hiring during times of layoffs can be problematic because some firms use small scale layoffs to release their “deadwood” (problem employees.) However, after sustained periods of economic decline, many organizations will have ceased operations entirely, forcing even the most qualified and strong performers into the labor market. The end result is the talent pool that will be available in the first few months of the turnaround will be very deep. The key is to plan ahead and have a process is ready, so that you can act quickly.
2. Expanded active candidate opportunities. If you’re in the recruiting function and have no responsibilities for retention at your own firm, understand that as a turnaround begins, the number of currently employed people actively looking for a job will increase dramatically. For example, one recent study by Adecco revealed that an amazing 71% of currently employed workers under 30 and 54% of all workers will actively seek to find a new employer when the upturn begins. This means that in addition to the robust unemployed talent pool there also be a huge number of employed people who will be seeking to leave firms that have treated them poorly during the recession. Employees are not stupid; the never-ending round of furloughs, travel freezes, budget freezes, and layoffs have left a lasting impression about how their current firm values employees. This means that if you have predefined and targeted these individuals, you will have an opportunity to hire some truly amazing talent away from your competitors.
3. Employee/contingent/technology arbitrage opportunities. Arbitrage is a common term in business for taking advantage of value differentials, but it’s a term that’s not frequently used in talent management. Many in talent management and HR are painfully consistent, staunch defenders of an “employee-first” or “people-first” approach to providing labor. Maybe it’s because the word “human” occurs in the title of the function (human resources), but the time has come to stop proposing a single solution (i.e., employees) to fill all labor or work needs. Proposing an “employee-only” approach is an outdated 20th-century concept that needs to be buried. For example, if a manager needs a certain amount of work done (for example, programming) the typical HR answer is “hire a new employee as a programmer.” But there are many other options for getting the programming work done. Some of those include hiring a contingent worker just for the time when the programming is needed. Another option would be to outsource the programming work. A third, but increasingly important, option that needs to be part of the decision-making mix is the choice of having the work done by technology. Rather than using people in every case, HR needs to learn how to add to its range of options the direct substitution of software and hardware for people. Car manufacturers like Toyota have long ago added “buy a robot” as an alternative to hiring new employees. Major accounting firms have also learned to buy software as a viable alternative to hiring more CPAs. This turnaround is an opportune time for HR and talent management to expand their thinking and their processes to include contingent workers, outsourced partners, and automation as additional labor options. I call this approach employee /contingent/technology arbitrage and before the turnaround gets under way, talent management must systematically review every job family in order to identify where technology or contingent labor is a better choice than hiring a new employee. Of course, such an approach requires HR to work closely with procurement, IT, and production to ensure that everyone is aware of the advantages and disadvantages of each of the individual contingent worker/outsource/hardware/software options.
4. Global “testing” opportunities. Economic history shows us that economic upturns don’t occur uniformly around the world. Obviously talent management managers can take advantage of these variations to recruit heavily in economic regions that remained depressed. These variations also provide you with some great opportunities to test new talent approaches in the countries whose economies turnaround first. You can use these countries as beta test sites to improve your recently initiated but often to this point unmeasured new ventures into social network recruiting, live video interviews, workforce planning, and retention efforts.
5. Employer brand-building opportunities. If your firm is one of the many that have had your “talent failures” (including layoffs, pay cuts, promotional freezes, etc.) publicized online and in the media, now is your opportunity to begin rebuilding your external image. Act fast to begin to spread the word in the media and on the Internet about the positive things that your firm is doing after you lift your heart and freeze. The fact is that after years of bad stories, the media is hungry for positive people-management practices talk about.
6. Opportunities to rekindle innovation. Reduced corporate revenues have meant massive budget cuts and overworked staff. However, the demand for innovative products hasn’t decreased at all, so additional hiring and budget will provide an opportunity for your company’s innovative employees to shift from “risk avoidance mode” back into innovation mode. Talent management can facilitate this increased emphasis on innovation by refocusing its development, metrics, and rewards programs to emphasize innovation over cost-containment. Change your employees’ mindset and increase their willingness to take risks, and talent management can play a major role in that adjustment.
7. Hiring manager “re-education.” During hiring freezes, it’s obvious that managers do very little, if any, hiring. As a result, they forget a lot about the right and wrong way to approach recruiting. Managers need to be updated or even retrained when hiring freezes are lifted. Look upon this “lull” as an opportunity to provide data and business arguments to convince them to increase their focus on recruiting. Educate them about the changing expectations of the workforce and the new technologies available in recruiting.
8. Talent “alert” opportunities. Almost all of recruiting is geared to respond to an open requisition. This reactive approach is extremely limiting in that it only informs managers of the availability of talent when a requisition is open. This ignores the fact that some managers would purposely begin hiring solely on the basis that highly desirable but seldom available top talent is available. For example, if you managed a golf team and currently had no slots open but learned that Tiger Woods was looking to change teams, wouldn’t you want to be notified? This proactive process is called a “talent opportunity alert” and it should be part of everyone’s turnaround plan.
9. The opportunity to avoid over-optimism. Many workforce forecasts and predictions are inaccurate because they almost invariably predict steady uninterrupted growth once the economic turnaround begins. Although everyone might be tired of the downturn, it would be a mistake to assume that there won’t be “ticks” or short spurts of growth followed by contraction. HR’s tendency to be overly rosy or optimistic needs to be tempered with the reality that both up and downturns will likely become more frequent in the future.
10. The opportunity to correctly identify when the turnaround begins. Rather than relying on strategic plans, budgets, or sales forecasts to let you know the precise time when the turnaround has begun, you should consider developing your own process. The easiest and most effective way of predicting within a month of when the turnaround will begin is to use the precursor or leading-indicator approach. This process identifies past economic turnaround patterns in your industry and firm and then uses these leading indicators or precursors as predictors of when your firm can expect growth, and to some degree how much growth. The premise is simple — study past turnarounds in order to identify which internal business functions or competitor firms most accurately predict the time of an economic turnaround. If you find a pattern where for example, your finance department always gets it right or firm X always begins its turnaround at the right time, you can then use their present actions as indicators of the coming turnaround.

Final Thoughts

Some of the most successful people in business got to where they are because they developed processes that allowed them to routinely “turn lemons into lemonade.” Unfortunately, many in talent management get so distracted or even suffer “corporate depression” during economic downturns that they fail to see the sun coming up over the horizon.

Downturns are never pleasant, but exploding out of the box after them can be exhilarating and exciting. Great turnaround strategies don’t just occur on their own, they require that serious talent and resources be put into workforce planning.

If you need more help, see me in Florida at ERE where everyone will be focusing on the future.

Recording “Live” Video Interviews Provide Several Additional Benefits
Not all firms choose to record and keep their live video interviews, primarily due to technology limitations, cost, or privacy concerns (no candidate wants to find an embarrassing interview posted on YouTube). However, if you do record your interviews, there are several benefits that can accrue to your firm, including:

1. Documentation — both the questions and the answers can be documented so that you can legally demonstrate what happened (and what didn’t) should a hiring decision be challenged.
2. Later viewing — recording your interviews allows you to show it to others who could not be present during the original interview. This also gives you the capability to take a second look at the interview to see if you missed anything or to compare it back to back with other recordings of interviews that might have occurred out of sequence.
3. Increased consistency — recording interviews encourages managers to follow the script and their prescribed list of questions because they know that the tape can later be reviewed by HR. HR can also review multiple interviews of the same candidate in order to see if they are giving consistent answers. The same process can be used to determine if different interviewers are inadvertently repeating the same questions and boring the candidates.
4. Niche skill searching — video content search tools now exist that allow users to search vast video libraries for words being spoken in the video. Such tools would enable organizations to quickly identify candidates interviewed in the past who mentioned a unique skill that might not appear on a resume.
5. Passing along candidates — individuals who were not selected because a “superstar” candidate was in the candidate slate can be forwarded on to other hiring managers without having to bring the candidate back in.
6. More honesty — you may get a higher rate of honesty because the candidate knows that the interview was being taped (making it easier for the firm to confront their answers after talking to their references).
7. Improving the hiring process — if the newly hired employee prematurely quits or must be terminated, HR or the hiring manager can go back and review the interview in order to see if they missed any indication of a problem. This information can be used to improve interview training or the hiring process.

Potential Problems That You May Encounter
With any process, there are weaknesses and potential problems that you might encounter. Most in-person interviews are fraught with problems as well, so don’t be surprised if the same problems occur in video interviews also occur in traditional in-person interviews.

1. Candidate resistance — some candidates may not like the idea because they are afraid of technology, privacy issues, or because they’re just more comfortable with traditional in-person interviews. Cultural and religious influences might make some individuals averse to having their picture captured. Taken together, these factors could influence candidate performance.
2. Manager resistance — managers have in the past resisted the use of video interviews because they couldn’t find the available time to actually view the video, they disliked having to go to a video conferencing center, or they disliked having to use special equipment like headsets. New remote interviewing technologies remove most of those concerns because they can be done in their office, using their standard computer and telephone. Some managers may still resist because they simply prefer an in-person exchange. Another possible resistance factor is the possibility of having to hold interviews before work, after work, or during lunch.
3. Equipment issues — although it’s rare, modern web cam cameras can malfunction and the loss of an Internet connection or mobile phone service can prematurely interrupt an interview. The facial expressions of individuals with darker complexions might not come through as sharply as others if the lighting is weak.
4. Interviewing from their company facility — for currently employed individuals, it’s probably not appropriate for them to interview while at their current job site. As a result the interviews should be scheduled at a time so that they can interview from another facility or from home.
5. Background noise — office noises and interruptions from the manager’s location may degrade the interview experience. Distractions or what appears in the video background on the candidate’s end (especially if they are at home) might distract from the interview results.
6. Supplying the candidate with video equipment — a process must be developed to quickly provide the interview candidate with a web cam and instructions in how to operate it. Some cameras might not be returned.
7. Possible performance differential — it might be a mistake to automatically assume that remote interviews and in-person interviews produce the same results without at least some preliminary side-by-side testing to ensure that candidates perform the same no matter which approach they are interviewed under.
8. Discrimination issues — when using telephone interviews, physical and diversity characteristics are not visible to the interviewer. However, during both in-person and video interviews, the race, sex, age etc. of the candidate is visible. There is a small possibility that individuals from different diverse groups will appear to perform less well on video than they do in person. As a result, track performance to see if there is a problem.

Improving Traditional Interviews by Changing the “Where and When”
If you can’t adopt remote live video interviewing, the next best thing might be to change the process so that scheduling in-person interviews is easier on the candidate. Remember, the people you’re interviewing might be current or future customers, so taking their needs into account can only help strengthen the relationship. Some new scheduling and location approaches to consider include:

1. Interview at night — Obviously, employed people have more time after work than during the work day, and at night they don’t need to fib to managers about where they are. Often at night, candidates have more childcare options. In addition, hiring managers have fewer meetings and business conflicts, which means that interviews can be scheduled more easily and quickly. Night sessions tend to be more informal and they are less likely to be interrupted by phone calls and urgent business-issue interruptions. Yes, some managers will find night interviews inconvenient, but that inconvenience needs to be weighed with the fact that they will get more currently employed people (the most desirable and the ones that are most likely to be top performers) to interview. You can alleviate some of the resistance by scheduling one or two “interview nights” a month well in advance, while also letting them take the next morning off.
2. Interview on weekends — In addition to night interviews, you should also consider holding them on weekends. This is especially beneficial when a large number of your candidates are coming in from out of town. Offering an “interview Saturday” once a month during heavy hiring periods will not only get you more and better quality candidates; it also sends a message that you really care about applicants and their needs. Incidentally, this demonstration of caring might be extrapolated by the candidate to mean that you will also really care about them after their hired.
3. Rendezvous at conferences — If a large number of your candidates are from out of state or the country, you can reduce the number of “not interested” responses by interviewing at places where a large number of target candidates are likely to be anyway. Some likely common rendezvous events include national association meetings, industry trade fairs, certification classes, alumni events, and seminars. Because these events are generally held in another city, attendees have fewer family activities that conflict, and thus have more free time to talk after the formal event sessions end. Not only do top performers tend to be the ones who attend these events, but the setting itself is more informal, so it lends itself to less stressful interviews. If you’re clever, remember you can develop a pool of names and interview them at conferences before you actually need to fill a position. Once you assess them, it’s unlikely that their skill sets or experience will degrade before you actually have an opening for them.
4. Hold the interview before or after local professional meetings — almost every large city has a number of monthly meetings held by local chapters of various professional associations. If you hold your interviews right before or right after these events, you are likely to improve the number of individuals who can easily make themselves available. Incidentally, you are also likely to improve the quality of the candidates because the very best practitioners periodically attend these monthly meetings. Incidentally, because these are professional events, you give the potential candidate an honest excuse for where they were. You also have to make sure that the people being interviewed before or after the event are not seen entering the interview area.
5. Hold the interview close to where they live and work — Moving the interview location to a more convenient spot in a big city can also be helpful. In reverse, if your business is located in a smaller city or rural area, holding “satellite interviews” in major cities can increase the number of willing interviewees. In cities where most professionals live in the suburbs, consider holding at least preliminary interviews at a suburban hotel or even at the mall. Yes, it’s a little inconvenient for managers (although they might live in the suburbs also), but you’ll get much better attendance from employed people. Hold interviews at hotels or conference centers right before or right after local professional association or network events, which top candidates will likely be attending anyway.
6. “Interview Friday” — Some firms have set aside a designated time each week or month for interviewing in order to help solve the rampant unavailability of managers. Everyone knows that hiring is frequently stretched out over long periods of time (which can mean a loss of top-quality candidates) because managers are “too busy” to interview. This problem can be partially alleviated by setting aside a designated time when no meetings can be scheduled and all managers and interviewers must be available for interviews. I recommend a Monday or a Friday once or twice a month. It might seem harsh at first, but once managers get used to it, it speeds up the hiring process tremendously.
7. Make interview scheduling easy — Hiring takes a long time, primarily because of the difficulty in scheduling interviews. You can eliminate the number of callbacks and the inevitable phone tag required to find compatible times for interviews if you develop a Web-based scheduling system. These systems allow candidates to select and schedule their own interview times online, based on the open slots that managers make available.
8. Limit them to one day — One of the aspects of interviewing that frustrates candidates the most is the multiple callbacks for second, third, and even fourth rounds of interviews. By stretching out the time involved, you not only increase the number of lies employee candidates must tell, but you also risk losing candidates to companies that make decisions faster. Several health-care facilities I work with have instituted a “one day rule” which allows managers to interview as many times as they want as long as all interviews are completed on the same day. Not only does it force managers to be more decisive, but it also demonstrates to the candidate that your organization has the ability to act quickly (something top performers expect after they accept the job).
9. Reduce unnecessary interviews — There are a variety of tools and techniques that can help reduce the number of unnecessary interviews. Some of them include:

• Educating your managers about the dollar costs in salary and lost productivity of having so many employees in multiple interviews.
• Educating your managers about the negative consequences of additional interviews on the quality of hire. Slow hiring means losing top candidates to other firms, so that the more time that you take to make a decision actually decreases the quality of the person hired.
• Setting a target number of interviews (say three) and suggesting additional interviews are appropriate only in rare cases. You might also show them data that increasing the number of interviews doesn’t automatically increase the quality of the hire.
• Track the time to hire, reward managers for fast hiring, and let managers know when they consistently exceed the time limits.
• Consider conducting team interviews, so that all of the managers and interviewers can ask their questions during a single session.

Final Thoughts
The time is right for radical change in recruiting. The easiest option is to rethink where and when you schedule your traditional in-person interviews. Next, you need to consider trying an interview-from-anywhere approach. If you do, the travel cost savings, the reduced environmental impact, the shorter time-to-fill, and the increased quality of hire impacts should be powerful enough to overcome any potential concerns related to webcam interviews. The time to act is now.

Video conferencing is not only a practical nice-to-have capability, it is a necessity for any modern recruiting organization charged with recruiting truly top talent around the world. Remote video interviews provide numerous benefits. One of the most difficult to ignore in these tough economic times is the fact that they are dramatically cheaper.

When it comes to video-conference interviews, organizations still have two options: high quality fixed facility interviews, and lower quality flexible location interviews. The latter requires only that the candidate have access to a decent broadband Internet connection and a low-cost webcam. When purchased in bulk, a number of webcams are available at prices less than $15 per unit. Based on my experience, I predict that within a few years the “interview from anywhere” approach will become the standard practice for all but final hiring interviews.

Literally hundreds of firms have already begun using video interviews, and usage patterns are climbing at a significant pace. While first-movers adopting the approach were predominantly in the high-tech and communications industries, today usage crosses nearly every industry. Organizations like HP, Microsoft, Google, Tyco, Whirlpool, Rio Tinto, E*Trade, PepsiCo, UCLA, Cancer Treatment Centers of America, and Broadcom are marquee customers of leading solution providers.

If you doubt that this approach will truly grab hold, just look back at the uphill battle that phone screens had to fight before they became the de facto standard first step in the assessment process.

The Business Case for Adopting the “Interview from Anywhere” Approach
Increasing the number of candidates available to interview and cutting the cost per hire are two major benefits of adopting the “interview from anywhere” approach. In tough economic times, the travel costs that result from flying in multiple candidates for interviews is a highly visible expense, especially when you consider that a majority of the people brought in will not result in a hire. For companies that recruit nationally or internationally, travel-related expenses can easily account for 50% of all recruiting costs.

The second and perhaps the most significant business benefit of remote interviewing is that it dramatically increases your candidate pool. For many organizations, tough economic times limit the talent pool dramatically to local candidates. However, since there are no travel costs associated with the “interview from anywhere” approach, firms with limited budgets will be able to consider top-quality candidates from outside the region. Ease of scheduling is another significant reason why the quality and the size of the talent pool increases; no longer will attending an interview be a major time suck. Even the volume of local candidates will likely increase as remote interviews will not require them to lie to their boss and disappear for a day.

Additional Advantages of “Interviewing From Anywhere”
There are many additional advantages associated with the interview-from-anywhere approach, so if you’re having reservations about the concept, here are some additional points to consider:

1. Interviewee and interviewer performance — because candidates are not rushed to get back to work or fatigued from hours of driving or airline travel, they are more likely to be relaxed and excited about the opportunity to present themselves. The net result is that the candidates perform more like their normal selves. In cases where the interviewers need to travel in order to ask questions during the interview, they too will be refreshed and better able to sell and excite the candidate.
2. Almost-live view — with broadband and the latest generation of webcams, the quality of the video is quite high. Unlike telephone interviews, facial expressions and body language can be readily seen, something that hiring managers rate as a “must-have” feature. Your ability to sell candidates that are in high demand may also be improved because they can effectively see and feel the excitement of the interviewing team.
3. Lower dropout rate because of multiple interviews — if your organization requires multiple interviews on different days, that multiplies the amount of travel and the scheduling difficulty associated with hiring an individual. Allowing the candidate to “interview from anywhere” and after work hours reduces the amount of scheduling and travel stress that routinely builds up over multiple interviews. Taken together, they reduce the likelihood that a currently employed candidate will drop out halfway through the process due to fatigue or their unavailability.
4. Faster time-to-fill — a great deal of the delay that plagues many organizations in making a hire can be associated with the time required for travel and to find an opportunity for the candidate to get away from work without raising suspicion. Requiring all of the interviewers to be in the same room also can delay the scheduling of interviews. If managers are willing to hold interviews at night, on weekends, or on holidays, they may be able to do all the interviews back to back. Holding the interviews closer together or even back to back also makes it easier for comparisons to be made between candidates. Taken together these factors may significantly shorten the time it takes to fill open positions. This can mean less lost revenue (as a result of the extended vacancies). Reducing the delays in making a hiring decision (prominent in traditional interviewing) might also mean that many of the quality candidates that are in high demand will not drop out of the process before it is concluded, because they were not forced by the time delays to accept other offers.
5. An improved candidate experience — most people in recruiting routinely say that they want to improve “the candidate experience,” but forcing candidates to lie to their boss and travel multiple times is not a positive experience. It may impact their willingness to accept an offer and what they tell their colleagues about your firm.
6. Ethical issues — for currently employed candidates, asking them to come in for an interview during work hours (on company time) can cause ethical concerns among the best candidates. In other cases it may force them to use sick days, personal days, or vacation time. They may also feel that they are letting their team down by being absent from work during the time that they are traveling and interviewing. Conducting interviews from home outside of work hours can help alleviate these pressures. Also, because there’s no travel time involved, the candidate doesn’t have to add the travel time to their excuse for not being at work.
7. Green concerns — using technology to reduce travel certainly reduces much of the carbon footprint and the environmental impact related to a job search. For environmentally conscious candidates, this may be a major selling point and an illustration that your company is focused on sustainability.
8. Family impacts — having to travel and be away from their family (with no guarantee that they’ll actually get the job) may discourage even unemployed individuals from applying.
9. Administrative costs — candidates who must physically visit the facility generate an expense because they must be cleared through security. There may also be scheduling issues and a cost associated with using conference rooms for the interview. These costs, although small, escalate as more individuals are physically brought to the facility.
10. Employer brand image — offering this new approach may garner media attention and positive comments on the Internet. Together they may encourage more individuals to apply. By showing respect both for the candidate’s time and the needs of their current firm, you may also build goodwill in your image.
11. Manager scheduling availability — using this approach, hiring managers can also interview from almost anywhere without having to be in the office. As a result, they are more likely to be able to easily find time for interviewing, further reducing a major barrier to speeding up time to fill.
12. It uses available technology — it’s important to realize that the technology involved has improved since the last time you may have contemplated video conferencing. If you use a vendor, there is generally no need to purchase additional software or web-related technology. In addition, because laptops, wireless networks, and mobile phones can generally be used, manager resistance decreases because they don’t need to use new hardware or technology.
13. More are comfortable with remote interaction — because many managers and candidates are now frequent users of online social and business networks, they are now generally more comfortable and experienced than in the past with interacting with individuals who are not in the same room.
14. Global capability — relatively cheap long-distance communications and the Internet allow this process to have a global capability.
15. A recruiting advantage — by being the first to offer this approach, your firm will develop a competitive advantage over other firms struggling to “offer something different.”
16. You can maintain the “physical meeting” option — no matter how many remote interviews you hold, you can still reserve the option to interview the candidate in person for the final interview.
17. Minimal price — even if you use a vendor, the price per interview will most likely not exceed $200. There are also free options if you have your own technology function.
18. Facility tour — in lieu of a physical walk around, virtual tours and team member introductions can still be provided to the candidate via a web video.
19. Vendor availability — most early adopters of the interview-from-anywhere approach are using a vendor to facilitate the process. While most support video from anywhere, a few focus on higher quality video experience and require the candidate to visit a studio. Some of the vendors to consider include: GreenJobInterview, iViioo, HireVue, and Candidate Quality Management.
20. Additional uses — in addition to using the interview from anywhere process for external hiring, it can also be used for internal transfers and vendor selection.

Next week: Part 2 will cover more advantages of live video interviews, some potential problems, and ways to improve your in-person interviews by changing the “where and when.”