Once again referrals have turned out to be the leading source of external hires in the annual CareerXroads source of hire survey. In 2008, 27.3 percent of the external hires made by the 45 large employers who completed the survey came from referrals made primarily by employees, but also by alumni, vendors, and others.

Corporate web sites — a destination and not an actual “source,” insists the report — was second with 20.1 percent of the external hires coming from there. Rounding out the top three were job boards, which accounted for 12.3 percent of the hires.

No big news in those results. For the last several years the survey that CareerXroads principals Gerry Crispin and Mark Mehler conduct every January has consistently found referrals accounting for about 3 of every 10  external hires made by the participating companies.

What is different this year is that 38.8 percent of all openings were filled by internal transfers and promotions.

“We found that very interesting, ” says Crispin. “That’s the highest number since we started this survey eight years ago.”

His explanation is that despite hiring freezes, critical openings still have to be filled. But, now that’s being done internally and the  jobs the transfers leave are simply being absorbed by the remaining staff.

In the report, Crispin and Mehler put it this way:

“… the significant increase in the proportion of internal to external fills in 2008 versus 2007 (28%) is at least partially due to the deteriorating economic climate during 2008. We think this conclusion is further supported by the survey respondents’ estimate that the number of contingent workers employed by their respective firms decreased from 18% in 2007 to 10% in 2008. Clearly the data reflects a shift in emphasis to filling internally and squeezing external hires.”

The report also notes that some of the surveyed companies are filling almost half their vacancies by internal promotions and transfers. That’s something those companies should report on their career sites, Crispin and Mehler say, since it evidences their commitment to career development.

The survey report also identifies a few new trends and strengthens trends first noticed in previous years. Most notably:

1. Third party recruiters and agencies as a source of hires have been in decline since their zenith in 2005 when the survey indicated 5.2 percent of hires came from there. In 2008 that number had fallen to 2.7 percent, a decline exacerbated by the overall drop in hiring.

   “Don’t place your bet on this side of the market having much of an upside when the economic climate reverses. It won’t,” the report says.

2. CareerBuilder has overtaken Monster among the job boards (28.9 percent vs. 23 percent of the total hires coming from job boards), but the report calls it a pyrrhic victory. “We believe this SOH has indeed peaked and predict it will diminish in the future.” However, the report suggests that all of the big, national boards are losing share to the niche sites, which collectively accounted for 36.2 percent of the hires coming from job boards.
3. Perhaps not surprisingly, not one of the surveyed companies said it planned to increase hiring in 2009. Showing the depths of the downturn, the companies collectively expect to hire 15.7 percent fewer employees this year than last.

Recruiters have come to regard the annual CareerXroads Source of Hire Study as a sort of guide by which to measure their own company’s sourcing. However, Crispin and Mehler caution that, “we seek to stimulate discussion about staffing issues rather than encourage blind acceptance of data at face value.”

The report is compiled from data reported by 45 firms (out of more than 200 invited to participate) who collectively filled 309,600 openings last year.

Note: The chart accompanying this post has been updated to include two categories omitted from the previous version.

Companies such as T-Mobile and McKesson are stepping up to the plate by establishing a formal workforce planning process with a designated leader in order to achieve results. So, what exactly is workforce planning? How can it help organizations achieve these goals? And why should you care?

Workforce planning can help you strengthen and empower your role in the company by doing exactly what recruiters have been trying to do for the past 10 years: get a seat at the table. Workforce planning is a set of business processes which analyze the supply and demand of talent, ensuring that the organization has the right people in place to execute its overall business strategy. An effective workforce planning process allows you to:

• Understand current talent gaps
• Plan staffing and recruiting needs
• Help business leaders forecast revenue and operating budgets
• Drive business to partner with recruiting

Sounds simple? Don’t be fooled. Embracing the idea of workforce planning and implementing a strategic approach to your current and future workforce needs are two very different realities. Workforce planning fails when it lacks executive support, a clear methodology and business process, and the necessary tools and technology to execute the process. The workforce-planning process needs to correlate business strategies with workforce requirements. No easy task but one you should not ignore.

One important aspect to consider in workforce planning is your companies’ current level of maturity and the steps you need to take to become more strategic in your process. Mitzi Adwell of The Newman Group compares these different stages of workforce planning to driving a car. At the basic level, you are getting in your car and starting to drive with pretty clear direction of where you’re going — a staffing and headcount plan. At an intermediate level, you are looking in your rearview mirror to get a better understanding of the landscape around you (workforce analytics). At the advanced level, you are looking ahead and using your dashboard to gauge how you should proceed (strategic workforce planning with predictive modeling).

Stage One: Getting in Your Car

In the most basic level of workforce planning, companies are looking at current headcount in their organization. Some companies even take it one step further and look at forecasted vs. actual headcount in order to build staffing plans that close their talent gaps and keep them on target with their budgeted headcount. One challenge is that this level of workforce planning is often decentralized, viewing talent from the bottom up versus a top down view that prioritizes talent-sets from the most to the least critical to the business overall. This headcount analysis is performed in the individual business units and does not connect with the overall organizational business strategy.

More often than not, companies plan staffing and headcount on an “as-needed” basis when facing major external pressures or changes in workforce demographics. Volkswagen Group of America used this type of planning process when the company relocated its headquarters from Michigan to Virginia. Given that it planned to replace three-fourths of its workforce within a short timeframe, it was important to include a precise plan in short order to ensure the pipeline of talent and the timing of hires met its operating goals. Situational workforce planning like what Volkswagen did might help companies think about how to handle business plans with major talent implications. Of course the more you know and the earlier you know it, the more effective you can be at using more sophisticated means of workforce planning.

Stage Two: Looking In the Rearview Mirror

At the intermediate level, workforce planning looks at quantitative data analysis, including forecasted skills and competency needs. Companies look at a regular workforce profile with key data variables including demographic segment, compensation, turnover, and performance rating. Looking at historical trends of these variables and relationships between them helps companies to better understand their talent patterns and trends so they can incorporate that information into their talent plans going forward. Companies such as T-Mobile will rely heavily on scenario planning or “what-if” scenarios this year.

Scenario planning allows companies to prepare for different internal and external business conditions such as retirement, economic changes, and workforce demographic changes, and think through what strategies they will implement in order to overcome challenges they see through the ‘what if’ exercises.

Stage Three: Using Your Dashboard

While other levels of workforce planning inform business leaders about talent plans, a strategic workforce planning process integrates these plans with the organization’s business and financial planning. At this level, companies gain a deep understanding of their talent pipeline and how it aligns with the overall business plan of the company. Companies use technology to help map the talent needs and make more informed business decisions with cost implications.

How You Can Help Your Company?

Bersin & Associates, an industry research and advisory services company, is partnering with The Newman Group to publish a comprehensive research report on this topic. The goal of this study is to identify the current state of maturity in workforce planning processes, level of ownership, range of maturity in audiences served, processes included, and level of integration with other business planning processes.

We would love to hear from you. The survey contains 23 multiple-choice questions. Estimated completion time is 20 minutes. As a participant, you will receive a copy of the executive summary to be developed based on results of the survey and scheduled for release in March 2009. This is an opportunity to share what you know and receive great insight in return.

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“. . .we can say that Muad’Dib learned rapidly because his first training was in how to learn. And the first lesson of all was the basic trust that he could learn.      It is shocking to find how many people do not believe  they can learn, and how many more believe learning     to be difficult.”
-Frank Herbert, Dune

This quote from the well-known science fiction novel Dune underlines the difficulty many people have in learning. Learning means change, examining what we are now doing, and being open to explore what we could do differently.

Very few of us have ever learned to learn and most of us live in fear of learning. This fear has roots in embarrassment, fear of failure, fear of ridicule, our society’s worship of “book” learning over experiential learning, the desire to be like everyone else, the need to be liked, and many other needs and fears.

Children have the wonderful gift of total trust that they can, through interaction with their environment, learn. They experiment, test, challenge, and in the process, learn. Their natural curiosity and excitement over piecing together the world as they discover it is a wonderful thing to witness. Yet, somehow as we go through our formal schooling that innate belief in our own ability to learn, and most of our curiosity, is taken out of us.

Our organizations reflect this as well. Only a few are true learning organizations that invent the future and do so regularly. One that comes to mind is Apple. Perhaps fueled by Steve Jobs and his seeming less-ruthless focus on perfection, it remains youthful and exciting, even now that it is into middle age. It has programmed into itself the ability to take risks, be bold, and go where others are afraid to go.

Recruiting remains a transactional and traditional function for most of us. Not much learning, and consequently change, has taken place despite huge changes in how organizations design, manufacture, and sell their products and services.

Talent remains local. Competencies reflect yesterday’s needs. Sourcing is still a reactive process based on templates designed in the past. And hiring happens the same way it did 50 years ago.

If you want to be a mover and shaker in this profession, you have to learn to learn. You have to take some chances and do things differently.

Here are some slightly out-of-the-box thoughts on how you can create a learning environment and stimulate discussion and change by challenging the traditional and by boldly acting differently:

1. Hire people from the same spectrum of countries you purchase raw materials from or where you sell your products. Whatever else these employees are doing for your organization, they are also eyes and ears for product development and for sales growth. They may have fresh ideas about uses for products or have ideas for new services you can offer. And, given the talent shortages, it may be easier to find certain skills in those countries than in your own. To make this work, develop a sourcing strategy that works in multiple countries and a career site that is in multiple languages and has different recruiting messages for different countries. Encourage leadership to embrace virtual employment and let employees work in their native countries.
2. Hire people from parallel occupations. Try and expand your hiring managers to think more broadly than they do now about the kinds of people they want to hire.  Too often I find job requirements that are narrow and way too specific. These descriptions often list very specific competencies and precise skills that a candidate must have, along with a certain level of experience, to qualify for a job. In a few cases this kind of specificity may be necessary, but for the most part it is wasteful and not creative. By encouraging hiring managers to think out the box (for example, hiring music majors and training them to be programmers as Cisco and IBM have done) expands your talent pool, can lower starting salaries, and makes it more likely that some creative new concept will emerge because these people have not been trained that something cannot be done. The time to productivity curve may be longer, but the quality of thought and the morale of employees will be higher.
3. Rehire retirees or retain baby boomers. Many organizations could realize gains in product development, time-to-market, and other areas by bringing back experienced ex-employees who have retired or by hanging on to experienced boomers who are thinking about retiring. Transferring knowledge to younger workers is a major undertaking for many organizations and the best way to do this is to utilize the older worker’s experience as mentors or coaches for younger workers. By putting a few experienced employees on a project with younger workers, learning happens automatically. No time is used in classrooms or seminars. Work remains the focus with learning a significant byproduct.
4. Get rid of job titles and levels. Put people into project teams with only broad titles such as engineer, planner, statistician, marketer, and so forth. Let the team collaboratively decide who does what based on the team’s goals and desired outcomes. Hire people with broad skills and experience or with only a little experience (e.g., new college graduates). Creativity and change most often come about when there is a significant contrast or gap between people, ideas, or needs.

If you are looking for greater satisfaction and commitment to your profession, be open to learning and actively practicing it.

You practice learning by taking chances, experimenting, measuring the results against a standard, and trying again. Being open to learning and making changes is what differentiates the movers and shakers from everyone else.

“More than any other function, recruiting shapes the future of an organization,” says Maureen Conn, U.S. staffing manager at Siemens VDO Automotive in Troy, Michigan. “Companies need to ask themselves where they want to be in 10 years, and they should remember that the future is driven by the people we select to have as part of our team. Some companies may view recruiting as a transactional department, but really, they should view it as a business partner to effect corporate strategy. The business world tends to view HR as incompetent police and that makes it difficult [for recruiters] to get a seat at the strategic table.”

In fact, Conn says recruiting should move to a department that focuses on consistently maintaining customer satisfaction, quality control, and continuous improvement in order to analyze both strategic and implementation approaches.?

“Because we’re viewed as a cost center and not a profit center, recruiting tends to be very under-resourced. For example, our recruiting staff?three people if you count me?has recruited approximately 600 professional-level new hires this year,” says Conn.

Sam Modi, senior IT recruiter with the Aspen Group, Inc. in Silver Spring, Maryland, agrees that recruiting should be a separate entity. “Recruiters need to know more than timesheets and benefits, and they should have more time to research candidates and negotiate prices,” he says.

Meanwhile, 37% of respondents think that recruiting is a core function of the HR department. Jennifer Holtzman, staffing consultant for AppleOne in Scottsdale, Arizona, thinks recruiting belongs in the HR department because “sometimes it seems like you can kill two birds with one stone; the duties go hand-in-hand, so I do not think it should be moved.”

Although Holtzman says she can understand why some want to see recruiters removed from HR, she thinks the reality of that situation is less than ideal. In fact, she contends that some of the job duties could overlap, ultimately making things redundant. For example, she thinks juggling employee benefits and recruiting is part of the same job and quite manageable for one person.

“Knowing the details with changing rules and regulations and legal issues helps, and it makes it a more efficient working environment by having it all in one department,” she says.