Some business concepts worth considering when developing a hiring strategy:

1. When business conditions change, your strategy has to change along with it.
2. Tactics don’t drive strategy; strategy drives tactics.
3. Strategy drives the planning process. The plan drives the tactics.
4. Plan. Don’t react.
5. If you have the time, worry about the forest more than the trees.
6. You can’t push on a rope.

With this as a backdrop, it seems that most HR/recruiting departments don’t have a fundamental hiring strategy in place that ties directly to their company’s business strategy. If they did, it would seem, as a minimum, that requisitions would be categorized by the impact the job has on the company’s strategy. Some jobs would be more critical than others. Workforce plans would be developed to build pools of potential candidates for these critical jobs long before they’re needed, and hiring managers would be intimately involved and trained on how to find, assess, recruit, and hire the best prospects.

A description for this type of hiring strategy resembles something like this:

Maximize Quality of Hire Strategy: hire A-level talent for all strategic and critical management positions and the top-third for all other positions, without compromise. As part of this, offer careers, not jobs, at every level in the company.

While this is worthy, it seems that most hiring managers react rather than plan, and most don’t have a clue about how to assess and attract the best. HR/recruiting exacerbates the problem by focusing more on cost than quality, giving recruiters so much to do that they become mere paper pushers, and/or jumping from one sourcing idea to another in the vain search for the silver bullet.

Few companies are immune. While defining this type of hodgepodge hiring strategy is not easy, the one being used at your company probably resembles a combination of one or more of the following:

1. The transactional, minimize cost per hire strategy: find anyone who is actively looking who meets the job description at the lowest cost in the shortest period of time using the cheapest approaches possible.
2. The silver bullet strategy: try out every new sourcing idea with the hope that it works better than the last, and now tarnished, silver bullet.
3. The eliminate-the-worst strategy: put as many barriers as possible to eliminate the worst with the expectation that good people will be attracted and persevere because we have a great employer brand and an easy-to-find career site.
4. The proprietary talent pool sourcing strategy: build a talent pool of diverse talent and hope that a few people raise their hands when they’re emailed a boring job. (Note this is actually a pretty good sourcing strategy if coupled with better messaging and a career-focused assessment and recruiting process.)
5. The vendor-driven (aka the comp- or OD- or legal- or IT- or OFCCP-driven) strategy: let’s forsake all our responsibility for hiring and let our vendors tell us what to do, or let some bureaucrat, technocrat, or lawyer tie our hands.
6. The post and pray: post boring jobs on as many boards as possible with the hope that a good person inadvertently sees it.
7. The incomplete strategy: let’s do something really well, but then mess it up by not completing the process. Example: finding top-notch prospects who opt-out of the process early due to one of the following: application process is burdensome, recruiters don’t know the job, managers who are weak interviewers, offers that are uncompetitive, etc.
8. The “I’ll know it when I see it strategy” — aka the hiring manager-driven strategy: let hiring managers do whatever they want to do with heavy reliance on the job descriptions and the manager’s good sense of what success looks like. As part of this, recruiters are just told to send over as many candidates as possible who meet the specs.
9. The knock-out question or survivor strategy: this is a version of the “eliminate the worst” strategy, but starts by asking people a bunch of silly questions that only leave the desperate as survivors.
10. The hide-and-seek arrogance strategy: make it extremely difficult to find job postings, make it more difficult to apply, and require all candidates to bow down to the hiring manager if they’re fortunate enough to be granted an interview.

Of course, no one every starts out with this type of hiring strategy in mind, but somehow, piece-by-piece, this is what it evolves into. Part of the problem is letting the idea of the moment drive activity. As a result, we can often unknowingly affect the final outcome for the worse. This is called sub-optimization. For example, in today’s paper I just read that Orange County (California) is planning on widening its main freeway system into Los Angeles. Unfortunately, LA County is not planning on expanding the junction, with the result just moving the traffic bottleneck north by 10 miles.

Something like this happens every time a new sourcing process is implemented without considering the end-to-end impact. Problems like these can be minimized when there’s an overarching maximize-quality-of-hire strategy in place that everyone adopts. Then every subsequent action or decision can evaluated on how it impacts this strategy.

If you want to implement a maximize quality of hire strategy, you should first go through each step in your current sourcing, interviewing, and recruiting process and see if it’s counterproductive in some way or preventing the best people from consideration. With this as a framework, develop a two-pronged action plan. The first part involves stopping doing the things that prevent you from hiring the best. The second part involves implementing new processes based on how the best people look for new careers, how they compare different opportunities, and the criteria they use to accept an offer.

While I’ve been contending that HR/recruiting must take full responsibility for quality of hire, developing the strategy, plans, and processes is at the core of this. Of course, getting managers on board is the most difficult challenge here, requiring executive-level vision and support to be successful. A strong metrics and feedback program tracking everything pre- and post-hire is the essential piece that ties it all together. Developing, implementing, maintaining, and monitoring this maximize quality of hire strategy is what I mean by ownership. In my mind, maximizing quality of hire is the most second most important function of HR/recruiting. The first is developing and maximizing the talent already on board. Everything else pales in comparison.

Then, in the year 1405, it got smart and created a position of a night watchman to keep an eye on the city and identify fires.

The watchman’s job was to climb the 153 stairs to the top of the cathedral tower and at each hour from 10 p.m. until 2 a.m., he would call out in four directions, C’est le guet; il a sonné l’heure (”This is the nightwatch; the hour has struck”).

Apparently the night watch was effective, because the tradition still continues today!

The buildings in the city are no longer made of wood, and technology has largely eliminated a fire risk. So why does the city still employ a night watchman?

There are probably a few reasons to keep the tradition in place, but I believe that the main reason can be summed up in one word: reassurance.

I’ve never met someone who didn’t enjoy a little reassurance. In this case, the people of Lausanne like the safe and comfortable feeling of knowing that someone is out there keeping an eye on their city.

From a recruitment context, candidates in your hiring process also want reassurance. They’d like frequent updates on the status of their application. They want to know that their resume hasn’t been lost in a black hole. They want to understand the next steps in your interview process. They want to know when they’re no longer being considered.

If you believe that reassurance is important, how can you use that knowledge to improve the candidate experience? What technology can you implement to provide candidates with self-service access to check the status of their application? How can you clearly set the expectation with candidates so that they understand the timetable and steps within your recruitment process? How can you improve your communication with candidates as they move through the stages of your process?

I encourage you to implement a “night watchman” strategy within your recruitment process to provide reassurance and to offer an added level of service to those candidates with an interest to join your team.

I don’t need to fight

To prove I’m right

I don’t need to be forgiven.

–Baba O’Riley

“Why is this taking so long” is one of my favorite hiring manager questions. The best answer is to not have it asked in the first place. Sadly, it makes the recruiter have to justify their existence with a flurry of undocumented and ill-prepared remarks on past activity while feeling awkward and flat-footed. All in all, it is not a fun time.

I believe that we can avoid this awkward question in almost all cases, but before we discuss how that is done, let’s look at four sample answers to that question. These answers are not good ones and should be avoided. (The answers below might be accurate, but we need to be sure that candor and objective conversation take a back seat to organizational politics.)

1. It is taking so long because it took you four weeks to finalize the position profile. Not a great answer. Managers like to see themselves as decision-makers (especially those who so clearly are not) as opposed to individuals who need input from 37 team members before they approve a position profile.
2. It is taking so long because you take forever to respond to the candidates I submit. Not so good either. Managers have endless reasons for taking too long in terms of response time, but personally, I do not care what those reasons might be. Twenty four to 48 hours is all it should take. If you need more info on the candidate, I will get it for you. If you do not need more info, make a decision; do you want to see the candidate or don’t you?
3. It is taking so long because you do not get back to me after candidate interviews. Avoid this answer! Having the candidate die of old age waiting for the manager to think, discuss, compare, contrast, evaluate, reflect, confer, plot, map out, or my personal favorite, “sleep on” is pitiful. (DOD, big pharma, and biotech can be glacially slow). Once again, 24 to 48 hours to make a decision. Do you want to move forward or not? (A client once told me he had to “ponder.” I hate ponderers.)
4. It is taking so long because you change the position profile twice a week. Once again, no good! I have far more respect for managers who tell me they are not sure of what they want or they need assistance in defining the position or whatever. Under those circumstances I can help in a host of ways, but don’t keep changing the profile because hitting a moving target makes recruiting all the more difficult. (Beware of the manager who tells you the profile changes endlessly due to the “fluid and changing needs of our organizational objectives.” Those people are clueless.)
5. Bonus Answer! It is taking so long because of all of the above! This is the worst possible answer because it simply points out the horrific shortcomings of many managers that do not seem to go away. Recruiting is a partnership, and partnerships do not work unless both parties pull their own weight and come to an understanding of what must be done, when it must be done, who is going to do it, and a clear sense of urgency.

As you can see, the answers to this question are not pretty. With this in mind, let’s look at some ways to avoid it.

1. Agree to a contracted time to fill. Meet with the manager to discuss the position profile and set an agreed-upon time to fill. Agreed upon means that you and the manager agree to a timetable. For example, if 45 days to fill an engineering position is agreed upon, that’s fine, provided nothing foreseeable will interfere with progress. On the other hand, 45 days is not OK if the manager is taking a thre-week vacation during that agreed upon time-to-fill window and will not be available to interview. Make sense?
2. Start aggressively. If you have a 45-day agreed time to fill, don’t wait 30 days to begin to source candidates. Start fast and start hard. Keep in mind that it is always easier to slow things down than to speed thing up. No one is ever sorry they are ahead of schedule.
3. Keep it moving. In recruiting, the ball is always in someone’s court, so do your best to see that that ball is not in yours. Do whatever you need to do as quickly as possible without compromising quality. Be sure that you are always waiting for the manager as opposed to the manager waiting for you.
4. Document activity. In my career, I have learned that I was never sorry that I documented activity even if I never needed it. In a world where data points can be very helpful, it is a great idea to just keep a simple running log of key activity on candidates, timetables, and anything you deem as important. Not a ton of work; just 4 or 5 minutes a day. You might not need it, but if you do, it will be a great thing to have handy.

Now, why not seek out and ask your most uncooperative hiring manager my favorite question:

Why is this taking so long?

Pretty cool, eh?

1. Instead of going to a career fair to find your next top tier hire, get your manager to realize that great people have to be recruited. “If you needed another QB like Tom Brady, would he stand in line at a career fair, or answer a want ad online, in the paper, or on your website? No, you have to call his agent who gets him interested and to the table to talk. I’m that agent.”
2. When a hiring manager and HR want to make a lowball offer because the recession has made everyone more desperate, but your candidate is employed, here’s what you say to get them to reconsider low-balling. “When a kid is getting ready to go out high in the draft, do you think about what the lowest package is that he will consider? No, you make him the best offer you can afford to make or you pass on the pick. No one who is good is going to be happy or accept a low-ball offer.”
3. When a manager wants to look around at all resumes and candidates on the planet even though the very best candidate just interviewed and wants the job: “It’s kind of like picking a starter instead of second string. When you see someone who is going to be the key to your bench, you don’t hesitate to look around in case someone else might be better; you add them to the team in the first string. Just because he is first doesn’t mean he isn’t the best.”
4. When a manager wants to change the position or add unrealistic job functions to a new role: “It’s not like there aren’t people like Deion Sanders who can play offense and defense and the entire length of the game. It is just extremely rare to find someone who will do both. It would be better to find a great cornerback than an average cornerback who can also return a kick.”
5. Instead of letting a team do too many jobs for too long and asking them to double that for the “good of the company,” consider this: “Even the best players need to feel like they have back up, have time to recover, and like to play one position very well. Do you think that you may risk losing your best players if you play them too long?”

I know a lot of people who will think it is very funny that I would ever remotely write about football because I don’t give a hoot about it. And I also know that managers don’t want to be talked down to or reduced to silly analogies. But there is some truth to the fact that language and cultural barriers account for the majority of miscommunications. Finding the common ground in what interests them may be the entry point toward showing them what you got.

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

Discover How to Learn From Other Industries

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

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

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

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

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

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

16 Lessons That Corporate Recruiting Leaders Can Learn From the Yankees

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

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

Final Thoughts

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

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

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

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

Details are sketchy, but Dave Mendoza did post an email about the hire to his site Six Degrees From Dave. The email is from a recruiter for Nelson Staffing and says the firm got a contract from “A Major (and pretty exciting) employer in the South Bay here in N. CA.” The email doesn’t name the employer, but it says Nelson needs to find “200 upbeat and enthusiastic recruiters and sourcers for them — by next week.”

While California’s Bay Area — home to Silicon Valley — is crowded with tech employers, few are big enough to support a need for 200 recruiters. Google is. The company laid off about 100 contract recruiters at the beginning of this year, which was 25 percent of its recruiting force. The fact that the company is now hiring 200 suggests that it expects to grow in 2010.

Some 70 percent of the new positions are at company headquarters. The rest are in other parts of the U.S. and in other parts of the world. All the positions are onsite; “no work from home.”

I’m guessing that the positions on the Nelson job board for recruiter and sourcer in Mountain View (Google’s HQ) are the same ones referred to in the email. If so, the pay scale appears to be in the $40-$45 per hour range for sourcers and $60-$70 for recruiters.

Incidentally, Mendoza’s post doesn’t mention Google by name. Nor would he confirm that the online search and advertising company is behind the hiring. Other sources, however, did confirm that it is Google.

Mendoza’s blog post has all the details — they are also in the online job postings — but briefly, here’s what Nelson Staffing says it wants:

• Experienced Recruiter (minimum 5 years total in both corporate and/or agency recruiting) – Technical,  sales, product marketing. Recruiting experience on resume in ’09;
• Recruiters (minimum 4 years recent exp) – Candidate sourcing;
• Sourcers (minimum 3 years solid recent exp) – Ability to reach passive candidates – exceptionally internet savvy;
• Recruiting Coordinators (minimum 2 years in an HR support or recruiting support role) – heavy scheduling, process management.

In my opinion, we’ve downplayed what it really takes to be successful in our profession — recruiting, counseling, and closing top people who have multiple opportunities, and making sure our hiring manager clients don’t blow it.

To start refocusing on the right stuff, I’d like to nominate quality of hire as the metric to assess recruiting department performance, and relegate cost per hire to the second page.

I believe cost per hire is a misguided means to judge recruiting department performance. For one, it rewards the wrong things and ignores quality of candidate and quality of hire. For another, it’s far too tactical and narrowly focused. Worse, improving costs could degrade quality.

This is a strategic mistake of huge proportions that too many HR and recruiting managers miss entirely.

These problems go away if the focus is on measuring quality of hire first and quality of candidate as a subset. Even if recruiting is reluctant to take on the responsibility of maximizing quality of hire, it must be responsible for setting up a system to measure it. While important, measuring quality of hire is not straightforward.

Here are some ideas on how to get started on thinking about how to do it:

Yves Lermusi, the CEO of Checkster, believes good reference checking before (external) and after the hire (internal 360°) might be the best way to measure, monitor, and improve quality. He might be right, but from what I’ve seen, if the measure of candidate quality pre-hire is different than after the hire, you’re not measuring the same thing. Regardless, Yves’ point of measuring candidate quality post hire and monitoring are absolutely essential. So you should check out Checkster as a means to do this.

Here’s another perspective. I was speaking with a senior recruiting manager with a Fortune 100 company the other day. She told me her company conducted exhaustive post-hire performance reviews at the 90-day, 6-month, and 9-month time periods for new hires. These reviews were based on comparing the new hire’s performance against the performance objectives of the job. If the person fell short here, the review was expanded to include an in-depth competency evaluation. This approach seemed spot on to me. However, the recruiting manager told me under-performance was generally attributed to lack of understanding of real job needs before accepting the offer and problems with culture, especially with the working relationship with the hiring manager, once on the job. This strengthens the argument of measuring pre- and post-hire quality on the same performance standard.

However, some differ on this view. For example, after a recent ERE article I wrote on a related quality of hire article, someone sent me a detailed LinkedIn message describing his company’s approach to measuring the quality of their candidates by sourcing channel. It consisted of a detailed scorecard examining a set of criteria that mapped to the traditional job description. This included things like quality of the academic background, quality of the experience, depth of industry knowledge, and the like. This is probably not too bad, but I suspect that this was not the focus of the interview. But none of this gets at the issues involved in a post-hire quality assessment. For example, the person could be a fine person with all of the experience and academic requirements noted, but someone who was no longer motivated to do the type of work required, or someone whose style was not compatible with the hiring manager’s.

From a pre-hire standpoint, some might argue that the traditional competency or behavioral-based interview is a great way to measure pre-hire quality. My 30-year concern with this is that it still ignores job performance and managerial fit. Being competent to do the work doesn’t mean being motivated to do the work. Nor does competency or behavior measure a person’s ability to prioritize the work, handle too much work, work under pressure, work with different resources, work with comparable teams in similar situations, or work with a weak manager.

For me, it’s pretty easy to conclude that if you want quality of hire to become a useful measurement tool, you must start by measuring pre- and post-hire on the same basis. Further, the measurement standard you should use must be made on some comparison to real job needs. (Send me an email if you’d like a copy of a performance-based talent scorecard from my book, Hire With Your Head (Wiley, 2007).) This means candidates need to be measured before they’re hired on their ability and motivation to perform the actual work required, including fit with the hiring manager.

If pre- and post-hire quality measures are different (up or down) it means that the assessment process is flawed. So it’s important to use feedback from the post-hire quality assessment to change how candidates are assessed. I suspect that few companies do this; regardless, that’s a major reason and benefit for measuring post-hire quality. Then once pre- and post-hire quality assessment are the same and you have a good system for tracking quality of candidate and quality of hire, you can then move on to the more strategic quest of maximizing quality of hire. This includes improving your recruiting and sourcing skills in tandem, and tracking quality by sourcing channels, recruiters, and even hiring managers.

The whole point of this article is to suggest that quality of hire is a much more important measure than cost per hire in measuring recruiting department performance. While cost is important to track, it shouldn’t come at the expense of quality.

Focusing on the internal budget of the recruiting department is insignificant in comparison to the impact the thousands of people the recruiting department hires has on their company. What’s more exciting is that the tools are now available to actually measure and maximize hires, rather than just talk about it.

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

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

It’s Time to Face the Numbers and Facts…

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

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

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

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

–The Recruiting Roundtable

Talent Management Failure Metrics Are In*

Here are more details on the five numbers provided above.

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

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

Some additional data points to consider include:

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

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

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

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

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

My Goal Is to Get You to Pay Attention

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

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

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

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

Action Steps to Consider

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

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

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

Final Thoughts

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

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

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

If not HR/recruiting, then who?

Most HR/recruiting execs would suggest hiring managers themselves as the likely assignee. Others would contend that HR/recruiting is responsible for the quality of the candidates, but managers are responsible for the quality of hire. Others would suggest there are too many variables to assign it to anyone.

Further confusing the issue is determining when quality of hire should be measured. If you do it before the person starts, you’re measuring the sourcing and selection process. After the hire, you’re measuring the hiring manager’s management and leadership abilities as much as you are the candidate’s ability to perform the job needs. Compounding the time variable is the measurement standard. If you use a different measurement technique for before and after, then you’re left with a comparison between oranges and cell phones, or more likely, experience and qualifications vs. performance.

It’s because of these complex issues that I believe that HR/recruiting must take responsibility for quality of hire. If not HR/recruiting, then who?

Here’s my rationale behind the nomination.

1. Maximizing quality of hire is the most important strategic role HR/recruiting can play. Other than maximizing on-the-job performance and retention, there is no more important role for the HR/recruiting department. Not wanting responsibility for this seems odd to an old recruiter like me. All the executives I’ve placed thrive on this type of challenge. Why would HR/recruiting be reluctant to take on — even demand — this responsibility?
2. The CFO is responsible for the capital acquisition process, so why shouldn’t HR/recruiting be responsible for the talent acquisition process? While the financial department doesn’t select, install, and run the capital equipment it approves, it still manages the approval process and strongly influences the ultimate decision. This parallels the role HR/recruiting should play in the talent acquisition process.
3. Having responsibility means the process is adhered to, not the decision itself. Developing and monitoring the hiring/selection process is the role of HR/recruiting. This means developing and implementing processes that ensure that the best candidates are seen and hired. There should be an audit process as part of this to ensure that the best decision has been made, and that if it has not been, the process is modified.
4. There is a huge tactical and strategic cost to making mistakes. HR/recruiting needs to deal with all the mistakes, including finding replacements and dealing with the legal and employee relations issues. The opportunity costs of bad hires alone provides the rationale for some type of vigorous and auditable selection process. Who else could possibly lead this type of cross-functional effort?
5. If not HR/recruiting, then who? Hiring managers should police themselves on quality of hire. Some do it, most don’t, and even those that do, don’t do it well. Regardless, there should be one standardized process that works and is used company-wide. This is the primary reason why hiring managers can only be held responsible for the successful performance of the person hired, not the process used. If some managers want to use their own process, they need to be held 100% responsible for mistakes, including the costs associated with this. This is one way to convince them they should use the approved process.

Of course, if HR/recruiting is given the responsibility for maximizing and measuring quality of hire, there comes some programs that need to be implemented to pull it off. Here are some quick recommendations:

1. Stop using job descriptions to source and select candidates. If you describe the work that needs to be done and assess candidates on this, before and after the hire, you’ll solve the dual measurement problem and reduce turnover dramatically. The primary reasons new hires underperform and/or leave is lack of understanding of real job needs and a poor fit with their hiring manager.
2. Develop sourcing programs that target high-quality candidates, rather than eliminating the worst to see who’s left. This is not insignificant. It means you must stop asking knockout questions and stop posting boring ads. The only reason companies ask knockout questions is to eliminate weak candidates who apply. If you change the sourcing paradigm to target great candidates, rather than hoping great candidates fall through the cracks, you eliminate the “eliminate the weak candidates” problem at the strategic level.
3. Use a performance-based talent scorecard and evidence-based assessment system to measure pre-hire quality. Competency models and behavioral interviews are too generic and do not measure a candidate’s ability and motivation to perform the actual tasks required for success. Instead, candidates should be evaluated across all real jobs, including their ability to work effectively with the hiring manager. Quantifiable evidence of consistent and comparable past performance needs to be the basis of the yes/no decision.

With this type of process in place, HR/recruiting’s role then becomes one of ensuring that the process for maximizing quality of hire is being followed — not making the hiring decision. This is comparable to the authority given, or taken, by the CFO, in ensuring that capital expenditures are justified in some reasonable fashion. Maximizing the quality of every single hiring decision is the primary strategic role of the HR/recruiting department. If HR/recruiting wants a seat at the strategic table it should demand this responsibility.

1. You walk in to a car dealership that doesn’t have any salespeople on staff. No one is available to answer your questions. No one will describe the features and benefits of the cars. The only person there is a 17-year-old kid working at a cash register. Test driving is prohibited. If you want the car, you simply buy it … like a pack of gum.
2. You are interested in buying a certain house and there is no real estate agent or home owner available. You are told that the process involves first making an offer without the opportunity to see the interior or take a tour. After you make an offer, then you can enter the home.

The reason why these scenarios seem funny is because when making a big decision, information gathering is critical. In these situations people need information, reassurance, and probably even some hand-holding to feel comfortable.

And, for big decisions, it’s helpful to gather information from another human being (i.e.: car salesperson or real estate agent, etc). We want that personal connection to help guide us and answer our questions.

For most people, finding a new job is another big life decision.

If the human connection is so important, then why do many companies take the cash register approach regarding their talent acquisition strategy?

These companies:

• Require that candidates submit their resume online as the first point of contact.
• Offer no personal contact for a potential candidate to ask questions.
• Will not allow for a site visit until a candidate is already at a final interview stage.
• Never respond to candidates emails or phone calls
• Do not list a contact person on job postings

All of this builds to our questions of the day:

1. How can a candidate be genuinely interested in an open position without having an opportunity to fully research your organization?
2. How can you possibly attract top talent if you don’t offer a real person to serve as a recruitment contact?

Don’t treat your recruitment process like that car dealership with a cash register. Rather, incorporate your recruitment staff in the front end of your process to fill your funnel with enthusiastic candidates.

However, while many will work as advertised, getting budget for them is a different matter entirely. In the past, the only way to get any significant new expenditures past the CFO was with some type of rigorous cost-savings analysis. However, this approach ignored any improvements in candidate quality as possible justification due to its “intangible” nature.

But as Dr. John Sullivan has been ably pointing out for these past 10 years, improvements in candidate quality dwarf potential cost savings. In fact, one could easily justify a cost increase if quality of hire could be proven.

In this article, I’m going to introduce a means to calculate the ROI of any new recruiting program on a quality-of-hire basis. Further, I’m going to suggest that once you have a means to measure quality of hire, you’ll shift your focus toward improving it, and consider cost per hire a secondary priority.

While cost per hire is not unimportant, it’s far less important than quality of hire. In the HR field, ROI has traditionally been calculated based on the cost savings a new process generates in comparison to the investment. These savings traditionally involve recruiter productivity opportunities, the use of lower-cost advertising techniques, or the elimination of outside services like search agencies.

ROIs calculated on this basis only have value if the quality of the candidates seen and hired are the same. If quality declines, the associated cost savings are meaningless.

To get some perspective here, let’s look from a slightly different angle at the financial decisions of hiring — the amount of money your company will be spending on direct compensation for new hires in 2010. For example, if your company will be hiring 1,000 additional people next year at an average compensation of $60,000, you’ll be spending $60 million in additional annual compensation.

While this is a huge amount, most companies don’t look at the financial implications of each of these individual 1,000 hiring decisions from a quality standpoint, relying instead on the transaction costs involved in bringing these people on board. By incorporating quality of hire into the ROI analysis, the strategic consequences of this huge expenditure is more appropriately considered.

Measuring quality of hire starts with having some basic tools: first, a talent scorecard to measure incoming candidate quality and, second, a means to convert this into financial impact. With these tools, calculating quality of hire ROI is relatively straightforward. This is demonstrated graphically in the accompanying figure.

The graph represents the current mix of recent hires, assuming some type of normal distribution across all talent levels from A to F. As the economy recovers, there will be a natural tendency to push this mix to the right, reducing the quality. This can be offset by new programs which will improve the mix, pushing the curve to the left. In this case, the average is somewhere between a B and C level, typical of most companies.

An impact multiplier needs to be assigned for each quality group in order to assess the financial contribution each level makes. In this case, it has been assumed that an A-level person makes a positive business contribution that’s equivalent to four times the person’s total compensation. The impact multiplier for a B-level is two times compensation; a C-level is considered break-even; hiring a D-level person results in a loss equivalent to their compensation; and the F-level cost is five times the compensation.

Developing the impact multipliers is the big assumption in this quality-of-hire ROI calculation, but for staff-level positions, the ones shown in the table are quite reasonable. (Click here for more background on this, including some charts, graphs, and a webinar podcast.) Theses multipliers increase dramatically for senior management, and are a bit lower for hourly and entry-level positions, but probably not much.

While you could use short-term performance reviews to determine quality levels post-hire, some type of talent scorecard needs to be used to evaluate candidates on a pre-hire basis. Logically, from a validation standpoint, it’s best to use the same evaluation process pre- and post-hire. Not having linkage pre- and post-hire has been one of the big problems in using quality of hire for developing ROIs for recruiting initiative.

More important, since most hiring mistakes are associated with hiring a good person for the wrong job, these “grades” must be based on performance, not generic quality descriptions. For example, a brilliant person who needs to be pushed to do the work is at best a C-level. Problems associated with these classic mismatches prevent companies from improving quality of hire, regardless of any great sourcing and employer branding programs. This is why I suggest measuring pre- and post-hire quality based on real job needs using a tool like the performance profile instead of a job description in combination with a multi-factor talent scorecard to measure end-to-end quality of hire.

Using these tools, calculating hire-quality ROI involves a number of steps:

First, calculate the average talent mix for your current hiring processes. To do this, take a sample of your recent hires, assigning each person a realistic quality grade. Then using some weighted average approach, determine your average talent mix. It’s probably somewhat below a B level, with a corresponding multiplier of 1.5X to 1.75X. (Email me if you’d like to participate in a quick SWAG assessment.)

Next, determine the financial contribution of this current talent mix. Multiply your current talent mix multiplier by the total compensation for the group to determine the financial contribution they collectively make to your company. In the example of 1,000 hires at $60 million at a B- mix and a 1.5X multiplier, this would be $90 million, for a net contribution of $30 million.

Now the fun begins. Now you need to determine how a new recruiting initiative improves your current talent mix. Any proposed recruiting initiative should be assessed on how well it improves the overall talent mix, not just how much it reduces costs. Graphically, this means moving the normal curve shown earlier to the left, meaning more As and Bs and less Cs, Ds, and Fs. To obtain a 10% quality of hire improvement, you’d need to hire 10% fewer below-average candidates, replacing them all with above-average candidates. Due to the weighting, a 10% quality shift like this increases the multiplier more than 10%. In the example above, this shift increases the multiplier from 1.5X to 1.75X. (Email me if you’d like to see the model and the math.)

Finally, calculate the quality-of-hire ROI by comparing the improvement in contribution to the cost of the initiative. As shown above, a 10% improvement in talent mix increases the multiplier from 1.5X total compensation to 1.75X. In the example, this means the net contribution of the 1,000 new hires increases from $90 million to $105 million, for a net increase of $15 million. This is an enormous impact, and indicates why quality of hire should be a far more important driver than cost per hire when evaluating new recruiting initiatives. Consider the ROI implications. If you spend $500,000 to obtain this quality improvement, you’d have a first-year quality-of-hire ROI of 2,900% ($15mm- $.5mm/$.5mm)!

Now for the good/bad news. Once the economy recovers, improving quality of hire will be more difficult, as the demand for talent exceeds the supply. As shown in the figure, these economic forces will have a tendency to worsen the talent mix as your best people are aggressively sought by the more aggressive recruiters, or they leave on their own for greener pastures.

Under improving economic conditions, preserving your current talent mix will become more challenging. In this case, preventing the impact of a reduction in talent mix should be used to calculate your quality-of-hire ROI.

Recruiting departments should be measured on how well they improve quality of hire, rather than a single-minded focus on cost/hire. The discussion should start by figuring out who’s responsible for it: recruiting, hiring managers, or both. Regardless, the impact of a minor improvement in quality of hire has such an enormous business impact that it’s irresponsible not to directly consider it in every hiring decision.

I say this because I have recently talked to a dozen or more people who I know personally and have worked with over the years. I can vouch for their skill, professional abilities, and reputation. While they may not be a good fit for the particular job they were seeking, they were worthy of respect and of receiving a consistent and predictable response.

One particular friend of mine recently decided to switch jobs. He was not laid off and was not unhappy. He just felt the longer-term opportunity was better in a different place. Being a educated candidate, and with some advice from me and others, he laid out a plan. He started by asking friends about opportunities and also by choosing a few specific firms he might like to work at and finding LinkedIn friends who worked in those firms. The net result was referrals to a possible four or five potential jobs.

He then decided to check out the corporate websites of these few companies to see if the positions were listed. His first shock was at the poor quality of these sites. Most of them lacked good general information and offered nothing specific about the kind of work he was interested in. Only one of the sites listed the position he knew was open, offered little information about the position except the usual boilerplate, and then asked him to go through a tedious process of uploading a resume. None of them really learned anything about him or his referral. No questions, no interactivity, nothing. He didn’t know what they really wanted to know about him, and they certainly weren’t providing him much that was useful.

At this point he was already a frustrated potential candidate. While in no hurry to change jobs, he was the borderline passive candidate: sort of looking, interested, easy to recruit to the right situation, and totally unknown. He is also very competent and talented.

He had also given his resume to his friends to submit to the recruiting function and had even helped a friend upload his data into an employee referral site. Yet, after several weeks he had heard nothing at all of meaning. No email, no phone call. He tried to call several times only to receive a voice mail saying they would call back, but no one ever did. He kept checking with his friends and all the positions are still open more than six weeks later.

What is going on?

Here are my thoughts:

Possibility #1: The position is not really open and the recruiting department is just collecting resumes to find out who is out there.

This has a high likelihood of being the case, but is borderline unethical and certainly does nothing to build the brand or create goodwill among people that you might someday really want to hire.

There are much better ways of finding these people.

Possibility #2: My friend does not have the qualifications that the hiring manager is looking for.

Even if this is the case, he should get the courtesy of an email or phone call letting him know that. On the other hand, if the job description is even close to accurate, he meets and exceeds most of the criteria. He is also referred by a current employee and that should, according to all that we write about on ERE, make him a higher quality candidate than an un-referred one. This also makes not getting back to him worse, and it embarrasses the employee.

Possibility #3: The position has been filed and just not taken off the website.

Highly unlikely as he has checked with his internal friends who have told him it is still open and that the hiring manager is frustrated with the lack of good candidates.

Possibility #4: The recruiting department is inefficient and lacks good processes and discipline in dealing with candidate flow.

This is the most likely one in my mind and needs to be addressed quickly and firmly. Once this recession has ended (and for high-end jobs it was never really that bad), these poorly treated potential candidates will be hesitant to try you again.

There is really no excuse for not dealing with candidates in a systematic manner. No matter how many apply, your systems should be capable of dealing with the volume or you should remove the job posting until you can handle it. By letting more people apply than you can review and answer, you are creating an irreversible degradation in your reputation, brand, and future ability to hire the best people.

Needless to say as a foundation your department needs a set of protocols and procedures that every recruiter follows. These should lay out enforceable requirements for response time to candidates, how referral candidates are treated, what is communicated, and how shortfalls are explained to people who are declined.

Other procedures should govern how many resumes are received for a position before no more are accepted and how these are reviewed and presented to managers.

Websites need to be clear and should be interactive, interesting, and engaging. They should answer the questions candidates are likely to have with honesty. Your rules and response protocols should be publicly displayed.

Until we respond with the kind of service candidates are accustomed to from retailers and other service providers, we should be prepared for a backlash of anger and disappointment that has only grown louder over the past year.

During one recession I remember being young, working in retail, and thinking: “everyone in retail has to have a four-year or master’s degree, for that is what my co-workers all had.”

I didn’t know back then that I was in the middle of a recession, one that pales in comparison to today. People now faced with transition are diligently looking for the right fit, but are also considering applying for positions which they are overqualified for, and, then they are surprised, they are not getting them.

Overqualified workers will be quickly bored, frustrated and discouraged, and the moral in the office may suffer.

One hiring manager said the best time to hire overqualified is when a company is faced with rapid growth, needing to promote quickly without much runway. Having a strong bench with “A” players will position the right talent in key roles, easing the growing pains. This is not the time most companies are feeling that growth.

Some managers are tempted to create that strong bench even without that growth. They want accounting departments full of controllers instead of accounting clerks, or an engineering department full of senior-level designers.

Soon after hiring a clearly overqualified candidate, the manager sees the pitfalls.

One employee who used to be a SVP of finance accepted a controller’s position found that he quickly felt underused. Also, he was using systems that needed to be upgraded and felt very frustrated when his recommendations were ignored. Each day his frustration grew and his respect for his boss and the systems diminished. The manager wondered how he ever had an SVP-level position after seeing the attitude he displayed. This is a classic example of the right person in the wrong position. The controller was set up for failure.

A sales position was filled with a candidate who once was an industry expert, and a very successful sales manager who won outstanding performance awards. Selling is selling; she thought and felt she could quickly move up based on her prior track record. Once she joined the sales force she found that she really didn’t fit in. Placed on a team made up of mostly entry-level people she had no one to identify with, and felt like an outcast. Her co-workers viewed her as a manager — even though she wasn’t — and also had difficulty working with her. Her managers confessed they hired her to help bring the level of professionalism up on their team. The feeling of isolation was very difficult and resulted in a continued job search.

The manager was relieved when she moved on. It takes quite a different approach in managing the overqualified.

The right fit is still the goal for many hiring managers, even though the temptation is there. The best candidate for a position is one who can do 50 to 75% of the work with the need to learn and grow to master the task. This period of time will give an employee the challenges and rewards most seek and provide a give and take with the manager. This provides a success track, putting the candidate in the best light to perform and succeed and display a positive attitude.

As far as what we can do with the overqualified, one senior level HR strategic planner suggests the best fit for an overqualified candidate would be a staff-level in a totally new area, such as putting an operations person in a staff-level human resource role, or a retrained engineer in an entry-level IT position. Switching industries or areas will give a candidate the right opportunities to grow and learn, preserving their enthusiasm and optimism. These retrained or redirected employees, with their prior experiences and successes, will usually be on a faster growth path, and be able to pull on past experiences to become a valuable contributor to the new area.

The most important aspect is to understand who you are targeting. I’m not talking about recognizing the technical skills or requirements you want to see in the candidate. Temporarily, throw the job description out the window. Then conduct an early reference check. This is a performance check you can cash.

If the results confirm a prized candidate, think of him or her as a pearl. The Encarta Dictionary defines a pearl as “somebody or something highly esteemed or valued.” The gems themselves take years to develop and the art of pearl cultivation is a long and delicate process. As it relates to candidates, we all recognize the best as valuable. But we often overlook what it took for them to become who they are and therefore do not treat them accordingly. In many cases, we are talking about years of dedication and hard work to perfect their craft. Those who rise to the top of their profession are a select bunch. They are select but not scarce and are very much open to being recruited. But unlike any other, it takes a dedicated, specific plan to successfully recruit them.

Another thing to keep in mind in the initial approach is that many of the finest desire a certain amount of recognition that comes with their achievements. They take great pride in their accomplishments and want you, the recruiting or hiring entity, to pay attention to it. Still, there is a fine line between preferential treatment and the acknowledgement of greatness. The latter commands the stage without demanding that it be so. Those are the most sought after “pearls.”

However, there may be friction if the top candidates are required to follow a set of routine guidelines without explanation. A greater amount of latitude should be given when scheduling interviews, for example, as their time is of the essence. It will be difficult to control the process if a certain amount of patience and flexibility are not demonstrated.

Selling must be at the foundation of any strategy designed to capture the best. Why do so many fail to recruit top talent with any consistency? The lack of sales skills and persuasive techniques are the bane of otherwise successful organizations. Essentially, they are unable to convincingly sell the talent on the opportunity or the company. At best, they produce a half-hearted effort expecting a job description or the company bio to suffice. Or they rely on a formulaic hiring process to do the trick. This does not work. Each candidate should be individually courted. Studies suggest that there are staggering numbers of top performers who are not recruited because they are not “sold” on the recruiter or the position.

There are three important dimensions to selling as it pertains to recruiting top performers:

1. Selling one’s own credentials as a recruiter or hiring authority (Why should I listen to you?)
2. Selling the position or opportunity (Why should I be interested in the opportunity?)
3. Selling your company or the organization to which you desire to connect the candidate (Why would I want to work there?)

Think of the candidate as asking the questions in parentheses. Sometimes they are expressed aloud; other times they are not. However, the questions are typically key in their own decision-making process. You should be able to make a compelling argument as you engage the candidates. So, having a thorough understanding about what you offer from your side of the fence is a necessity; the ability to present that information in a saleable, attractive package is even more important.

For the most part, great candidates have options so they need to be sold on you and yours. I would suggest that if you or anyone on the interviewing or hiring team is uncomfortable selling, that you address it immediately. There are a good number of professionals who can be called in to assist with training and providing classes, courses, etc.

Every successful recruit should make the next one just that little bit easier to onboard. Be reminded that recruiting does not occur within a vacuum. The goal should always be to build a vital network. I’ve seen companies get so excited by a great hire that they forget that they’ll have to do it all again before too long. They shelve their recruiting hat only putting it back on when an opening needs to be filled. This is a big mistake. As can be intoned from the foregoing, recruiting the best is a major time commitment. There are few shortcuts, but the process can be made much more expedient if it is viewed as collaborative and proactive rather than a singularly reactive activity.

Call a brainstorming meeting with all the new top hires. Ask them to provide at least two names and some background on people that they know or have worked with who they consider to be outstanding contributors.

Soon you will have created a database of top prospects and be able to tap into them as needed. This will allow a quick jump into the process and save a considerable amount of time.

There can be no substitute for professional dedication to this endeavor. It takes total immersion with repetition to master the top talent recruitment process. Keep abreast of new material on the subject and customize it to your own needs. It is a continual learning journey. The combination of the appropriate education and practical application will produce some measure of success. As Julius Caesar once said, “Experience is the teacher of all things.”

The typical hiring questions that come up are:

• Who do we hire?
• Where do we find them?
• What should we pay them?
• How do we retain them?

While these questions are important, there are two issues that must be addressed first: alignment and transformability.

Alignment addresses the passion and skills the person brings to the organization, and their fit within the organization. Transformability is hiring the person not for the job as it exists today, but as it will exist tomorrow. Addressing the alignment issue without considering the transformability issue will likely result in hiring the wrong person.

Alignment has three components: passion, skills, and fit. In selecting an employee, gauge their passion for the work and for the challenge it represents. Identify the skills needed to support the continuing growth of the company. It could be marketing, sales, operations, or financial skills. Lastly, evaluate how the person will fit into your organization. Fit essentially is how well the person will cope with the “way work is done around here”: with the personalities, the pace, and the customers.

Alignment is important, but in isolation of the second component — transformability — insufficient to ensure that the right person will be hired. You are not hiring for the job as it exists today; you are hiring for the job as it will likely exist 12 months from today.

Remember, we are talking about a fast-growing company, and one of the characteristics of a fast-growing company is that things change — fast.

Think about the last time you changed jobs. While we all like to believe we hit the ground running, most of us took some time to assimilate into the new job, to the way work gets done, to what is and is not acceptable, and to a myriad of other issues resident in a new organization.

Now consider this: you just start feeling comfortable in your work environment (that is, you have assimilated) and you come to work the next day and the job has changed. Your skills are no longer what are required because what is required now is different. This is a fact of life in fast-growing companies.

So when you are thinking about hiring, and you are a fast growing company, think about how the job will look 12 months from now. Think about the skills that will be required, and start looking for candidates who fit the future, not just the current, job requirements.

When talking with candidates, tell them what the job is today, how you expect it will change over time, and that you are looking to fill the job as it will likely exist in the future, not as it exists today. This way, you are being honest.

Some candidates may seriously wonder if you know what you are doing. Others will be energized by the idea that the job will change and they will not only have a chance to grow, but they will be expected to grow. Fast-changing job requirements are not for the faint of heart or bureaucrats. This kind of job ambiguity isn’t for everyone, but if you consider alignment and transformability as you start the hiring process, you are being honest with both yourself and with your future employee. The probability that you will hire and retain the right person increases significantly.

Here are nine questions to consider when interviewing for a fast-growing company:

1. Did the candidate show passion for the work and the challenge?
2. Did the candidate demonstrate an ability to tolerate ambiguity?
3. Did the candidate possess general knowledge and skills? Were they intelligent?
4. Was the candidate prepared for the interview and did they have interesting ideas about the job, the company, and the product or service?
5. What is candidate’s work history (results) and experience with different roles/jobs?
6. Did the candidate demonstrate an ability to “think on his/her feet”?
7. Is there a cultural fit?
8. Did the candidate present well (read: executive presence)?
9. Did the candidate challenge you and your thinking during the interview with a good questions or another way to look at an issue?

The idea here is that by tracking changes in satisfaction and the job-hunting activity level for the fully employed, we’ll have a leading indicator of employment churn.

Fully employed people switching positions with other fully employed people doesn’t do much for the national employment rate, but it can still keep a recruiting department extremely active. This employment churn becomes a problem when a company is forced to find a bunch of new hires to replace a significant number of tenured employees who have left voluntarily. This becomes a really big problem when it’s unanticipated and when it’s a company’s best people. Replacing them is then even more difficult.

The underlying cause of employee churn is similar to any financial or real estate bubble — greed, or the feeling of not wanting to be left behind. On the hiring side it’s nothing more than a few people getting better jobs, which leads to more people getting more active and finding better jobs, which in turn leads to even more activity, and so on, until you have a tidal wave or avalanche effect.

On the job-hunting side, it’s obvious that once a few new jobs are created, those who are fully employed, but most dissatisfied with their current jobs, will jump ship first. As these people are replaced, it will create a wave of job-hunting activity for those slightly less dissatisfied, and as these positions are replaced, even more people will start sensing the economy is recovering, and begin looking as well.

This churn will accelerate rapidly, as the pent-up demand for better jobs and salary increases is unleashed.

Based on our survey results, this could happen sooner than expected. These surveys are starting to indicate a decline in overall job satisfaction coupled with increased job hunting activity. None of this job switching will affect the overall employment rates, but this replacement activity will force corporate recruiting departments to gear up their activity level at a rapid rate. Things will be much worse if these replacement hires haven’t been forecasted.

The accompanying chart shows the decline in satisfaction over the six-week period from mid July to late August.

What’s most surprising is the decline is from the group of people who indicated just a few weeks earlier that they were extremely satisfied with their jobs. This has dropped from 21% to 13% in just a few weeks.

Those who indicated they were satisfied didn’t change much, with the biggest pickup in those who indicated they were neither satisfied nor unsatisfied with their jobs. This increased from 11% to 21%. Essentially, 40% of the group who were initially very satisfied with their jobs no longer feel this way.

What happened in two to three short weeks to cause this decline?

It could very well be that as the economy has begun to recover and opportunities have started reappearing, just having a job is no longer good enough.

So people are getting itchy and are starting to do some preliminary searching.

While a hypothesis right now, we should be able to get confirmation of this by conducting a cross-question analysis comparing job-hunting activity by level of satisfaction. The results from this analysis are still preliminary, but this trend is quite apparent and is shown in the graph titled, “The Most Satisfied are Starting to Look.”

As part of the survey, we asked respondents to describe their current job-hunting activity level. The choices ranged from not looking to aggressively looking. In early August, 78% of the extremely satisfied said they were absolutely not looking. This dropped to 57% by the end of August.

A similar drop was noted for those who classified themselves as being satisfied with their jobs, dropping from 51% who were absolutely not looking to just 18%. As you can see by the graph, there was also a major increase in both groups who indicated they would consider something if called by a recruiter.

This drop in job satisfaction in combination with an increased level of job-hunting activity is a strong indicator that employment churn is about to increase dramatically in the next month or two. If this is the case, you’d better get ready right away.

Here are some ideas to consider:

1. Rebuild your recruiting team. If you don’t have enough recruiters to handle the load, you’ll get behind long before the recovery really starts. Then you’ll never be able to catch up.
2. Conduct your own internal satisfaction survey to validate these results and pinpoint your most vulnerable areas. While the survey results are reasonably statistically valid, they’re not specific enough to uncover specific problem areas by industry or job function. Many companies are now aggressively launching internal satisfaction surveys to ensure they’re not caught unaware. This way, they’ll minimize the impact of any potential retention problems.
3. Accelerate your sourcing efforts for your most critical positions. You’ll need to begin an aggressive recruitment advertising effort for those positions that seem most critical and where you are most vulnerable. If you’re a corporate recruiting leader, you might want to use your employee referral program and get everyone to provide you the names of the best people they’ve ever worked with anywhere. Then contact these people and put them in your talent pool. (Here’s a recorded webinar we did showing how you can use LinkedIn to accelerate this effort.)
4. Learn to use hiring ROI to justify to your CFO the cost of any new recruiting or sourcing program. If you’re going to be hiring a bunch of new people before your company’s hiring forecast is approved, you’ll need a creative approach to justify any expenditures. I’m preparing a white paper on a new approach to calculate ROI by measuring the impact any new hiring initiative has on changing a company’s overall talent mix. Email me if you’d like a sneak peak. Here’s a recent article with some background on this important topic.

While it will be a rocky road to recovery, the replacement market is likely to heat up first, and soon.

If you get behind the power curve in these early next few months it will be very difficult to ever catch up. New sourcing technologies offer great new techniques to find the best, but don’t forget: they’ve never been tested in a hot market where the demand for talent exceeds the supply. Some forward planning and some big contingency programs will get you through the worst of it, if employment churn accelerates faster than anticipated.

In a moment of frustration (or epiphany) I quipped that candidates were seeking relationships and our recruiting technology offers them the equivalent of a one-night stand (or more accurately a chance to complete an application). Looking past the potential off-color nature of the comment, the truth is there is a gap between what people in this world of Web 2.0 desire and what a typical recruiting operation allows. That gap is the williness on the part of recruiting to have a conversation with you unless you are part of the chosen few that meets with requirements of a specific job.

Jeff Jarvis writes in his book–What Would Google Do?—about the first law he learned on the Internet:

“Give the people control and they will use it. Don’t and you will lose us.”

Think: It Is Not About Us!

Giving up control is scary, but the alternative is downright frightening. If you would like to see that picture, just read Jarvis’s famous blog post about “Dell Hell.”(Use keywords “dell hell” in Bing.) It is the story of Jarvis in a moment of frustration with Dell that caused a groundswell of public opinion and caused Dell an amazing amount of pain (i.e. lost sales, bad PR, etc). Dell eventually got the message, but at what cost? To say that this event has caused a sea change is an understatement.

Think Distributed, Not Destination

Jeff Jarvis (What Would Google Do) suggests that companies (like Google) that act as a distribution system have been more successful in the Web 2.0 world than organizations (like Yahoo) that have focused on building portals and destination points. When you build a destination site, it is as if you are taking the prospect where you want them to go, as opposed to using the site as a method that they can go where they want to go. The Microsoft Talent Engagement Model (see graphic below) is more of a marketing distribution system for our jobs and jobs-related content than to a single talent community site. In fact, as you dig into the model, you will notice that activities and information flow in a myriad of directions as opposed to a single web site.

Not Creating New Communities!

We joined existing communities (LinkedIn, Twitter, and Facebook) and used their platforms to engage the appropriate segments of their membership. Not only do these social networking sites have a large number of active participants, the very audience we are trying to reach contained in their ranks. Forrester’s Technographics research indicates that a Groundswell has occurred and the majority of adults in our society (especially the best educated, highest-paid professions as well as the new entrants to the job market) have joined social networking sites. It is very apparent that our target audience is online and in these existing communities or social networking sites.

We are creating community, but not necessarily creating new communities (if that makes sense). Perhaps a way to good way to think about it is that we are organizing a community in way that can make the community function better to better meet the interests of our target audience. For active job seekers, we can provide a higher quality experience and help them navigate Microsoft. For the more passive individuals, we can provide the “inside scoop” on technologies; what it is like to work at Microsoft; and engage current employees in conversation.

An Alternative to Goodbye!

At Microsoft, we are pipelining talent in communities as an alternative to saying goodbye. These communities are located on social networking sites (LinkedIn, Twitter, and Facebook) as well as our vendor’s (Jobs2Web) platform. We use communities to

1. Offer an alternative to prospects who are not ready to apply
2. Offer an alternative to prospects who are screened out
3. Offer an alternative to prospects who do not complete the application process.

The Microsoft Talent Engagement Model (see graphic) illustrates that there is a lot going on in our approach to pipeline and creating community.

The pie chart in the upper-left hand corner is a reminder that the talent supply is comprised of active, casual, passive, and non-job seeking talent. And it points out the active job seeker is only about 14% of our potential audience. That leaves approximately 86% of the potential audience—causal, passive, or non-job seekers that could be part of the talent engagement equation.

The center of the funnel illustrates that we feed our SEO results; our SEM activities; our TalentStream (A CRM-based pipelines/community engaging approach that maps a target audience’s behaviors, attitudes, and interests to our outreach) campaigns; and the prospects generated from live and virtual events. Previously, I argued that SEO Is Not Enough: that tactic alone does not reach a large percentage of the potential talent supply. So we add TalentStream campaigns, events, and other outreach strategies to reach deeper into the potential talent supply toward where the more passive prospects are. We use a variety of approaches that are based on an understanding of our target audience’s behaviors, attitudes, and common interests.

The left-hand side of the Microsoft Talent Engagement Model depicts how we use a number of different opportunities to distribute information to active, as well as some casual and active prospects. In this way, we allow the prospect to decide how they want to engage or hear from us. For example, the passive job seeker might want to subscribe to a job agent that will alert them when a certain type of opportunity becomes available. The casual job seeker might have been referred by an employee to a specific job and we want to move them forward in our process. The prospect that is not looking might show up at a virtual event that has a Microsoft leader discussing an important new technology.

Not ready to apply? Not the right fit? Came in second? Regardless of the reason, the right-hand side of the Microsoft Talent Engagement Model graphic illustrates the ability to offer the prospects the opportunity to remain engaged. If they join a community, we will listen, answer questions, and converse with prospects. If they are “non-applicants” at the present time, we offer a variety of ways a prospect can decide how to receive information. For the person who is screened out of an interview process, we can offer them the opportunity to stay engaged while they wait for a better job fit. For the candidate who came in second in an interview panel, we can actively assist them in considering other opportunities within Microsoft. And for the person who has left Microsoft for other opportunities, we can keep in touch. In many instances Microsoft Alumni wish to return after a short length of time in their new venture.

This behavior of not allowing for conversations with prospects is going to catch up with the recruiting profession—and it is not going to be pretty for some of us. But we still have a chance to get in front of this. Apply or Goodbye is no longer the only option.

The THX commercial tickles our ears in the movie theater, loudly proclaiming the “Audience Is Listening.” The lesson of the Web 2.0 is the “Audience Desires a Conversation” and recruiters had best join in the dialogue.

One purpose of this article is a preview of a presentation for the Fall 2009 ERE event, where our talent community pilot will be discussed in the broader context of Web 2.0 Beyond the Social Recruiting Hype: Microsoft’s Approach to Building Talent Pipelines and Communities. While the presentation will be much broader than a discussion of “apply or goodbye”—one of our core beliefs is that Web 2.0 demands that we have conversations with prospective employees at all phases of the job search cycle. Failure to do so will result in our recruiting the best talent for Microsoft, and that significantly impacts our business.

Of late, given the decrease in open positions, the candidate pipeline subject has resurfaced again as a hot topic among many recruitment leaders and hiring managers.

I’ve heard comments like:

“Now is the time to fill the pipeline for future hiring needs.”

“Since the recruiters have extra time, let’s have them build candidate pipelines.”

These comments are being made at companies throughout the country.

What I find most interesting is a growing frustration and disconnect between recruiters and hiring managers regarding this subject.

Additionally, while in theory recruiters with fewer requisitions should have more time to “pipeline candidates,” in most organizations, this is not happening.

Why is this the case? The frustration and lack of candidate pipeline development is a result of:

1. Managers’ unrealistic expectations regarding candidate pipelines.
2. Undefined, unrealistic expectations regarding the time it takes to create pipelines and develop a candidate relationship management program.

Regarding the first point, recruiters and hiring managers have different definitions for “developing candidate pipelines.”

If you ask most hiring managers what the definition is, most will say:

“A ready pool of pre-screened applicants interested in working for our organization. When an opening comes up, we call them up, bring them in for an interview and if we like them, hire them.”

My (and I think most recruiters’) definition is:

“A pipeline/network of talented professionals (active and/or passive job seekers, pre-screened or not) that you regularly communicate with regarding opportunities with your organization. A pipeline of candidates, that when an opening comes up, you can immediately contact and engage in discussions about the opportunity and/or to network.”

To maintain a pool of pre-screened, job seekers ready to join our organization with little more than a two-week notice (managers’ definition) is not achievable or realistic.

We need to educate managers of this fact and the potential difference in the definitions.

First of all, taking into consideration that most of these so-called “ready in the wings” applicants would be active seekers, the probability that they would remain interested and available for an opportunity with your organization (before taking another) is very low.

Second, let’s assume you have 50% attrition of this pipeline on a monthly basis (i.e., 50% take another position and/or lose interest in your position/organization). The amount of time required to keep the pipeline stocked with candidates would be very inefficient and most likely be cost-prohibitive.

This concept proposed by managers would be comparable to a grocer acquiring perishable food, only to lose 50% of it before they can sell it! It’s probably not smart business!

Most recruiters (and hiring managers) underestimate the time required to develop candidate pipelines. And relatively few recruiters have calculated the amount of time it takes to identify, contact, and maintain relationships with quality professionals.

To help you quantify the time required, let’s dissect the process:

• First you to need to find qualified applicants who meet the position specifications (and we all know quality talent is not sitting out on job boards or applying to our postings). This might include performing primary (phone-based) and Internet research to identify potential prospects.
• You then need to verify that they are potential candidates and validate they are good at what they do (typically phone and/or referral based).
• Once identified and validated, you need to make contact with them, engaging in discussion to understand their current situation, what would motivate them to move, etc.
• Once you have established a connection/relationship, you need to create and maintain an ongoing relationship management campaign to stay connected with them.

Of course using your centers of influence (hiring managers, employees), and using technology (including social networking sites) can reduce the time required to build and maintain pipelines, but I haven’t found anyone who has built strong candidate pipelines (as I defined above) who doesn’t dedicate a 5-10+ hours a week to this activity (pending type of recruit, # of job categories you recruit for, etc.).

Are you (or your recruiters) spending this amount of time per week on this task? Do you have a sourcing team dedicated to this task?

So what is a solution to the candidate pipeline dilemma?

1. Educate hiring managers regarding candidate pipelines, and make sure your definition of a candidate pipeline is the same as theirs.
2. Educate the hiring managers regarding the process of developing candidate pipelines.
3. Make sure the hiring managers and employees are engaged in the process: Who do they know in the market who are top performers that we should connect with? Who are the top performers at our competitors? Once we identify potential prospects, run the names by staff members to capture positive/negative intelligence about them.
4. Do a pure time study to quantify the amount of time it takes to: a) identify applicants; b) verify skills/quality; c) maintain contact with them and build relationships
5. Develop a data-driven strategy to develop candidate pipelines based on customer demand (time and tools required).

While these ideas outlined probably seem fairly simple and straightforward, you will be amazed at the results of implementing them.

(Editor’s note: Sometimes we see great blog posts on ERE.net, and when we do, we publish them here with the permission of their authors. This post was originally on David’s blog.)

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

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

Analogy #1 — Understanding the Perfect Time to Buy

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

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

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

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

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

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

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

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

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

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

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

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

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

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

All the Factors Point to a Great Time to Recruit

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

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

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

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

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

The Perfect Time for Recruiting

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

Other advantages to countercyclical recruiting include:

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

Update Your Recruiting Strategy with These Seven Elements

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

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

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

Final Thoughts

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

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

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

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

I understand this line of thinking. It’s simple, concise, easy to categorize. A “sexy” pitch. In fact, it’s the same line of thinking that leads to the idea that anyone who hangs out with a communist must be a communist sympathizer, or that someone who fires a woman must be a misogynist, or who is accused must be guilty in some way. In short, it’s dead wrong.

What’s wrong about it is it’s incendiary, irresponsible, and extreme. One-sided. And it’s not like I believe the opposite line of thinking to be true either (that all recruiting should be focused on those who are unemployed). Quite the contrary. I have a problem with that version as well. I’ve read a number of articles (such as in Workforce Management Magazine lately, in this recession, that imply (or even overtly state) that passive recruiting is a “shameful practice” and contributes to the distrust of corporate America by the many millions of workers who are seeking employment. Passive recruiting shameful? Again, this reasoning is as misguided as the CEOs above.

“To suggest that passive recruiting in the face of a high unemployment rate is unethical is a misnomer that fails to take into account the bigger picture,” says Dr. Cheryl-Marie Hansberger, vice president of strategic development for Delcan, a global engineering firm. “It is true that most industries are seeing an increase in the number of applicants per position; however, for our company this increase has not equated to larger pools of qualified candidates. Instead this increase creates an additional burden for lean HR teams as we spend more time processing unqualified applicants. The fact of the matter is successful companies use the most cost-effective means to recruit qualified candidates, whether it is a direct hire or a passive candidate, period.”

And this is what I’m not hearing much of in all the chatter out there — the middle ground — where the truth lies.

“Recruiters … want to fill the job perhaps more than anyone,” says Ginny Eagle, director of talent acquisition for T-Mobile. “If the requisition has attracted what appears to be top candidates, we look no further. If not, we source. Sourcing involves multiple activities to find the perfect candidate. Professional networking tools are used, and we often can’t really tell if someone is still employed or not because people are not updating their profiles when they first leave a job. They sometimes wait, so they don’t appear to be unemployed.”

One of the themes that I’ve constantly referred back to is, when it comes to recruiting, one size does not fit all. As mentioned above, great recruiting requires both active and passive strategies and, in short, good, hard work. As with most things, to say that something is all or nothing simply isn’t true. For instance, the idea that active recruiting involves “damaged goods” is simply not always the case. It takes a great HR person to know the difference.

“There is no denying that many share the opinion that the best people don’t get laid off. To me, this is a narrow point of view as situations certainly exist, such as our current economic environment, that put even the best people at risk,” notes Jason Farr, vice president, global talent acquisition, Coca-Cola Enterprises.
“I believe it’s important to not limit ourselves and to be open to all candidates.”

To be sure, there are candidates who have been laid off for performance reasons, and companies do use an economic downturn to mask laying off people for performance issues. In this instance, companies know there are a lot more active candidates in the marketplace and thus, they can replace the individual laid off quicker. As a result, there are certainly individuals with professional red flags in the marketplace, but the successful recruiter will have a balanced view of this.

And there are undoubtedly specific roles whereby the chances are that 90% or more of appropriate candidates will be developed through passive recruiting. For certain roles, in certain professions, there are simply not a lot of candidates, and the best people are employed elsewhere. “While passive recruiting is very costly, it is essential in industries that have large barriers to entry and, as a result, smaller qualified applicant pools,” says Hansberger.

“Those in the healthcare industry know this quite well,” adds Christine de la Paz, human resources director, Aurora Behavioral HealthCare. “We are specific to what we are looking for, and not only through our whim … the requirements are dictated by government bodies and accrediting organizations. After all, our RNs need to have a valid license.”

Thus if you’re a company looking for these types of people, you have to know where they are and be able to convince them to come elsewhere. To not adopt this approach for these key roles would be corporately irresponsible.

But a vital element in all of this is you don’t have to pursue only one strategy. The different approaches do require different skill sets. Active candidate recruiters tend to have a “post and pray” mentality and are very assessment-focused; passive candidate recruiters are skilled at sourcing strategy and research, among other things.

The key is that as recruiters and HR professionals, we have to develop skills and techniques to do both and should not necessarily be single-strategy focused. Some (dare I say many) roles will require both an assessment and sourcing strategy.

Notes Chelle Wingeleth, director-global recruitment services, Research in Motion Ltd, the developer of the BlackBerry mobile device, “It is incumbent upon recruiting professionals to design and pursue strategies to find the best talent quickly. In today’s market it is true that there are more active candidates; however, this does not mean that we can become complacent and rely upon one source. Posting a job so that active candidates may apply is not a silver bullet. What if the right candidate does not apply? A good recruiter will focus on attracting active applicants and, in parallel, search for passive candidates.”

A question bigger than all of this lurks, however: As staffing and recruiting teams have dwindled in companies and the recruiting specialists have left, where do we go to identify candidates?

The answer, as you may have guessed, turns out to be not one place but many places. They include everything from using outsourced providers to developing appropriate sourcing methods in-house (as mentioned above).

Ultimately, according to Wingeleth, “Companies and recruiters are striving to do the right thing. Who among us does not want to see unemployment go down? But, the reality of our situation is this: The national jobless rate is 9.5%. This means that 90.5% of Americans are employed. No line manager or company playing to win in this economy would say they want to ignore 90% of the potential talent. Put another way, who would only want to consider 10% of the possible candidates?”

Thus, as I’ve mentioned previously, if your ultimate goal is to increase your value to your organization, and be the best recruiter possible, you have to stay away from only-one-way-or-another, all-or-nothing mentality. In the end, in this economy, it may get you nothing.