Episode Transcript
Speaker 1 00:00:11 Hi everyone today. I want to talk about recruiting or talent acquisition as it's called, which is one of the most important things you do, the company. And one of the reasons I'm going through this is we're introducing a large body of research this week called the definitive guide to talent acquisition, which is based on more than a year of study by Janet. Merton's our director of research in that area. And you'll see some very, very interesting findings there. The big finding is that this is much harder than it looked. And when we went through and analyzed maturity models of various practices of talent acquisition, only about one in four companies really have a handle on this in a very strategic way. So it remains complex, convoluted difficult, and in many cases, a work and process. And I think when you read through our research, the, those of you that are members, this is an opportunity for transformation.
Speaker 1 00:01:05 So first of all, the problem, the problem we face is we have had roughly 14 years of economic growth interrupted by a pandemic and ever increasingly tighter labor market. We're now at a point where the unemployment rate is 3.6% in the United States, four to four and a half million people are quitting jobs every month. And the number of jobs open or the number of jobs available keeps going up. People keep creating jobs. So what's essentially happening is your company is growing. And even though you've automated and digitized, a lot of things, you need people and the jobs that are available and the jobs that have recover from the pandemic are really in areas like leisure, hospitality, restaurant, service, truck drivers, nurses, they're really human centered jobs that cannot be automated. So this problem is not going to go away. The second thing going on is a lot of people have left.
Speaker 1 00:01:58 The labor force. The participation rate is around 62 and a half percent. It goes up and down a little bit over the period of time, but it's relatively low around 2 million people retired early during the pandemic, mostly boomers. Some of them will come back to work, but that's reducing the labor pool. The birth rate is down. The fertility rate is down. And a lot of research that I've been looking at recently also shows that childcare has become a critical issue for workers in the high end demand jobs. So people are staying home because they've had the opportunity to be home and work from home and they may not want to come back to work at all. So the supply chain of labor is constrained and will be for quite a long time to come unless something else happens in the economy. The third interesting statistic is something that's quite staggering.
Speaker 1 00:02:47 It's called the fill rate. The fill rate is the percentage of jobs filled compared to those that are created each month. So in a given month, if a million jobs are created in the United States and 600,000 are filled, the fill rate would be 60%. Well, the fill rate over time is usually one or more. So usually there are more jobs filled than there are jobs created, cuz there's a lot of job mobility. But at this particular point in time, if you look at the bureau of labor statistics data, it is the lowest it has ever been. It's 60%. So in other words, for every 10 jobs that you open up in your company, only six are getting filled, which means we're falling further behind, further and further behind. There are more and more open jobs being created every month. That's why the unemployment rate is going down.
Speaker 1 00:03:36 Now you have to match people to the, those jobs. So this isn't a purely economic thing. There's a lot of human issues under the covers. So let's talk about recruiting. Now, first of all, the traditional model of recruiting used to be called post and pre you get a job wreck written often by a manager, not an HR person. He says, I want somebody to do so. And so, so I want somebody with such and such a job title. You post it on a job board or a series of job boards. You buy a bunch of advertising and you turn it over to a recruiter. And the recruiter has 20, 30, sometimes 40 of these jobs to fill. And the recruiter looks at the incoming stream of resumes, calls people or contacts, people over the phone sets up. Interviews puts together a process of interviewing tries to get people to go through that process.
Speaker 1 00:04:22 And if it's a hard to find job and many jobs are difficult to fill and they don't get a lot of good applicants, they do what is called sourcing. They go out there and find people. They talk to people, they network, they get to know people and they become more like head hunters that doesn't work anymore. I mean, it sort of works, but it really doesn't. And what we found in the research is that process in most companies has been more or less standardized, about 45% of companies have standardized that process, but it doesn't get the value add that it needs because of course the real key to hiring a great person is knowing the job, knowing the manager, knowing the culture of the company, clearly matching the individuals career and aspirations with the company, making sure the job is physically close enough to their home, that the benefits match their particular stage of life and that the team and manager get along with that person and like that person.
Speaker 1 00:05:13 So there's a lot of human issues involved. And what we went through is we studied this, you'll see in our maturity model, is that the four level of maturity we call creative and human centered, cuz what you really want to have happen is all of these things are standardized to make it easy, to apply for a job and easy to assess candidates and easy to interview people and easy to compare candidates against each other and be completely diverse and inclusive in the process of course, and not focus only on white male candidates who went to good schools for example, but also that the humans, the recruiters and the hiring managers can really get involved in the fit. Cause as our research now finds from the last several quarters companies are going through a lot of redesign redesign of their organization, redesign of their jobs. We now hear people say, employee experience is a little bit dated.
Speaker 1 00:06:06 It's now designed for productivity. How do we define role the job so that it leverages the technology we have effectively? And it can be done in a more scalable way because we know we're not gonna be able to hire as many people as we thought we were. And that has to be done by the hiring manager in partnership with HR and oftentimes facilitated by the recruiter. You know, a good recruiter will go to a hiring manager and interview him or her and ask them a lot of questions about the role to not only understand it, but to possibly encourage the hiring manager, to think through the actual role they're looking for and what we, uh, hear all sorts of stories on this is that hiring managers often have a tendency to overhire. Well, let's find somebody who's done this for 10 years because I know then they'll come over here and do it well at our company.
Speaker 1 00:06:55 Well, there's a couple problems with that first to of all that person with 10 years of experience in that job might be very expensive and hard to get second, if the job isn't that expansive, they're not gonna like it. And they're gonna come in and leave after they've been there for a little while and third, somebody who you overhire is also making more money and they're going to upset the pay equity in the team, because all then you hired somebody who makes 30 or 40% more than the rest of the team. And everybody else gets upset because people do find out how much other people are making. So this problem of fitting the job to the person and the person to the job is a very, very significant part of talent acquisition. It isn't just filling slots like a head hunter. Now, there also is a big head hunter role to this.
Speaker 1 00:07:40 And one of the things that comes out of the research is the recruiter is one of the most important parts of the process, despite the role of AI and technology and video interviewing and everything else. And the recruiter has to recruit internally as well as externally. What most companies are starting to realize is that many of the best candidates they have for a given position are already in the company. They're just doing something else and we didn't know who they are and they are not aware that this job is available and we haven't had a way to match them up. So through talent marketplace systems, which are growing very fast and expanding the role of recruiter to be into her recruiters, as well as external, we can fix that. And so those are all innovations that, that come to level three and level four companies.
Speaker 1 00:08:27 You know, I wrote about it in this article. I put out to this week, I did a lot of interviews in this during my work as an analyst. And one of the companies I talked to was a large oil company and the head of talent acquisition told me when they were looking for oil, gas drilling engineers, which are very, very hard to find petroleum engineers who oftentimes have PhDs are very rare. There's only like a couple thousand in the whole world. He said, you know, we did a lot of statistical analysis of the engineers that turned out to be the most successful that had the longest careers with us that had the greatest performance ratings and so forth. And we looked at their grade point average, we looked at what colleges they went to. We looked at what other jobs they had had before this.
Speaker 1 00:09:06 We looked at the cities they were born in and all sorts of strange things. And he said, none of them really statistically correlated to the best engineered. But one thing did, it was the recruiter. The great recruiters found us great people because those recruiters really know the job. Really know the company really know the culture of what we do here and can very well fit a job with a great person who is a good fit for us. And so in the middle of all of the technology and process work and automation, uh, and design and brand really hiring great recruiters, training the recruiters and connecting the recruiters to the rest of HR because recruiters are an integral part of the HR function. They don't stand alone in sort of a COE only for recruiting. Now, a lot of other the things come outta this research.
Speaker 1 00:09:56 So let me mention a couple of other things as well. The two other things that come out that are very, very significant in this research is what we call the total employment brand and the candidate experience. The total employment brand doesn't mean job advertisements with great videos of people who love working here. It means really offering a complete exper to a job candidate that fits their entire life and career desires. Now that sounds like an awful lot, but that is what's going on. When people decide to come to your company, even hourly workers, they are making a big decision about their life. They're making a decision about their daily activities and where they want to commute, who they want to work for, where they, a career is going to grow, how well they're gonna be able to pay for their kids' education, how well they're gonna be treated, how well they're going to personally grow in their own personal growth.
Speaker 1 00:10:46 And they wanna be affiliated with an organization that they trust an organization. That's doing great things for society, an organization that's successful and growing. And all of that has to come together in what we call the employment brand. And Glassdoor is in some sense, a reflection of that, but you can't change the Glassdoor ratings. So you have to think about what are you offering as many companies say, what is your deal? What is the ultimate thing? You offer a worker that will attract them to your company. And that's not a simple question. You need to really think about it and work on it. The fact that we have labor unions starting to proliferate at Amazon and at Starbucks is an indication that employment brand is not simple. Amazon is clearly a very successful well run company, and they have a lot of benefits and all sorts of interesting career programs and so forth for employees.
Speaker 1 00:11:36 But there's a lot of people at Amazon that have not been happy working in the distribution centers for a whole variety of reasons. We have a lot of information on that and they have decided they've fed up. So their employment brand has to be adapted. They're gonna have to think about it. You know, Andy jazzy and the head of HR, there has to really do some serious soul searching about what are we offering to these people and is the constellation of benefits, correct? In the work experience itself, by the way, some research that just came out from Harvard that I read over the weekend was really kind of interesting. What it said was that these senior executives in the companies that were surveyed have a completely different perspective on what is good and what is valued versus the line managers and the employees, the senior executives tend to think things like career development and educational benefits and tuition, reimbursement are really valuable.
Speaker 1 00:12:27 But when you go and you talk to line employees, particularly frontline workers, they're interested in the they're interested in the pay. They're interested in the supervision. They're interested in an opportunity to get promoted. They're interested in safety, they're interested in different things. So it's always good to look at your holistic employment brand and talk about whether with your senior leadership team, because there are unlimited ways for you to spend your salary and compensation money. And I remember in the United States of at least 32% of all payroll is spent on non cash benefits. That's a massive that's trillions of dollars. So everything from vacation policy to career, to the workplace, to health and wellness, you, you get to decide which of these matter and do it along the lines of what will attract the people that you leave are the right people for your company. And let me reinforce one more thing on the point of brand.
Speaker 1 00:13:18 There's no question that our research points out that having a mission driven, purposeful company that really takes care of customers and people is a big part of attracting great people. The second thing I wanna talk a little bit about is candidate experience. Now there's been a lot of dis discussion about this and there's awards and things. The real issue with candidate experience is that if it takes a long time or it's difficult for somebody to apply for a job, you are not going to get great people because job seekers are busy. They have lots of things to do, and the more successful they are, the less time they have looking for a job. In fact, they may not be looking at all. So if they can't find what you're trying to hire in a couple of clicks in a couple of minutes, and if they do apply for a job, if you don't respond to them fairly quickly, poof, they're gone.
Speaker 1 00:14:05 Uh, and one of the largest, most successful companies in the world that does about 200 and thousand or more recruits per year, but gets four or 5 million job applicants told me that their recruiting process is so rigorous. It is virtually impossible to get hired in less than eight to 10 weeks. And they said, that's been a big problem, cuz a lot of people will not wait that long, particularly highly technical people and they just disappear on the process. So one of the things that is very difficult but important is to think about the whole design thinking process of what is it gonna be like to apply for a job here. And there's lots of great vendors to help you with this. And that includes applying, locating the right job, maybe not applying for a given role, but actually letting the system tell you what role it thinks you apply for.
Speaker 1 00:14:46 And then how are you gonna be assessed? And the area of, of candidate assessment is fascinating and very, very complex. There's essentially an industry of industrial and organizational psychology based assessments. That's been around for a long, long time. And they're based on job analysis and then consultants that have gone into different jobs and looked at the characteristics and skills these jobs need, and then come up with very simulations and tests to try to deter Orman. If this candidate is a good fit for this job, we were just on the phone yesterday with a company that does this and those tests are now being integrated into AI platforms so that the job candidate can relatively quickly go through one of these assessments and get a good sense for themselves as well as for you, whether they're a good fit for the job. Most of you know, it's very common to use.
Speaker 1 00:15:32 What's called a video interview where somebody does a video interview answering some questions and you get a chance to look at those and assess them as a team. There's now systems called interview intelligence systems that actually step interviewers through the interview process and allow you to compare interview responses from various candidates as at various interviewers, to try to see which questions are best differentiating people. There's just an amazing amount of technology. But my message is amongst all of that, make sure you're focused on simplicity because this is to some degree, a scale problem. You can't, unless you're a small company, you can't hire every employee as if they're the most important person in the world without some good automation and you will lose people. A lot of them, if it's too hard to apply, plus if they have a miserable experience, they're gonna remember that they may not apply again.
Speaker 1 00:16:24 And you wanna keep track of the people that applied and didn't get the job they're called silver metal candidates because you're gonna go back to them later and you're gonna wanna hire them for or something else. Let me just conclude with one more thought. There's all sorts of very interesting, fascinating AI. Now, part of recruiting and this really works in the early days of AI. We weren't really sure how it was going to apply to HR, but it is really, really driving a lot of value. Not only do you have chatbots and instant recruit and of candidates to the right job by location, all done by AI, but there's AI that can look at a candidate's background and give you second order recommendations about whether they'll be a good fit. You have AI that can take silver metal candidates. People that didn't make a job cut and send them to a new role in the company that they would be a better fit for or, or revisit them later.
Speaker 1 00:17:14 There's AI in the CRM systems that can communicate with candidates to keep them warm so that they don't go away. And if you're interested in them, they can come back and you can hire them later. Um, and all of those are things that have to be stitched together into this candidate experience. You know, it's been a little bit of a long podcast, but let me finish with one more point. We have done a lot studies in the last two years on a lot of topics. We've looked at learning. We've looked at recruiting, we've looked at employee experience. We've looked at wellbeing, we've looked at org design. Interestingly enough, the impact of a great recruiting function is higher than all of the other things we do in HR. And the message there is that recruiting is the most important thing you do. If you get the right people into the company, obviously the word right is not a simple answer.
Speaker 1 00:18:02 You are gonna make the rest of your life a lot easier. And if you're making mistakes, they compound, they get worse because if you hire a manager, who's not quite a good fit, he or she will hire more people who are not a good fit. So there's essentially a cascading effect of not doing a talent acquisition well, and the strictness or the nature of your hiring will change over time. As you grow, you'll have less control over it and you may not have the founder led or early day mission embedded into the process. It is your job to make sure that doesn't happen. I do believe that when I see companies going through labor union issues or harassment or other problems, those are great companies with great founders and great management teams, but they have let the talent acquisition process slip. They have pro perhaps not taking care of their recruiters or not taking care of their hiring manager process.
Speaker 1 00:18:54 And they haven't spent a lot of time or enough time talking about the deal, talking about the EVP, talking about the mixture and range of benefits they're gonna offer for different roles so that they really are relevant. And who is the perfect candidate. I remember talking specifically back in the oil company interviews, I of you, you know, half a dozen oil companies. And they told me we don't all want the same person. One of them is a really hard charging, high paid, very competitive, very demanding company. And they only want the very, very most aggressive people. Another one I won't mention their name is a company that hires people for life. Their retention rate is like 98%. They never lose anybody. Even if you're a Rollie engineer or mechanical engineer, one, person's gonna be more suited for one of those companies and another one's gonna be more suited for the others.
Speaker 1 00:19:36 So lots and lots of things to do. So it's a fascinating topic. We are introducing the research this week. We have a course in the JBA called talent acquisition at a crossroads, which is a really excellent course. It's kind of an overview of all of these topics with lots and lots resources in there. Janet Mertens will be doing a webinar, a series of webinars on this, and we will definitely be discussing it irresistible. And let me remind you, please come to our conference. It's the week of May 21st, 22nd, 23rd, 24th, 25th. That week that's actually the week of my birthday, by the way, there's gonna be some very special surprises there. We can only support hundred people, so it will be full and we really would love to have you join us. It's gonna be really fun to get everybody back together again. Thank you very much and have a great spring.
