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Continued Shortages (from our vault)

(July 14, 2000) It's clearly going to take Wall Street some more time to understand that there has been a major shift in the labor supply. Today's news, which shows layoffs and unemployment claims trending downwards in spite of a softening economy, is an indicator of the shift. Unfortunately, the markets continue to interpret the data as if things remained unchanged.

The notion that labor shortages are a permanent face of the economy is so counter-intuitive that being slow to get it is completely understandable. There are no historical precedents for the current situation. As we all know, market prognosticators (and pundits in general) depend heavily on history for reassurance. In unprecedented shifts, information flows become corrupt and traditional sources lose their value.

The stock markets and there analysts, however, are not going to remain permanently blind.

As we've been saying for years, even if the economy grows at depression levels for the next decade (and that is very unlikely), the labor shortage will become so dramatic that it will cause changes in the fabric of our lives. The move to control the situation will result in the broad adoption of a Chief Technical Officer style role in most medium to large companies. Work weeks will expand. Definitions of career, loyalty, compensation, family, community, education, productivity and work itself will shift significantly.

As a result, companies providing services that attack the problem will ultimately become high flyers. The emergence of Information technology and the office of the CIO were at the root of the growth of EDS, the big five consulting shops and Computer Associates (among others). We have no difficulty imagining similar sized operations rooted in the solution to the labor shortage.

In HR circles, the attention is shifting to "retention" (recruiting your own people every day). While retention programs may stem attrition to something less than the 30% that plagues some large Silicon Valley firms, it's a Band-Aid that doesn't address the growth question. Certainly, retention coupled with acquisition can be used to slowly increase headcounts (and we expect a flurry of talent based acquisitions). Like pundits, you can depend on HR to dig in to history in the search for an answer.

In the long run, the question will be the acquisition and development of a real Human Asset Supply Chain. The metaphor itself is beyond the comprehension of most contemporary HR practitioners. The idea that people are really a capital asset to be cultivated for long term return, something that inventory managers get about the cans on a shelf, is going to emerge as slowly as the change in Wall Street's thinking.

But, it will emerge.

- John Sumser © TwoColorHat. All Rights Reserved.

End To End

(July 13, 2000) Even in our relatively contained industry, the cultural differences between players based on size, industry (in HR), region or position within the E-HR environment, tend to subvert conversation. Although we all seem to use the same words, it turns out that we're talking about different things. It appears that two participants in a dialog can walk away from an agreement with inverse understandings of what's been decided.

After our recent article about profiling systems, we got a huge pile of response notes. They seemed to range along two axes initially. On one dimension, the mail praised or damned the analysis (i.e. profiles are useful or they're not). The other dimension involved the correspondent's definition of profiling (whether they are created by recruiters or candidates).

It turns out that the term "profile" is used differently by different companies. In some places, the term means "synthetic resume prepared by an analyst". In other settings, a profile is "a candidate generated data package that is easier to search usefully'. In the staffing industry, huge fortunes have been created by companies that prepare manual profiles on each candidate. In HR, many hyper-effective recruiting departments evaluate resumes with standards. The approach works in some settings and fails in others.

The language discrepancies go well beyond profiling. Bots, spiders, intelligent agents, applicant tracking, workflow, job posting, job board, recruiting service, search firm, hiring manager all seem to have context sensitive meaning. It's a problem that few vendors are able to tackle effectively. The industry's core institutions take little notice of the wide variety of practices and meanings.

The worst of all is the fabled "end to end" solution. The further we dig into the marketing hype surrounding comprehensive solution providers, the more we're left with an image of two elephants facing away from each other but joined at the back end. From what we can tell, the only two ends involved in "end to end" solutions belong to the vendor and the customer. By cleverly facing away from each other, they can pretend that they have solved a problem.

For the most part, marketing departments in the vendor community are faced with a difficult challenge. At the point that they cap their definition of their target markets, investors can begin to see the limits to their growth. While this creates endless problems in the conversation between customer and customer support, owning up to finite limits in market capabilities is a death rattle for growth forecasts. We don't anticipate an end to the confusion anytime soon.

- John Sumser © TwoColorHat. All Rights Reserved.

Underlying Assumptions

(July 12, 2000) It's easy to forget the most important part of Recruiting: having enough money to pay the people you hire. Not surprisingly, having enough money and valuing the people you hire correctly is the central issue in making more money to hire more people. Although it's possible to have lots of money and not be able to hire the right people (this happens in Silicon Valley), for most employers the principle can be taken at face value.

In a publicly traded company, an additional component of this equation involves the management of the company's stock price and its expected market performance. Since company stock is often issued as a part of retirement programs (in hipper operations, it's used to supplement actual compensation), everyone in the organization (and all of its potential members) is interested in Wall Street performance. With over 50% of the population identifying themselves as investors, the scrutiny in this area is much higher than it used to be.

In smaller companies, the sense of financial well being comes as a part of the payments and collections cycles. Since business cash flow and profitability are elusive topics in smaller organizations, the behavior of the management team (when handling financial matters) is a critical component of establishing a high momentum attractive workplace.

In today's environment, Recruiters are typically insulated from the questions of financial health and weakness of the operation. As it was in Victorian times, some topics simply aren't discussed with strangers. Subconsciously, the organization eliminates the problem by keeping the Recruiters in the dark or delivering a packaged story for them to tell. While a significant percentage of recruits are interested in the financial stability (at least) of the enterprise, Recruiters are buffered from the information.

This is one of the dynamics that will undergo profound change in the coming years. As Recruiting performance is more directly tied to the well being of the overall unit, they will come to depend, even more heavily, on the success of the business while contributing more measurably to it.

This implies a fairly rugged shift in internal politics. Non-contributors who are fed a story can be discounted. Participants with a face value stake in enterprise success have political clout. The emerging generation of Recruiters (and their leadership) will be dynamic players at the strategic decision making table.

- John Sumser © TwoColorHat. All Rights Reserved.

Profiling

(July 11, 2000) We see lots of schemes that replace resumes with profiles. In theory, it's a great idea. If a Recruiter would simply take more care and patience in the actual specification of the job to be filled, and, if potential candidates would simply fill out the required details, life would be easier. We're certain that there's a team deep within the IRS who believes that more of the right detail would make their lives easier too.

Unfortunately, the profiling approach misses the shift in the underlying economic equations. Recruiters have less time these days and are more likely to produce better results by concentrating on the problem at a higher level of detail. Potential candidates (as we mentioned yesterday) are in the catbird's seat. Profiling won't work, in the long haul, because the approach places too much additional overhead on both sides of an overburdened equation.

When we say the resume is dead, we mean that the requirement for a candidate to create a marketing document is history. In a seller's market, candidates don't give freely, they take. Almost all of traditional and transitional recruiting assumes that the candidate will continue to give freely as a component of the search.

That's not to say that profiling can't have a place in the Recruiting process. Just that it is hardly a panacea. Profiling is useful in the process of filling jobs for which there is still competition between candidates. It simply doesn't work when the jobs to be filled are staying vacant. In those cases (an increasing majority of slots), the question boils down to "How do we entice the candidate to give us the information we need?"

It's a time of transition in Recruiting techniques and the overall role of Recruiting in the corporation. As we begin to understand the complexities of the new environment several things are becoming obvious:

What used to be simple is now complex.
What used to be complex is now simple.
What used to be tactical is now strategic.
What used to be strategic is now tactical
Many tools work well for early adopters.
The very same tools often work badly for the late adopters.
The competition in Recruiting rewards out of the box thinking.
Out of the box thinking becomes conventional in under a year.

Meanwhile, capable and honest business people are trying to make a difference on both sides of the equation. This creates an environment in which the most important part of picking any vendor is a combination of the relationship and the likelihood that it will endure over time as a competitive advantage. While candidate generated profiles are less useful than advertised, they are the foundation of an environment in which the profiles generate themselves.

- John Sumser © TwoColorHat. All Rights Reserved.

Interviewing

(July 10, 2000) In Silicon Valley, there are 1.06 jobs for every employable resident. The basic requirement for employment is an observable (not necessarily regular) pulse. The basic question a candidate asks in an interview is "What are you going to do for me?" Usually, wages, benefits and perks are discussed well in advance of the details of the job.

In the mad escalating spiral of cross recruitment, lots of things are changing. The power dynamics of the employment relationship have shifted. Although the differences are clearest in the Valley, the trend is across the board. What outside observers often fail to grasp is that Silicon Valley is a bellwether for the rest of the English speaking world.

In a permanent labor shortage (a growth economy with a stable population), employee arrogance is a fact of life. Values created in Depression era parents and their offspring are withering away as the need for workers outstrips the supply. Multiple job offers, reduced to filling chairs, breeds an environment in which the Recruiter's responsibility should be seen as growing.

Most often, however, working Recruiters are buried in the problems associated with getting a candidate to an interview. The level of responsibility-taking engendered by this challenge is in decline. Rather than stepping up to the idea that a Recruiter is responsible for the success of the candidate, the opposite is becoming increasingly true.

In the good old days, this was appropriate. Foisting an unprepared candidate off on an interviewing manager allowed the process to focus disproportionately on a candidate. In those days, the most prepared candidate often got the job by demonstrating the initiative necessary to research the target employer. This was the secret behind the wild success of the "What Color Is Your Parachute" school of thinking.

These days, the secret to successful interviewing (which now means finding a way to hire the person you're interviewing) is helping the candidate to prepare for the interview. Since the first subject will be "What Can You Do For Me (The Prospective Employee)?", the Recruiter can give the candidate an edge in the interview by pointing out critical items and ideas on the web. A simple page, tailored to the requirements of each job, that shows relevant sections of the annual report, workplace amenities, supervisory hot spots and so on makes the difference.

Using the web, a Recruiter can become a behind the scenes advocate for the candidates who are headed off into an interview. Companies that execute this strategy understand that the interview is no longer a "trial by fire". It is a confirmation of the Recruiter's contribution.

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