HRevolution

Costs 101

2008-07-27T13:32:00.002-05:00

The legacy of RPO may just be that recruiting managers begin to understand costs, and how to manage them. I don't mean manage as in 'limit', although that's a fine thing. I mean manage costs as in structuring them to maximize the use of resources.

The crux of this issue begins by distinguishing between fixed and variable costs. Fixed costs are infrastructure costs that are necessary to enter a business. Once incurred, they are fairly stable. They include things like office rents, recruiter salaries, hardware, and software costs. They are part of the price of entry. On the other hand, variable costs fluctuate with activity. As activity rises, so do variable costs - things like advertisements, commissions, and travel costs.

From an accounting standpoint, it is preferable to have ratio of lower fixed costs to variable costs. That is, you want to minimize your fixed overhead relative to variable costs. Why? Because your fixed costs, remain stable as activity increases, meaning they can be amortized across more hires as activities increase. Variable costs fluctuate with activity, increasing with higher production, and decreasing when activity slows. This ratio matters less during high demand, as costs will generally be the same, but becomes very important as demand recedes. For example, a company with 10 full-time recruiters will invariably have to lay some of them off in order to reduce (fixed) costs during a recession. On the other hand, an organization with the same workload but only 6 full-time recruiters who have outsourced certain components, won't likely lay off staff. The difference is that those outsourced components are likely to be variable costs, which decrease as activities decline. Therefore variable costs cut themselves, and your staff remains intact.

Managing this ratio is more important when demand cycles hasten or are unpredictable. The moral is that anything that can be removed from your fixed costs, and converted into a variable cost is a management coup.

Selective RPO

2008-07-27T13:22:00.003-05:00

With all the attention given to Recruitment Process Outsourcing (RPO), expect the next big thing to be Selective RPO. That is, instead of outsourcing the entire effort, organizations will maintain aspects they are good at, and outsource components where they're weak.

The first big round of RPO has not been a success. Not for the clients, and not for the vendors. Clients miss the in-house familiarity they expect, and providers aren't making money. Many clients feel they threw the baby out with the bathwater in order to get a better handle on their costs. And, while costs are better measured, the job isn't getting done.

The next iteration will consist of companies realizing their recruiters do some things well - like posting jobs, working with hiring managers, etc., but are not so good at others. In particular, sourcing passive candidates. In an effort to play to their strengths, they'll maintain these efforts and outsource weak areas. Overall, they'll have better control and better results.

Sourcing - where its at

2008-05-16T21:23:00.002-05:00

So, after a lot of thinking, we've gone into the sourcing business. It seems like the right time to offer this service to the recruiting world. Sourcing involves the research and screening calls to potential candidates. More to the point, we dig up names of potential candidates, then call to see if they'd be interested in applying for the job. The research is pretty straightforward, but there are lots and lots of calls. This is different from what the common recruiter does. We don't run ads. Not on job boards, and not on our website. We actively source people. We go out and find them.

This is the kind of never-ending, repetitive work that burns out recruiters. So they find ways to avoid it. It seems that when a recruiter can't fill a requisition, they either call a headhunter, a temp agency, or a contractor. This means the first reaction after failing to hire is the most expensive one.

If a headhunter charges 25-30% of first year salary, then a mid level professional hire at $75K costs between $18-22K. We think there's a big opportunity to outsource the sourcing effort to us, sparing the recruiter the worst part of his job. We send the candidates to them and they take it from there. The cost? Around $6K for most positions. That's a significant savings. And it enables the corporate recruiter to add more complex values in the hiring process (like preserving the company culture) while keeping their job...

Seems to me this should be the recruiter's first call for help.

Thoughts on Immigration

2008-05-16T21:19:00.002-05:00

I'm curious as to how we, as a nation, are against more generous immigration policies while we strive to improve diversity in the work force. These two values seem to conflict, even though they're applied at different levels.

What would our forbears think if they saw our immigration policies today? The majority of us are descendants of the beneficiaries of an open door policy. So we're acting in conflict with one of the nation's original values. Not to mention needing the labor pool.

The immigration conservatives make a good point. There is something to be said for preserving, or at least slowing change in our existing culture. Learning the language, and obeying our laws is not asking too much of immigrants. Tribes entering our country vary in their willingness to assimilate. We don't find much backlash against those who do it well. We perceive them as wanting to become Americans, as opposed to annexing our neighborhoods and cities, turning them into something foreign.

But our immigration policies need to balance these two core American values: an open door immigration policy (or at least more open than it is now), and pride in our culture. The key lies in balancing these.

Perhaps immigration policy should reflect each group's historical capacity to integrate with the existing culture. That would open the door wider for those striving to assimilate, and slow down those resisting integration. Sure, there would be all kinds of argument about measurment, but the notion balances an open door policy with the need to integrate.

Follow up on the "A" Player

2008-04-21T08:06:00.001-05:00

After several months of détente, the “A” player has worked from home and has largely duplicated last year’s performance. She tells me she only interacts with the office as needed, and dislikes the Friday morning sales talks run by “Metrics Man”. She feels it would help him tremendously to actually do the job for a week. Apparently, he thinks that if you call people in your database enough times, eventually they buy. Her own dbase is threadbare and her production is slowing. She’s wondering if he’s feeding the “B” players in order to teach her a lesson.

But last week, Metrics Man blew up at a different salesperson. He isn’t enjoying his supervisory role, doesn’t have people skills, and lapses into a defensive (conflict) mode. The bottom line is, supervising salespeople isn’t among his strengths. He’s developed record of stepping on toes, strong-arming subordinates, and being generally hard to deal with. He’s highly valuable in other areas, but not this one. So, after this conflict he was reassigned to duties more in line with his capabilities.

So, the last manager was re-assigned because he couldn’t motivate the troops to high enough performance, and this one because his people skills weren’t strong enough to manage extraverts. For the moment, the President plans to manage the sales group, presumably while they look outside the organization for a sales manager.

The fact is, that different personalities work better for different things. It’s a lesson this organization doesn’t seem to grasp at the sales or managerial level. They might get lucky and find a good manager. I hope so. If not, they will continue to struggle until they figure it out.

Motivating The "A" Player

2007-12-05T18:30:00.000-06:00

I've been consulting on the side with a small company. They want strong growth for a couple more years and plan to sell the company. Like many organizations founded by technologists, they're having trouble in the sales side of their business. About a year ago, they hired a woman in sales who produced three times the revenue of their next best producer. They are ecstatic, but, in her first annual review they were surprised at her demand for a 54% increase in base salary. (Sidebar: its easy to build the case that she's worth it; she could have asked for a 300% increase, matching the return they get on base pay for others in the position).

The woman is highly motivated, and works with great intensity. She has the highest volume of phone calls, is the most efficient at converting them to appointments, and closes the most deals. Thats pretty much the trifecta in sales. When she joined the firm they agreed they didn't care how many hours she worked, or if she worked from home, etc., as long as she produced. And she produced. She came in with enough experience to realize that sustained effort at high levels is about motivation. She understands how to get herself there, and how to avoid burnout. Her process includes mental health days and quarterly vacations. In short, her intense process requires more down time but creates incredible results.

In well-run organizations this causes paradigm shifts, and an inquiry as to why the existing standard is so low. Any self respecting entrepreneur would recalculate the value of their company if staffed by comparable talent. Then, an exploration into the difference between "A" players and the "B" squad on the sales team. In this case, however, the company failed to make this distinction. Incredibly, they demoted the sales manager (presumably for failing to motivate the "B" squad effectively) and promoted the research manager to manage the sales staff. He's the guy with all the numbers, has metrics for everything, and is expected to create "accountability" for the sales staff. Implicit in this move is the assumption that these people are largely the same, and the right manager can turn the "B" talent into "A" producers.

Among his first acts was to institute weekly meetings where he would point to the individual's numbers and point out that 'more phone calls would make you more money'. Then came an array of quotas for calls, for appointments, etc.. Although these things were meaningless to the "A" player, who blew through these thresholds all year, she had a weekly one-on-one like everyone else. Ultimately, they clashed on when she logged in (working from home) and logged out. His concern was that she wasn't putting in the same hours as everyone else. Her response was dismissive, and she pointed out that her agreement with them was that she would work her schedule as long as she produced. He didn't care for her attitude and this clash was repeated at each meeting, until the review.

The review itself could serve as a study in what to avoid in the review process. Expecting praise, the achiever was shown several pages of metrics, half a page of areas for improvement, and short, albeit glowing paragraph at the end. The ensuing conversation followed a predictable course about how many hours she worked, and that if she'd work 8 hours a day instead of 7, she could make more money. She reasoned that her process created $380K and their process created $130K per head. He felt she was being disrespectful. She implied she wasn't being disrespectful, but it was arrogant to impose his $130K process on her when her process was clearly superior. She ended with the notion that she brought her process to them, not vice versa. And if he insisted on micro-managing her that she would leave. Both left exasperated.

It is clear now, that an imbalance had existed for a year. Management felt they were making allowances, and apparently it bothered them. The salesperson was outpacing all of them and felt underappreciated. The company had stumbled on a highly motivated professional, an "A" player. The veteran sales staff exposed as "B" players became jealous and contributed to the problem in petty ways. While it seems obvious that they had two different personality types in the sales role (and that revenue would increase dramatically with more "A" players), the company instead is trying to turn the "B" squad into an "A" unit by imposing a series of quotas. While there have been some gains, they are limited.

Maturing as a Manager
If you're a manager lucky enough to witness output that is orders of magnitude higher than normal, your first task is to do no harm. Just try not to screw it up. Watch and learn. One doesn't impose control just to show who is boss. Being in charge doesn't mean you know everything, and you're not entitled to fiddle with things you don't understand. That is arrogant.

Motivating "A" Players
When you're dealing with mules, motivate with a stick. When dealing with a thoroughbred use a carrot. A thoroughbred running fast runs the risk of burnout, so rest is critical. You also need to understand that a high-strung breeds may bolt if you start waving a stick. And last, if you want to treat everyone the same because its easier to manage, then hire the same kind of people.

Why Sourcing?

2007-12-05T17:59:00.000-06:00

We've seen an interesting phenomenon in our field this year. While many companies are experiencing growth, they've held back on growing their recruiting organization. This seems the norm rather than the exception. They're willing to add revenue generating employees, but not administrative headcount. Apparently companies are none too confident in the economy. As a result, many recruiters have too many openings to be effective. And so, even with access to sourcing tools, they haven't the time to use them.

Sourcing is the first step to filling a position. Active sourcing - looking for a candidate (as opposed to running an ad), is time consuming. When recruiters don't have time to do the initial effort required to fill a position, things back up further. So they outsource searches to contract recruiters and search firms.

An alternative to this very expensive tradition is to outsource just the sourcing component of the hiring process. Why not hire a research team to dig up leads? And a telemarketing staff to screen them? Its cheaper than hiring an executive search firm, or even a contract recruiter. If corporate recruiters were fed pre-screened candidates and their sole responsibility was to complete the remainder of the hiring process, how productive could they become? At least they'd be focused on the higher value-adds in the process, focusing on qualified candidates and hiring managers instead of sifting through resume dbases.

Now, what if those researchers and telemarketers were based in India? What would that do to the economics of recruiting? Why don't search firms outsource research this way? Think what their margins would be. They're already high.

Its the kind of thing companies come up with all the time in their core business. Why not in HR?

"Passive" Jobseekers

2006-08-21T11:03:00.000-05:00

This notion of categorizing the population into “active” and “passive” jobseekers has become stale. For most corporate recruiting, only active jobseekers matter. Lacking the skills and focus that are the hallmark of executive recruiters, the corporate recruiter is limited to advertising, referrals, and resume pools.

The term ‘passive jobseeker’ implies an individual is receptive to a new job without acting on it. While many people may be receptive to a better job, the fact that they aren’t actively pursuing one means they are not a jobseeker. I’m receptive to winning the lottery but I don’t buy lottery tickets. Does this make me a ‘passive’ lottery player? No. It makes me someone who doesn’t play at all. The point is, if one is not actively seeking a job, one is not a job-seeker. The term “seeking” implies activity. The term “passive” describes a lack of activity. You can be one or the other. If you are active, you are a jobseeker. If you are passive, you are not a ‘passive’ jobseeker. You are simply not a jobseeker. As far as corporate recruiting goes, you are a non-factor. (If approached by a headhunter, it may be different).

The problem is a recruiter-centic notion dividing the world into two camps, the jobseeker, and the jobseeker-who-wants-a-new-job-but-just-doesn’t-know-it-yet. The latter being the larger group. Since the jobseeking group is small, we feel the need to appeal to the larger population. We tend to see this as an advertising opportunity (like all recruiting problems). So, we post to more job boards and get a whole lot of unqualified resumes. Then we complain. We complain because, instead of getting all those passive jobseekers, we got active ones who don’t fit the requirements. Damn. It’s really frustrating when we try to appeal to the passive population and we find out they’re not reading the want ads. News Flash: people who aren’t reading the want ads are not job hunting. They’re not job hunting because they are not jobseekers. Not active, not passive, not jobseekers.

By defining everyone as some type of jobseeker we have obscured the target population. We have failed to identify, target and attract whomever it is we want and attracted a bunch of chaff instead. This happens all the time. We’d be much better off simply accepting that, while there may be qualified people interested in our opening, they aren’t going to see our posting. Then we can begin a problem-solving approach to identifying who they are, how to reach them, and what we can offer to attract them. While we persist in the notion that people are passively seeking our jobs we’ll continue to be frustrated by our current recruiting methods.

There you have it. My rant on “passive” jobseekers. I’m tired of the word, fed up with the debate, and have no time for anyone using such language.

Now, if you were to call them “latent” jobseekers…

Leverage III

2006-07-29T12:50:00.000-05:00

Is there really a labor shortage or have we simply accepted chronic, pervasive underemployment? My point is that if we fully engaged people on the job, we would harness a lot more energy and productivity from our existing workforce. But with our current approach to job design and our assembly-line approach to work, we get only a small portion of what people have to offer. We seem unable to fully engage people in their work. Far too many people punch in physically and check out mentally. We may or may not be in a labor shortage, but we are certainly wasting human capital. You know those studies that show we only use about ten percent of our brain? If comparable studies were done on our workforce, we'd probably learn we're only using half of whats available.

The ability to fully engage a person creates leverage by taking a small amount money and focusing an entire person on a task. When we fail to engage someone, we fail to leverage them. When we succeed, we get more involvement, better decisions, and people taking ownership of tasks. We get better results for the business as a whole. We promote people who do this. We also (mistakenly) think it's a rare trait when we seek it in employees. We ignore the possibility that our job design, with inherently narrow descriptions, structures out these traits and engulfs employees in repetitive, boring work.

What does it take to wake up a generation of managers? When will they realize most of us have the capacity to do so much more than the narrow slot into which we've been fitted?

Further, as engagement is widely recognized as key to success (ask any manager), why is it not measured? It seems obvious that an engagement index for an organization would be useful in gauging the productive capacity of it's workforce.

Insofar as we believe we "manage" human capital, it seems presumptuous to do so without focusing on a worker's level of engagement as the central factor to be managed. How long can we afford to remain inefficeint (read: stupid) with our human capital in an increasingly competitive global economy?

Ownership

2006-07-29T12:49:00.000-05:00

My best hires have always been those willing to take ownership in their work. These people excel. In addition to screening for this tendency in selection processes, we also develop it in our department. I don't believe the ability to take ownership is a tendency limited to a chosen few, though it may be closer to the surface for some. We have had a lot of success with it.

So, how do we create an ownership mentality? We begin by spreading responsibility. We extend people's jobs to include results, and with those results we add rewards, including stock options - literal ownership - that are distributed as widely as I can possibly justify. We encourage people to take ownership by giving them ownership. It's that simple. I still can't see why this isn't the norm.

Speaking of ownership, in an earlier post (Salary Compression, May 8th), I mention encouraging ownership by way of spreading the wealth through bonus programs. This is feasible without dilution to shareholders when greater wealth is created. The bet is that engaged employees create more value for shareholders even when participating in a larger reward system (especially when the rewards include stock options). Oh, and ownership works really well in flat organizations. They naturally expand responsibility across people and levels in ways other structures cannot.

It's no different than the bet an entrepreneur makes when taking venture capital. They'll take a haircut on the percentage of ownership, anticipating they'll make more money owning a smaller piece of the (now larger) venture.

Job Descriptions

2006-07-21T10:41:00.000-05:00

I've just read a post where the writer advocates writing accurate job descriptions to ensure applicants aren't disappointed with their jobs. Here it is:

"I know this article is going to be controversial because businesses that rely on employer and recruiters are very reluctant to admit, that the customer isn’t always right. If employers do not put what they are looking for accurately in the job description they can’t expect to find it. It is like going on a road trip through New York State with a map of Arizona. Good luck.

In my experience as the President and Founder of several online career centers and an HR Consulting company, the vast majority of disappointed employers tend to complain about the unqualified applicants who apply to their jobs. However, the root of the problem is really the unclear job posting. The employers complain that the unqualified candidates who apply to their jobs are wasting their time but in fact it is them who are wasting the candidate’s time. All of the articles I read in the marketplace are for candidates helping them write cover letters, format their resumes and conduct a job search. Nobody does anything to help the employer with writing a clear job description.

The job description should include the following:
1) Brief Description Of The Company
2) Accurate Job Role and Task Description
3) Clear Directives Of Mandatory Requirements, Licenses, Skills or Years Of Experience
4) How, When And On What Criteria The Employer Will Follow Up With The Candidate.

Title is important as well, it should include the following:
1) Job Title
2) Level Of Job (Senior, Junior, CEO Etc)
3) Geography City & State/Province"

The author leaves his contact info in case we need to hire him. I find it odd that this advice appears on Collegerecruiter.com where I assume the emphasis is on entry level recruiting. Getting a job description right, as the author suggests is sound practice. But to those hiring entry-level people, following his prescribed format has limited utility. Job descriptions are written by insiders - people familiar with the company, the job's surrounding roles, and the industry. The reader is an outsider. The entry-level applicant is an uber-outsider. They know little about any company, and even less about yours.

Clarifying your job description for the college market means translating it from corporate speak into terms they can understand. For example, the corporate norm "the position has 5 direct reports" is very different from "responsible for the production of 5 people, and at our company supervisors act more like a resource than a boss." Its surprising how entry-level people respond when you do it right. Its worth the time testing different approaches as you hone your message for a specific audience.

While I'm at it, let's take the critique beyond entry-level. Job descriptions can do only so much to describe a job. Again, the writer is an insider and can relate the elements to a world not described in the job description. For example, some companies have lots of titles. Others have very few. I worked at a company that had only 3 or 4 titles and when you hit "manager" it meant a great deal, as there were only VPs and a president above you. When I left there, I went to a company where "manager" described the entry-level role. The job description writer takes such things for granted. The reader has no insight. In my experience, the best you can do is try to make the job description brief and accurate. You simply cannot presume you can convey your understanding of a role in a job description. Simply outline it accurately, and get on with the business of recruiting.

Remember, recruiting is a contact sport. Keep the job description simple and spend your time making contact.

Leverage II

2006-05-19T18:44:00.000-05:00

Why is it important about using the concept of leverage as it relates to employees? It sounds clinical, but has several impacts on the business. Let's look at a low level example of an employee in an ice cream parlor.

We don't expect a lot from employees in food service. What you'd expect from the average (disengaged) employee at an ice cream parlor is a few polite sentences - What flavor? One scoop or two? That will be $2.50. And, a polite "thank you." This person was hired to scoop ice cream. At least that's the perception. A job description might focus on duties like lifting ice cream buckets, being polite to customers, and making change. A skills matching engine would focus their scooping abilities. Most people in such jobs are disengaged, paying just enough attention to keep busy and glide through their shift.

An employee who is leveraged - meaning the whole person is mentally engaged- creates an entirely different experience. People are greeted as they enter. Customers are complimented on their dress or appearance ("that's a lovely blouse"). Polite inquiries are made ("what sounds good to you today?") and their choice of flavors is complimented ("excellent choice - that's my favorite"). The customer becomes engaged as well. The greetings and banter create a quasi-social exchange which adds to the experience. These customers get more than just ice cream - they get attention. They are welcomed. They are complimented. They are likely to return. Employees who behave this way with customers are also more likely to keep the shop clean, tables from leaning, and keep chairs in good repair. Leveraging an employee in this manner creates repeat business and builds a strong brand.

The bottom line is that the structure in which we work does not leverage people well. Job descriptions focus on skills, not on qualities that capture (or appropriately challenge) whole people. By focusing on such a small facet of a person we harness very little of their energy. We limit the task, the definition of success, and consequently, productivity. We all but guarantee underemployment. We might pay individuals and take up a lot of their time, but we don't engage them. We have an opportunity for leverage, but the way we structure employment works against us.

This structure - the way jobs are organized in companies - evolved during a period when human capital was cheap, and financial resources were scarce. It spread during the industrial revolution, and finance was at it's center. Understanding finance was very important and it evolved into a sophisticated discipline. Human capital was deployed in support of financial investments; and the science of utilizing human capital evolved very little.

Today we are faced with a reversal - financial capital is available while human capital is becoming scarce. This would be a good time to re-design business structures. A shift in perspective is required where value is created by focusing on leveraging human assets first, and supporting them with financial investments.

Leverage

2006-05-10T20:19:00.000-05:00

We use the concept of leverage all the time. It's big in real estate, stock options, and investment. The basic idea is that, with a small amount of your capital, you gain control of a larger asset. Making a down payment on a house, a car, or buying an option on a stock are examples of leveraging an investment to control a larger asset. It follows standard business principals of getting the most out of your dollar.

Yet we don't understand the concept as it relates to employees (unless they're executives - but I digress). Our companies are arranged in little boxes, with corresponding job descriptions, duties & tasks. Into these we stuff people and pay them for their time. We strive for internal integrity (see last post) among these boxes and spend (waste) much time administering fairness through the HR group. It is the height of irony that we create these boxes, place people in them, then ask them to "think outside the box". Like it or not, this is today's organization.

For the record, I don't like it. The system promotes a limited view of people and what they can contribute. It is the anti-leverage. We fill jobs by focusing on a few skills to exploit on a repetitive basis, not capture all that a person can do. This threatens motivation of the whole individual. This is anti-leverage.

Consider that by paying a person a little at a time, we focus their entire body (if not mind) on a task of our choosing. This is leverage; we control a larger asset with a little money. Further, consider the productivity of employing the person's whole attention to our tasks, as opposed to just one facet of that person. The differences in productivity, service, output, and the health of the business are profound. To leverage an employee is to engage them fully in the task. When engagement is missing, leverage is missing.

Salary Compression

2006-05-08T08:46:00.000-05:00

We're beginning to see market forces impact our recruiting again. New grads with technical skills are pushing the envelope and are receiving higher offers than we pay existing people with 2-3 years of experience.

When I first experienced this in the early '90s I railed against the idea of paying rookies more than experienced people. These other companies were screwing up my numbers. After awhile, you learn to pay what you need to and hope nobody compares salaries. That doesn't work well at all.

What is clear now is that pay grids are designed for "internal integrity" implying they are designed to maintain fairness within the organization. When I first asked about this, the implication was that they were once based on market costs. It seems that once applied, the market changed but the design did not. So much for internal integrity.

While I'd love to see compensation reflect the actual value produced by each job, I realize this is difficult to do. However, it isn't so hard to figure out how to include more employees in the fortunes of the organization (both ups and downs) instead of defaulting to the static pay ranges that dominate business today. The use of stock options is a good example; companies offering options to a wider range of employees have a better chance of retaining them.

But we could take it one step further, in addition to a base salary and stock options, I'd like to see more companies offer a bonus related to the team and company's performance, and the individual's contribution to it. This creates flexibility based on performance, and keeps people reaching for more, not simply expecting it. If part of the bonus relies on team production, teams are more serious about productivity. I see no reason such a program couldn't be spread across an entire organization. As a recruiter, it's a lot easier to sell a pay range than tell a prospect we simply pay less than our competitors.

What happens to bonuses during downturns? The bonus pool would shrink, reducing payouts, and the payroll burden decreases proportionally. While employees would not be happy to miss out on a bonus, they would be riding the fortunes of the company. Just as important, lower payroll burdens may render headcount reductions unnecessary. Once things improve, the company would have a stable of trained, hungry workers ready to expand. This is far more valuable than the norm where, having laid off a workforce, a company needs to hire and train a new group.

Relationships, Commodities, and Meaning

2006-04-28T23:06:00.000-05:00

Sumser has been writing on relationships and referrals this week. This morning he references a piece from Jeff Hunter paraphrasing: “The existence of relationships is replacing the meaning of relationships.”

This is a great insight. And it certainly seems true. Especially where business reasons are driving relationships - like referral networks.

So, why do I want to cringe?

First, because relationships are important. As recruiters, developing relationships is our stock in trade. And, on a fundamental level, we are social beings. Our biological and social needs for relationships precede our business needs. It is the business needs that commoditize relationships. As social beings we seek emotional support in relationships; and turning them into commodities feels unnatural. To put it another way, we lose intimacy. And replacing intimate relationships with casual ones leaves us unfulfilled.

Second, because trust (a subset of intimacy) is important. This is what breaks down within 3 degrees of separation. This limits the commoditization of relationships. Relationships are not transferrable. There is some limit to how much commoditization can occur. This is also a limitation of automated referral tools.

Last, as recruiters, we establish relationships for a living. It is this skill more than any other that we bring to the table and build upon. So when the importance of quantity outstrips quality in our relationships, we feel like we're prostituting our emotional skills for the company. And that’s not worth it.

French Talent Wars

2006-04-18T14:48:00.000-05:00

I've been reading with fascination about the labor issues in France. It appears that, despite low population growth they have a different talent war. Instead of dealing with shortages, as we are, their talent is at war with the government. I feel like I'm watching a car accident - I don't want to stare but can't look away.

Here's the deal - in response to a recent law which would make it easier to fire workers under 26, French workers are throwing a fit. The law is aimed at increasing employment among young people by lowering the obstacles to firing them if they don't work out. There is chronic unemployment among this group. But the French workforce sees this as an assault on their right to lifetime employment, characterizing any situation with the potential for job loss as precarious. (Are French workers so lame that without protection they would be fired en masse?) The protests imply such fear among workers that you have to wonder about their culture. We've become accustomed to the lack of loyalty between companies and employees. We have learned that moving from one employer to another can have an upside. Indeed, most of us seek upward mobility on some level; and we know there is always some risk. Perhaps, as a generation, we've always been aware of employment risks. Perhaps we have less fear because our economy continues to grow - or perhaps it grows due to freedom of movement among workers.

I do know this, when you stay in a job too long it becomes dull. Productivity declines (even if our capacity grows). We've all been there. We know what uninspired production creates: mediocrity. When you place widespread mediocrity in the context of an entire workforce, you doom your local economy to mediocrity. This cultural difference, opting for safety and mediocrity over risk with an upside, has Darwinian implications in the larger economy. In casting their vote, French talent has declared war on raising expectations. A victory wins the right for every citizen to live a quiet life of desperation. Meanwhile the global economy steadily pulls away, and a proud nation matters less and less in the world.

Talent Management III

2006-04-04T12:59:00.000-05:00

So, I'm differentiating between managing talent from managing people or tasks. Here's the rub. A hands-on approach to inventorying talent, individually or by groups, is the kind of thing HR should be good at - it's comparable to skills analyses. But, it would be a creative move, and HR doesn't do creative. After all, how many new ideas come out of HR? So the likelihood is low, unless the next "Great Company" (tomorrow's Google) does it, then others copy. Or a vendor builds a module into a product and the right company happens to try it...

The irony is, when executives credit their people as their greatest assets, they are serious. It's just silly that we don't try to measure the value our "greatest" assets. We do it for the lesser assets (property, plant, equipment, patents, accounts receivable, etc.).

Here's a B-school refresher:
What is measured is important.
If you can't measure it you can't manage it.

Talent Management II

2006-04-04T12:25:00.000-05:00

After Jeff's comment on the last post, it occurs to me we should differentiate between task management, people management, and talent management. Task management is MBO-stuff (management by objective) and a very useful thing. People management is about ensuring people are focused and effective (hopefully with a good attitude). Talent management would be an effort to develop and adequately deploy talent, whether it be on an individual basis, or across a group of people. This isn't touchy-feely - and not everyone should be on American Idol (though they all seem to try). I'm suggesting we make an effort to inventory people's talents and figure out how best to deploy them. This would likely increase productivity and growth. At worst, engagement levels and retention rates would improve.

Have you ever worked with someone who is really talented and knows it? The prima donna types stand out (and we despise them) but there are many talented people who are down-to-earth. We see it in the opportunities taken - or passed by. Jobs that don't utilize their skills effectively aren't acceptable. In a talent-short economy, more people will behave this way. I'm surprised more don't already. Instead, most of us rationalize our underemployment and double our efforts to focus on jobs that have become exercises in repitition. They test our self-motivating skills, not our talents. We should teach classes in college on how to motivate yourself through a boring job (a truly useful skill). For those majoring in business, perhaps a minor in Rationalizing is in order. This focus would be justification of short-changing yourself across a career of chronic under-employment.

To borrow Maslow's heirarchy for a moment, once your need for cash, benefits, vacation, and status have been met, it's the challenge that counts. The use of your time becomes the highest need, and jobs not addressing it aren't worthwhile. Why? Because it isn't an appropriate use of your talent. It doesn't stretch, nurture, or teach something new. You think the competition for talent is going to heat up? Do you think you're adequately challenging your people? Are you?

As we age, it becomes clearer that our working lives are finite. Many of us have achieved some goals by mid-life, only to wish we'd set them higher. With half the game over, we aren't interested in short-changing ourselves for the sake of a mere paycheck, or worse, an ignorant task-focused manager.

Talent Management

2006-03-27T15:09:00.000-06:00

In HR we run into situations where we feel we have to balance the needs of the organization and the individual. In fact, this is an unnecessary conflict. It is a by-product of our existing structures. Avoiding such conflicts is considered a matter of aligning individuals with organizations, and that’s a good start. But people and organizations change and when alignment is off we fire the people. In the end, we're forced to choose and organizations win.

What’s missing is the realization that people want to be used more effectively. They want to be challenged, and want to be engaged. Companies want them to be engaged too, and go to great lengths to define what it is they want us engaged in. But there is no conflict between an individual wanting to be challenged and a company’s desire to increase productivity. They are the same animal, seen from different sides.

While we see clarity in defining skills and tasks relevant to each job, we don’t attempt to quantify the totality of skills a person brings to an organization (and might like to use). We don’t examine that talent set and ask how it might be deployed beyond a narrow job description. Defining an appropriate challenge for anyone would seemingly necessitate an examination of their abilities, but we parse out the skills relevant to specific tasks only. Then we ask them to repeat their behaviours until they become disengaged, quit, or get fired. But it begins by ignoring that untapped human capital that isn’t considered relevent to the job at hand. Its very short-sighted, and not being addressed at all. Instead, we’re automating performance management systems using the very same methodology and hoping we get a different result. Good luck with that.

Diversity And Business Success

2006-03-08T12:05:00.000-06:00

A recent invitation to a seminar included the line: “Thought leaders will agree that diversity is a pillar of corporate strength - the business case for diversity is just too strong to ignore. Corporations that are supported by a diverse employee base usually find themselves at the top of their industry.”

Like so much marketing, the juxtaposition of strong diversity program and industry leadership implies diversity is the cause of success. This linkage is one of debatable significance. The language suggests causation; it is more likely that the relationship between diversity and success is correlated. This isn’t nitpicking, its important. The HR community is notorious for putting forth faulty arguments disguised as “business cases” to further an agenda.

I don’t see how a company can prove that their diversified employee base is instrumental to their success. While diversity may contribute to success, it is not necessarily key to that success - any more than any other characteristic of the firm (e.g. the firm’s product lines, patents, market position, fiscal policy, etc.). To demonstrate diversity as the cause of success would require isolating the benefits of diversity from marketing, sales, product development, etc., which is impossible. As a result, the “business case” for diversity is easy to ignore.

On the other hand, the correlation between diversity and business success is much easier to support. Companies with strong diversity initiatives often have success in other areas. In effect, excellence in diversity can imply excellence in other areas. There are many examples of companies with strengths in diversity and great management, or a range of market achievements. In these cases, a strong diversity program may be the hallmark of a good company, not the cause of it. Does diversity contribute to their strength? Undoubtedly. Is it the cause of their strength? This is much harder to verify, and therefore unlikely. The issue is whether diversity correlates with success or causes it. Knowing the difference helps form a persuasive argument instead of undermining our credibility as business-savvy professionals.

Don't argue a "business case" that diversity drives business success. You simply cannot prove it. Doing so undercuts our credibility; it shows how weak our understanding of business really is. The business case is that if a firm aspires to excellence, it needs a solid diversity program. This appeals to management’s goals and aspirations without presuming a direct impact the bottom line. While such contributions do exist, they are ancillary benefits and a by-product of diversity not the direct result. If you’re going to make a pitch for strengthening diversity point out the correlation between excellence in diversity and excellence as a company. That should grab their attention without undermining your credibility.

Manpower Predicts: End of World As We Know It

2006-02-21T08:38:00.000-06:00

In the last post, the CEO of Manpower predicted that businesses will fail for lack of planning ahead for the talent shortage. It’s his job to create a market for his services. Spreading fear about how rough it will be is a ploy. While he may be adept at running a staffing firm, his approach belies a lack of understanding of how businesses behave. Instead of taking his ‘sky is falling’ to heart, what do we think will happen in the talent shortage?

First of all, we know businesses adapt to changing conditions. To think that managers assume the same models that are effective today will work as well tomorrow is folly. Companies have adapted quickly and effectively to changes in financial models, disruptive technologies, logistical improvements and customer preferences. Businesses adjust all the time. That said, they don’t have all the answers to how to deal with a long term labor shortage – nor do they claim to. Business, at it’s core, is opportunistic, and can’t stand being reliant on dwindling resources. It will seek alternative methods, models, and resources. The one thing we can be sure of is that companies will adapt.

What does adaptation look like? Automation of every possible piece, outsourcing pieces that are labor intensive. Taking the company elsewhere (where the shortage is less severe), expanding immigration to ease shortages. These are things that can be done that we already know. In business, historically the mother of invention is necessity. Business hasn't felt the necessity yet, and so we haven’t seen much invention.

From a Manpower survey we’ve learned that “employers are not just looking for bodies to fill sales jobs, they want experienced sales people who know their respective industries and can drive revenues.” Sure, we all want people who can show up and make us money. We want lots of things. The survey says so. It doesn’t say we’re entitled to them. It doesn’t say what we’ll do when we can’t have them. It doesn’t say the economy will fail if we don’t get them. Here’s a thought, today’s just-in-time hiring approach presumes an endless supply of trained, experienced people. If you can’t just buy those folks, where do they come from? Hmm. Maybe companies will have to train their own people. Maybe an employment relationship lacking in commitment or investment in human capital won’t work in the future.

Mr. Joerres' prediction that businesses will fail for lack of the right talent also states the obvious. It happens all the time. Many companies succeed or fail today based on the behavior of managers or executives. Failure to get the right people at that level often results in the demise of a company. While failures are often cloaked in mergers or acquisitions, they are failures. What’s new in Joerres’ report is that failure to get the right people won’t be limited to executive ranks, but widespread among line workers. And, yes, that will be new. Services depending on people will slow, and quality will slip. We will require new and creative methods to approaching human capital. And, given the lack of ingenuity applied to this precious resource, the labor shortage should produce some long overdue creativity.

Interestingly, the article points out that staffing firms show increased profits in this labor shortage (like oil companies during gas shortages). In response, Manpower has “refreshed it’s brand and streamlined it’s activities” focusing on higher margin markets. Manpower can wail doom and gloom all the way to the bank. But who cares? The sky isn’t falling. It’s just another round of change. My money is on business, and it's capacity to change.

The Sky Is Falling...

2006-02-21T08:10:00.000-06:00

Another article proclaiming doom:

The talent shortage is becoming a reality for a larger number of employers around the world," Manpower's CEO and Chairman Jeffrey Joerres said in a statement. Joerres said that in 10 years' time, many businesses would fail because they had not planned ahead for the talent shortage and would be unable to find the people they need to run their businesses. "This is not a cyclical trend, as we have seen in the past, this time the talent crunch is for real, and it's going to last for decades," he added.

http://news.yahoo.com/s/nm/20060220/bs_nm/services_manpower_dc

Even with the facts, it seems we are unable to see beyond existing models of doing business. Sure, if I'm running Manpower, and all these businesses are calling me and ordering a scarce resource, I'm going to stress out. Most of us recruiters have borne this experience for years with little recourse. Changing our business model was not one of our options. But worse, it seems Mr. Joerres can only view business 10 years from now being conducted in the exact same way. That's unlikely.

'Tis The Season

2005-12-12T09:14:00.000-06:00

When work goes flat. Everyone in the office still comes in as early but with the appearance of Christmas cookies in the lounge and holiday invitations things start to tail off. Not for everyone, mind you, but the place slows down.

In recruiting, you have insiders and outsiders. The insiders - recruiters & hiring managers - tend to behave as though nothing changes during the holidays. Business as usual, no stopping this train. Outsiders, however, feel the slowdown in a big way. It's hard to jobhunt during the holidays - scheduling an interview can be tricky when the interviewers are trying to use up their remaining vacation days. And if you think scheduling an interview is tough, try getting to a hiring decision. For whatever reason, hiring decisions are avoided during the holidays. Jobseekers pick up on this. Nothing much is going to happen during the holidays, so unless you're in retail, why work hard? Just keep coming in at the same time.

It's all just jive if you don't get to thrive

2005-11-23T19:52:00.000-06:00

So, what do the problems in France tell us about people?
Anyone? Hello? Well, one good thing about not publicizing your blog, you don't have to deal with other people's thoughts and opinions. Good thing too. That way I can go on believing only my thoughts matter.

What do these problems in France suggest about what it is to be human? Well, the desire to succeed is part of the human condition. We all want to thrive. Those living in a free society but unable to participate in opportunities to succeed will rebel. The rebellious activities in France have nothing to do with religion or ethnicity. Although both make the protesters easy to identify, their grievances do not stem from either issue. They are angry about their inability to thrive. They are angry about being left out of the mainstream economy. They cannot find work, so they cannot thrive. Many were born in France and consider themselves French, but perhaps the French people who have lived there for generations don't see them as French. The ethnic ebb and flow over centuries is engulfing Europe and the Europeans don't like it. Too bad for them. It will be interesting to see how they approach balancing the cultural and ethnic changes. To a large extent, this is what Europe is facing in this millenium.

Cultural Democracy?

2005-11-22T19:50:00.000-06:00

So, if management by appeasement is the way France is going, what do the riots tell us about democracy?

For starters, surviving is not the same as thriving. It is part of the human condition that people want to thrive. It is part of the democratic ideal that all citizens have the right to pursue happiness. A democracy assures the right to thrive, if not the opportunity. This is the government’s job.

If the government's appeasement ensures survival, and democracy supports an opportunity to thrive, then government needs to enforce an equal opportunity to pursue happiness. When the divide falls along racial, or ethnic lines, the government has failed. To be fair, this is a tough nut to crack. We've tried it for generations in the US and still have room for improvement. I must admit, I don't mind seeing Europeans struggle with these issues given how harshly they've criticized us in the past.

What remains to be seen is whether the French can redefine what it means to be French. It’s easy to assimilate a few minorities and brag about your success. But, as Europe is finding, it is much harder to assimilate large groups with different religions, ethnicities, and cultures in numbers so large that they will reshape your culture. The challenge posed by riots has become a cultural one. Can the French people be culturally democratic? We’ll see. So far, mainstream French citizens can’t see themselves wearing bhurkas. With all the baggage Islam carries from its radical sect, who can blame them? But, even without baggage such change is difficult. To watch your society move from it’s traditional center is mind-bending. Instead of re-examining one’s identity, culture and values, it makes one want to defend them.

Again, this is a good time to not be a French politician.