I recently posted a rather contentious article on the idea that inadequate hiring processes lead to an assortment of preventable hiring mistakes. Unfortunately, these mistakes have profound repercussions including underperformance, dissatisfaction and turnover. I classified these hiring mistakes into four levels of performance - from Type 1 hires at the lowest level to Type 4 at the highest. Many readers misunderstood the type classification as being a categorization of the person. It's not. It's a categorization based on the result of a flawed hiring process. For example, putting a great person in the wrong job would be considered a Type 1 or Type 2 hiring decision.
As part of the post, I alluded to the idea that the root cause of most of these problems is not the fault of the hiring manager but the company’s underlying talent acquisition strategy. The best explanation of this was found in a link to the video below aptly titled The Staffing Spiral of Doom – Catch 22.
For those not into videos – despite their entertainment and/or informative value – here’s the quick summary.
There are two primary staffing strategies. One is based on the assumption of a surplus of talent and the other on a scarcity of talent.
A surplus strategy assumes there are plenty of good people available. As a result, hiring processes are designed to weed out the weaker and less qualified candidates. While demeaning, it will work if there are plenty of top candidates available who are willing to take lateral transfers, accept average compensation and are driven by an economic need to apply. This approach will not work if the surplus assumption is wrong. In this case you’ll hire more Type 1s and 2s, a few Type 3s, and no Type 4s, since the best people for the position won't apply.
A scarcity of talent strategy assumes there are not enough strong people available to meet a company’s hiring needs. In this model, it’s necessary to attract the best people via proactive and outbound recruiting approaches. Much of this involves networking, building pipelines of prospects and targeted email campaigns. In the earlier Four Types of People post I suggested that in order to attract the attention of the best of these people, messages had to be compelling and career-focused. On top of this the interviewing and screening process needs to be longer and involve a number of additional exploratory steps.
While many companies are aware of the scarcity of top talent situation, most still use a surplus approach for attracting and screening these people. To offset this dilemma, they use a battery of indirect assessment tools in the belief this will allow them to hire stronger people. In the Four Types of People post, I contended that while this will minimize Type 1 and Type 2 hiring errors, it will result in more Type 3 hires. These are people just like those whom the company has always hired. This is not necessarily a bad thing if all of these people are strong, but it does prevent improving the overall quality of the people hired.
In order for a company to raise its average talent level it needs to hire more people above the current average. This requires programs based on how these stronger people look for new jobs and how they decide to accept one job over another. While most companies know this, they insist on using methods that preclude this from happening. This is what’s referred to as a Catch-22 from Joseph Heller’s book of the same name. The video describes the problem and offers some techniques to break free from its circular reasoning.
Bottom line: You can’t use a surplus of talent approach for hiring new people when a surplus of talent doesn’t exist.
I decided to ask 1,582 U.S. company employees how they go their last job. I gave them four choices:
Internal move or promotion
Some type of proactive networking activity, or referred by someone within the company
Contacted by a recruiter or hiring manager who found their resume or LinkedIn profile
Responded to a job posting
I also asked if they were actively looking for a job at the time, or not. The results of this survey are shown in the graphic. Here’s a link to the survey itself if you’d like to take it and/or pass it on, and the preliminary analysis. Even though the data is not perfect, here are some obvious conclusions:
Most jobs in the U.S. are filled either via an internal move or through some networking activity (Steps 1 and 2). For active candidates these two steps totaled 58%, and for passive candidates an astonishing 81%. If suitable candidates are not found at this point, companies default to the “post-a-job-description” and “look-for-resumes” approach (Steps 3 and 4).
Only 27% of active candidates found their job by responding to an ad. Another 14% of active candidate got hired after their resume or LinkedIn profile was found by a recruiter or hiring manager. Key finding: if recruiters are spending more than 25% of their time posting ads or searching for resumes, they’re missing the heart of the talent market.
While networking is essential for job seekers (46% of active candidates and 49% of passive candidates found jobs this way) most corporate recruiters are not fully invested in this approach. It takes a great deal of skill and subject-matter expertise to do this effectively. Since this is how the best people are found, you might want to review a copy of our latest Recruiter Circle of Excellence Competency Model to see where you and/or your recruiting team ranks on this score.
The sequenced four-step process hiring managers use to fill positions is typically below the radar, yet it’s of strategic importance. The big point: the more direct knowledge the hiring manager has regarding the person being hired the less the person’s skills, academics, and experiences matter. For example, internal promotions are by definition based on past performance and future potential, since the objective of the move is to provide the person with more skills and experience. People who are hired externally, but are highly regarded and referred by a trusted source, are evaluated on a reasonable balance of past performance and skills and experience. Yet an unknown person who responds to a job posting or found in some resume database is screened and evaluated primarily on the depth and quality of his/her skills, academics ,and past experiences.
This four-step job filling sequence creates a hidden job market where performance and potential are more important than skills, experience, and academics. In the public job market this situation is reversed. This is probably the reason so few passive candidates are hired in the public job market — they are not interested in taking lateral transfer or doing the same work. Instead they’re looking for better careers. Key finding for recruiters: if a company wants to hire more talented passive candidates they need to find these people before the job requisition is officially open! (Note: please don’t use some legal excuse for not doing this. I asked David Goldstein, one of the nation’s top labor attorneys with Littler Mendelson, to validate the use of performance as an objective selection criteria. He did.)
I know the results of the survey are imprecise and the data is subject to swings of plus or minus five percent in any category, but this is no reason for not plowing forward. This is what bureaucrats do: procrastinate and make excuses why they can’t find enough good people. Real recruiters put their heads down and start making phone calls connecting with great people they don’t know. That’s the moral of this survey.
As The Adler Group gets ready for 2013, Lou prepared his Top 10 list for 2013. He doesn't always publish this, but it reflects what he thinks recruiters should focus on in the upcoming year. This year we're fortunate since he's decided to let everyone have a glimpse at what he thinks is in store for 2013. We thought you might find it useful as a framework for establishing a self-improvement program for the new year. He bases his advice on something he learned from Jim Rohn about 25 years ago: "If you want things to be better for you, you first need to become better." We think you'll find Lou's list a helpful place to begin this journey.
This past week I was interviewed by a reporter from a major news magazine. He contacted me about a controversial article I had written on ERE addressing the lack of forward-thinking when it comes to companies developing talent acquisition strategies. In the article I suggested that follow-the-leader seemed to be the dominant strategy of choice used by most companies.
We then got around to talking about the skills gap in the U.S. workforce, whether it was real or imaginary, and if anything could be done about it. “Plenty” was my instant comment. Here’s what came next:
We don’t have a skills gap; we have a thinking gap. I suggested that the real problem was the wrong strategy. In a talent scarcity world, you can’t use skills to screen out people who don’t have them. I describe this as the sourcing Catch 22. (Here’s a video I did for LinkedIn summarizing the problem.) The solution is rethinking how we screen, assess, and hire people.
HR leaders aren’t willing to own and implement the “talent is No. 1” vision. I’m working with a number of CEOs right now on how to get HR leaders to take a lead on owning the whole talent process from beginning to end. It seems that all too often, HR leaders aren’t chosen for their ability to execute the vision of making talent No. 1, despite their lofty pronouncements and best intentions. To me, HR leaders should be equally as committed to ensuring great people are being hired as the CFO is to maximizing profitability. This means being more forceful in implementing programs that raise the talent bar, not maintain the status quo. Few people enjoy preparing a detailed ROI analysis to justify a $200,000 capital investment. Yet HR allows these same people a great deal of leeway in spending the same amount to hire someone.
U.S. Department of Labor regulations worsen the problem. The government is equally as culpable, if not the root cause, of the national skills gap. Here’s why: its compliance method of choice is to use “objective” criteria as a means to ensure fairness in the hiring process. Somehow this got translated into using a list of quantifiable skills and experiences to advertise and screen candidates. This is the Catch-22 mentioned above, screening out people for something we already know they don’t have. Making matters worse, there is very little science behind the objective criteria used for screening. When people ask me how much experience people need for a job, I always say “enough to do the work required.” Taking this one step further, maybe we should define the work instead of the skills needed to do it. It seems to me that, something like “design a circuit to double battery life in the iPhone 5” is more objective than “5 years of power circuit design experience and a BSEE from a top-tier university.” The screening would then consist of proving they can do the work or learn how quickly.
Hiring managers aren’t fully committed nor capable. Most hiring managers aren’t rewarded or promoted based on their ability to hire outstanding people. Short-term performance is at the top of their priority list, reinforcing the apparent need for a full laundry list of skills and experience. Flipping this mindset is part of the solution. Amazon’s raising the talent bar approach is another, where a talent advisory team ensures that every hiring decision balances both short-term performance with long-term potential.
Substitute achievement, potential, and ability to learn to bridge the skills gap. This is really the key to the solution: the best substitute for the skills gap is to hire people based on their ability to learn, motivate, and lead others and achieve results. This would instantly open the prospect pool to vets, wounded warriors, and all types of diversity candidates. One of numerous ways of assessing this is to ask candidates about their biggest accomplishments where they had the least amount of experience. Then focus on their ability to learn, deal with ambiguity, leadership, and achieving results with limited resources. Regardless of how achievement is assessed, the only way to implement the concept is to first break the institutionalized habit of over-reliance on skills and experiences.
Offer more apprentice-like programs to bridge the skills gap. A skills and experience gap of 10-20% can usually be addressed with specialized in-house training, coaching, and management support. This amount of “stretch” represents the typical promotion or lateral transfer. Skills gaps bigger than this need to be more formalized with some of the training offered by community colleges and trade schools in combination with local business support. Businesses need to pay for much of this training — not the taxpayer. One of the CEOs I worked with in the past created and paid for a state-sponsored apprentice program for toolmakers. Much of the hands-on was conducted at his facilities, and of course, he had the first chance to the hire the best of the group.
Eliminating the skills gap starts by first figuring out the real problem. Unfortunately, most HR execs don’t start here; instead, they follow the leader, purchase off-the-shelf solutions, cover the problem with a few Band-Aids, or apply short-term fixes, mistaking activity for progress. Long ago, a CEO I worked for loudly proclaimed that strategy drives tactics, not the other way around. Maybe this would be a good place to start.
This article originally was published in the Electronic Recruiters Exchange (www.ere.net). Check out ERE for more great recruiting information.