The Decline of Corporate Elitism

When I was a kid, I always hoped and dreamed that I would get into one of those Ivy League schools. Unfortunately, I was a disaster of a student (and a ridiculously undisciplined Asian student to boot). Yes, I had well over a 4.0 GPA, took 26 total AP classes in high school, but I really succeeded by my ability to test well. I never studied, barely did my homework and didn’t read assigned texts. In short, I just happened to be really lucky. But I also didn’t have the drive that it takes to get into one of the elite institutions of higher learning. Those schools, like Harvard, Yale, Princeton and Stanford, were reserved for those voted “most likely to succeed” in their high school yearbooks.

Upon graduating from college (from what turned out to be an excellent, small, liberal arts college), I didn’t land that highly desired job in consulting or investment banking. Those jobs primarily came from colleges more elite than my own. So I fought and clawed my way into situations where I would learn and grow, eventually creating this blog not as a public space, but as a place to record my thoughts so I’d remember them in the future.

I now have the pleasure of helping my clients understand how strategy can impact all manner of HR, talent and service delivery outcomes. One of the most interesting in recent years has been a focus on understanding staffing outcomes in the college recruiting area. The old conventional wisdom has always been to get the most elite candidates from the most elite colleges. After all, these are the best and the brightest, and what CEO does not tell the world that they have the best and smartest team in the world? Unfortunately, this conventional wisdom does not work out for all it’s cracked up to be.

My favorite case study comes from a global financial analyst firm. This organization recruited from one of the Ivy Leagues for years, but ultimately they ran some analytics and discovered that the Ivy League candidates not only didn’t perform better, they often performed worse than candidates from “middle of the pack” schools. The most successful candidates (those promoted into management and eventually reaching executive ranks, those who had long tenure rates, and those who became great leaders and people managers), were often from public sector universities in “Po-dunk, Middle-of-Nowhere.” The analysis revealed a single striking characteristic difference: the sense of entitlement.

It turned out that candidates from elite schools were indeed smarter, but they also had in their belief system that they could do better – no matter where they were. There was not only a continuous striving to get to the top faster, but a sense of discontent no matter how good their present state was. This ultimately lead to early voluntary terminations in less than 2 years, and a striving for job/title inflation that was counter-productive to real experiential growth.

On the other hand, candidates from “Po-dunk” were so excited for the opportunity, happy they were in New York instead of “Po-dunk” and genuinely appreciative that they somehow got into one of the elite financial firms, that they worked their butts off and formed long term relationships with their companies. Ultimately, sticking around and putting in some real effort ensured that many of the “Po-dunk” graduates made it into executive ranks, probably as quickly as the elitists did (after 6 company changes).

Another customer, an engineering firm, found that not only did the school not matter (which would seem odd in engineering), but what did matter was how well this organization could form high quality relationships with Ph.D candidate advisors. A high quality relationship with a professor guiding many engineering Ph.D. candidates was a significantly better predictor of the new hire’s desire to put in hard work and stick around. After all, if your Ph.D. advisor got you and many of your predecessors an opportunity at a job, and they are all experiencing success, aren’t you going to do the same thing?

The point being that the old conventional wisdom isn’t the formula for recruiting success anymore. The pressure high school kids face these days to get set up for life by getting into the best colleges is also creating very bad precedent and expectations. Just the idea that they think they will be “set up for life” by getting into the right schools is turning off employers. More and more of my customers are doing deep analytics to understand where their top college candidates come from, and increasingly it’s not the elite schools. If you’re still following the old conventional wisdom, it might be time to revisit your strategy.

HR Technology Conference 2014: Recruiting System Thoughts

Overall, this year was one of the best years in a while for the vendor and show floor.  In my opinion, there were some significant areas where technology has finally started catching up with vision, and it was happening on a pretty broad level.  The smaller startup vendors from the last year have pushed the bigger players, creating a lot of positive movement.  More on that in another post.

Let’s start off with recruiting because…. well everything starts off with recruiting.

User Experiences:  
The idea that you can take any of the older recruiting experiences like Taleo, Brassring, PeopleSoft, etc and wrap a UX around it is fantastic.  Half of the candidate problem is process and interview experience, but it all start with being able to submit an application in the first place.  We all know when we’re in the never ending PeopleSoft application submission process because most of us have never actually gotten to the end of it.  Manager experiences are equally bad, and half of our organizations can’t get managers to use recruiting functionality because it’s so bad.  We have HRBP’s supporting them instead.

  • Jibe has been around for a few years that I know of, and they have an incredibly elegant candidate, manager and recruiter experience.    Jibe avoids all of that by cleaning up the experience, making it mobile and easy, and doing for a huge selection of ATS systems.  I do have some concerns with their laser focus on the user experience since at some point the vendors might catch up and make the UX overlay unnecessary, but for now and the next few years, there is a huge amount of opportunity for them.
  • Findly is an organization that I just don’t understand their core ATS differentiator, but they also have the ability to wrap a UX around Taleo, Brassring and SuccessFactors recruiting.  At this point they are only doing a wrap around for the candidate experience, but it’s pretty decent.
  • Many of the newer cloud ATS (including the ones mentioned below) have great UX – being architected in the last 5 years puts them far ahed of the old generation, and really makes it unnecessary to wrap a different UX around it.

Old vs. New ATS
One of the things I’m desperately trying to figure out is when the new vendors will be ready to fully take over the mantle from the older recruiting vendors.  We still have the old school, behemoth vendors with such robust and rich feature/functionality that deployment and maintenance of the applications just are not agile.  Then we have the new school of recruiting applications that are very agile, but don’t have nearly the depth in functionality.  Somewhere in the middle is a happy medium that allows 95% of our organizations to get what we need and manage staffing practices with the speed at which the employment market changes.

Just to name a few, we have Jobvite with good ATS adoption, but it’s obviously not Taleo in functionality, we have Smashfly who started in the referrals business and is trying to broaden functionality quickly, Hirevue started in interviewing and is also trying to grow into other areas.  All of the systems have gaps, and at some point the gaps are small enough that system viability is unquestionable over the old ATS.  Right now, this feels a bit like 2007 when the talent systems started buying each other ,but there were always clear strengths based on where the vendor’s original functionality was.  it took 5 years before end to end talent was truly viable.

Recruiting CRM:
I’m still seeing a pretty big gap in really capable recruiting CRM systems.  Integration to the truly powerful content marketing engines and really deep CRM that comes close to matching traditional CRM is just not there yet.  That said, there are recruiting CRM systems that do a great job, but there are not that many of them.

I’m pretty excited about recruiting systems this year.  I do think we’re in a transition phase where the old stuff looks a lot older this year, and the new stuff starts looking pretty good.  Next year should hopefully see more maturity and hopefully the start of the changing of the guards.

Big Data For HR & Recruiting: 2 Use Cases

Forget about Google.  One of the world’s favorite sites has got to be  “Let me google that for you.”  With the wondrous world of the internet and ubiquitous information, ubiquitous access through our mobile devices, and ubiquitous connectivity, whenever someone asks a dumb question in email, you get to just send them back a link to (since most of the time you don’t actually know the answer anyway – I can’t count the times someone asked me something I didn’t know but I gave them the answer after googling it.)  It’s a bit sad though, that we have such incredible access to information in our personal lives, but our access to HR information seems to be severely limited.  We are just starting to do cool things in HR to answer interesting questions about our employees, but in a couple of segments of the industry, it’s about to get completely fascinating.

(NOTE TO READERS:  I stopped writing about specific vendors a long time ago, but today I’m going to highlight a couple that I think are doing really great work – but it’s more about the work that I’d like to highlight, so don’t take this as a vendor plug!!!)

Oh, we love buzz words.  I know I’ve been writing about big data and social HR a lot this year.  If the last decade was about the shift from HR administration to talent management, the next decade is going to be about creating insights about our people and making them own their own development.  When we talk about information, Google, Yahoo, Microsoft have been creating algorithms to search data for years.  HR just hasn’t had to tools to do it.  Things are about to change rapidly.

Use Case 1:  Using Big Data to Use Your Employees:
Use your employees?  Oh that sounds terrible.  The reality of this is that it’s really cool.  A small company called Careerify ( started selling a product last year that allows you to easily grow the volume of high quality employee referrals you get.  What they do, is they allow employees to connect their Facebook, Linkedin, Google+, Twitter and whatever other networks they have, so that you can help them understand when they should refer someone to the organization.  Let’s say for example that you have an opening for an electrical engineer.  Careerify would help you push an internal campaign to your employees, perhaps sending them an email that automatically identifies people in their network who are electrical engineers.  It goes a step further though.  Because you might be linked to a number of the employee networks with a variety of data, you can target the location of people on top of jobs.  But it even gets better… let’s say you know you have a culture of people who are active, outdoorsy, and fit, and there is an electrical engineer who happens to be a bass fisherman and loves to skydive (based on photo tags in Facebook).  This EE would be scored higher than individuals without those interests.

The ability to mine employee networks (with their opt in) and present employees with easily selectable pictures they can click on to invite someone in their network to apply is almost too easy.  We all know that employee referrals are the fastest, highest quality, and lowest cost recruiting source we have, but we just never knew how to make it easy for the employee.  By using big data to reach into employee networks and analyze profile attributes and even tags and update activity, you could literally improve your core recruiting metrics (time to hire, cost of hire, quality of hire) in weeks.

Use Case 2:  Bringing More Information to Recruiters
To be totally honest, I’ve been trying to work out why recruiting is always ahead of the curve when it comes to HR technology.  I think at the end of the day it all has to do with the fact that it’s a function the business actually depends on.  If they (managers) don’t do performance reviews, their organization probably won’t suffer for months or years.  If they don’t fill the open seat though, their productivity is suffering the very next day.  A company called eQuest (been around much longer than Careerify) has been using big data to answer some of those questions around “why aren’t I hiring anyone right now?”  What is interesting and wonderful is the completely different approach organizations like Careerify and eQuest are taking.

eQuest looks at the market through job boards, and correlates your recruiting activity to activity in the market.  Basically, if that same electrical engineer position is still open in 60 days, eQuest can tell you what ever other company is doing differently.  For example, based on what is out on the job boards, you have 3 EE jobs open out of 50 in your local area.  It just might so happen that you are offering a lower compensation rate, so you are getting 60% fewer candidates than the average EE job opening (demand is up, but you have not adjusted to market yet).  Or, it could just be that in the last 6 months, there are fewer EE candidates even looking at and opening those job postings (supply is down).

Unlike Careerify who tries to solve the problem by making it easier for your employees to help you, eQuest tries to solve it by putting better data in your recruiter’s hands.  Both are completely valid mind you, just different approaches to big data.  With either technology, I actually think we are getting closer to for HR and recruiting.  When my internal recruiter asks me if “I know anyone,” I’d have to think about it.  But if Careerify asks me, and automatically sends me a clickable picture of 5 people who already match, I only have to think about whether I really want that person around or not.  On the other hand, if my recruiters are asking “Why the F isn’t anyone applying for this job?” eQuest can probably give you a pretty good answer as well.

The Permanent Record

Perhaps it was because I’m Chinese American and my Chinese parents were rather crazed about education.  I did graduate high school with a 4.2 GPA and considered myself an academic failure (still do in fact).  My parents used to threaten us that our grades and other bad things we did would go on our permanent records.  I’m sure some of the bad grades I got (B’s?) are stored somewhere, but the permanence of them is questionable.  If I tried hard enough, I could probably find a transcript, but who really cares?  The permanent record is only meaningful so long as anyone cares to look.

This changes once you get into the workforce.  You get a bad performance review and it’s going to follow you around in that company for a very long time.  One wrong comment in a meeting with the CIO and you are not living that puppy down for years.  But one can always move on, and most things don’t truly last forever, especially if you switch divisions or companies.  Pretty much, when someone calls your old company for a reference, there is about 10% chance that job and last date worked are the only tidbits of information anyone will get.  There are things that seem to last longer now…

Ok, admit it, sometime this year, you have Googled yourself to find out if your name is on the first page of hits.  I’m happy to admit it.  I probably search myself once a quarter, but it’s not some narcissistic thinking in the back of my mind that is driving me to do it.  I could care less that on a random friend’s web browser I’m 8 of the top 10 hits.  (yeah, don’t search for yourself on your own PC – Google and others have figured this out and move hits about yourself up apparently).  What I really care about is my reputation.  My Facebook, Linkedin, systematicHR, published articles are all out there.  I’ve had conversations and arguments on the web, all recorded on some server I have no control over.

That picture of me on Yammer pretending to be Vanna White at some client change management thing (there was a whole spin wheel for prizes and everything).  I’m horrified, but it is out there forever.  (Damn you Erin!!!)  I might do silly things that I regret later, but I manage myself pretty well that I don’t do stupid things.  Somewhere along the line, a recruiter will undoubtedly look at a candidate profile of me on Taleo or Brassring, or whatever, and see all the web tidbits that link back to me.  They owe it to their companies to get a complete picture of who I am and how I’ll fit into the organization.  I owe it to myself to make sure that it’s a realistic picture, and not one tainted by one or two events that will stain the rest of the image.  If the worst thing anyone ever finds is that I helped with some change management, I can live with that.


The Social Recruiting Process: What You Need to Know

Techniques being used to find and hire talent have changed significantly in the last few years and it’s quickly moving toward a social process. According to a survey from Jobvite, 92% of companies in the US used social platforms for recruiting in 2012. 73% successfully hired a candidate through social media – a drastic increase from 58% in 2010. Needless to say, your basic HR software will no longer do the trick.

The key to successfully navigating the social recruiting process lies in understanding the underlying paradigm shift inherent in today’s emerging technologies. Recruiting is no longer a static, controlled process within your company. Rather, it is a dynamic process of continuous online engagement with large pools of potential talent.

Continuous Engagement is Key

Social recruitment necessitates a shift in attitudes about the recruitment process itself. Finding job candidates is a part of your company’s online presence – the success of your social recruitment hinges upon the successful use of your social profiles as a whole.

  • Your recruitment process doesn’t start with a job opening and end with new employee placement. Job openings occur continuously over time, so candidate sourcing will always be a constant, long-term process.
  • Simply posting a link to your job opening won’t attract the best candidates. They need to be already visiting your company page on a regular basis for the industry-relevant content you post.
  • Instead of thinking about soliciting résumés on social media, focus on developing relationships with your social networks. Concentrate on presenting your company brand to a group of people who have the talent and skills you’re looking for, and engage those people on your social profiles.

Utilize Dynamic Content

Your online marketing strategies are dynamic; the content you post on your social accounts is interesting to your followers and elicits engagement.  When seeking job candidates, you want to employ the same tactics.

  • Your job postings should be just as welcoming as the rest of your page’s content. Job descriptions attract and engage qualified candidates when they are well-written and supported with extra content that describes your company’s culture and the intangible requirements and benefits of a position.
  • Boost your job posting’s drawing power by including video interviews with current employees and other supportive content. Post these on YouTube and imbed them into status updates for optimal views.

Every Platform is Different

While all of your online profiles should work to attract those looking for jobs from with your industry, the recruitment best practices vary with each social media platform, so good planning is important. Your strategy should be modified to work with each platform’s processes, demographics, and rules for use.

  • Twitter: Participate in industry-specific chats in order to find followers who could become invested with your brand and have knowledge within your niche. Compile a list of useful hashtags for your industry and use them to tag all of your job postings so that the right candidates can easily find them.
  • Facebook: Create a jobs tab within your company page and promote it amongst your other content. You can link your recruitment software directly to your jobs page to make applicant tracking easy and efficient.
  • Linkedin: Take part in groups and discussions relevant to your industry. Develop a community of qualified followers and post your job listings where the best candidates can find them.

Your strategy for social recruitment should revolve around consistent, active engagement with your networks and followers. Promote your company brand with dynamic content that will attract and engage followers within your industry. Finally, appropriately utilize the different social platforms in order to reach the greatest number of qualified individuals.

Megan Webb-Morgan is a web content writer for She writes about small business, focusing on topics such as Gen Y hiring. Follow Resource Nation on Facebook and Twitter, too!


Recruiting Engagement

So, I used to write this blog for me.  Honestly, I could have cared less that anyone was reading it.  It has been a great exercise for almost 6 years – forcing me to continuously thing and read and research.  I’ve enjoyed writing over 1000 posts and think of it as a fairly significant achievement.  But I’m quite honestly tired of it.  I no longer do it for me, and I don’t have the time or energy to invest in doing the twitter thing, or networking with other bloggers – all the things that seem to make for successful blogs these days.  It’s just not fun at the moment.

I was watching a recent HBR video ((Harvard Business Publishing Videocast, The Path to Peak Performance.  Dr. Edward Hallowell.)) that did talk about emotion as one of the critical drivers of success.  He pointedly asserted that “working harder” was in no way a meaningful path to achieving higher performance.  Instead, the right people in the right jobs who were emotionally invested would create success (note that he didn’t call it engagement, but that’s what it is).  He also noted that this involvement of emotion in the equation seemed to have a balance between work and play.  That is not to say that people “play” at work, but that emotionally, the work was fun.  I’ll admit that I often do have fun at work.  I enjoy my projects and I enjoy creating.  But I think that many of us have people in top positions in our organizations that are not truly having fun.

This is an interesting departure from prior discussion of engagement.  Where before we could always create engagement, in this scenario, “fun,” emotional investment seems to be created more from within than anything we in HR can do.  What HR can do is put people in the right jobs in the first place, and then our employees have a chance at this concept of fun and play.  That the significant part of the engagement equation actually lies in selection and job placement before any of our engagement surveys or tools is deployed is a bit troubling.  After all, we don’t measure our recruiters on engagement or fit to position.  We’d like to think they are thinking in those terms, but we are measuring our recruiters on fill rates and time.

I do genuinely love what I do.  I think I’m good at it, and I find the work quite interesting.  My clients generally like me with the occasional exception.  I think I may be one of the lucky ones.  In my last 2 jobs, I’m pretty sure there weren’t positions open for me.  I happened to finagle my way into chatting with the right person, and they’d find a way to get me into the organization.  Most people tend to interview for jobs, have to take the job that they are offered that matches what they need to get paid.  The hope is that their skills, compensation threshold, and interests all collide at the same time, but realistically that’s unlikely, isn’t it?  Our gatekeepers are our recruiters.  We need to do a better job of not only measuring fit from a skills and income perspective, but also from an emotional interest perspective.  Our employees who are going to succeed are going to do so not because we figured out how to engage them, but because we got the right person in the right job and gave them the best opportunity to inspire themselves.

Behavioral Non-Interviews

Remembering back to college admissions days (which many of you might have kids going through that right now), one of the best parts of the whole process is doing the college tour thing and doing interviews at the various prospective schools. For 4 year degrees, the risk of not performing well on the interview is probably minimal, but it’s a stressful time anyway. There’s a very well known medical school in the U.S. that requires an interview for all of its candidates, and the interviews routinely take about 10 to 15 minutes to conduct. Never has an interview been known to take more than 30 minutes, God forbid we actually find out that much about our candidates. In truth, you get the tour of the campus, then you are seated with a number of other prospective students while you wait your turn to be called in for the interview. You could be sitting in there for minutes, or hours waiting, after which you go in for your freakishly fast 10 minutes where you cover topics as mundane as, “How was your summer?” and “What kind of food do you like?”

These are obviously quite difficult screening questions, akin to the tense corporate lunch interview when you are forced to pick between coffee and tea after the meal. After the short 10 minutes, you are thanked and ushered out on your way with, “You’re all done for the day.” Most of us would be crushed. We would walk out, find a little hole to crawl into, and weep. After all, our hopes and dreams of attending one of the top medical schools in the world has just been dashed. What we didn’t know, was that was not the interview. Indeed, behind a glass window (think police headquarters) is the entire admissions committee watching if/how you interact with your fellow candidates. What type of a person are you? What do you talk about? Who do you talk to? After, “You’re all done for the day” there is a choice to be made. Are you the type who picks up and leaves? Do you sit around on your iPhone waiting for your ride to come pick you up? Do you start conversations with some of the other prospective students? In this case, the reality is to be literal – you are not supposed to stand apart and set yourself as better than the rest. Most organizations like to consider themselves “collegial” and excellent places to work where people trade information freely and willingly.

Unfortunately, since we don’t usually do panel interviews where we have multiple candidates being pitted against each other at the same time, it’s tough to observe whether or not a person is really  going to be collaborative once we hire them. And I don’t really feel like submitting my Director-level candidates to a 2 hour personality assessment test. Our only real feedback at current is the candidate’s interaction with the receptionist and other people who might be sitting in the lobby while they wait. However, we almost never ask the receptionist what they think, and they aren’t really trained to give an expert opinion anyway. What is important to us when we recruit is a combination of what a person knows, and who a person is. We are quite adept at figuring out what a person knows, but less skilled at knowing who a person is over the course of four 1-hour interviews.

Managers and recruiters alike are supposed to be semi-skilled at reading candidates, but unless we have a full-on behavioral psychologist interviewing, I’m not sure our read of candidates is anywhere near perfect. We all know that when we are in front of a hiring manager or presenting to a client or whatever, that we are on stage. Reading the candidate when they are “on stage” is not meaningful. It’s about how they act when they are not acting.

Recruiting Effectiveness Measurement

Last post I wrote about recruiting efficiency measures.  From the effectiveness side, we’re all used to things like first year turnover rates and performance rates.  Once again, we’ve been using these metrics forever, but they don’t necessarily measure actual effectiveness.  You’d like to think that quality of hire metrics tells us about effectiveness, but I’m not sure it really does.

When we look at the standard quality of hire metrics, they usually have something to do with the turnover rate and performance scores after 90 days or 1 year.  Especially when those two metrics are combined, you wind up with a decent view of short term effectiveness.  The more people that are left, and the higher the average performance score, the better the effectiveness., right?

Not so quick.  While low turnover rates are absolutely desirable, they should also be assumed.  High turnover rates don’t indicate a lack of effectiveness.  High turnover rates instead indicate a completely dysfunctional recruiting operation.  Second of all, the utilization of performance scores doesn’t seem to indicate anything for me.

Organizations that are using 90 or 180 day performance scores have so much new hire recency bias that they are completely irrelevant.  It’s pretty rare that you have a manager review a new hire poorly after just 3 or 6 months.  For most organizations, you expect people to observe and soak in the new company culture before really doing much of anything.  This process usually takes at least 3 months.  And while the average performance score in the organization might be “3” your 90 and 180 day performance scores are often going to be marginally higher than “3” even though those new hires have not actually done anything yet.  However, you’ll have a performance score that is advantageous to the overall organizational score making you think that your recruiters are heroes.  Instead, all you have is a bunch of bias working on your metrics.

I’m not sure I have any short term metrics for recruiter effectiveness though.  Since we don’t get a grasp of almost any new hire within the first year, short term effectiveness is really pretty hard to measure.  I’m certainly not saying that turnover and performance are the wrong measures.  I’m just saying that you can’t measure effectiveness in the short term.

First of all, we need to correlate the degree of recruiting impact that we have on turnover versus things like manager influence.  If we’re looking at effectiveness over 3 years, we need to be able to localize what impact recruiting actually has in selecting applicants that will stick around in your organizational culture.  Second, we need to pick the right performance scores.  Are we looking at the actual performance score? goal attainment, competency growth, or career movement in # years?  Picking the right metrics is pretty critical, and it’s easy to pick the wrong ones just because it’s what everyone else is using.  However, depending on your talent strategy, you might be less interested in performance and more interested in competency growth.  You might want to look at performance for lower level positions while the number of career moves in 5 years is the metric for senior roles.  A one size fits all does not work for recruiting effectiveness because the recruiting strategy changes from organization to organization and even between business units within the same organization.

Overall, recruiter effectiveness is not as simple as it seems, and unfortunately there isn’t a good way to predict effectiveness in the short term.  In fact, short term effectiveness may be one of those oxymorons.

Recruiting Efficiency Measurement

If you look through Saratoga, there are all sorts of metrics around measuring our HR operations.  For recruiting, these include all the standard metrics like cost/hire, cost/requisition, time to fill, fills per recruiter, etc.   Unfortunately, I’m not a fan of most of these metrics.  They give us a lot of data, but they don’t tell us how effective or efficient we really are.  You’d like to think that there is going to be a correlation between fills per recruiter to efficiency, and there probably is some correlation, but true efficiency is a bit harder to get a handle on.

When I’m thinking about efficiency, I’m not thinking about how many requisitions a recruiter can get through in any given year or month.  I’m not even sure I care too much about the time to fill.  All of these things are attributes of your particular staffing organization and the crunch you put on your recruiters.  If you have an unexpected ramp-up, your recruiters will be forced to work with higher volumes and perhaps at faster fill rates.  Once again, I’m sure there is a correlation with recruiter efficiency, but it may not be as direct as we think.

Back to the point, when I think about recruiting efficiency, I’m thinking about the actual recruiting process, not how fast you get from step one to step 10, or how many step 1-10 you can get through.  Recruiting efficiency is about how many times you touch a candidate between each of those steps.  Efficiency is about optimizing every single contact point between every constituency in the recruiting process – recruiters, sourcers, candidates, and hiring managers.

The idea is that you should be able to provide high quality results without having to interview the candidate 20 times or have the hiring manager review 5 different sets of resumes.  If you present a set of 8 resumes to the hiring manager and none of them are acceptable, you just reduced your recruiting efficiency by not knowing the core attributes of the job well enough and not sourcing/screening well enough.  If you took a candidate through 20 interviews, you just reduced your efficiency by involving too many people who probably don’t all need to participate in the hiring decision and who are all asking the same questions to the candidate.  Sure, there is a correlation between the total “touches” in the recruiting process to time to fill, but “touches” is a much better metric.

I know we’ve been using the same efficiency metrics for ages upon ages, and most of us actually agree that we dislike these.  Touches within the recruiting process makes a whole lot more sense to me, as it gets to the actual root of the efficiency measurement.

Using RSS Feeds in Recruiting

I have a friend who has his own consulting business was describing some pretty cool RSS functionality he’s been using. One of his customers has an order system that gets input into theirs system. Each night, any orders get sent to my friend’s system through RSS. The RSS integration has been engineered not only to take the orders that are in, but also to pick up additional information along the way. For example, if there are documents associated with the order, those documents are added to the RSS feed. At the end of the integration stream, there is not just a file of the RSS order, but basically every piece of information that they need to execute the work, not just process the order.

As I think about RSS for recruiting, I don’t actually think about the obvious things like having feeds go to job boards. I’m actually thinking of possibilities around applicant and new hire data. For applicant data, I wonder if the data can go out through and RSS feed, and a matching program written to see if they are already in any of the existing databases for ex-employees or agency contacts that might sit in other databases. If not, there are then various other possibilities for the RSS. For example, if applicants are turned into real interview candidates, it’s possible to then take the information and further parse out RSS feeds in XML formats (since RSS is already and XML format) to create requests to your background check vendors and start getting degree verifications, security clearance verifications or anything else you might need.

The new hire is another interesting place where RSS can be used to collect data for you. An RSS new hire feed can also be used to trigger a program that will collect all of the new hire information, attach any resume files, and any other pertinent information that needs to be placed into the hands of the end user/processor. This data can then be automatically fed into the core HRMS system, but the same data set can also be used to set up any employee files and feed the onboarding system.

Today, we already use automated file transfers for many of the described processes. However, most native API’s don’t always fit into our unique scheming of how we would like a process to work for our own organizations. The workarounds or re-tooling of interfaces is often more costly than using something simple like RSS and creating some programming code around it.

Years ago (ok, 2 years ago) when RSS was first gaining mainstream adoption, we were all really excited about the possibilities of RSS, but we have slowly lost the visibility not only to what it could do for us, but to the low level of cost and implementation effort associated with it. In these years of leaner implementation budgets, perhaps it’s time to look at RSS with fresh eyes again.

Taleo versus SuccessFactors

At the end of 2009, Bersin did a great analysis of the two organizations that I can’t really beat.  It’s a nice objective and score by score view of the vendors that is based in good factual data, and I’m going to take a different approach, but you should read Bersin’s post first.  From my point of view, the discussion of the two vendors is quite simple, and the decision around to who has the advantage is also quite clear.

Let’s start with their roots.  It’s quite clear that Taleo is based on recruiting roots while SuccessFactors has the Talent Management side.  Both have ventured into each other’s strong suite, with Taleo having an incredible launch into performance a couple of years ago.  However, as time has gone on and the market has assessed the product, it may actually have been too much innovation for the average HR department to adopt and absorb.  I still think it’s one of the coolest products out there, but the change may have been too radical or restrictive.  Traditional performance vendors that were more flexible in allowing people to stick with processes that were somewhat similar to their current states might have been more comfortable during the selection process.  While we all say we want drastic change, when functional HR people really get down to business, I’m not sure it’s true.

SuccessFactors on the other hand has been reaching into recruiting.  Their first couple of sales came in 2009 and the product is in its infancy.  What Taleo has spent a decade developing, SuccessFactors has been at for a few short months and the product shows its weaknesses.  At the same time, Taleo’s recruiting product shows the immense configurability and options that the market wants, but does not get with the Taleo Performance module – sort of a contradiction.  SFSF’s Talent side gives the depth and maturity that simply isn’t there on the SFSF recruiting end.

Next, looking at their market presence, you decide who has the advantage.  While Bersin points out that SuccessFactors is in every RFP for Talent Management, Taleo is also in every RFP for Talent Acquisition.  This is not scientific at all, but I’m going to say that SuccessFactors has the advantage here.  My argument is that recruiting is not so much more complex than performance, compensation, succession, mobility, etc, and that Taleo has much more to build.  I’m also going to say that traditional recruiting is much more of a commodity, and that the Talent Management side is often seen as more of a business transaction.  Recruiting does not come out of commoditization until you get to mobility strategy, and that is generally a TM function than TA (granted cross functionality).  Its generally going to be easier for SFSF to build TA than for Taleo to improve the TM functions.

Lastly, looking at leading the market segments they specialize in, I’m going to say that Taleo has a pretty healthy lead in the TA market, and while SFSF is omnipresent, they don’t have quite the dominance simply due to the larger number of players.  Still, I think overall I’m looking at SFSF to be positioned better in the remainder of 2010 as the economy picks up steam and budgets continue to return.

HR Leadership Selection

I’ve been talking lately about how individual contributors are not always the best leadersHere, Jeff Hunter talks about why sometimes the individual contributor can become a great executive, and some of the problems they must overcome to get there.

A Vice President of HR may be expected to have a great eye for talent, the capability to negotiate complex contracts, the analytical ability to assemble complex compensation structures and the knack for coaching CEOs to greatness. Everyone takes for granted that as one climbs the ladder that they have demonstrated proficiencies in an ever greater number of areas. HR writes job descriptions, selects talent, manages performance and compensates people based on this deeply held assumption.

Imagine an HR leader who has just one competency: coaching. Whenever a search firm is looking for talent, they always land on this person, because they have been a long-time leaders at a very successful company. And yet, as the firm digs into the individual’s back story, they hear a long string of complaints: doesn’t understand compensation, bad manager, doesn’t understand technology, etc. We know where this story ends: the search firm passes the individual over and heads to the vertically integrated example of “executiveness.”

HR’s obsession should be creative productivity: increasing the creative commercialization opportunity of their talent investments.  ((Hunter, Jeff, October 17, 2009.  “John Lennon’s, The Future Of HR and Talent Camp.”  Retrieved from on December 28, 2009.))

I think Jeff is absolutely right.  We often think that we have to groom people and give them lots of experiences to be ready for leadership positions.  We’re adding to the idea of competencies and saying that additional strategic talent attributes are how many divisions someone has worked in, and if a person has and 2+ international assignments.

One of my first consulting gigs was with an organization where the EVP of HR didn’t really have an active hand in HR.  He had his group of 3 VP’s of HR who managed the day to day business.  Instead, this EVP was the executive coach to the CEO who wanted to turn this midsized company (7k employees) into a large company, and wanted to be the type of CEO who could grow and scale with it.  I’ve also seen EVP’s of HR where the core competency has nothing to do with compensation or talent, but is all about their ability to sit at the integration table during acquisition planning.

However, when we go out and look for senior HR executives, we stand by the old tried and true methods of someone who gets total compensation and talent.  Succession plans still go out and make people well rounded and provide lots of broad experience.  We don’t look at what the needs of the business really are, and decide if there are very focused areas of competency that need to be enhanced for the specific role in the organization.

The problem I think is simple.  Our senior HR positions are not written at a job description level in a way that reflects the reality of what the C-suite wants and expects from the person.  There is a job role that the incumbent will never execute upon because those jobs are really farmed out to the next level of HR management.  Instead, the C-suite wants an active participant.  Not somebody who can sit around and talk about HR, but someone who can talk about the business.  This does not always come from broad HR experience in multiple HR functions, in multiple corporate divisions, from several international assignments.  If you need an acquisition specialist, then you need someone who has gone through the acquisitions.  If you need a coach, then perhaps you need to go outside and find someone who has been through a high growth cycle with another organization.  Whatever it is, your senior roles need to reflect reality, not the standard job description that is in a random salary survey.

Employee Blogging for Recruiting

I’m not sure how many of you noticed the NYT article a few months ago on MIT student bloggers.

M.I.T.’s bloggers, who are paid $10 an hour for up to four hours a week, offer thoughts on anything that might interest a prospective student. Some offer advice on the application process and the institute’s intense workload; others write about quirkier topics, like warm apple pie topped with bacon and hot caramel sauce, falling down the stairs or trying to set a world record in the game of Mattress Dominos.

Posting untouched student writing — and comments reacting to that writing — does carry some risks. Boring, sloppily written posts do nothing to burnish an institutional image, college admissions officials say, and there is always the possibility of an inflammatory or wildly negative posting.  ((Lewin, Tamar, October 1, 2009.  “M.I.T. Taking Student Blogs to Nth Degree.”  Retrived from

Certainly we have our recruiters on the blogs (look how many recruiting and HR blogs there are nowdays).  And we’re all over linked in and facebook, especially facebook where we can characterize ourselves and our organization with some personality.  But I’m not really sure how many of us have looked into employee blogging.  Employee blogging are not those snippets of quotes that you see on recruiting pages.  They are not the rehearsed lines of “I love my company so much” branding with precision.  Instead, they are the raw, uncensored words of employees and their lives at your organization.

I think that employee blogging holds less risk than student blogging.  Students are expected to say whatever they want, but employees are still bound by the employment contract, and while we may tell people to write whatever they want, at the end of the day, employees still want to keep their jobs.  If you use employee blogs, you’re probably also selecting some of your smartest, most productive performers (and hopefully well compensated engaged employees too).  If this is the case, you have little to worry about.  What you will have is a blogging forum that tells potential employees what a day in the life at your organization really might be like.  Candidates get to hear from the mouths of real practitioners what to expect and what the culture holds, and even what some of the pitfalls are.  If you’re lucky, you not only attract the right people, but you might even weed out those who are not a good fit for the organizational culture.

In a few months, I’ll be hitting year number 5 of blogging at systematicHR.  Come on everyone, it’s time to get in the blogging game already.  🙂

Internal Staffing Through Social Media

We all know that the best way to find a job is by having great professional networks.  God, looking for a job through job boards is possible, but oh so difficult.  Shouldn’t the same go for internal staffing?  Rather than having internal job boards and postings, we should be deploying social medias to facilitate internal staffing transactions.  Here is the idea:

Employee plans around high potential employees, career paths, performance plans, and even succession plans should give us a pretty good view of what the possible next steps of each employee could be.  Rather than sitting around waiting for a position opening to pop up and hoping that the internal employee and the position opening get magically linked up, there are certainly ways to be much more proactive about this.

Often, employee job growth is a function of pure luck.  They either knew the right person and the hiring manager wanted to hire/transfer them, or HR stumbled upon someone and decided it was the right move the get them to the new department.  The science and predictability of moving people around the organization these days is more haphazard than science.

In the external market, people now join groups in social medias to acknowledge their interest in specific jobs or job families.  If you want to get into compensation, you can link up to people who are already in the compensation field.  If I’m an internal employee, why should I not have an internal social network of people who are in the compensation department?  I could connect to people, do informational interviews, ask questions about the skills needed, and understand the realities of working there.  Best yet, rather than hoping that magic occurs, I have a direct link to the people in the compensation department and when an opening actually happens, the probability that I’ll become aware of that opening grow significantly.  The hope is that someone in comp that I’m linked to is just going to let me know as soon as something happens, and not only am I linked and have some good awareness of the requirements, but I’ve also had time to prepare myself and develop the necessary skills.

Internal mobility is something that talent practices can execute within our HR organizations, but we can also put a lot of power in the hands of employees if we can correctly deploy social medias and have our employees adopt the idea that they can actively manage their own futures.  One of the key parts of the employee engagement equation is control.  Not only do employees need to love what they do, but they also need to feel some measure of control over their own destiny.  Deploying internal social medias in this way makes sense on so many levels, and HR really needs to get on the bandwagon of actually starting to deploy this stuff.

Defining Mobility

Talent is actually pretty tricky.  We seem not only to have problems defining talent and talent application components, but we seem to not know what some of those components even are.  I’m no making sense yet?  As anyone what are the components of a talent suite and you’ll get different answers – even though we’ve been buying and selling talent applications for years now.  Performance, compensation, succession, talent acquisition…   All of these are wonderful, tactical, and transactional processes.  But talent strategies were supposed to bring us to a “seat at the table” but all of these components that people naturally associate with talent are just the core activities behind the strategy.

I think that most people are not actually getting to understanding and executing on the realities of the strategy yet, but hopefully we’ll be there in the next few years.  Certainly there is an increasing surge of corporate thinking around this, and one of the first things that HR is talking about is mobility.  Unfortunately, we don’t really know what all this is yet – and many people erroneously think it’s just around moving people around.  Well, actually, it kind of is about moving people around.

When I think about mobility, I start thinking about employee career plans, and performance plans, and succession plans.  These are all just components of data on the employee record, but they are all linked to employee development and learning.  They identify where employees want to go, but conversely where corporations what their employees to go.  Not only are employees planning for themselves in career paths, but we are also planning for them in succession plans.  Everyone in contributing in multiple directions to identify possible growth scenarios for each individual employee.

At some point, there is an actual event.  Some business unit needs a new GM, or a new organization/store/plant is opening somewhere and we need to fill it with leaders.  This is where mobility comes to the front of the talent process.  Where the transactional processes that occur within the traditional talent application modules stop, talent mobility takes over as an execution arm to actually move people into the previously theoretical development opportunities.  Talent mobility is where the rubber meets the road.  If you don’t have a mobility strategy and process, all of your development plans, succession processes and performance transactions are for naught.  In the end, if you didn’t do anything but post a requisition and hire someone from outside because you didn’t have the visibility in talent to run cross functional queries around internal needs and fit skills to requirements, you completely failed in your talent practice.

HR talent applications are great.  But as with core HR applications, they help us store data and execute transactions on data.  They don’t replace the inner workings of making strategy come to life.  Operational staffing plans and projections don’t always link up to HR’s position management or talent acquisition’s forecasts.  We need our own tools to integrate with talent suites and keep us on the path to realizing the practice of talent’s full potential.

Employee Selection and Workforce Diversity: Are Current Tools Up To The Task?

Guest Author:  Stephen B. Jeong, Ph.D.

Hispanics, African Americans, Asians and Native Americans now constitute more than one-third of the U.S. population. By 2042, they are projected to make up nearly one-half of all Americans.  Given these rapidly changing demographics—and consequently, the rapidly changing U.S. marketplace—many organizations are recognizing that workplace diversity is a business necessity. Creating and promoting a diverse workforce is particularly essential for industries where a significant number of employees deal face-to-face with prospective customers, because the latter are more likely to buy from people like themselves. So retail, financial, legal, insurance, hospitality and consumer goods businesses may want and need staff diversity. Yet existing selection tools may not be up to the task. Here’s why:

1. Job tests based on outdated material

In the context of legal defensibility and employee selection tools, the concept of “validation” simply refers to accumulated “evidence” showing that a given selection is, indeed, a good (or valid) predictor of job performance.  Selection specialists (or those who design selection tests) typically gather validation evidence by correlating job applicants’ scores on a given selection test (e.g., on intelligence, job knowledge, values, personality) with their future job performance (predictive validation) or using incumbents (concurrent validation).  If the resulting correlation is relatively high, the test is considered to be a valid predictor of job performance.  Employment tests and other employee selection tools are judged on their “validation” strength, or the degree to which they can accurately predict future job performance. If there is a high correlation between an applicant’s score on a given selection test (e.g., testing intelligence, job knowledge, values or personality) and his/her future performance, the test is considered to be a good predictor.

One critical issue with the above approach is that the majority of the tests used in the U.S. today were validated primarily on a Caucasian pool. This means that while a given test may work well in predicting job performance for Caucasian job applicants, it may be biased, at a minimum, and in the worst case, invalid, when used with non-Caucasian applicants.  There are proven differences between Caucasians and non-Caucasians in terms of values, management and leadership styles, and general work-related preferences, and selection tests that fail to recognize them may be unhelpful for predicting job performance, retention, and engagement of non-Caucasians.

2. Differences between Western and non-Western cultures

Intercultural academics have been able to label what many of us have already known; that there are cultural variations that can differentially impact one’s thoughts, emotions, and behaviors in the workplace.  In addition to the more commonly known “individualistic” and “collectivistic” cultural differences, employees in Western countries (e.g., U.S., Europe, Australia, New Zealand) generally prefer a more equal power distribution in the workplace, while employees from Asian countries (e.g., South Korea, Japan, China, Taiwan) tend to be more accustomed to autocratic or paternalistic power relationships – or top-down authority.  They also differ in assertiveness, preferred levels of uncertainty and short-term vs. long-term orientations, all of which may impact one’s job performance, satisfaction, and promotion opportunities. For example, while assertiveness is generally a desired trait in Western societies, it is much less so and even frowned upon in countries such as Japan, Korea, and Taiwan. If a selection test assumes assertiveness as a desirable trait, a Taiwan-born applicant, who may have been a top salesman in his country, may be knocked out of the selection process here.

3. Difference Among Non-Caucasians And Acculturation

In addition to the Western vs. non-Western distinction, selection tools should further take into account differences among non-Western cultures – e.g., Hispanics, African-Americans, Asian-Americans and Native Americans, differences between foreign- and US-born, and differences among nationalities within a racial or ethnic group – which include customs, values, work ethics, body language, and communication styles. Ethiopians are very different from South Africans; Costa Ricans from Bolivians; Japanese from Koreans. The point here is that these sub-groups vary greatly with respect to normative values that guide their behavior in the workplace.

People also vary with respect to their degree of acculturation and assimilation to the mainstream. Naturally, attitudes and values of those individuals who have resided in the U.S. for longer periods of time are likely to be more similar to the general American population. However, more recent immigrants are less likely to be so. Hence, if an organization’s business and diversity strategy dictates the inclusion of more recent immigrants, it is critical to understand that current selection tools used in the U.S. would be least applicable to recent immigrants from non-Western countries.

It is important to make one thing clear:  I’m not suggesting that all selection tests must identify and include all unique cultural attributes in order to be useful – that would be impractical. Rather, one should simply consider the fact that the majority of the selection tests in use today are likely to hold less value when used on non-Western and non-Caucasian applicants.

So, what’s the answer?  There is no one simple solution. It depends on an organization’s industry, strategy, mission and priorities as well as its customer demographics.  If the goal is to sell to new immigrants, one should select applicants whose views closely mirror that of one’s prospective customers. If the future American market place—in which the current minorities add up to almost a majority—is at all a consideration, our current employment selection tools need to be revised to reflect both the common as well as those unique cultural attributes that can play out in the work setting.  For current and future generations of immigrant workers—whose primary identification is with a non-Western culture—a new measurement approach should lead to a more meaningful (and valid) performance prediction—one that addresses those attributes valued by their culture.

Stephen B. Jeong, is currently the Managing Director of Waypoint People Solutions –, a human capital consulting firm that focuses on high precision employee diagnostic surveys using cutting-edge measurement technology and methodologies. He holds Ph.D. in Industrial-Organizational psychology from the Ohio State University and has been advising private, public, and government organizations since 2000.  He can be reached at

Market Salary Rates

The HR Capitalist had a post the other day about pricing candidate salaries.  But as usual, I have my own opinions.

Say it with me – the market rate for any candidate is the $$ amount they will accept.  They’ve got info about what they are worth, you’ve got info about what they are worth.  When it all comes down to it, ranges give guidance, but you can’t rely on the extremes in the offer process.  You use the range to close business.  ((Dunn, Kris, December 8, 2009.  “Say It With Me: The Market Rate for any Candidate is the $$ Amount They Will Accept with Mimimal Counters…”  Retrieved from

I’m not totally sure I agree.  Chances are, the hiring organization does not really know what the prior salary of the candidate was.  We know that many candidates lie on resumes, and since their prior salary is not usually written, salaries probably also tend to get inflated.  We also have a pretty reasonable range of salaries that our compensation departments are doing.  These global surveys are pretty standardized across a number of consultancies, and are fairly predictable.  Candidates generally know the range of pricing they are looking at, as do the hiring organization.  It’s no secret what the typical ranges are for a candidate who is experienced and has been in the market.

However, rather than the market rate being how little a candidate will accept, I think that this idea is a recession strategy.  Since we have lots of people sitting on the bench right now either having been laid off or whatever, this strategy might work in the short term.  But in the long term, I’d like to think that we’re looking at recruiting and pricing more strategically.  If we are running a successful recruiting program, we are going to be recruiting people who are already employed, and perhaps are not even looking for jobs.  These are the best candidates as we all know (even if we all know it in theory but not in practice – they are the hardest candidates to get).  When we talk about positions that are highly collaborative or require a degree of innovation capacity, then the stakes go up significantly.  It’s not the lowest price a candidate will take, but based on the idea of a growth economy and the strategy of the position being filled, I believe it’s more about what the position is worth to the organization.

I’ve had it all ways, early in my career with a WAY lowball offer (which I took since I was rather inexperienced and it was still a good offer for where I was at – I later learned that all my peers were earning at least $10k more).  I’ve had the generous offer based on my skills and experience and the fact that I was not really interested in moving jobs, and I’ve had the fair offer (when I was actually on the bench myself).

At the end of the day, we need to make sure that we are hiring people in a cost effective way.  But if we decide that low salary pricing is the only way, then we deal a bad hand if we’re looking to fill strategic positions with high caliber employees.  The best people out there know they are the best and don’t take to this strategy well – they walk away instead.  Even the average people out there know where it’s at, and lowball salaries don’t make for long term engaged employees.  Decide for yourself if that $5k is worth disengagement or missing out on the best candidates.

HRO is not Dead

HRO has seemed dead for at least a couple of years now.  A couple years ago it was almost all I was writing about, and there were mega deals to be had every other month.  All consultants were talking about to their clients was deciding if they should outsource or not.  At the time, HRO was really the domain of the Fortune 100, maybe the Fortune 250, those who had the financial ability to spend that type of money on mega HRO.  Unfortunately for the HRO industry, outsourcing HR was not necessarily as easy as ITO or FAO.  The people factor sitting in the background was actually a factor that should have been sitting in the foreground, and large outsourcers who were used to technology or financial transactions were not as able to translate their business into HR.

We’ve lost track of HRO, but it’s really not that dead.  The fact is that while the mega HRO deals were going on, we figured out what works and what doesn’t.  What works are the things that always did.  Outsourcing technology, payroll and benefits.  But we’ve always outsourced that stuff.  I think the one new area that is starting to get outsourced is RPO.  We’re seeing more outsourcing in the sourcing area of recruiting.  As usual though, we’ve learned that it’s the transactional areas that are perhaps less strategic.   For payroll, wage and hour policy is still usually held internally, although the outsourcers are really the experts on compliance.  Benefits design is pretty much in-house, and the transactions are easily outsourced, and for recruiting, sourcing can be removed but the decision making is left for the hiring managers.

In the last wave of HRO, we started to see organizations start to outsource stuff like talent.  I’m not quite sure how this worked beyond technology, but apparently people were doing it.  As the economy comes back in 2010, I think I’m expecting transaction outsourcing to come back in a major way.  Organizations will be coming out of cost containment and looking to spend on implementations that allow them to capture more cost savings that they could not spend the money implementing in 2009.

For more on BPO and a couple comments reflecting my own here, see Phil Fersht’s blog here.

The Gartner Magic Quadrant for Recruiting

A few days ago, my fellow compatriot Jason Corsello wrote about Gartner’s new magic quadrant.  I’ve actually looked upon the Gartner magic quadrants with some disdain in the last few years, not because of any perceived lack of validity, thoroughness or any other concern with the approach to analysis that Jim Holincheck does, but more because their goal of simplifiying the market may have gone a bit too far.

The Magic Quadrants are wonderful tools.  They allow Gartner subscribers to easily and quickly identify the top performing vendors in any given space in mere seconds.  Some short descriptions of each vendor follows and to be honest, the assessment of the quadrant is usually within that 80% rule of where I would put vendors myself.

The problem is that I fear some organization will look at the quadrant (top right) and when performing their vendor selections, they will just long list those vendors in the leaders box.  I may be speaking out of turn, but the magic quadrants are really not about steering people to certain vendors.  A variety of assessments from financial, to functional to technology to market presence, etc have been used to evaluate each vendor, but these evaluations do not mean that fit can be prescribed simply from a visual with dots on it.

The quadrants are viable tools, but are not a guide in and of themselves.  Whether you go out and hire Holincheck (some of my own clients have had great success with him), Corsello, me or any other consultant, the fact is that if you don’t already know the market well enough on your own, then you do need a guide.
Jason Corsello has a number of really good suggestions on how to use the Magic Quadrant.  Hope you go read them.

Recruiting Dubious Talent

Here is what the NY Times had to say about AIG executives and bonuses a few weeks ago:

Now we can debate why A.I.G. felt it necessary to guarantee seven executives at least $3 million apiece when the economy was clearly on shaky ground. Perhaps we will find out these contracts were a bit of sleight of hand to enrich executives who knew this financial Titanic had hit the iceberg. But another possible explanation is that A.I.G. knew it needed to keep its people…

“We cannot attract and retain the best and brightest talent to lead and staff” the company “if employees believe that their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury,” he said…

“The jobs are terrible,” said Robert M. Sedgwick, an executive compensation lawyer at Morrison Cohen who represents a number of employees of banks that have taken government money. “You have to read about yourself in the paper every day. These people are leaving as soon as they can.”

Let them leave, you say. Where would they go, given the troubles in the financial industry? But the fact is, the real moneymakers in finance always have a place to go. You can bet that someone would scoop up the talent from A.I.G. and, quite possibly, put it to work — against taxpayers’ interests.

“The word on the street is that A.I.G. employees are being heavily recruited,” Ms. Meyer says.  ((Andrew Ross Sorkin, March 16, 2009.  “The Case or Paying Out Bonuses at A.I.G.”  Retrived from on April 18, 2009.))

So while I understand the whole talent and retention thing, basically we are saying that the people who were arguably behind the largest financial crisis in modern economic history are worth retaining.  There is no arguing that these are fabulously talented people.  But fabulously talented people can either exercise their talent in either positive or negative ways.

An organization recruiting AIG talent knows two things.  First, these people do have a track record for innovation and being very good at what they do.  Second, the instruments these people put in bankrupted one of the largest corporations in the world and threw the world economy into a tailspin.

It’s like the concept about marriage and changing one’s spouse.  You can assume you will be able to change your partner after you are married, but it never really works.  So here, you know you have really talented and smart people, but the idea that you can change the underlying principles and philosophy they operate on seems a bit naïve.