The Internet makes talent communities inevitable

In recent weeks we’ve seen a lot of outpouring of grief over the now dead SOPA legislation. The law’s critics claim that, if passed, the law would end the Internet as we know it, threaten our way of life, and confirm the Mayans were right. We periodically experience this type of mass hysteria, whenever something seems to threaten the “promise of the Internet” — the last time was over net neutrality. That so-called promise has to do with the perceived “free” flow of information: articles, stories, videos, songs, or content. What’s gotten lost in this noise is that that nothing is free. The current business model of the Internet has simply shifted dollars from content creators to content aggregators. Advertisers sponsor content so users can pretend it is “free.”

A long time ago, about the time the last ice age ended, there was something called AOL. It seems like eons have passed, but those who remember that era may recall that after we returned from foraging for food we would turn on our dial-up modems and connect to AOL, having paid a monthly fee for access to all the content that was available, the forums, the news, etc. Connection speeds were 1,200 bits per minute — you could almost count those bits coming in. Now we do the same with Facebook and Google, which we experience as free. Perceptually, we ignore the ads — targeted ads based on all the information collected by the sites — ads tailored to our habits, our behavior, and interactions. AOL charged a fee and had no ads; Facebook doesn’t charge a fee but has ads. There is no free lunch.

So now we have a business model on the Internet favoring networks that can attract members and keep them there. That requires having content that attracts users, however it may be generated. Initially, sites like YouTube and Facebook, with their user-generated content, left us wondering why they existed. But, they have been enormously successful and it is clear that communities naturally form where content gets developed and shared. The better the content a community brings to its members, the more of them it gets and the more engaged they are.

Big Brother is Watching You — and That’s OK

What we know now is that people prefer content they don’t have to pay for directly. We’re apparently willing to share substantial personal information with advertisers in exchange for “free” content. Just how much intrusiveness we’re willing to enable remains to be seen, but the boundaries are constantly being pushed — Google’s new privacy policy being only the latest example. The company will now offer a new “benefit” for users — it will track you across multiple services including Google+, YouTube, Gmail, and any other property they own, including Android phones. I wrote this on Google Docs, so what I wrote was likely being indexed as it was written. Big Brother was an amateur.

Imitation Is the Sincerest Form of Flattery

While users are opposed to paying for content (whether it is legally or illegally obtained), there’s an opportunity for employers. Any employer can create forums where content is produced targeting interests that are relevant to specific groups of people –- creating talent communities — thereby aggregating candidates they may eventually want to hire. This is the only way to create talent communities, built around a topic that candidates (or people that might become candidates) are passionate about: chemical engineering, pediatrics, Java, nursing, recruiting, etc. A place online where people congregate to share their interests and interact with each other. Anything else is not a community.

But this opportunity comes at a cost. Relying on Facebook or Google+ to create talent communities means accepting their terms of doing business. That is, giving them access to data that can be analyzed and sold to third-parties. That’s the price of “free” content. There’s really no getting away from it — the money to support Facebook has to come from somewhere. Although this model prevails today, there are other forces at work that will change the game. The exchange of personal information is at odds with our natural desire for privacy. So, as we continue to explore how much privacy we’re willing to exchange for “free” content on sites like Facebook, a desire for alternative models will grow. Other forms of sponsorship, where advertising is less apparent, will naturally appeal to those concerned with privacy, and may even serve to encourage community members to share more in a community with restricted membership.

Communities don’t have to be built entirely on Facebook’s terms. It is possible to create somewhat private communities. In fact, it is prudent to create communities on one’s own terms, rather than be at the mercy of a third party whose interests diverge from ours.

Employer-sponsored talent communities should be private domains for members that represent a group desired by the employer as employees. The basic formula for success is simple: develop or support the creation of content and make it available for free and accessible, and drive people to it. However, putting this into practice is a lot of work.

First, it requires having interesting content, which means that it needs to be material that is original, relevant to a particular group, and prompts controversy. Then there needs to be a critical mass of members in the community that gets engaged in robust discussion. That is what creates a community, it’s not just a repository of content. A community is one where people congregate to share their views and learn from each other. That’s the “social” part of social media, a fact that often gets forgotten in the zeal to build a lot of communities which are nothing more than databases.

This is what employers need to be doing today. There is no other way to create talent communities. But do it now, because who knows what’s coming that may make it difficult to create communities.

Fake bird seed represents many vendors’ test claims … and, what users don’t know about birdseed and test validity can cost them a fortune. Test validity does not mean people like the test; or, the test has zero adverse impact; or, the EEOC approves; or, the test looks sexy. Validity means test scores consistently predict some specific aspect of job performance. For example, if high scores predict more mistakes, then low scores should predict fewer. Validity predicts on-the-job performance … both ways.

Reputable test vendors (i.e., those who follow professional test development standards) eagerly show controlled studies of test results … and, welcome questions about them. Bird seed vendors enthusiastically produce client testimonials … andget defensive when questioned. How can testimonials be unacceptable? For the same reason you cannot trust political ads. They have an agenda and are seldom supported by facts. Here is an example using a sales job:

Sales Manager Anecdote: We used XYZ test and our sales productivity increased.

OK. What is your definition of productivity? What else was happening at the time that could have affected the numbers? Did you land a big customer? Did the economy improve? Did lower and higher scores predict lower and higher sales? Are you using group results or individual data? Sales dollars are only one part of the job. What about satisfaction, service, returns, cross-selling? You see, anecdotes are rhetorical. They might sound good, but seldom tell the whole story. Anecdotes and validity are not equal. Birdseed vendors, because they don’t follow professional test-validation processes, don’t know they don’t know this.

Define Performance … or Else!

Let’s continue with our sales example. Nothing is more important than a highly productive sales staff. But wait. What does that mean? Are we discussing acquiring new customers? Farming or hunting? Cross-selling? Delivering great customer service? Customer retention? Solving service problems? Favorite golf buddies? Job turnover? Learning new products?

Get the picture? I have learned over time, especially with call centers, that many performance areas even conflict with one another. Problem Solving Quality and Calls Completed are often negatively related (i.e., it generally takes more time to better resolve problems). It drives employees crazy when an organization sets mutually conflicting objectives. So which one should they test for?

Performance is a loosey-goosey catch-all term that could actually mean something entirely different to different people. In my experience, few sales managers and even fewer HR departments ever take the time to think this through. So, before you decide on a test vendor, carefully define what you want to measure. If you think “performance” is a singular thing, then you are in a heap of trouble. If someone does not know what he/she wants to control, then any solution will be like bed wetting … warm and comfy at night, but cold and miserable in the morning.

Truth or Dare!

My bathroom scale is heartless. It tells me when I am overeating. It also tells me when I am at my healthy weight. Your hiring test should do the same thing. Good scores should have the same strong causal relationship with high performance; and, bad scores should have the same strong causal relationship with low performance. This is really important. Vendors who do not follow professional test development standards don’t seem to really understand that validation is a two-edged sword. Let’s look deeper a very common, and very wrong-headed practice.

Vendor A separates people into a good group and a bad group. The good group takes the test and the vendor averages their numbers. From that day forward, every applicant is benchmarked against the good-group average. Sound’s good? Sorry. It’s a clear sign the vendor is selling fake birdseed.

Let’s start by asking how the people were group-classified. What constitutes performance? Are good schmoozers in the same group as slow learners? How about group size? Are there enough people in a group (i.e., it takes at least 15 to 25 people before you can draw a decent conclusion). Is the bad group the same size as the good group? (Groups should always be about equal-sized.) Are the differences between groups strong or subtle? (If everyone is at least good enough to stay employed, you will probably be able to see only strong differences.)

What about the test itself? Can the vendor show proof every item in the test directly affects group performance? How strong is it? Research shows that virtually all self-reported motivation, personality, and attitude test scores have weak relationships with “hard” job skills like learning ability, problem solving, and so forth. If the test factor doesn’t strongly predict job performance, the test won’t make any difference in hiring quality … it will just make your job more difficult.

One more comment about group scores. They tell you about groups — nothing about individuals. Consider the following: people in the Top Group have scores of 20, 30, 40, 50, 60, and 70 (average = 45). The Bottom Group scores are 10, 20, 30, 40, 50, and 60 (average = 35).

So the person doing this analysis figures that producers score an average of 45 — so let’s go test people and hire the ones who score 45 or more. Whoops! If we used top-group averages as our standard, we would eliminate three top producers and hire two bottom ones. Fake birdseed alert!

Separating Pros from Pretenders

Setting hiring-test standards is an all or nothing game. There are no shortcuts. In my personal experience, wrong-headed vendors are seldom intentionally deceitful. They enthusiastically believe in their fake birdseed; after all, people who make things with their own hands seldom welcome criticism. So, they rely on client anecdotes, claiming that is sufficient proof of validity. Some will even claim that the EEOC has validated their test. Sorry. This is completely wrong-headed and foolish thinking.

If they rely on vendor claims, users will never know how many good candidates they turn away, nor how many bad ones they will hire. They always pay the price for this mistake later. You see, legal challenges seldom happen in the hiring phase. They happen on the job. Challenges begin when incompetent employees challenge termination or being overlooked for promotion. Forget the short term and six-month guarantees. Bad hiring decisions start showing themselves about a year later.

So how do you identify a pretender? Anyone who is:

• Producing client testimonials (not tightly controlled studies) claiming their test is valid;
• Getting defensive when questioned;
• Claiming their test doesn’t actually predict performance, but can be helpful;
• Claiming the EEOC has approved their test;
• Setting standards based on group or job averages;
• Focused primarily on training, not professional test development;
• Giving everyone a broad-based test (i.e., not based on performance requirements) and then measuring averages;
• Giving everyone a broad-based test (i.e., not based on performance requirements) and then measuring differences;
• Believing a self-descriptive test strongly and accurately predicts job skills;
• Not able to produce a technical manual documenting what the test measures and why that factor leads to job performance;
• Not clear on the definition of what the test actually predicts;

There are others, but this is a good start. Here is a quickie birdseed question users should ask every vendor: “Was your test specifically developed to predict job performance? If so, what part?” Any answer other than “Yes” means the test probably won’t work.

Birdseed or Not Birdseed!

As you might imagine, birdseed vendors complain the loudest. That’s really shameful. Validation principles are taught in major universities throughout the western world and religiously followed by every professional test development house. Just because a vendor does not know what they are is no excuse. It reminds me of Gary Larsen’s little fat boy trying to enter the School for the Gifted and Talented by pushing hard against a door that clearly say “pull.”

Here are some believe-it-or-not examples:

V1: Vendor (who sells a self-reported personality test) … All you care is about assessment. Don’t you care about performance?

A: Hello! Assessment is anything used to evaluate a candidate and predict performance. Besides, there is abundant literature showing self-reported tests are miserable predictors of skills like problem solving ability, planning, and teamwork. You want accuracy? Start selling tests that measure hard-to-fake applicant skills.

V2: Vendor (who sells a post-WWII NAZI atrocity test). Our test is validated. See our report. Wanna be a distributor?

A: No, thank you. I am not in the market for a concentration camp commandant. Besides, a technical report filled with anecdotes from unqualified people venturing their unsupported personal opinions about your test does not meet professional test standards.

V3: Vendor (who does group-level averaging). Group averaging is just another form of validation.

A: No. It’s not. Your test has no clear performance criteria; no proof a specific factor causes performance; group data is being used to make individual conclusions; and, your groups are so small, the numbers are either nonsense or chance.

U4: User … If I use a test, I’ll never place a candidate!

A: If there was ever a statement concerning the sad state of applicant screening, this was it!

U5: User … We like the DISC/MBTI/ACL/CPI/16PF/MMPI/Caliper test so much, we decided to use it for hiring.

A: That’s interesting. As far as I know, none of these publishers claim their test predicts job performance. Some even strongly recommend against it. Perhaps, you know something the publishers do not? Think about it. Just because a test measures a difference between people, does that mean it also predicts someone’s job performance?

U6: User … We use tests to match candidate personalities to managers.

A: That might be a good idea, unless company culture never changed; managers never changed jobs; people never changed departments; or, cloned personalities never lead to group-think.

U7: User … We interview. We don’t use tests.

A: If you ask questions and make hiring decisions based on applicant answers, how is that not a test?

V8: Vendor (after learning what it takes to meet professional test requirements) … I can’t do that!

A: That said it all.

V9: Vendor … We keep adjusting top group scores until we get the maximum individuals in the group to pass. The results become our hiring standard.

A: Fine-tuning junk science yields finely-tuned junk science.

V10: Vendor … We compare every applicant against a country-wide manager/salesperson/driver/XZY job norm.

A: So, you are assuming all jobs/companies/industries with the same title are alike; everyone in the group norm performs just like your people are expected to perform; every individual in the group norm matches the group average; jobholder answers are identical to applicant answers; applicants never try to make themselves look good on tests; and, every factor in the norm affects performance? Sure.

It’s a brand new year, great things are on the horizon … and for me, I have had it up to my eyeballs with a particular topic. I am so fed up with this topic that I want to climb to the highest peak and scream, bang my head against a wall, and even toss my desk around the room over and over. This topic that’s making me and others so irritated is Passive Candidates.

Yes, that’s right. The topic or even the mention of passive candidates now a day makes me want to throw up. In conducting my own personal year in review and through scouring HR topics, articles, blogs, etc., it seems as if 2011 was the year of the “Passive Candidate.” My response … so the heck what.

I guess I am at a loss as to why there is so much over-emphasis on “passive candidates.” Whatever happened to simply hiring the most-qualified, best-fit individual who can add their strengths in order to advance the organization? Now we have resorted to “Commandments of Recruiting Passive Candidates,” “Rules to Recruit Passive Candidates”, “Your Guide to Passive Candidates” — you get my point.

So here are some questions for you to ask yourself and answer:

• What does passive mean?
• Are “passive candidates” better qualified than active candidates?
• Are “passive candidates” perfect?
• Do “passive candidates” even know they are passive?
• Are “passive candidates” just acting passive and playing the recruiting game?
• Do hiring managers even know what passive means, or are they following another trend?
• Has a “passive candidate” ever been hired and then performed poorly, or are they all major rock stars?
• On a company employment application, where is the check box that asks whether one is passive or active?
• Is there something wrong with being an active seeker?
• What is most important to you in making your next hire?
• Why does it seem that some of these “passive candidates” seem to change companies like it’s nobody’s business?
• How come when I am speaking to a “passive candidate” and ask that individual what other opportunities they are currently looking at, the list is most of the time extensive?

Passive, active, semi-active, inactive, submissive, reactive, retired, separated, etc. — shouldn’t we want to hire the best and most qualified individuals for our positions? Don’t we want to seek out and hire those who possess the strengths to improve the organization?

Right now, there are individuals knocking at our doors, and while not all of them are qualified, a lot of them are very qualified. Yet, a lot of these individuals are facing discrimination by hiring managers and recruiters who want someone who is working or someone who is passive. I have yet to see any study or statistical data that proves passive candidates to be more qualified, make better employees, or add additional value than those employees in the “other” categories.

I am after the most qualified individuals for my positions. I hire for experience, qualifications/strengths, and fit. I have never asked whether an individual is passive or not because to me it doesn’t matter. If you have the skills, meet the criteria of the position, and are determined to be a fit, then there is a great possibility in making a match.

I recently completed an internal search for an executive-level position in one of our most prestigious business units. After taking the order and obtaining full details, I started my search process. Fast forwarding to the end, I presented five candidates in my final slate: two passive, two semi-active, and one active. The end result — the active candidate received the offer after a thorough and extensive interview process.

It turns out this active individual came from a competing company who had shut its local doors months prior. To no fault of her own, a little bad luck had her now in a position that she had never been in before — in active search mode. In my own evaluation, I found her to be no less qualified than other passive candidates I interviewed for this same role. In fact, she was the most qualified and turned out to be the best fit.

I call on my fellow HR and talent leaders to not follow trends or fashions. Rather, stick to and follow the fundamentals of recruiting and search, build relationships, treat others well, hire for skill set, fit, and strengths, interview like a pro, and lastly maintain an open mind.

“I need to find Application Engineers installing medical equipment — x-ray equipment to be exact — and I looked on LinkedIn and there’s not much I can use. Oh, sure, there are some application engineers who list ‘medical equipment’ in their profiles, but I need people from specific companies — companies like GE, Johnson & Johnson, 3M, Medtronics, Becton-Dickinson, Boston Scientific, Stryker, St. Jude, Varian, Cordis — you know, the majors. And I don’t need them if they worked at those companies in the past — I need them working at those companies today!

“I also don’t need all the desperate substitute offerings LinkedIn is giving me because they don’t have exactly what I need –I can’t wade through that mess of misfits.”

“Can you help me?”

“Yes,” I said.

“Can you help me fast?” he asked.

“Yes,” I said again.

“I have to warn you, though, a couple of those companies you listed are customers of mine so I won’t be able to source them but I think we’ll be able to add some other companies that will yield you a list of 30 or 40 that might do the trick for you,” I added.

“And you’ll be able to get me names of the application engineers at those companies who are installing medical equipment today?” he asked. There was an emphasis on the word “today.”

“Yes,” I answered.

“And you’re sure they will be application engineers — the guys in the field installing the equipment?” he pressed, still unsure I knew what he was talking about.

“I promise,” I solemnly swore.

“How long will it take?”

“Give me 48 hours,” I answered. I’ll be able to send you probably half of what’s out there to get you started. Give me another 48 hours and I’ll send you the rest.”

I heard the surprise in the silence that followed.

“You there?” I asked.

“Yes, yes, I’m here,” he stammered. You sure you’ll be able to find these guys? I’ve wasted two weeks foolin’ around with the crap online. I can’t waste any more time.”

I understood I had a doubting Thomas on my hands long before he asked me this last question. I also understand the hurt, confusion, and doubt that his own failed efforts on this difficult search were casting upon mine. It wasn’t his fault — he’s been led to believe the remedy for hard-to-fill positions like his resided online.

It doesn’t.

The information* he seeks resides in the tightly cocooned interiors of companies like the world-class players he mentioned and it’s hard to get to. It takes a refined sense of fast timing and intuition to reach it.

Fast timing and intuition doesn’t exist online.

They just don’t.

They exist in the sharply honed telephone skills of clinicians like me and other expert phone sourcers who paw and peek and dig and dive into these companies. It exists in your own or another’s ability to engage strangers to tell you things.

Anyone can “engage” the Internet.

It never says “No.”

It never barks back at you or asks you why you need the information you’re seeking.

The Internet is safe.

It’s anonymous and it’s modern technology so it feels like something’s getting done.

The results (in the example given above) speak for themselves.

“I’m sure,” I assured him. “If I don’t, you don’t pay me!” I added, closing the deal.

“Give me 48 hours,” I said.

“What do you need to get started?” he asked.

*Before anyone gets too excited let me state that there are some positions that are fillable with information found online. But the high paying, challenging ones? Not so much.

I’ve learned that mistakes can often be as good a teacher as success.

Jack Welch said that. It’s a good reminder of that old aphorism about learning from your mistakes.

What about those times when no one believes in you? When you fail when no one expected you to succeed anyway? Ted Turner has been there: ”All my life, people have said that I wasn’t going to make it.” Today, there’s no doubt that he’s made it, and like Welch, helped transform an industry.

How many successful “failures” get hired is anyone’s guess. Recruiters look for them; try to separate a winner from the others with interview questions like that classic, if overused, “Tell me about a time when you failed and what you learned.”

Good interviewers are looking for winners who have the character strength to learn why they failed, what to do next time to succeed, and who will then get back up on the horse.

But exactly what are the specific traits that lead one person to try again when others just give up?

Industrial and organizational psychologists have spent decades researching that very thing. Today, there are any number of tests from dozens of firms, purporting to help employers solve problems (retention being a key issue) or hire people who will perform just like the company’s current top performers.

There’s no doubt that these work — at least to some degree. Try, though, to describe the specific traits of success and you quickly find how elusive and complicated an exercise it is.

Months ago, the New York Times wrote a long article about the search for measuring and teaching success and character at an exclusive private school in The Bronx. The article cites the work of Prof. Angela Duckworth:

People who accomplished great things, she noticed, often combined a passion for a single mission with an unswerving dedication to achieve that mission, whatever the obstacles and however long it might take.

That quality she called “grit.”

Duckworth developed a short, 12-point grit test that proved to be a better indicator of success at West Point’s freshman summer training than the Army’s Whole Candidate Score.

Grit eventually became one of the seven key character traits the school determined were the most important underpinnings of success, and would be the traits the school would seek to foster: zest, grit, self-control, social intelligence, gratitude, optimism, and curiosity.

“The idea of building grit and building self-control is that you get that through failure,” the school’s headmaster told The Times, which closed the article with this observation: “Randolph (the headmaster) wants his students to succeed, of course — it’s just that he believes that in order to do so, they first need to learn how to fail.”

So the next time your hiring manager rejects all your candidates, and your hot prospects go to the competition, and the only seat you’re getting at the table is in the lunchroom, watch the video and think of what Oprah Winfrey once said:

Be the one thing you think you cannot do. Fail at it. Try again. Do better the second time. The only people who never tumble are those who never mount the high wire. This is your moment, own it.

This chart (click to enlarge) shows the job market over the past decade, from the U.S. Bureau of Labor Statistics.

The job creation record from 2001 through 2007 was more than 5 million non-farm payroll jobs added, topping out at 137.5 million in January 2008. At that point, the economy entered into recession, with six million jobs lost through mid-year 2009, when the recovery commenced.

Note that the current number of people on company payrolls today is almost equal to the number of payroll job holders 11 years ago. In addition, since January 2001, the U.S. economy has gained a net increase of 12 million people available in the workforce, from 142 million to 154 million.

At present, the number of employed is substantially below the available workers. The BLS uses a category of workers called “discouraged workers” to define a group that, while available for work, are “not looking for employment.” The practice results in an understated unemployment percentage versus the total workforce, as evidenced by the Workforce Participation Rate.

According to BLS data, since 1980, the average Workforce Participation Rate is 65.8%. If we calculate the “unemployed” count to reflect the average participation rate, we find that the more correct figure for unemployment today is more than 17 million workers, or an 11.4% unemployment rate. Compared to the official report of 13 million workers and an 8.5% unemployment rate, the BLS figures grossly understate the unemployment problem. In a quote from a recent Gallup Poll: the practice of “reducing the unemployment rate by driving potential employees out of the workforce is not a solution to today’s job problem or a good sign for the U.S. economy.”

The recovery that officially started in June, 2009 has stalled out, and growth in GDP as well as the job creation process essential to a healthy job market is not happening.

Job Creators: on Strike or Broke?

Spending by businesses and consumers, along with other factors, are primary drivers of growth in GDP and job creation. For 2012 to be a break-out year for job creation, two key variables must come together:

• Economy: conditions must turn positive, with tax, regulatory, and government policy reforms a priority, as well as stability of policies for a 5-10 year time frame, and
• Private sector: Businesses and consumers must have sufficient after-tax funds to spend and generate new jobs over the next few years.

In the next three to six months, the performance of the economy will determine if the conditions cited above are favorable (or not) for job growth. The private sectors represent different facts but the same issue about available funds for spending. Let’s focus on the business sector.

This Business About Cash

Over the past year, the media has reported on the extent of cash on hand on corporate balance sheets as an indicator that the job market will improve once companies begin to invest and spend money.

In a Wall Street Journal article in September 2011 co-authored by Ben Casselman and Justin Lahart, they stated: “Corporations have a higher share of cash on their balance sheets than at any time in nearly half a century, as businesses build up buffers rather than invest in new plants or hiring. Cash accounted for 7.1% of all company assets, everything from buildings to bonds, the highest level since 1963.”

Washington Post columnist Harold Meyerson recently opined that, “U.S. corporations can’t sit on their nearly $2 trillion in cash reserves forever, but that doesn’t mean they’re going to invest their stash in job-creating enterprises within the United States.”

On a related note, Neeraj Chaudhary with Euro Pacific Capital, Inc., blogged recently: “Some have described this cash hoarding as a nearly irrational timidity on the part of the private sector and has for many justified the currently robust intervention from the public sector in the form of deficit spending, fiscal stimulus, and monetary accommodation. The saying goes that if companies won’t spend, government must pick up the slack to restart the economy. Another key factor that is under reported in the “cash on the sidelines” story is that up to $1 trillion of the cash held by U.S. companies sits outside American borders, where it is essentially unavailable to fund U.S. operations.”

As noted, cash reserves of non-financial corporations are at record levels, but, according to several analysts, so is debt. In the WSJ article noted above, “Companies’ growing cash cushions could also help them weather a domestic slowdown. Per Mr. Chaudhary: “Despite the seemingly large amount of cash held by U.S. corporations, their debts far outweigh the balance in their collective bank account. According to the most recent Flow of Funds report published by the Federal Reserve, U.S. corporations have approximately $7.3 trillion in outstanding debt; the oft-quoted $2 trillion of cash sitting on corporate balance sheets pales by comparison. If borrowing costs were to rise, corporations would need every dollar of their available cash to keep from going under.”

Dana Saporta, (WSJ article), an economist with Credit Suisse in New York, said “When Lehman Brothers collapsed, companies that counted on being able to borrow money for routine operations suddenly found themselves locked out of financial markets and scrambling for cash. The value of having cash became apparent during the crisis, painfully so for those who were caught unprepared, and I don’t think corporate America will forget that lesson anytime soon.”

Alan Reynolds, Senior fellow at the Cato Institute in an article in February, 2011, stated: Firms hire out of income, not by liquidating assets or adding to debt. No sensible employer plans on meeting routine payroll expenses by drawing down assets, liquid or not. Decisions to increase or reduce hiring are unrelated to decisions to increase or reduce any assets on the balance sheet. Companies add workers if the expected addition to after-tax revenues is likely to exceed the addition to costs (including taxes and mandated benefits).

Low Visibility

The business sector has increased cash holdings, with up to $1 trillion in domestic operations alone, as well as debt, and is now holding cash to deal with the uncertainties of the economy, concerns about ability to borrow from traditional sources (banks), fear of another financial crisis, and potential increases in operating expense if interest rates rise. All options noted reduce available cash for job creation.

With regard to the options posed, (on strike or broke?) the option that seems more correct is “broke.” If businesses cannot visualize a way forward with sufficient confidence to justify risk, and more importantly, fund plans for growth as well as expansion, how do we get back to robust job creation? The short answer seems to be: we don’t.

Think about it. We’ve got wonderful technology. We no longer need to sift through hundreds of job applicants by hand. We select our criteria and wham — we have our list of candidates. We’ve got efficient phone systems; individuals interested in working for us or talking to us can simply punch in the right numbers. “Press 1 if you … press 2 if you…”

The calls are directed automatically. As recruiting and HR professionals we can then call them back if we want. If not, well …. they don’t know who they’re calling anyway. Makes things so easy for us …. Doesn’t it?

The systems are set up so we barely have to do anything. Which of course we all know in reality doesn’t quite work that way. But the concept sure sounds like a dream.

And we have become anonymous. As people. As individuals. As a company. Particularly when it comes to the outside world and those applicants we really don’t want to deal with. The ones who take up a lot of our time when they do not have the qualifications for the job. Those individuals who call and call and call. Those individuals who are not going to be hired by us. Ever. And that’s great. That’s where the technology comes in handy and is extremely beneficial.

But what about those individuals who could be an asset to our company? Or at least are worth strong consideration for positions. Are we slighting them? Do we miss out on even talking to them because of the screening criteria we’ve used, or the way they’ve worded their resumes? How about the individual who never made it beyond a voicemail left to some anonymous machine because the right person never got the message? If we had met with them maybe we would have known immediately they would have been a strong contributor to our organization. What about those people?

We all know the value of a face-to-face conversation. As an experienced recruiter, you typically know within minutes of meeting a candidate if they are a strong prospect or not. You know what hiring managers are looking for. You know strong contributors when you see them. You understand that many times the resume does not always reflect the true nature of an individual. Their drive. Their ambition. A positive outlook. A new way of looking at things. A team player. A strong communicator. Those things just simply cannot be fully grasped unless you sit down with someone personally. But of course that does not always happen. It can’t. There is simply not the time.

And with face-to-face communication we add another element. That of accountability. We feel a stronger need to get back to people. We’ve met them. We’ve looked in their eyes. We’ve made a promise. We’ve given them our word. We’ve told them we will get back to them. And it becomes a lot easier to do so. And a lot more important to us.

So … can efficiency be hurting us? It does beg the question: are we sometimes missing out by being too driven by technology and ease of systems? Would a little bit more of a personal touch improve recruiting? Improve our employee base? Increase retention? Build a stronger brand? Even enhance sales? Now that’s an interesting thought.

As we enter this exciting new year, here are the trends that I feel are going to define the future of pre-employment assessment.

Hot!

The dawn of big data, business intelligence, and analytics. This is by far the most important thing going on in assessment today. It is not just assessment that is being impacted by the increasing power of big data as a decision-making tool. All areas of society are benefiting from our increased ability to use data to identify trends and make predictions to increase efficiency and effectiveness. One of the biggest obstacles for assessment has been the difficulty experienced in proving its value proposition in real terms.

This past decade has been marked by the movement of testing online. The product of this investment has been a significant amount of data and a much more complete understanding of what content predicts specific outcomes. We are now entering a decade in which new advances will be marked less by radical new types of content and more by the ability to view assessment from a business-intelligence mindset in which data supports hiring as a business process.

As I reported in a recent article, this movement is being led by the leading vendors in the assessment world who have begun to create a new generation of tools to help their customers understand complex relationships in their data as well as the relationship between their local data and more general, bigger picture data. While it may take some time to really gain traction, increased analytics will make it much easier to clearly demonstrate the bottom-line impact of assessment on all kinds of valued outcomes. The inability to clearly link assessment to results has been holding us back for decades. As this blockage continues to erode, the use of assessment will continue to grow.

Assessment and matchmaking. The use of assessment to match people with jobs to which they are best suited is proliferating. To understand the basic model for the matching I am talking about, think online dating site. In this model two parties are searching for a match based on a profile-creation process in which the same key pieces of data are collected and sophisticated algorithms are used to identify potential matches based on compatibility in the data. While these sites are far from perfect in their matching abilities, the model works much better than a blind search in which the matching parameters are not clearly defined or consistent.

When it comes to matching people with jobs, understand the value that a scientifically based assessment can provide. Assessment is essential to this process because it provides a standardized, objective way to reliably and accurately measure human traits in a manner that is not possible with simple fill-in-the-blank questions. So, adding assessment to the matching parameters can offer serious value.

This concept is not new. These sites have also exploded because of a continued lack of ability for big job boards to deliver results; the increase in analytic ability (see trend #1); and an increased ability to understand how to measure human traits accurately and reliably.

Expect even more of these companies. Effective matching is an excellent way to highlight those who have more of what is desired and thus help provide better odds of making a good hire using the “official” hiring process.

There are many different takes on this basic model. Explaining them all is beyond the scope of this article (stay tuned though: my next article will be devoted to categorizing the various companies offering assessment-related matching). No matter what the model, the most important thing impacting the success of these sites will be directly related to their ability to build a database that will have value to both parties involved. The best matching process in the world has no value if the database of candidates to match to is empty. The best candidates in the world will not waste their time using a site that has no legitimate openings to offer.

Expect to see many try to jockey for dominance in this area. The winners in this arena will be those that are able to engage both candidates and companies and compel them to give their time and effort to provide the data required for effective matching. The winners will also be the ones who can make joining their sites a viral proposition (Hello LinkedIn and Facebook … are you listening?).

Warm

Assessment as a key part of talent management. Talent management is all the rage, and rightfully so. For decades there has been a need for a more strategic focus on how organizations use their people to have maximum impact.

While talent management is a concept that covers the entire lifecycle of the employee and is designed to support development and management of people, pre-employment assessment still seems to be something that few talent management vendors are including in their products and models for success. Talent management is an opportunity to truly impact results via its ability to define what is important for success, and then help ensure that companies are hiring, developing, and promoting people in ways that have a direct impact. Until the talent management concept includes pre-employment assessment, it is incomplete. Vendors will come around to this viewpoint, but they are doing so more slowly then I expected. As pre-employment assessment continues to prove its value and get more traction, expect to see it added to the talent-management equation.

Continued (but slow) movement from test to experience. Those who read my articles regularly and know and have worked with me are well aware of my passion for simulations and engaging assessments that provide an experience rather then a boring and frustrating testing session. These types of assessments are the future. I am not backing down from this stance; however, this is not happening as fast as I had expected. While we have seen some cool new simulations and branded experiences over the past few years, we have yet to see the technology needed to really move this area to the next level. This will come with time.

For now it is exciting to see new products and solutions that represent a step in the right direction. I am encouraged to see vendors continuing to invest in making their assessments more engaging, but the bulk of assessments are the same as they always have been in terms of their content. We are still living in an age where most pre-employment tests are simply web-enabled versions of their former paper-and-pencil selves. Luckily we have been able to make the testing experience much shorter while also making it more accurate. The next steps forward are happening, but the revolution in this area will take time.

As the years go by I am continually encouraged by the new and creative solutions that I am seeing. My workshop at the ERE Expo last spring provided me with enough examples of engaging assessments to fill up several hours of time. I encourage those who are creating assessment products to continue to place themselves in the candidates’ shoes and to understand the value-add to your brand from a branded experience or simulation.

Increased access to assessments for SMBs. The manner in which assessments are adopted remains a bit curious. My research shows that companies of all sizes tend to use assessments. While enterprise is likely the area where the most companies are using assessments, we all know that small and medium businesses actually have more total employees because there are so many of these companies out there. Most vendors are very focused on the big fish, enjoying the prestige of landing Fortune 500 companies who have the resources to do cool and interesting things with their hiring process. Bigger companies also provide healthy numbers that are conducive to validation work and program evaluation.

Small to mid size companies do have options. Many vendors do have the ability to serve these companies with the same types of products as the enterprise. However, smaller companies often don’t even have a dedicated staffing person and it is hard for them to think strategically. In most cases smaller businesses must rely more on guesswork when implementing assessments, as best practices used by enterprise are often beyond their means and understanding.

Vendors are realizing the opportunity to offer the SMB market something better. I am seeing new vendors who are creating solutions that are focused on helping SMBs. Many of these involve other trends I have already discussed in this article. Namely, we have so much data on hand now that we are able to understand the truth about what items are predictive in many general situations (such as customer service), and companies are creating new matching tools to make this knowledge accessible within software-based systems. So, SMBs are gaining access to the more accurate off-the-shelf assessments for a lower cost.

Expect slow but continued movement by vendors to serve the SMB space over the next few years.

Cold

Clarity around legal standards. New models for assessment that are continually being developed are subject to a set of legal standards (the EEOC’s Uniform Guidelines on Employee Selection Procedures) that were developed in 1978. The core idea of these Guidelines — that to be legally compliant a test must be job related — is without question and will be relevant forever. However, for many reasons that I won’t go into in this venue, the Guidelines are sorely out of date.

Assessment has changed a good deal since 1978 and it would be nice if the legal standards for their use could directly relate to these changes.

The legal ins and outs of assessment are one of the more challenging aspects of selecting and implementing assessment programs. I continue to fall back on the silver lining here, that the prime directive of the Guidelines is that we must demonstrate that all assessments are job related. The good news is that job-relatedness is also the driving factor in determining ROI. So, doing it right provides both legal CYA and money in the bank.

Still, it continues to be frustrating to see so many new and exciting ways that assessment is being used to do good with no Kosher stamp provided by the powers that be. At the end of the day, the threat of investigation by the Feds is pretty low given the resources they have available, so most companies continue to play the odds rather then invest the time and money in ensuring compliance.

Sadly, I do not predict that there will be any changes to this in the coming year. It troubles me that there is silence around how the new sophisticated data modeling tools and matching products meet government standards. These tools are the future and as they evolve and proliferate, the gap between assessment models and the rulebook will continue to widen.

We have a lot to be excited about in 2012. Organizations of all sizes should take advantage of the many opportunities to make hiring a strategic asset.

However, if you consider omitting information that could directly help the applicant successfully understand the process or land a job to be a lie, then there are quite a few areas where corporations are omitting the complete truth.

I call them “dirty little secrets” because insiders are well aware of them, while most applicants and business reporters are not. If you are a recruiter, you may find that this list includes over-generalizations, but in my experience, the problems in this list are certainly not unusual. My recommendation is that corporate leaders need to identify the areas where there is a distinct lack of openness, candor, and authenticity in the recruiting process and instead to proactively provide that information to applicants.

Recruiting Dirty Little Secrets

Here are a dozen areas where corporate recruiting could improve.

• The corporate black hole — because of recruiter overload, the volume of applicants, and technology problems, a resume submitted to a corporate career site may actually have a zero probability of being reviewed. In the industry, it can be referred to as “the black hole.”
• Looking for an excuse to drop you — there are books written about the need to focus on the positive aspects of individuals, but the entire screening process is often focused on finding a single error or lack of “fit” to quickly eliminate any applicant. If you are categorized as a job-jumper, you are unemployed, you have bad credit or Klout scores, you live in a distant zip code, or they find weird things on Facebook about you, you will be immediately rejected without knowing why. As a result, those who fail to make a single mistake during the process, rather than those who are the best, are the ones that are most likely to get hired.
• The rejection letter is designed to avoid complaints, not accuracy – if you actually get a rejection letter or e-mail, you should be aware that canned phrases like “we decided to move in another direction” or “there were other more qualified candidates” are pretested or lawyer-approved phrases that are designed to quiet you and keep you from making a follow-up inquiry. In many cases, the person sending the letter won’t even know the actual reason for your rejection.
• The interview process will likely be disjointed – applicants invited in for interviews routinely complain about disorganized interviewing, death by interview (having to go through 10 or more interviews), continually getting the same repeat questions from different interviewers, and having to return multiple times on different days. If the process seems poorly managed and disjointed, it is probably because it usually is. The overall corporate interview process is more often more whimsical than scientific and integrated.
• Some jobs are not really available to outsiders — although legal requirements may require an organization to post all open jobs, in some cases, the hiring manager has already predetermined that they will hire internally. There is no way for an external applicant to know when a job is “wired,” so applying can only lead to frustration and you will never know that you did nothing wrong.
• Some companies are blocked — if you work at a company covered by an informal “non-poaching” arrangement where two firms agree not to hire from each other, your chances of getting hired are near zero. Even though these agreements are illegal, they are secret, so your application will never be considered and you will never know why.
• Recruiters won’t know if you are a customer – you might think that being a loyal customer might help your application, but most corporations have no formal way of identifying an applicant as a customer.
• We will keep your resume on file (but we will never look at it again) – is certainly true that when they tell you that your rejected application will be “kept on file” it will be. However, it will be kept almost exclusively for legal reasons. The odds of a recruiter scanning through a corporate database of thousands of names in order to revisit a resume that has previously been rejected are miniscule. Unless a recruiter remembers you by name, assume that your resume has been dropped into the “black hole.”
• You will never know the real odds – although corporations regularly calculate the percentage of all applicants that are hired, you will never find that number on the corporate website. Although the lotto is required to publish your odds of winning, corporations keep it a secret. For some jobs, the odds are well over 1,000 to 1.
• Technology may eliminate you — and most large organizations, resumes are initially screened electronically. Unfortunately, if the software is not fine-tuned, the recruiter is not well-trained, or if you fail to use the appropriate keywords and phrases, no human will ever see your resume. In one test, only 12% of specially written “perfect resumes” made it through this initial step, although in theory, 100% should have made it.
• Busy people are forced to take shortcuts — during a down economy, the volume of qualified applicants can force recruiters and hiring managers to take shortcuts. For example, recently a coordinator asked the recruiter which one of a handful of resumes should be invited in for an interview. The response was “I don’t have time to look at them; just flip a coin and pick them.” Hiring managers are also known to make choices based on snap judgments or stereotypes that add a degree of randomness to getting a job.
• Don’t call us, we’ll call you — if an applicant is rejected at any stage, there is no formal process to help you understand where you need to improve in order to be successful when applying for a job in the future. Unlike in customer service, there is no 1 -800 number to call, and because of weak corporate documentation, recruiting might not actually know (beyond a broad reason) why you are rejected and how you could improve your chances.

Final Thoughts

Almost without exception, corporate recruiters are hard-working and ethical people. But most are too overworked to be able to take a step back and to formally assess where the recruiting process could be more open, honest, and transparent. Unfortunately, most of the current “candidate experience” efforts that I have seen are focused more on increasing courtesy and politeness rather than being significantly more open, honest, and transparent. If you would like to add to this list of “secrets,” add them to the comments section immediately following this article on www.ere.net.

As usual, there was much sturm und drang about social media, the lingering recession, and the Iowa caucuses — no, wait, that’s another post.

At any rate, here are the things I thought were most notable:

Job boards did not die: Yes, the combined power of thousands of bloggers and SM evangelists simply could not bring down the 100K+ or so job boards around the world. In fact, the publicly held boards seemed to recover nicely as the year progressed (er, maybe not Monster’s stock). Well, hope springs eternal, right? Maybe in 2012?

LinkedIn got serious about making money: Nothing like an IPO to focus a company’s attention. LI settled down to creating more recruitment products for its audience of employers and recruiters to buy, and it continued working on the 1-5% of its users who actually visit the site monthly to pay for that privilege. LI is not going away, folks — and that means you, job boards.

Monster fought back: The job-board monolith made several key moves in 2011 that kept it in the game and growing. First, it launched a Facebook offensive via its BeKnown app (tens of thousands of users and climbing). Next, it introduced SeeMore, a database-bridging search tool aimed directly at the LinkedIn threat. I expect to see more initiatives in 2012 (once it gets past that stock thing, that is).

Matching sites proliferated: Taking their place alongside well-established job-matching sites such as RealMatch and JobFox were new entrants: VentuRocket, Grex, Direct Approach Solutions, JobHat, Geekfinder — the list goes on and on. Have any of them solved the precision issues that have historically plagued matching sites? Stay tuned.

Mobile kept growing: It was no surprise that mobile continued to make significant inroads into the online recruiting space. According to Beyond, 77% of job seekers were using mobile in 2011. Is your site “mobilized”?

The .jobs universe fizzled: 2011 should have been the year that the .jobs universe grew. Perhaps it did, but the adoption rate among companies I surveyed was still below 15%. Legal issues may make this a shrinking universe.

Money started moving: As John Sumser pointed out in a recent post, acquisitions increased in the online recruiting space  – and that shouldn’t change in 2012. As we inch our way out of the recession, a combustible combination of pent-up demand, smart use of technology, and pre-emptive strikes against competitors will keep the pipes full.

Temps became the new perms: The recession left considerably fewer jobs in its wake — and more of those left were filled by temps. This drove up business for staffing firms and freelance sites such as oDesk and eLance, and changed hiring cycle patterns throughout the industry.

TheLadders said “adios” to $100K only: In a move that probably surprised no one, TheLadders moved away from its long-held position and embraced jobs under the $100K mark. But it’s still not a job board, right? At least, that’s what its ads say …

Indeed targeted employers: After years of saying it worked with job boards rather than against them, Indeed began directly competing for employer dollars. Monster was not amused.

One of ERE’s long-time members, Ted Moore, in a comment to that article, stated, “If you rely heavily on LinkedIn and similar tools to connect with those your clients can easily find and recruit on their own, at least as they perceive it (and what else matters?), I look forward to competing with you.”

I know Ted and I also know he means what he says.

I also know as time marches on those who think LinkedIn is sourcing are eventually going to pay a heavy price for their growing addictions.

In my “Help Me Help You” document that I send to all my new customers requesting telephone names sourcing, there is a paragraph that instructs the customer to provide me:

– Any names you might already have — this does two things: 1) avoids me duplicating your efforts and 2) gets me in to the targets faster. Be sure to include their titles and any contact info you have on them — their titles help me understand how close I am to the target and what these folks may be called at the respective companies and their contact info gives me clues as to how to get inside their organizations.

More and more we have the LinkedIn discussion.

THEM: Do you use LinkedIn?

ME: Not much.

THEM: We’ve already done LinkedIn.

ME: Silence.

THEM: We can’t find anything that works.

ME: Silence.

THEM: That’s why we’re calling you.

Me: Silence.

THEM: I’ve read your articles. Do you really think the majority of candidates are not on LinkedIn?

ME: Absolutely.

THEM: I think I believe you. I’ll be frank; I didn’t believe it at first.

ME: Silence.

THEM: You once wrote maybe 3% were findable online (see comments here). Do you still think that percentage is accurate?

ME: Absolutely.

THEM: That’s hard to believe with 135 million members!

ME: Silence.

THEM: I recently looked at the numbers — that’s how I came across one of your articles.

ME: Silence.

THEM: About 35% of the site’s members are American. We do all of our recruiting here in the States.

ME: Silence.

THEM: I’ve recently seen numbers that estimate only about 10-15% of LinkedIn profiles are in the active range.

ME: Do the math.

THEM: That would mean only about 4 to 7 million Americans have profiles that mean much of anything on LinkedIn.

ME: There are about 150 million workers in America. I’ve seen the number pegged closer to 200 million recently.

THEM: What do you need to get started?

What I haven’t included here is the question some ask: “What if the names you send me are on LinkedIn?”

ME: Depending on the space we’re working, a small percentage may be. If it’s recruiters you want, chances are most of them will be and you don’t need me. Have at it. But if it’s Uranium Geologists you want, I guarantee the companies you desire won’t have many of their GeoScientists listed. But let’s do this. You do LinkedIn first. Please do it first. Send me the names of people you find. I won’t send you them. How’s that for fair?

THEM: I don’t have time.

ME: Silence.

THEM: So I suppose if they do turn up on LinkedIn that’ll be up to us to swallow.

ME: Silence.

THEM: That’s fair. What do you need to get started?

As a college professor and someone that advises firms on the design of college recruiting programs, I have come up with a long list of the advantages of hiring recent graduates.

If you’re not seeing these attributes in your recent college hires, interns, or those you are courting, the problem is most likely a result of major weaknesses in your recruiting process and not with “this latest generation” of college students.

The Business Benefits of Hiring Recent College Grads

The benefits are split into two categories 1) benefits to individual hiring managers and 2) benefits that may accrue to the entire firm over time. Note that the possible outcomes listed here are based partially on generalizations that cover many but not all top college hires.

Shorter-term Benefits of Hiring College Students

1. Lower salary costs – most are willing to work for significantly less salary than “experienced hires.”
2. Continuous learners — because they have a recent history of learning, they are self-motivated “continuous learners.” This may actually be the most important competency.
3. Comfortable with technology — New grads expect to use technology and have no fear of it. They learn new technologies rapidly, and this, combined with their extensive knowledge of the latest hardware and software, automatically makes them a high-value hire both for current and future needs.
4. Comfortable with the Internet and social media – college students are much more likely to be familiar with and skilled in all aspects of the Internet, and in particular the emerging area of social media and mobile applications.
5. High levels of innovation – there is a great deal of academic research indicating that many great innovators do their best and most groundbreaking work in their youth. Midcareer hires may bring continuous improvement but lower levels of radical inflection-point innovation.
6. Fast change and agility — nothing more accurately describes the business world these days than intense competition and rapid change. If you’re going to be successful, you’re going to need agile individuals who are not just capable of fast change but also those who literally look forward to it. Fortunately college grads have a combination of youth and an excitement for trying new things that makes them more willing to accept and adapt to rapid change. They’re also agile and as a result they are able to shift rapidly and frequently between unrelated tasks.
7. Team players — very few major projects can be accomplished these days without teamwork. Fortunately, college hires these days are thoroughly experienced in teamwork and cross-functional teams. Rather than being forced to participate, it comes natural to them.
8. Superior communicators — college hires are accomplished communicators. They know how to communicate with teammates, vendors, regulators, and customers in many diverse and economical non-face-to-face ways. This includes the use of social networks and web 2.0 tools that experienced hires might be unfamiliar with.
9. The “why” question — a willingness to repeatedly ask the “why question” of others (Why do we do it this way? Why not that way?) helps to force you to re-examine your approaches.
10. Better performance on the job — we know from professional sports that the performance of college grads can meet and sometimes exceed that of experienced players (i.e. Kobe and LeBron). If you use a “surgical” data-driven college-hiring process, a majority of your hires will be above-average performers almost immediately. If the same process surgically targets grads with high levels of loyalty, your retention rates will also be exceptional.
11. New ideas — they bring numerous new ideas that they’ve acquired from leading-edge thinkers and professors that continually challenge them to think differently.
12. No need to unlearn — because they have little work experience or corporate cultural history, they don’t have to unlearn old ways or bad habits that experienced hires might carry with them.
13. Multitasking ability — they grew up in a multitasking world, so they look forward to being assigned to simultaneous tasks. Experienced hires might consider it overloading when you expect multiple tasks to be done simultaneously.
14. Energy and enthusiasm — their youth and relative health will likely give them what some describe as unbounded energy during the day, requiring fewer breaks and with no lapses in work quality due to fatigue.
15. Willing to take high-risk assignments — their relative youth and inexperience may lower their level of fear, making them more willing to take on risky tasks and assignments. With fewer outside-of-work commitments, many may be willing to take career risks that experienced professionals would not.
16. They understand metrics — because they’re fresh out of school, recent grads are likely to remember how to use numbers, statistics, and metrics. Although they might not have any practical knowledge, their lack of fear related to numbers and metrics is a positive factor.
17. Willingness to do grunt work — because of their eagerness to learn, even top students may be willing to do thankless assignments and even grunt work that others consider beneath them. This may speed up projects that are often delayed because no one on the team is willing to volunteer for the unglamorous tasks.
18. Willingness to travel — fewer outside-of-work commitments and a high level of excitement regarding exploring and travel means that they are more willing to take assignments that require a significant amount of travel.
19. Diverse ideas — each year, the diversity levels of graduating classes increase making them more diverse than the available experienced hire pool. If your college recruiting program has an effective diversity component, the diverse thinking of these college hires will add richness to your teams and decision-making because diverse individuals see things differently.
20. Professor contacts also — if you hire the very best graduate students, you will likely also get with them their academic contacts and access to the best research professors.
21. Access to research — once again if you hire the very best graduate students, you will also do research. You may also gain access to the research of their professors, thus aiding in product development.
22. Faster time to productivity — because they learn quickly, have high energy levels, have few family commitments and they have no professional biases to unlearn, new college hires may actually reach the minimum required level of productivity faster than experienced hires.
23. Easier to manage — although they may ask lots of questions initially, they may actually be easier to manage. This is because they seldom have the level of entitlement, professional biases, and political awareness that experienced hires usually have. Because they are new, they are less likely to argue, play politics, or complain.
24. An opportunity for a tryout — hiring experienced professionals can be a hit-or-miss proposition because you don’t get a chance to actually see them work. Fortunately, with college hires you can preview their work by hiring them as interns. If designed correctly, this internship opportunity can dramatically reduce the number of hiring errors.

Long-Term Benefits to the Firm for Hiring College Grads

Some firms have found that college hires bring many benefits that accrue to hiring managers, but in addition, also help the company over the long term. Some of the benefits that may extend to the entire company include:

1. A global perspective — many U.S.-based schools have a high percentage of international students. The curriculum in nearly every discipline these days focuses on global issues. As a result, you can be sure that new college hires will think globally, as well as feel comfortable working with internationally located individuals.
2. Essential for filling future management positions — it is difficult to hire first-level managers externally because no matter how strong their management skills, they are unfamiliar with the team and the corporate culture. Consistently hiring entry-level college hires allows you to promote the best into supervisory and management positions within five years. Without this college hire strata of employees, it will be much more difficult to fill these critical management positions.
3. Long-term assets — if you do hire college grads, they are yours to lose. So with great retention and career development, they will continue to be an asset to your firm for up to 40 years. Midcareer hires can’t possibly return value for the same number of years.
4. You might only get one shot at them — whichever firm hires a new grad, it literally has a chance to keep them forever. Meaning that if this firm treats them well, they may remain at this firm throughout their entire career. However, if you only hire experienced hires, you may have missed your one and only chance to monopolize this particular individual.
5. Competitive advantage — if your firm gets this talent, your competitors cannot.
6. Youth market benefits — if your firm happens to target many of its products and services toward younger people, having a large number on your staff will likely result in better products and increase sales to this population.
7. An opportunity to influence curriculum — even the process of college recruiting allows you to build relationships with faculty. Over time this many help you in steering the curriculum so that graduates more closely fit your future needs.
8. Now is the perfect time — in the past, a weak employer brand image or a poorly designed college recruiting program may have resulted in your firm hiring lower performing college hires. However, because almost no one is actively hiring large numbers on campuses these days, you could cherry-pick the very best if you are willing to act quickly.

Others suggest it more resembles the proverbial wolf in sheep’s clothing, a digital beast that devours our contacts and serves them up to large corporate clients willing to pay for what was once our data.

One cannot really blame LinkedIn for monetizing its business model. It does need to generate revenues to keep the lights on. But as it pursues recruiting revenues, as it encourages business professionals to use LinkedIn more as a marketing platform for “brand you,” as it prods users to pay for the privilege of networking and recruiting on LinkedIn, it is fair to wonder what value we get in return for that investment. While LinkedIn may remain a shiny object to which many recruiters feel inextricably drawn, we are in serious need of a reality check.

Earlier this year, LinkedIn reached two impressive milestones. It went public and it surpassed 100 million registered users. However, before LinkedIn went public, the social network filed a document with the SEC reporting a significant risk factor to LNKD investors: just how unreliable that 100 million figure is.

The number of our registered members is higher than the number of actual members, and a substantial majority of our page views are generated by a minority of our members. The number of registered members in our network is higher than the number of actual members because some members have multiple registrations, other members have died or become incapacitated, and others may have registered under fictitious names.

In other words, LinkedIn’s 100 million number is wildly inaccurate. However, attempting to pin down a more meaningful number is like nailing Jell-O to the the wall. That is why, dag-nab-it, LinkedIn is sticking with the 100 million member figure. Flawed though it may be, it contends it’s the only number it’s got.

Given the challenges inherent in identifying these accounts, we do not have a reliable system to accurately identify the number of actual members, and thus we rely on the number of registered members as our measure of the size of our network. Further, a substantial majority of our members do not visit our website on a monthly basis, and a substantial majority of our page views are generated by a minority of our members.

Recruiters: are you paying attention? A substantial majority of LinkedIn members rarely visit LinkedIn. That’s according to LinkedIn itself. Seriously, if that’s the case, one has to wonder how viable LinkedIn is as a social network. LinkedIn wonders as well:

If the number of our actual members does not meet our expectations or we are unable to increase the breadth and frequency of our visiting members, then our business may not grow as fast as we expect, which will harm our operating and financial results and may cause our stock price to decline.

The investor website Seeking Alpha has expressed concern about LinkedIn’s Marketing Solutions business — an advertising business unit that provides about a third of LinkedIn revenues — because “a website’s value to advertisers is directly proportionate to its number of active users.” Seeking Alpha accuses LinkedIn of being intentionally vague about its active user base and suggests we examine Quantcast reports on audience size instead. Only 1% of LinkedIn users are “addicts” who visit the site 30 or more times a month compared to Facebook’s 76%.

That disconnect may be starting to unsettle investors. The Wall Street Journal has taken note of recent drops in share price as early investors and executives unload shares in the wake of its May IPO. While many stocks weaken once employees are free to sell their shares after a company goes public, this appears to be much worse. In fact, Bloomberg contributing editor and investor Paul Kedrosky recently opined that LinkedIn’s precipitous decline is because LinkedIn has been broken from the beginning.

Kedrosky, who is also the editor of the popular financial blog Infectious Greed, notes that LinkedIn’s institutional investors make up only about 12% of its ownership, about half the percentage of stocks that enjoy strong institutional support.

Kedrosky’s article was called to my attention by Gary Stock, a longtime friend, technologist, and former code-breaking cryptanalyst with the National Security Agency. Stock participates in an invitation-only discussion group called “The TBTF Irregulars.” The group was formed by technology journalist/physicist Keith Dawson and also features the likes of David Weinberger, co-author of the seminal book on social networking The Cluetrain Manifesto and author of Small Pieces, Loosely Joined. It other words, this is a group that takes social networking theory very seriously.

Gary noted there has been growing chatter among The Irregulars about how LinkedIn may be losing its way. They observe that it is behaving more aggressively and hyperactively. Popup wizards online nag us to enhance our profiles, to give up more and more pieces of ourselves. One Irregular noted an email from LinkedIn to confirm a connection suddenly mistook him for a new user, though he’d been a member for years, and attempted to raid his address book to send out new invitations to connect on LinkedIn. When he demurred, his friends still strangely get hit with those email invites. In other words, even though he said “no,” LinkedIn’s technology apparently said “yes.”

Those hiccups may be due, in part, to the problems with iterative development, of rules and algorithms run amok as large platforms scale. However, it may be that LinkedIn is undergoing a personality change.

Stock theorizes that LinkedIn may have an “all-things-to-all-people” problem. He observes that LinkedIn once insisted we limit our networks to those whom we know and with whom we do business.

Gary being Gary, he took building quality connections in the beginning so seriously that when a college student that he knew attempted to connect with him on LinkedIn, he visited that student to explain personally why he could not make the student a connection: they had never worked together and were not even in the same industry. However, soon Gary realized that he did do business with the student. In fact, he had for several years. The student’s family sold produce at the local farmer’s market that Gary frequented. So Stock relaxed his rules, and it appears, LinkedIn has as well.

A network that first insisted that we network only with those we know has morphed into a place to network with those we want to know us.

That transformation has turned the LinkedIn data stream into a torrent of less-meaningful data. Eventually, Stock predicts, LinkedIn may need to divide itself into separate businesses or risk becoming a “melange of gray goo that nobody recognizes anymore.”

For non-nerds, “grey goo” is a phrase first coined by nanotechnologist Eric Drexler in the 1986 book Engines of Creation. Grey goo is the the result of an apocalyptic scenario in which rogue self-replicating robots consume all matter on earth while building more themselves. If it isn’t careful, LinkedIn may find itself turning into a large mass of replicating nanomachines (members) lacking large-scale structure (promiscuous networking). Yes, grey goo.

In other words, Dodd-Frank is mandating that more women and minorities must occupy lucrative Wall Street jobs that heretofore have been dominated by white men who, in gender and ethnicity, resemble Gordon Gekko, the anti-hero of the movie Wall Street and of its sequel.The Dodd-Frank provision is buried within some 850 pages of legislative text designed to strengthen the financial sector, promote economic recovery and job growth, protect consumers, and permanently end taxpayer bailouts of private institutions. Section 342 of Dodd-Frank embeds 20 Offices of Minority and Women Inclusion at virtually every major financial regulatory agency of the federal government: Treasury, the Securities and Exchange Commission, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the 12 Federal Reserve banks, and the newly created Consumer Financial Protection Bureau.

The offices are designed to serve as watchdogs, monitoring the diversity of the agencies and the government contractors and subcontractors with which they do business. The list includes “financial institutions, investment banking firms, mortgage banking firms, asset management firms, brokers, dealers, financial services entities, underwriters, accountants, investment consultants and providers of legal services.”Wall Street’s issues with gender diversity date back to the now infamous “Boom-Boom Room,” Smith Barney’s basement party room where lap dances took place in the 1990s. Since then, females across the industry have shared similar tales about how they were sexually harassed with vulgar talk; excluded from business lunches, meetings and golf outings; and how their careers were hindered or damaged.

While consciousness has been raised and while the numbers of female and minority executives have improved, the vast majority of Wall Street firms lack diversity in the upper ranks. And that disparity could be a big problem in the eyes of Dodd-Frank regulators. Wall Street does billions of dollars in business with the federal government for services that include debt issuances, sales of government assets, as well as more general advisory services.

That business now may hinge on a Wall Street firm’s ability to correct racial and gender imbalances. According to Dodd-Frank language, if a federal agency’s compliance director concludes that a contractor has not made “a good faith effort to include minorities and women in its work force,” the agency head is authorized to cancel the contract. In other words, contracts worth billions are at stake — a dollar amount designed to be so significant even the wealthiest 1% would take notice.How can you determine whether Dodd-Frank diversity mandate applies to your firm? Chances are Dodd-Frank does apply if the following describes your current firm:

• Your company is an investment banking firm, mortgage banking firm, asset management firm, broker, dealer, financial services entity, underwriting, accounting, investment consulting, or law firm.
• Your company does business with the federal government’s financial agencies: Treasury, the Securities and Exchange Commission, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the 12 Federal Reserve banks, and the newly created Consumer Financial Protection Bureau.

What should you do if you determine that Dodd-Frank diversity mandate applies to your firm? Your company must demonstrate that it has made a “good faith” effort to employ women and minorities. Clearly, “good faith” is subject to regulatory interpretation. However, Wall Street firms that demonstrate incremental improvement year over year in the diversity of their workforce may be better positioned for compliance than those that do not.

Employers also need to make sure that rounds of recent layoffs have not had a disparate impact on protected classes: workforce reductions and reorganizations have a way of eroding diversity ratios. Still, steady improvement may not be enough if regulators determine an organization could and should be doing more. To prepare for impending diversity regulations, potential next steps include the following:

• Define the baseline. Quantify the percentage of qualified women and minorities in the labor markets from which you recruit.
• Quantify the percentage of women and minorities in your current workforce, broken out by level, function, and geography.
• Compare your company’s diversity to the diversity of the labor market and identify opportunities for improvement.
• Focus the diversity talent pool and pipeline initiatives on the levels, functions, and geographies where they’re needed the most.
• Identify, map, and cultivate relationships of diverse talent at all of your favorite target companies.

Because Dodd-Frank diversity regulations are still being written, few Wall Street employers are fully conscious of its impending diversity mandate. One head of diversity for a global investment bank told me he fears that by the time those regulations are announced next year, there simply will not be enough time for Wall Street firms to come into compliance. Consequently, my colleague maintains that the time to act is now.

Dodd-Frank is the law. Wall Street companies can either ignore its diversity mandate at their peril or they can invite a growing occupation of corner offices and trading desks by female and minority employees. Interestingly, the latter choice also stands to make the workforce more economically diverse, which, in turn, may put Wall Street back in touch with Main Street. In fact, what may be most intriguing about the Dodd-Frank is the transformative potential of its diversity mandate. It holds the promise of reforming Wall Street from within.

During my first corporate recruiting position I felt that my role was as a “service provider” to my managers, so when they said jump, I did. Looking back on that now I realize how many opportunities I missed to set myself up as an expert in my profession of recruiting because I lacked the confidence to command a meeting and initiate a true partnership during the beginning of that relationship.

During my time as a recruiter I have run across several different types of managers and most can be intimidating. Below are some of the most common personality types that I’ve run across and ways that you can forge strong relationships with them despite some of their traits.

The “unemployment rate is so high you must have candidates banging our door down” manager: This particular breed of manager needs to be better educated on what is really out there in the market. The unemployment rate rising doesn’t always result in a rise in the actual candidates who you need for a given opening. Websites like the U.S. Bureau of Labor Statistics and Wanted Analytics are great starting points to use, and they’ll be able to arm you with some statistics on how many candidates for that job are actually out there. Be prepared for your first meeting with this manager by painting a realistic picture of the market from the very beginning of your search so that you set expectations correctly in the beginning.

The “I am an executive and feel I am better than you and want to hire an agency” manager: Oh my, this is my least-favorite manager, and there is always at least one in every company! Some managers no matter what your success rate is want to use an outside source just for the purpose of using an outside source. Try and compile a list of agencies that your company has worked with in the past and rate their success rate against your own, and how many hires have they made for your company vs. how many you’ve made. What has the success of those employees been in terms of tenure?

When I worked at Mike’s Hard Lemonade, I had an executive who just so happened to be best friends with a particular agency that he gave the exclusive to on everything. I wasn’t able to get him to stop using that firm on my first search, but I was able to see the candidates that agency was submitting and how easily they were finding them by pulling up the same candidates on Monster or LinkedIn. When you can illustrate that the 25-30% agency fee is only getting you a 10-minute Monster search, executives tend to listen a little more closely. With time I was able to convince that manager to allow me two weeks for a search before it went out to an agency. Over time my track record spoke for itself and I was able to gain trust and create a good partnership with this manager.

The “I don’t have time for hiring” manager: About half of my managers fall into the category of not having any time for recruitment, yet hiring and staffing their team is their No. 1 priority. These managers can be difficult to get any information out of, yet they assume you’re able to leave a five-minute meeting and produce a perfect candidate in a matter of days. The reality is managers need to be educated that the more information they provide to you and more information you get upfront, the less painful and slow the process of staffing for their team will be. I worked with a manager at Cobalt several years back, who was notorious for missing my meetings. So when I received a position from him I would do as much pre-work as possible, knowing from experience that I was only going to get yes and no answers from him, and that our first meeting about this position would most likely be our last.

Be prepared in that first meeting with candidate profiles. You most likely won’t get more than a job description from this manager, so use that to find some profiles and review them on the spot. Even hearing a yes or no on a profile can provide you with a sense of the type of candidate that they are looking for. Come prepared to the meeting with companies in your area that are hiring similar profiles so that you can provide the manager with a list of companies to pull from instead of expecting him to have that available for you. Ask if there is a lead or manager on their team who can assist with the candidate screening in an effort to save them time.

The “in an effort to look engaged I am going to ask for status updates on everything you do” manager: Some managers just like to micromanage the process and want to know everything you’re doing, including how many resumes you’ve seen, how many candidates you’ve rejected, etc. I try to be as proactive as possible with these ones and ask in the first meeting what kind of metrics they are looking for, and will create a weekly report for them. Most ATS’s have reporting functionality that you can use to build out custom reports without a lot of effort needed on your end. I use Jobvite, which has a custom report functionality that works great for this, and also allows for managers to go into the system and run their own reports at any given time.

The “even though I am a VP of _____ I am also an expert in your field and will tell you how to do your job” manager: You gotta love managers who know everyone in the industry, exactly where to find people, and how you should go about starting your search. While having a manager be networked and engaged is usually a blessing, sometimes it can go to the extreme and become a curse. Managers who know everyone in the industry and therefore start rejecting candidates based on rumors, hearsay, or reputation alone will really narrow down your pipeline. Use their knowledge to your benefit. If there are associations and groups that they’d like you to network in, ask if a member of their team can assist you as well so that you’ll have time to not only run your own search but also incorporate the ideas of your hiring manager without running yourself ragged.

Job Failure and Job Success

My profession is studying jobs and designing tests/exercises/interviews that measure both skills and attitudes. Extensive job experience and exhaustive graduate studies have brought me into contact with hundreds of managers in large corporations. One of my first activities has always been to interview people, either in the job or supervising the job, and ask: “What are all the reasons employees succeed or fail in this job?” The following responses are typical:

Can’t manage time, Makes bad decisions, Can’t get along with people, Doesn’t seem to care, Can’t sell, Can’t lead others, Poor communicator, Not honest in dealing with people, Poor communication with customers, Poor planner, Doesn’t follow up, Can’t learn new information, Poor attitude, Doesn’t show initiative, Can’t see the forest for the trees, Doesn’t consider enough information, Never anticipates consequences, Has poor judgment, No tact, Not a “people person,” Ignores deadlines, Inflexible, Doesn’t like the work, Not a team player, Doesn’t support organizational goals, Can’t see the big picture, Can’t make a decision, Bad fit

Now that we know what people who supervise (and do) the job say, let’s look at how HR usually answers the same question:

No one helped them, Not given direction, Bad management, Never trained, Bad fit, De-motivated, Not really sure, Personality conflict …

(Yes, it’s usually a very short list.)

Notice the difference? Managers and job-holders cite about 80% skills-related items and 20% attitude-related ones. HR, on the other hand, almost always attributes performance to victimization. I think this is a pretty significant finding, don’t you? Now consider the following claims from the email vendor:

The vendor says:

• Our research shows 89% of bad hires are due to attitude such as coachability, emotional intelligence, and temperament.
• Source credibility for this data is attributed to articles in Fortune, IndustryWeek, and other newsstand magazines.
• Almost everything about job attitudes can be discovered from an interview.
• You can learn all your need to know by attending a 60-minute webinar.

On what planet?

Obviously the vendor’s body of research has been kept completely secret from the hiring-science community. Sure, if an employee arrives on the job with a full complement of skills, attitude can have a big effect. But, by completely ignoring ability, do you think this vendor is appealing to people who supervise the position, or the HR community? More to the point, if this product ignores 80% of job experts’ data, do you think their product can possibly be as good as they claim?

I’ve been on the end of many of interviews and can say with certainty most magazine authors are less-than-expert in the subject matter. In fact, they work hard to find simple sound-bite answers to complex questions, seldom caring about hard research because it makes for dry and uninteresting reading. In short, articles published in mainstream media are a better indicator of clever PR than expert peer-reviewed research. If you want opinions, visit the newsstand or bookstore. If you want facts, read unbiased hiring research studies.

Measure attitude using only an interview? Sure. For one thing, everyone knows a smart candidate can dance rings around a typical interviewer. For another, interviewers neither have the training nor the experience to be personality psychologists. Anyway, abundant literature (I know… booooring!) shows clinical evaluations (e.g. trained psychological experts) are inaccurate predictors of job success. You won’t find this information in the WSJ or HBR because it is not “catchy.”

Hard Facts

In my experience, there are thousands of training-program vendors, thousands of junk-science test vendors, and a few hundred professional selection tool vendors. Seldom will you find both training and professional selection technology coexisting — the technology and philosophy is totally different.

If a vendor’s website talks all about training, it’s a good idea to pass. You see, developing a professional hiring test takes more than drafting a few questions. It takes months of editing and statistical analysis to demonstrate it actually predicts some aspect of job performance. BTW: This would be a good time to revisit the manager’s succeed-or-fail list.

If you are responsible for making hiring decisions, be careful of self-promoting vendors entering the hiring and selection marketplace. Professionally, I never found one sufficiently qualified in the science of test development to develop a product that will eliminate dead-wood candidates. And believe me, if you use junk-science tests, you will learn the hard way they don’t work as advertised. Furthermore, all that dead-wood will be on your payroll.

This warning is true for all products that suggest they can teach you to analyze a candidate’s motivations, use self-reported personality surveys to match performance with a data base of job titles, predict job performance without actually measuring skills, or use any other method that is less than comprehensive or validated. From a legal perspective, the user, not the vendor, is always responsible for test use.

I have been accused by some of promoting “assessments?” Get real. It’s semantics: Interviews, resume reviews, application blanks, surveys, tests, sourcing, and so forth, all all assessments. Assessment is just another word for test, and, valid tests are useful tools for evaluating qualifications. If you don’t have proof your test/interview/assessment predicts job performance for your job in your organization, then you will assuredly turn away good people and hire useless ones.

Why should you worry? Experts estimate poor employment decisions cost about six month’s salary, not to mention perpetuating HR’s professional reputation for quick, ineffective solutions to complex problems. Forget vendor hype. Simple, one-step hiring solutions are nonsense. They don’t deliver.

Director of Fun.

That was the title I was looking at on a resume for a marketing director position. As I read through the applicant’s accomplishments and responsibilities, I could see that it was clearly a marketing-type position. It stuck out, just not in a good way.

What may have seemed like a great little thing to have on a business card as an attention-getter had now turned into a liability. Nobody knows what a “Director of Fun” does. And sure, maybe “Marketing Director” isn’t all that specific on its own, but give me some context (industry, company size, and market) and I can pretty quickly figure out what you’re doing.

Using these fun titles externally is a mistake.

What’s in a Title?

Now listen, I’m not a super stickler for titles. I know it’s what you actually do that’s the real important point.

If you’re an HR manager but you’re doing HR assistant work, I’m going to treat you as such (and vice verse as well). And we know title inflation is a big part of the hiring process and it can help make business transactions flow easier. Go into large banks and insurance brokerages, some with hundreds of branches and I’ll bet you find a VP or SVP in the building.

Wacky job titles simply confuse most real people.

So yes, titles can be B.S., but I think most people know that. If you walk into a brokerage and find most people are managers and directors and the top guy is a SVP, you still contextually know people’s roles and who is in charge. It might be a shift in thinking, but you aren’t reinventing the wheel.

Now “Director of Fun”? Or “Corporate Magician”?

Fun titles Not So Fun in the Real World

Some organizations think funky job titles are a great way of expressing a company’s culture or to stand out from the crowd. Moo.com sent over some of the most interesting examples of this. Here are my top 10 head-scratching titles Moo listed, in no particular order: 

1. Sales Ninja
2. New Media Guru
3. Social Media Trailblazer
4. Corporate Magician
5. Master Handshaker
6. Communications Ambassador
7. Happiness Advocate
8. Marketing Rockstar
9. Problem Wrangler
10. Digital Dynamo

Master handshaker? Problem wrangler? Whose hands do these people shake, and what problems do they wrangle?

In a quote from the press release, Moo.com’s Paul Lewis says,

“Traditional one-word job titles no longer act as an accurate description of what a person does or what they are like. So why not stand out a bit by giving yourself a job title that sums you up as a person rather than limits you to just one aspect of what you do.”

The funny part to me is that Lewis is credited as Head of Marketing (and here, too, on his Twitter profile). And while it may not stick out, I know that he is in charge of marketing. This is helpful if I ever need to get in touch with someone in marketing at Moo.com, or if I ever need to hire someone with some marketing chops.

Taking a Step Back

Fun titles can be great for internal teams. It can help put a fun spin on being at work, especially at some of the less pleasant, white-collar jobs that are out there.

But when it comes to dealing with people outside of the company, it is time to make a decision: do you communicate what you do clearly, or, do you avoid that and try to educate every single person you meet about that fun job title — only to have them forget what you actually do five minutes after they meet you? Or worse, you are mocked for not having a real title and people question your business skills and savvy?

Even the Gen Y guy inside me knows the right answer: you always pick clarity first.

Once a client or business partner gets to know you and your company, they’ll know you’re fun and cool, even in spite of an ordinary job title. And you should be just fine with that.

Be different. I harked on this point a couple of months ago, but I challenge any staffing agency that wants to be great to clearly communicate their compelling business case. Talk about your recruiting process, client relations, local market connections, and client successes.

Don’t be a cheesy sales guy and don’t treat your own recruiters poorly. I know a lot of staffing agency recruiters, and I shy away from vendors that treat their recruiters like dirt (this also drives high turnover and lowers the professionalism bar for all recruiters). Some vendors may say how they run their businesses is none of my business and I should judge them simply on candidates hired. And in response, I will say that how you treat your people speaks volumes about how you are different/better.

Understand your competition and how they do business. As an extension to my previous point, I think staffing firms are so entrenched in the daily operation of their own business that they don’t take the time to understand the competitive landscape. Are your competitors dropping the ball with other clients? What are they doing to build business and break into new accounts you’d like to be in? I think that the typical staffing agency only has a superficial understanding of their competitors and then tries to sell against these perceived weaknesses (for example, I hear “we don’t just send you a bunch of resumes like everyone else” a lot).

For the savvy staffing agency, this in-depth knowledge of the competitive landscape should provide you with worlds of opportunity. The truly great vendors know their competition, know their recruiters, and know their challenges and strengths. This knowledge should provide an agency information on where business development opportunities lie in the market. As a corporate recruiter this information can provide me with much-needed insight into the current talent pool and where my recruiting headaches may soon lie ahead.

Too much business development is done with the “give-us-a-shot” approach. When I wrote my previous article several agency recruiters reached out to me and said, “How will you know that I’m different without giving me a shot at a tough requisition?” While I appreciate their effort, I can’t simultaneously engage a lot of vendors with this request. My world would be consumed with just managing vendors and their candidates.

Here’s a business development suggestion: Go to a client where you’ve had solid success and ask them to either A: Make a call on your behalf (I know that’s a huge stretch but I’ve done it before), OR B: Ask if you can use their name and success story when calling into another company. Strong relationships with clients allow this level of imposition. Lastly, don’t be everything to everybody. One issue I’ve seen with vendors is that they contract with every company in town. In the staffing business I know that means more sales, but it also limits your ability to recruit talent away from my competition.

Maybe there is a need for this many vendors. Ultimately I know the answer to this question is dictated by the market. If there were truly too many staffing agencies, natural selection would weed out those that are less successful. This is an effect we saw during the Great Recession. Some staffing agencies closed up shop while others were able to stay in business and make it through a couple of tumultuous years. However, the handful of excellent staffing firms drown in a sea of mediocrity.

The few solid staffing firms have a reputation built on years of experience, consistency of internal staff, and relationships built with hiring managers and human resources. As a result, a lot of their business development comes when a trusted hiring manager moves to a new company. This person becomes a strong internal champion helping introduce the agency to a new client.

Maybe they are all the same. In consideration of this article’s content, maybe we need to consider this reality — the vast majority of staffing firms are the same. Their sales pitches sound the same and their recruiting approaches are pretty similar, so maybe the best staffing firms simply have the best salespeople.

Perhaps it’s time for staffing firms to admit this reality of sameness and let hiring mangers work with the salespeople they like the most (or take them to coffee the most or get them football tickets, etc). What if success is truly predicated by luck and “dialing for dollars”? If this were the case, then treating vendors as a commodity is the only reasonable course of action (And further reason for the proliferation of vendor management systems).

In closing, I will be the first to state that I don’t know if there are too many staffing firms. At first pass, my opinion seems to be yes. I get way too many solicitation calls for the same service to think otherwise; however, the reality of the market will really bear out whether your local market can absorb new players and will weed out others.

On its face, this would seem to make sense. But it rarely works. After a while, it becomes clear that things aren’t working out as planned. The new hire either does what the other staff are doing (abandoning their agency skill set), or they quietly leave.

It’s an old story: the agency recruiter comes into an established department overseen by HR, replete with processes, advertising budgets, and clear lines of authority. Internal company recruiters, especially those working for larger employers, are adept at marketing jobs designed around the company’s brand and managed through an ATS. There are teams, matrixed relationships, and lots of processes governing recruiters. The goal here is to create reliable, repeatable service levels.

Square Pegs in Round Holes

Agency recruiters find themselves wedged into an environment which is the exact opposite of the agency model — it relies on advertising, has much higher req loads, and is a place where process trumps results. They quickly realize they have to get with the program to fill so many requisitions. This is a situation where the agency skills are not much use. The agency recruiter who wants to stay in a corporate role learns they cannot afford to use agency skills unless they have a shorter requisition list, so they can work them intensely.

Recruiters who learned their trade at a company with a strong brand never really learned to recruit. The brand does the heavy lifting. The corporate recruiter runs a different game, emphasizing ads, job distribution, and SEO, instead of digging for candidates, because its the most efficient way to meet their needs. Anyone wanting to stay will do the same. So the agency skill set falls by the wayside.

Others take a different path.

Many agency recruiters hired into corporate roles know they are talented, and that their agency skills are valuable. For them, it’s not about fitting in, but using these talents. These people are often more innovative, and more resourceful. They are results-oriented, and approach recruiting as a business function (instead of an HR function). Those invited to join a corporate recruiting team may see a great opportunity to make a difference by adding their skills to the mix.

When their approach to recruiting butts up against layers of bureaucracy, they realize they’re in a land where process and predictability are prized over results. It’s more important to ensure that the process shows that every candidate was treated equally than to get a hire. Mediocrity is acceptable, and they are handcuffed with no way to use their skills. In short, their creative, aggressive strengths are at odds with an HR culture. The bottom line realization is that if you’re really talented, you’ll leave.

Corporate recruiting runs on programs and processes. Agencies succeed because they put on a pirate hat and exploit opportunities. Pirates aren’t in for the 9-5 grind, an annual performance review, and 3% pay increase. They want to make something happen. They are resourcefulness and occasionally bold. This isn’t very HR.

We owe much credit to “skills-based” hiring, where the personality and cultural characteristics are secondary to a skill set. Most companies say they look at skills first, then fit. But if true, they probably wouldn’t hire an agency recruiter into a corporate role. The talents that drive success in an agency clash with most corporate cultures. Agency work is best done by putting on a pirate hat and making something happen. Too many rules stifle creativity, and the orderliness of corporate recruiting programs are not conducive to such behavior. Indeed, companies hire executive search firms for this very reason: they need a pirate but can’t afford to have one associated with their brand. So they contract an outside vendor and gain the skills while sparing the brand.

… the last two candidates you have sent me are terrible! The agreement you sent me prior to engaging in this search requires me to pay you 25% of the individual’s first-year salary if I hire one of your presented candidates. In my case, that would be in the neighborhood of $17,000, which is a good sum of money.

I am feeling a little confused at the moment, as I was under the impression that you are to provide me the top 1% of talent available in the field of which I am seeking talent. Or, at least that is what you told me in your initial presentation of why we should use you.

Instead I opened both of the resumes you have sent me this morning, only to find the first individual, who has already applied to this position no less than eight times and we have already rejected, and the second individual has changed jobs more times in the past fiv years than runway models change outfits; am I to think this individual will stay with us any amount of time to learn our business and be a strong contributor?

When I signed up for this “executive search/recruiting” service, I was under the impression that you were going to bring me the best of the best, a game changer or an “A” player who can bring significant value and contributions to my business unit. But all I see here are average professionals and not the caliber that warrants me paying you $17,000.

I know it’s your business on how you operate, but I feel as if I need to share some suggestions for you and for what I really need in a search partner…

• Executive search is a science that requires patience. You don’t have to fire me every resume in the city on day one of the position being open. Take your time and bring me your top 3-4 high quality individuals from which I can make a selection.
• How do you know what I really need? All you asked for was a job description. You never once asked me what was/is important, what the key functions to be performed are, the type of individual that will fit in our group, why someone should take a job here, etc.
• Quality means quality. If you are asking me to pay you 25% of one’s first-year salary, this person better be worth my investment.
• Please follow up with me — after you sent me 20+ non-qualified resumes on day one, it was almost two weeks since I heard from you. I wasn’t sure if you were still engaged on my search or if I was to even expect another resume.
• Don’t circumvent the process. We started working together on Day 1 and next thing I know you are pinging my boss with other candidates and topics. This makes me look bad.

Hope these few pointers help you in the future, but at this time we are going to take this search in house and handle it ourselves.

Good luck,

Mr. Hiring Manager