Entire publications are devoted to what these vendors are doing. Only about a third of U. Why do employers spend so much on something so important while knowing so little about whether it works? Survey after survey finds employers complaining about how difficult hiring is. There may be many explanations, such as their having become very picky about candidates, especially in the slack labor market of the Great Recession.
But clearly they are hiring much more than at any other time in modern history, for two reasons. The first is that openings are now filled more often by hiring from the outside than by promoting from within. Today the figure is a third or less. Since the restructuring waves of the early s, it has been relatively easy to find experienced talent outside. Less promotion internally means that hiring efforts are no longer concentrated on entry-level jobs and recent graduates.
Now companies must be good at hiring across most levels, because the candidates they want are already doing the job somewhere else. The second reason hiring is so difficult is that retention has become tough: Companies hire from their competitors and vice versa, so they have to keep replacing people who leave. Most of those vacancies are caused by voluntary turnover. The root cause of most hiring, therefore, is drastically poor retention. Here are some simple ways to fix that:. Internal job boards were created during the dot-com boom to reduce turnover by making it easier for people to find new jobs within their existing employer.
JR Keller, of Cornell University, has found that when managers could fill a vacancy with someone they already had in mind, they ended up with employees who performed more poorly than those hired when the job had been posted and anyone could apply. The commonsense explanation for this is that few enterprises really know what talent and capabilities they have. Finding out whether your practices result in good hires is not only basic to good management but the only real defense against claims of adverse impact and discrimination.
Other than white males under age 40 with no disabilities or work-related health problems, workers have special protections under federal and state laws against hiring practices that may have an adverse impact on them.
As a practical matter, that means if members of a particular group are less likely to be recruited or hired, the employer must show that the hiring process is not discriminatory. The only defense against evidence of adverse impact is for the employer to show that its hiring practices are valid—that is, they predict who will be a good employee in meaningful and statistically significant ways—and that no alternative would predict as well with less adverse impact.
The fact that the vendor that sold you the test you use has evidence that it was valid in other contexts is not sufficient. In addition to the time and effort of hiring, my colleague Matthew Bidwell found, outside hires take three years to perform as well as internal hires in the same job, while internal hires take seven years to earn as much as outside hires are paid.
Outside hiring also causes current employees to spend time and energy positioning themselves for jobs elsewhere.
It disrupts the culture and burdens peers who must help new hires figure out how things work. None of this is to suggest that outside hiring is necessarily a bad idea.
But unless your company is a Silicon Valley gazelle, adding new jobs at a furious pace, you should ask yourself some serious questions if most of your openings are being filled from outside. Employers are obsessed with new technologies and driving down costs. A different approach for dealing with retention which seems creepy to some is to try to determine who is interested in leaving and then intervene. Vendors like Jobvite comb social media and public sites for clues, such as LinkedIn profile updates.
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Whether companies should be examining social media content in relation to hiring or any other employment action is a challenging ethical question. On one hand, the information is essentially public and may reveal relevant information. On the other hand, it is invasive, and candidates are rarely asked for permission to scrutinize their information. Hiring a private detective to shadow a candidate would also gather public information that might be relevant, yet most people would view it as an unacceptable invasion of privacy.
When we turn to hiring itself, we find that employers are missing the forest for the trees: Obsessed with new technologies and driving down costs, they largely ignore the ultimate goal: making the best possible hires. It costs nothing to post job openings on a company website, which are then scooped up by Indeed and other online companies and pushed out to potential job seekers around the world.
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Employers may simply be fishing for candidates. Because these phantom jobs make the labor market look tighter than it really is, they are a problem for economic policy makers as well as for frustrated job seekers. Companies should take ads down when jobs are filled. Trimming recruiters, who have expertise in hiring, and handing the process over to hiring managers is a prime example of being penny-wise and pound-foolish.
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This is based on the notion that something may be wrong with anyone who wants to leave his or her current job. The number one factor that would encourage the former to move is more money. For active candidates the top factor is better work and career opportunities. More active than passive job seekers report that they are passionate about their work, engaged in improving their skills, and reasonably satisfied with their current jobs. They seem interested in moving because they are ambitious, not because they want higher pay. I know of no evidence that passive candidates become better employees, let alone that the process is cost-effective.
If you focus on passive candidates, think carefully about what that actually gets you. Better yet, check your data to find out. It seems like a cheap way to go, but does it produce better hires? Many employers think so. A downside to referrals, of course, is that they can lead to a homogeneous workforce, because the people we know tend to be like us. This matters greatly for organizations interested in diversity, since recruiting is the only avenue allowed under U.
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The Supreme Court has ruled that demographic criteria cannot be used even to break ties among candidates. Tata is an exception: It has long done what I advocate. For college recruiting, for example, it calculates which schools send it employees who perform the best, stay the longest, and are paid the lowest starting wage. Contrary to the popular belief that the U.
Unfortunately, the main effort to improve hiring—virtually always aimed at making it faster and cheaper—has been to shovel more applicants into the funnel. Employers do that primarily through marketing, trying to get out the word that they are great places to work. Organizations are much more interested in external talent than in their own employees to fill vacancies. Here are the top channels for quality hires. Much better to go in the other direction: Create a smaller but better-qualified applicant pool to improve the yield. Every application also exposes a company to legal risk, because the company has obligations to candidates not to discriminate, for example just as it does to employees.
More than a generation ago the psychologist John Wanous proposed giving applicants a realistic preview of what the job is like. That still makes sense as a way to head off those who would end up being unhappy in the job. Marriott has done the same, even for low-level employees. During the dot-com boom Texas Instruments cleverly introduced a preemployment test that allowed applicants to see their scores before they applied.
How to determine which candidates to hire—what predicts who will be a good employee—has been rigorously studied at least since World War I. The personnel psychologists who investigated this have learned much about predicting good hires that contemporary organizations have since forgotten, such as that neither college grades nor unstructured sequential interviews hopping from office to office are a good predictor, whereas past performance is.
There is remarkably little consensus even among experts. There is general agreement, however, that testing to see whether individuals have standard skills is about the best we can do. Can the candidate speak French? Can she do simple programming tasks? And so forth. But just doing the tests is not enough. The economists Mitchell Hoffman, Lisa B. While reading the book Leadership for Dummies, I came across the concept that a leader needs three things to succeed:. It seems rather straightforward, and sounds similar to the refrain about information e. The more I thought about this situational leadership concept, the more powerful it appeared to me in terms of how people succeed or fail.
You can be a terrific employee, with all the winning attributes to be successful, but you know what? Things have to gel; people must gel. Different organizations have different norms, values, beliefs and accepted modes of behavior, and not everyone meshes or works well everywhere. Not everyone necessarily wants to work at round-the-clock Wall Street, on everyday Main Street or even in the bureaucracy of Washington, D.
Studies by hiring consultant Bradford Smart show that these hiring disappointments happen three out of four times a leader is hired! Under this definition, the optimal workforce is at the intersection of all three The right people in the right place but at the wrong time might be thought of "The Bench" - parts of the workforce that are not utilized currently, but will be when demand increases.
The wrong people in the right place at the right time are parts of the workforce where there is a demand for work, but those people are not the right people to perform the work. These might be parts of the workforce that are now misaligned to the organizational strategy. The right people at the right time, but not in the "right place", are parts of the workforce that would be able to do the work if location wasn't a requirement.
If the work could be performed remotely in any way, it might fall into this segment of the diagram above. This includes offshoring, telework, and outsourcing; but it also includes those parts of the workforce that just happen to be located in a different office, or a different department.