src=""> The Hiring Insider: Hiring Managers - Are you ready Part II!

The Hiring Insider

Thursday, June 17, 2004

Hiring Managers - Are you ready Part II!

Bear with me today - I'm reprinting an article in its entirety today...good read. Enjoy.

Make Use Of The Calm Before The Storm

By: Bill Larkin

This article originally appeared on

The primary motivator for employee loyalty over the last three years has been fear – fear of being downsized, and fear of not being able to find another job. But as signals of an improving job market continue to flash, thousands of employees who have been rooted in their jobs are plotting to free themselves. The market tide is turning in favor of the workforce, and experts say few employers are ready for it.

If you don’t believe it, consider this: in a survey conducted by Accenture, 40 percent of U.S. workers say they plan to leave their current job within the next five years. A recent AOL survey paints an even grimmer picture; in which 58 percent of more than 5,000 participants said they “may” or “will definitely” start looking for a new job when the economy improves. Why are these numbers so high? The need for financial cutbacks forced many organizations to neglect programs that are essential to employee retention. The Accenture survey says it all: respondents cited lack of compensation (71 percent), advancement opportunities (58 percent), and professional development or training (51 percent) as the primary reasons for seeking new employment.

Despite the renewed focus on employee retention that 2004 is expected to bring, many experts say the damage has already been done. “We are entering a dynamic period for the employment market,” says Ed Jensen, a partner in Accenture’s Human Performance Service. “Employers need to protect themselves from raids on their talent in order to remain competitive.”

It stands to reason, then, that there are two main challenges looming on the horizon: acquiring only the best of the candidates you will need sooner than you think, and keeping the best of those you have. Ironically, these burdens will fall upon one of the hardest-hit departments in your organization: human resources.

Pan for gold
It’s hard to believe that a short time ago, HR professionals – and the organizations they work for – were used to shelling out 30 percent search fees to agencies in the hopes of securing a high-quality candidate to fill one of their many open requisitions. Now, there is no room in many budgets for outside help in the hiring process, and there’s less time and manpower to do the legwork internally. For those HR departments that find themselves short-handed due to recent downsizing and attrition, the thought of a renewed focus on recruiting is surely a cause for concern.

Despite the popular assertion that the current market is still flooded, finding the right candidate is harder than it may seem. “The writing is on the wall,” asserts Scott Cohen, national practice leader for talent management at Watson Wyatt Worldwide. “Organizations will increasingly compete for the smartest and the best individuals.” And they’ll have to hunt pretty hard for them, like the proverbial needle in a growing haystack. A recent report issued by Challenger Gray & Christmas Inc. maintains that 92 percent of recruiters and hiring managers were inundated with irrelevant responses via the Internet, and 71 percent said a majority of the resumes they received in response to an online job posting did not match the job description. The increasing demand for resume and recruiting management is poised to overwhelm an HR department that has already been reduced by layoffs. How does the already overburdened HR professional handle and evaluate resumes to fill critical positions from a shrinking pool of contenders with less help on a tighter budget? Most major and many smaller companies have already automated their recruiting and applicant tracking processes. Those that have not need to make it a top priority.

The ideal solution should provide integrated applicant management capabilities that not only streamline the hiring cycle, but also enable hiring managers to identify the best candidates more quickly and cost-effectively. The idea is not to replace human judgment, but to support decision makers by automating repetitive tasks and increasing the efficiency of those high-touch activities that cannot be automated. Managers may even use self-service to hire applicants on the spot, an important capability in environments where demand can dictate rapid bursts of hiring, such as retail.

Do your homework
In desperate times, people may take desperate measures: some people will do anything it takes to land a job, up to and including fabricating degrees, work experience, previous earnings, and qualifications. Even worse than including phony accomplishments, they may leave out negative information that would typically disqualify them. In an era that has uncovered – too late – a high-profile college football coach who exaggerated both his college and football experience and an armed robber turned board chairman of a major firearms manufacturer, it’s frightening to imagine how many covers have yet to be blown. While some of these stories are benign enough, the wrong person in the wrong job can cause real harm, and when that happens, the damage to everyone involved can be devastating. How can organizations avoid hosting the next big scandal, or worse? By understanding how to legally and accurately verify candidate credentials, and making the effort to do it consistently.

With less HR staff in place to perform extensive background checks, is it worth the time it takes? Absolutely. Even one bad hire can do some serious damage. LeRoy Robbins, CEO of recruiting specialists IIRC, claims that the hard costs are estimated at “50 percent to 200 percent of that person’s salary and benefits,” not to mention the soft costs of an increase in workload and its accompanying decrease in company morale and customer service. “As you move up the line, bad hires become more significant because of the impacts of their roles. Having to replace that person is enormous,” explains Robbins.

Beyond the responsibility to the organization itself, there are legal duties to consider, such as taking the proper steps to avoid hiring an unfit individual who causes harm. Negligent hiring processes, discrimination, and invasion of privacy can all lead to costly grievances and lawsuits. At the 21st Annual Employment Law & Legislative Conference, Wendy Bliss, J.D., SPHR discussed effective pre-employment screening practices. Depending on the requirements of the position being filled, all of these methods may be appropriate: multiple reference checks; verification of the last 5 to 7 years of work history; criminal background checks; a social security number trace, examination of education and motor vehicle records; and credit, professional license, certification, or registration checks when job-related and validated. She also recommends checking the applications over for any of the following red flags: blanks, unexplained gaps in employment, questionable reasons for leaving prior jobs, illegible writing, no signature, information that is inconsistent with the applicant’s resume, and multiple people listed who may not be contacted for a reference. Because every state’s laws differ slightly, it is vital that employers familiarize themselves with the specific requirements governing reference immunity, service letters, use of criminal history, and other related issues for any and all of their locations.

Stay ahead of the pack
As the job market continues to improve, employers will find themselves once again catering to the best and brightest talent. “Employers have been less careful about how they treat their employees because they know there is a ready supply out there,” says Sharon Koss, SPHR, president of Koss Management Consulting in Seattle, WA. “They have forgotten what turnover is, how expensive it can be, and how hard it can be to find good people.”

They’ve also forgotten how much good people can cost in a competitive market. To avoid getting burned, employers need to first make sure that all current employees are fairly compensated, and when a position comes open, consider hiring from within. In many cases, the best person for the job may be lurking a few cubes down. This is another scenario in which an automated system can make a world of difference. With a comprehensive in-house talent pool just a couple of clicks away, recruitments costs are significantly slashed. This makes it easier for organizations to promote top talent, fostering higher employee engagement, and improving the retention of key employees.

Then, organizations should start putting in place a system by which they can ensure the compensation packages they offer are competitive, but also fall within the parameters of their budget requirements. For example, are you able to quickly measure the value of a candidate’s total compensation package (salary, benefits, bonuses, etc.) against your budget for the position? Can you compare packages you are offering against industry compensation data, salary surveys, and internal jobs before an offer is made to the candidate? Can you easily take into account the geographic pay differentials that exist based on the candidate’s work location?

It’s a lot of work, but a system of compensation “checks and balances” is critical to preventing your company from overpaying or under-competing for talent. Fortunately, there are applications available that can automate much of the legwork that needs to take place in order to assemble sensible but competitive compensation plans. In fact, some organizations have used applications and the accessibility of data to take a less traditional approach to compensation.

According to Edward Lawler, a professor at the University of Southern California’s Marshall School of Business, many organizations are using the availability of compensation data combined with automated employee performance management to develop competency-based compensation systems. It attracts employees who like the notion that, if they work hard, they know how and when they will be rewarded. It also prevents the loss of talent, which is perhaps even more important. “A competency-based system helps an organization achieve its goals,” explains Lawler. “When it is structured right, it rewards top performers and keeps many of them from leaving.” Companies that do not provide the right rewards and opportunities, however, wind up priming their talent for the competition.

Watch where you’re going
Many organizations are blissfully unaware that they are currently suffering from a false sense of security; in fact, most organizations believe that when the employee exodus does happen, it will happen to some other company. It won’t be long before that illusion is shattered. As the pendulum begins to swing back in the opposite direction, savvy employers who anticipate its movement can survive, or even thrive, by taking preemptive actions to retain their proven performers while they attract and groom the best of those candidates who have begun to test the waters of the recovering job market. By providing the appropriate rewards and opportunities to seasoned in-house talent and offering competitive compensation plans to meticulously screened prospects, your organization can ride the wave of the impending upheaval while your competition struggles just to weather it.

About the Author:

In his role as Vice President of HRMS Solutions, Bill Larkin’s current charter is to drive Kronos’ success in the Human Resource Management System (HRMS) market. In June 2002, Kronos entered the middle tier of the HRMS market with licensed HR and payroll products, which complement Kronos’ existing suite of employee resource management solutions.

Larkin brings to Kronos extensive consulting, sales, product development and marketing skills honed during a 20-year career in human resources, in which he held positions with Automatic Data Processing (ADP) and Genesys Software Systems.

Prior to joining Kronos, Larkin founded LCS and Associates, a consulting firm specializing in HRMS end-user requirements definition and vendor selection. Larkin also has helped a number of software vendors develop and expand their HRMS strategy. Larkin was a co-founder of the eClipse Group, a consulting firm formed as a joint venture between the Human Resource Management Consultants and LCS and Associates.

Larkin is an active member of the International Human Resource Management Association and the Northeast Human Resource Association. He holds a bachelor’s degree in business administration from Iowa State University.


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