Business: Hiring in a Noisy Employment Market
Some suggestions for breaking out of the rat race
Audience: HR and hiring managers
Contents
Executive Summary
Introduction
Tuning the standard process
Alternatives to the Standard Process
Proactive, Deliberate Candidate Sourcing
· Proactive candidate sourcing
· Advantages of proactive talent sourcing
Employee Referrals
Social Media Profile Gathering
Other Methods of Talent Acquisition
Conclusions
Executive Summary
Current hiring paradigms are beset with a range of issues that tend to make the entire process long, ineffective and error-prone. Here, we briefly survey both conventional and emerging trends in hiring processes in an effort to make the process more rapid and successful. We cover tuning and optimizing the standard conventional practices, some alternatives to them, proactive candidate sourcing, employee referrals, social medial profile gathering and other methods of talent acquisition.
Introduction
Previously, we explored some of the issues with current hiring practices. The three principal concerns were:
A very serious bug in the income tax legal system (Section 174)
A tendency for applicants to apply for as many jobs as they possibly can
Companies receiving too many applications for positions counter by using applicant tracking systems (ATS) to thin out the applications down to a workable number, possibly with an extremely high error rate
These three have a very large negative effect on hiring. The tax law issues are pervasive, and affect almost all companies.
The second two in particular tend to create a positive feedback loop; more applications means more machine filtering, which leads to even more applications, etc. ad infinitum. The result is a very noisy hiring system, one we feel is broken. We aren’t the only ones who feel that way.
Common solutions include using staffing companies to fill open slots, hiring contractors on a “try and buy”, also known as “contract to hire”, basis, where contractors are tested in positions, and offered regular jobs if they are successful. While both of these options can help, they aren’t really universally applicable.
We have developed a few alternatives, and will describe them below. As is always the case, each company’s culture, priorities and needs are different; we rather doubt there is a single good solution, but there might be a mix of solutions that can serve well enough.
Tuning the standard process
The most conservative and least controversial option, and one we hope all companies are already doing, is to examine their hiring practices in detail, developing robust and objective metrics for measuring their individual process steps and the overall hiring process. It helps enormously to break the entire process down to a series of steps, perhaps using a flow chart composed of irreducible individual steps. We can expect larger companies to already have some sort of written hiring policies in place; however, it is not necessarily true that they have their process down to the level of detail to where they can do real engineering on their hiring process, something we think should be routine.
T. J. Rodgers, the famously contrarian maverick founder of Cypress Semiconductor and longest serving CEO in the industry, wrote a wonderful book called No Excuses Management which can be borrowed from the Internet Archive, an excellent excerpt from which was published in the Harvard Business Review. The article should be early required reading for every hiring manager. TL;DR: devise an engineerable hiring process, tune it until it works right, and stick to it religiously. We quote from the article’s lead-off paragraph, emphasis ours:
If everyone in our company made ordinary business decisions in a commonsense way, we would be unstoppable. It turns out that very few people, at our company or anywhere else, make ordinary business decisions in a commonsense way. Most companies don’t fail for lack of talent or strategic vision. They fail for lack of execution—the mundane blocking and tackling that the great companies consistently do well and strive to do better.
He goes on to describe their way of hiring, and how he demanded and enforced the system, presumably after it had been fine-tuned and engineered. We should point out, having worked in the semiconductor industry ourselves, that it is an extremely specialized type of manufacturing with virtually no room for error. Thus, not everything Rodgers writes about will be applicable, for example, to a software development company. The generalities remain, however: companies need a well-defined process they can measure and improve, step-wise.
We broke down a typical application process, from the point of view of an applicant wishing to improve chances of securing a job, in two previous articles (part 1, part 2), and discussed overall chances of getting an interview with an idealized company and an idealized applicant in another article. The takeaway from the last article is that the chances of getting an interview for a good candidate are not very good, necessitating a very large amount of unpleasant, unpaid labor, to wit, many well-researched applications on the part of a job seeker. The process is grueling and arduous.
The rise of the twin phenomena of mass applications and heavy filtering by ATS automation came together, and we argue that the two form a positive feedback loop and mutually reinforce each other. This makes for a very noisy job market, poor candidate experiences, poor hiring results, unhappy people everywhere.
This brings us to perhaps the most important, tunable step in the hiring process, and the only one where we can perhaps predict some real progress: tuning the ATS and making sure its results are well within expectations. First, a company wishing to do this needs to figure out exactly what they expect the ATS to do and how that can be measured and checked. It isn’t enough to say, “HR has time to look at no more than 20 applications per position, so we set it so it does that”, or anything like that. Doing this over time virtually guarantees mediocrity, in both workers and, eventually, managers.
ATS systems come in many varieties, some much more modern and powerful than others. To make things simple, we differentiate between two main types of ATS: dumb ATS, which does little more than count keyword matches between the job description and the applicant’s CV, and the (possibly) smart ATS which has some, probably rudimentary, synonym matching and language meaning understanding. The latter may be enhanced via artificial intelligence, which actually tells us nothing about what it does.
Companies still using ATS need to continually check it against humans doing the exact same task. This is elementary quality control, and, regrettably, is both time-consuming and expensive. Thus, the number of quality control experiments must be controlled, and designed in advance to glean as much statistically valid information about the performance of the system as possible. If the results of machine-selected applications and human-selected applications are too different, the ATS needs tuning until they are approximately the same.
The other observation we are moved to make about ATS is that we think its real value lies in sorting out unqualified candidates. We do not think such systems are capable of selecting the best candidates, and this stems from our own experience with AI. Existing artificial intelligence systems simply don’t have this capacity, and are unlikely to have it any time soon.
Uncritical use of ATS, especially with default factory configuration, are most likely to select candidates from the middle of a multivariate bell curve, because that’s what they are programmed to do. We think it statistically very unlikely that these selections correlate with the best candidates, and very likely they will pump out mediocre choices, to the long-term detriment of the company that uses them.
We also find it likely that properly tuning an ATS system so that it matches human expectations will be expensive enough to make decision makers think twice about using the systems at all. Data on this fact is rather difficult to find. We wonder why?
We have one final observation about hiring, with or without ATS. At the end of the process, after candidates have been interviewed, the results gathered and examined, there is still a decision to make: who gets hired? Rather than have an objective, pre-designed scoring system, with the job offer going to the highest-scoring candidate, most hiring managers make this decision, perhaps with some consultation from team members and colleagues, with their instincts. In short, they use their gut. This is a non-repeatable, non-measurable process step, and the most important. It is famously unreliable, and not recommended.
Alternatives to the Standard Process
We now turn to alternatives to the standard process. To do so, we make a few reasonable assumptions.
Companies are rightly suspicious of exaggerated or even false claims in candidate CVs, and especially so in light of the recent rise and wide availability of artificial intelligence, which happens to be very good at writing advertising copy, i.e., resumes.
Companies must be able to differentiate between good and bad candidates, and in particular, need to be able to score candidates in some objective manner for their fitness to perform a particular job, and their likelihood of fitting in with the corporate culture.
Their hiring process must be fast enough and nimble enough to get attractive offers to good candidates rapidly, before the competition can hire them instead.
Their hiring processes must comply with applicable laws and regulations and company hiring policies.
HR hates receiving up to 1000 applications for a given position and has made it clear to senior leadership that they cannot process that many, nor do they believe posting job ads is an effective way to initiate a candidate search.
Senior leadership is deeply suspicious of applicant tracking systems and prefers not to depend on them.
Senior leadership wants a much more pro-active hiring system than the highly reactive standard system.
These assumptions are not earth-shaking nor particularly profound. Instead, they are simply good common sense.
Available alternative methods of hiring include proactive candidate sourcing, employee referrals, social media profile gathering, industry events and conferences, general networking, and outsourcing.
Proactive, Deliberate Candidate Sourcing
We detail this hiring technique in a dedicated article. To us, this method shows the most promise for several reasons.
For one thing, candidates are frequently advised to tune their resumes to match job descriptions as closely as possible. There are automated tools specifically to aid in keyword matches, for example. Companies should expect that a large fraction of incoming application CVs have been carefully tuned for keywords, skill sets, meaning matches, and tone. While this can be beneficial, there is a strong temptation to edit a CV until it is a near perfect match for the job description, to the point of exaggeration or even deception.
Companies that make the switch to a primarily pro-active hiring system have no need to post employment ads. Instead, they prowl LinkedIn and Indeed profiles in search of candidates who already qualify for a job they have in mind. There will be immediate cost savings from not having to buy employment ads.
Additionally, since the jobs they open are not announced in advance, there is no more motivation for resume-tweaking to match job descriptions. As this method gains traction, potential job seekers need only keep their online profiles up to date and well-written, presumably with a more honest account of their real work history. In fact, since they will no longer have specific job descriptions to match their CV to, they cannot anticipate new job openings and so must use their online profiles as attractors to companies.
Proactive candidate sourcing
To put hiring on a proactive basis, senior leadership needs to set up regular, periodic practices designed to reliably anticipate hiring needs over the next quarters and next year. Implementing proactivity requires:
Each manager with direct reports is required to create a plan to replace those direct reports in case of termination of employment, whether voluntary (quitting) or not (layoffs and termination). This plan forms one of the deliverables the manager owes his/her manager.
Each manager, upon the first realization a new position will be needed, creates a simple proposition document, specifying the future need and at least some outline of skills that will become necessary. The format of such a proposition should be standardized and lacks detail, instead, specifying a class of skills needed. The proposition is delivered to the manger’s management for approval. Note that this proposition is at this point vague and intended for the later use of HR. If the manager’s manager approves the proposition, it is forwarded to HR.
HR gathers these approved, future propositions and begins building a talent pool of potential candidates for later consideration. Sourcing specialists in HR scan LinkedIn, Indeed and other available sites where skilled people post their CVs, and make lists of likely candidates.
As the hiring manager gradually narrows down the exact skill set required, he/she builds a job description out of the original, less detailed proposition. When that job description is more or less completed, he/she consults with HR to determine how many members of the talent pool fit the draft job description well enough to be approached and possibly interviewed for a job. It is at this point that the hiring manager reads the profiles of the available candidates and makes up or down decisions on which to interview.
If there are sufficient candidates from the talent pool to proceed, the hiring manager requests formal approval to open up a position from his/her manager.
If approved, the position is formally opened by HR, who then contacts the preselected candidates for screening and, later, interviews.
Candidates are interviewed and scored via a pre-determined, objective process that includes both skill set fit and culture fit. The highest-scoring three candidates are offered the job, one at a time, in order of their scores. One is then hired.
This process, suitably tweaked to fit a company’s priorities and needs, places hiring on a very different plane than what is done now with the standard process. It is far more efficient, more secure and more fair.
Advantages of proactive talent sourcing
One significant advantage is the obviation of the need for over-specified job descriptions. So called “kitchen-sink” jobs, stuffed with more requirements than three people could reasonably be expected to accomplish, will be a thing of the past.
Candidates don’t know in advance they are being examined for possible future contact, obviating their need for matching their resume to a particular job description and incentivizing them to make their profiles as descriptive of their actual experience as possible. When they are approached for a position, the hiring company is already serious and prepared, has a small number of candidates under consideration, and so candidates will have a much more positive experience, and far less wasted time.
Managers must go through a deliberate process of anticipating future hiring needs, and have time to go from a vague, categorical potential to a specific job description, in consultation with HR, who has created a talent pool and therefore knows what skills are available in that pool. Senior management has ample time to consider future hiring needs, prioritize and fit into personnel budgets.
The newly created position is never made public, and is only transmitted to pre-vetted candidates who presumably already possess the needed skill sets. Competing companies thus know nothing about what positions the company hires, improving security and competitive advantage.
Use of ATS more closely resembles why the systems were designed in the first place; to track applicants as they move through the hiring process, instead of filtration of mass numbers of applicants. Human beings do the selection of choice candidates through a progressively more detailed process, starting with the development of talent pools, some of which are reusable.
This type of system critically depends on the creation of new types of HR specialists, the sourcing specialist, who is experienced and adept at reviewing online profiles, can make spot consistency checks, and is primarily in the business of constructing talent pools for various job categories. Automation of search and talent pool development is possible (LinkedIn, for example, has an API along with strict usage requirements). Stepwise refinement of talent pools is likewise automatable.
Employee Referrals
This method, already in wide use, depends on current employees either referring people they know in general (“Tom’s a smart guy and a great worker, a former colleague of mine.”), or in response to a specific future position, the requirements of which are developed well enough to share with employees.
It has the advantage of at least some degree of pre-qualification, since a current employee with a vested interest in the future of a company has recommended the candidate. Some companies offer monetary bounties for successful referrals.
It has the disadvantage of tending to homogenize the culture of a company, since people tend to recommend others similar to themselves. For this reason, employee referrals are a component, but not a complete solution, to hiring concerns.
In general, we feel this is a beneficial and efficient way for a company to grow its work force organically. It must be combined with other personnel harvesting methods so that the company has enough diversity to remain competitive.
Social Media Profile Gathering
This method can be quite simple. As part of a company’s permanent HR website, a page with a simple form is maintained. Interested parties fill out their name and add their LinkedIn profile URL. The automation on the website then sends a message via LinkedIn requesting confirmation, and, if received, adds the candidate to their general talent pool for possible future use.
This method, while simple, depends on high enough traffic to the company HR site to develop a large candidate pool. Advertising or posts to LinkedIn can help drive this traffic.
Also, such talent collection lacks specificity, which can be partially alleviated by specifying categories of skills the company is likely to need soon, such as developers, project managers and scrum masters. Regularly editing the page with current or future needs can help tune the talent pool over time, and allowing candidates to specify a lifetime for their listing at sign-up can further tune the talent pool.
A further advantage of this method, and contrasted to long resume and job history forms some companies use, is that it standardizes using candidates LinkedIn profiles, making the process simple for them and convenient for the company. It’s much more efficient for the company to store a name, a few categories and a LinkedIn URL than the data in long job history forms.
We’ve filled out a few such forms in the past, and stopped doing it long ago. It takes too much time and is nearly impossible to maintain, whereas maintaining one’s LinkedIn profile is relatively simple, centralized and more-or-less standardized.
Other Methods of Talent Acquisition
We’ll simply list a few further possibilities and discuss them in detail in future articles.
Industry events and conferences. These have their place, and, when used in conjunction, say, with social media profile gathering can be used from time to time to collect potential future candidates. Our recommendation is to make the events both entertaining and informative, so that people want to sign up.
General networking. This amounts to the individual networks of employees on sites like LinkedIn and Indeed. When a company has a hard-to-find, unicorn skill set, they can appeal to their own employees to see if they know anyone with that skill set in their own networks. Employees can check their contacts, and, if they choose, contact members of their private networks to gauge interest.
Outsourcing. We believe, motivated by ageism, nightmarish, long job hunts, constant, machine-generated rejections, ghosting and other unfortunate practices, that more and more people will choose to spend that nightmare time developing their own small businesses and making themselves available as B2B service providers.
Companies who need various skill sets would be well-advised to begin setting up internal processes to smoothly make use of this talent pool. Given that demographic trends in the West and other places around the world are heading downward, there will be shrinking numbers of people available for various skill sets. Outsourcing has both advantages (fractional, as-needed employment) and disadvantages (higher hourly prices) which we have written about previously and will revisit again soon. HR departments can certainly be expanded to handle these tasks and relieve Purchasing from the burden of managing these relationships.
Conclusions
Successful companies in the near future will need to re-think their hiring practices from the ground up. The old ways are growing ever more ineffective and need to be replaced, most likely with a collection of new methods like those discussed above.
We’ve discussed here optimizing the conventional process, mostly in the context of getting a little more use out of it while developing more robust alternatives. By making a few relatively simple changes, companies might be able to get this old dog to still do tricks.
For acquiring employee talent, we believe a proactive process as described above can be developed. It will involve several new practices, such as routine anticipation of future skill needs, planning and development of talent pools. This method is a proactive update of the standard method, and de-emphasizes advertised job listings in favor of quieter development of talent pools. In the process, it also de-emphasizes ATS as applicant filtration, and returns it to a much more appropriate tracking tool.
Employee referrals, already a large part of talent acquisition, should be continued. Simplified social media profile gathering can help automate development of talent pools and ease the amount of work required to build up a proactive employment system.
Last, companies should consider making greater use of their own employee’s networks and outsourcing, particularly for shortage skills and unicorn workers. A combination of these methods and some diligent execution should allow companies to find the talent they need, but the development of these new methods needs to start now, before the competition wins the race.
Footnotes
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