Retention

Monday, July 06, 2009

17% of Americans Pee in the Pool - And Other Hard Hitting Talent Metrics...

Alright, I know, the title has nothing to do with HR, but it was from an actual article in the Detroit Free Press and it made me laugh out loud.  I mean seriously, who got up in the morning and started to write this article as real news?  It did get me thinking though about other worthless metrics, we might measure in our everyday professional life, that are meaningless.  It's a classic argument that HR Pros and every organization seems to have different metrics they use to measure the health of their people business. So, here's my list of measures you don't really need in HR:

1. Turnover and Retention- notice I didn't say "or" - companies that use both make me laugh,Caddyshack_doody especially when they haven't differentiated between the two (ie., we have 3% turnover, but 97% retention - really, thanks for doing the basic math for me!).  Now, if you measure the retention of your top performers, and have a performance management system that identifies that group - more power to you - you are now in the Top 10% of HR Pros.

2. Days to Fill- When measured as an aggregate.  The majority of organizations in the world hire many different types and levels of talent.  To say our HR/Recruiting Dept. has a 43 days to fill ratio is again meaningless.  This should be broken down by hiring segment - 14 Days for Admin level, 35 for Professional, 67 for Management - or something like that.  Also, have at least some knowledge of industry days to fill for those segments you are hiring for and give your Operations Partners the comparison - even if yours is worse, because you'll then be able to show them improvement!

3. Diversity- when measured as a percentage of the whole.  So, we have 45% diversity within our employee population.  So what?  Again, this is meaningless.  What is the goal and why is that the goal?  If you can show operations that at 63% diversification our business units run 15% more productive - now you are in the Top 1% of all HR Pros in the world - make it happen - you might have to work past 5pm, but it will be worth it!  I beg of you, please stop measuring Diversity if you aren't going to have a goal and reason - otherwise all you're doing is telling every white male on staff that until we get 100% diverse we aren't done - so if you are a white male HR Mgr. - you will have to replace yourself to reach your final goal!

4. Employee Engagement  - I can't think of a more worthless metric!  Once a year we, the HR Dept., are going to justify our jobs for a month as we roll out our annual Employee Engagement Survey and then act like Nazis and throw pizza parties in the attempt to get everyone to fill one out. Then send the next month collecting all the data and making the largest PowerPoint presentation on the planet, so we can show our senior executive team the good, bad and ugly. Finally, we add fat free pudding to the cafeteria menu as a response to our two month project.  Really!? Is this adding value?  Lou Holtz said it best "Motivation is simple. You eliminate those who are not motivated.”

5. Training and Development Class Surveys- This probably should be #1, if this wasn't a completely tongue in cheek post.  Has anyone really ever filled one of these out, for in-house training - I mean unless you were made to or didn't get paid!  That is the new standard for Organization Development folks, "you must fill out this survey of the class to show that you were here and get paid for the time spent" - if you're in Org. Development and doing this - Stop It!  It sucks, and you suck if you do this. If you have great training, you'll know it, people will talk about it, and other people will track you down to be a part of it. 

What measure would you like to see go away?

Editor's Note - Tim Sackett is the Executive Vice President for HRU Technical Resources, which really means they just ran out of titles between Director and CEO.  Tim's job is to make sure everyone is happy and productive – for those who have worked in staffing firms, you know exactly what that means. HRU is primarily an engineering and technical contingency firm that specializes in the manufacturing sector in defense, consumer products, automotive, higher ed, etc.  HRU is based in Lansing, MI – but has close to 500 employees all over the country. 

Wednesday, June 10, 2009

Can You Have a "Best In Class" Culture with 82% Turnover?

If you don't follow me over at the HR Capitalist, that's OK.  I can always buy time at FOT from the powers that be to tempt you to read my stuff here.  Here's a story I've been tracking for awhile at the HRC, and it always seems to come back up every 3-4 months.  There's some fresh meat at the end for the carnivores in the crowd.

The topic is the performance management company SuccessFactors, who has always made the decision to push their culture as a "we eat the dog food" type of selling point.  Makes sense - they manage performance and push employees via their culture statement and internal performance management processes - why wouldn't they be your choice to buy performance management solutions from?

Last week, I ran this letter to the editor at Workforce where an apparent former employee took SuccessFactors and CEO Lars Dalgaard to task for the culture at SuccessFactors.

Take a look at the letter linked - it's a nasty one.  If you've been in the people business long enough, youSuccessfactors know that you can't please everyone all the time. 

With that in mind, here was the question I ran last week at the HRC - Is it better to:

A. Openly promote the culture you seek (I'm talking external promotion) and risk the violent reaction of those former employees who feel like you never lived up to your promises/claims, or

B. Be more reserved in your promotion both internally and externally, with the risk of lowering the chances that all your employees clearly understand what you desire your culture to be about.

While SuccessFactors has clearly chosen Option A, what's interesting to me is that almost every other performance management solution provider takes the Option B route.  They're just much more conservative than SuccessFactors, which is not to say that they don't have great cultures and good stuff going on.

Instead, what it may mean is they've seen too much ex-employee reaction to the marketing of the SuccessFactors culture.  Here's a comment from over at the Capitalist from reader "DC", who was kind enough to go out to GlassDoor and see what ex-employees are saying about SuccessFactors.  Here's what DC reported back:

Interesting follow up post Kris. I noticed on your previous post on this subject that one of you commenters wondered if SuccessFactors had similar complaints logged on glassdoor.com. That was the first time I had ever heard of glassdoor, so I checked it out. For a company that claims to have a no jerks rule embedded in their code, Successfactors employees seem to paint a different picture. I’m sure most companies have some disgruntled employees, however even current employees of this company seem to say that the exception to the no jerks rule is the CEO. I don’t know the guy, but the comments about him and the way he runs the business are certainly at odds with their company’s creed. Look at some of this stuff – the one that stood out the most was the first one below from a former HR person at the company.

“I used to have to give this "company pitch" enthusiastically and didn't know whether to break out laughing or cry at my deceit. Someone at the company had better honestly address the extremely high and disturbing turn over at SFSF. During 2007, the turnover was 82%.”

“Management's behavior gives you the sense they feel you should feel blessed to work there, which makes employees feel like disposable commodities. CEO is not afraid to publicly blast or insult people on email, etc.”

“Bad behavior eventually catches up with people & companies. Look at Wall Street. Lars Dalgaard lacks integrity. Stop promoting the (No Jerk ) rule. If you are going to promote something of value then walk the walk instead of spewing out sound bites of Self-Righteousness.”

“In my time there, I never had a performance review done on me (yes that is the main product they sell), didn't get to participate in the 360 career development surveys for my management team (despite all of the "bible thumping" from the CEO over this) and was precluded from having career development discussions by my manager and his manager.”

“The CEO is volatile, the "no a-hole" rule is not followed, there is intense favoritism, the politics are rampant, the morale is very low, and there are constant fire drills (initiated by Lars) to accomplish things which are in direct conflict with what Lars says are the goals of the company.”

“I don't believe that Lars Dalgaard even takes the "No AH" rule (No Jerk Rule) seriously so why should the employees.”

“Ironically, for a company that provides solutions for HCM, it does not do a good job of Performance Management of its employees.”

Wow.  Thanks for the research DC.  I'll leave it here for today - If the 82% turnover figure is right, I'd abandon the external promotion until I got some things fixed, either on the selection or culture (i.e. retention) front.

What say you?

Monday, May 11, 2009

Bad, Bad Manager: "You Can't Leave Me!"

This one comes out of the bad manager's play book.

A friend instant messages me the other day. She's on the market for a new gig and I've been helping outPanda as her pseudo career adviser. She's an A-player who has lots of options to entertain. She's paid her dues at her current gig, gained a ton of great experience... but she's not able to innovate and keep growing in the way she wants to. So on this particular day that she messages me, her manager sat her down to talk. "I hope you aren't looking at other job options. Don't you see we've laid other people off and kept you?" How nice. The message could have probably been delivered a bit differently, we all can agree on that. But then it got worse. The kicker: "You can't leave me," her manager said. Wow. Are you cringing as you read this?

Times are tough everywhere, I get this. And especially in organizations like my friend's where they have done layoffs and made salary cuts both, those who are left are likely doing more for less. But that's not an excuse for bad behavior. If this were a manager in my organization, there would be a few different things I'd ask him/her to consider:

  • People look at other job opportunities even when they aren't looking. Everyone likes the passive candidate better, right? Never assume all doctors appointments are doctors appointments.
  • But if you really think someone "can't" leave you? Well, then let people stretch their wings. If you really can't bear to see them go, what is it going to take to keep them satisfied and fulfilled?
  • Sometimes you've just got to let go. People may leave, and the reality is that everyone is pretty much replaceable. Guilting someone into staying won't resolve whatever underlying issues they have which are causing them to even be open to leaving. 
  • Of course you're human, we're all human... but are you really that needy? And do you want to really show that card to your team? You're a manager for goodness' sake. Infuse some confidence in your staff. Even if you feel like it would be difficult to do without one of your staff members, even if you've worked hard to make them feel valued by recognizing them and doing all those warm fuzzy things... get a grip.

This story ends nicely for my friend - she was offered a new gig last week and it's a great career move for her... but when she gave notice to her manager? The tears flowed and again it was more, "You can't leave me," chatter. No wonder my pal is getting out of there. Sigh... can we get this manager some coaching please?

Editor's Note- Jessica Lee is an Employment Manager for APCO Worldwide, a global PR firm in D.C. Like most upscale HR pros, she spends half of her time on recruiting, the other half on ER, Training and OD.  When she's not hammering a candidate to determine Motivational Fit, she's thinking about the future of HR and wondering how she can avoid using the job boards to fill the next spot in her organization...

Thursday, February 05, 2009

Dude, You've Got a Culture Issue, Not a Gen Y Problem!!!

So, put yourself in my shoes as I was asked this question last week:

"The culture at my company doesn't really work for Gen Y kids. When we give feedback, mostKicking_Screaming_poster times it's direct and to the point. We tell you what's wrong or what needs to change, and then people go and change. Now we have younger employees who want more when you give them feedback, and they ask, 'How do I improve or change? What do I need to do differently if I'm not doing it right?' And we don't know how to respond. We've never had to dig that deep. We've always just been critical and then moved on. Why is Gen Y so demanding?" 

Sigh. And, to boot, it was an HR pro who asked me the question. To be fair, at least he asked, right? And it was in a safe setting where we were all learning - he asked in a roomful of other HR pros as I was presenting at an onboarding seminar for IQPC where I was specifically presenting on strategies for onboarding Gen Y. 

Back to the question though - how would you have answered that? Before he could even finish, I wanted to scream, "Dude! You've got a culture problem on your hands! The issue isn't with Gen Y!" Yet, I smiled, and nodded as he finished up his question. But before I could even open my mouth, a fellow Gen Y HR pro attending the seminar spoke up and asked how else is he, as a Gen Y person, supposed to become better at his job if he's not provided specific guidance? He said that he and all the Gen Y peeps he knows are really open to change and want to improve and become better at their craft - because after all, we're goal-oriented suckers. And we're not foolish enough to think we can just do it on our own or find the answer on Wikipedia.

A boomer HR pro at another table jumped in immediately thereafter. She asked the man who raised the question whether he had kids. He said yes. And she asked him to think about it from a parenting perspective... if you told your kid, who just started playing basketball a year ago, that he needed to work on his layup - would you just leave it at that? Or would you help him practice? Would you give him hints and tips and advice on how he could get better? 

Ladies and gentleman... two lessons from this little anecdote of mine:

1. The issues a lot of folks peg onto Gen Y - they aren't necessarily just unique or specific Gen Y issues. You may think we're needy, demanding, or that we have high expectations... but some of this boils down to creating a culture around performance, and good, solid management skills. Really. 

2. The wisdom of the crowds, it's a beautiful thing and our collective knowledge is amazingSometimes Often when presenting, I find that turning it over to the audience is as effective, if not more effective, than me just "lecturing." Say what you need to, teach the lessons you feel are important, but know when you need to move from behind the podium and into the crowd to become a facilitator. 

The deck I presented from is below for your enjoyment. Holler with questions if you've got 'em.

 

PS: One of the joys and benefits of blogging is brand building - and that brand, it would be you. Or me. Thanks to my blogging here at Fistful of Talent, the kind folks at IQPC found me and asked me to present at a seminar focused on onboarding. What a great professional development exercise for me, but also an opportunity to share with my fellow HR cronies about my views on the world. The power of social media and the blogosphere is well and alive, folks.

Monday, January 26, 2009

Fixing the Annual Performance Review - I Recommend More Work for HR Folks

Dig2 While HR may not be the one doing all the work each year, traditionally they are the "cops" that track and manage it.  The "it" I'm referring to is the annual performance appraisal.  While the individual manager is typically responsible for their team's individual reviews, the HR folks are the ones checking their list twice to make sure every employee gets their appraisal and their salary review on their anniversary date or, in some companies, at the same time each year for all employees within a group.  But, if you want to be seen as a strategic partner - I think you need to redefine the performance review and be the policy "decider" not the policy "defender."  And here's one thought on where you can start.

Use Multiple Time Lines

Charles Green at the Trust Matters blog had a discussion a while back on the process universities go through to determine tenure for its professors and teachers.  The question Mr. Green discussed was ...is tenure an outmoded concept?  From the post ...

"Is academic tenure an outdated haven for non-performing professors stuck in narrow, irrelevant silos, crying out for the clear air of market discipline?

Or does the onslaught of 'pay for performance' in academia just encourage 'teach to test' and degrade intellectual curiosity?

Not much of a choice, is it? And have you stopped beating your wife?"

The post was discussing the fact that annual reviews of professors (the antithesis of tenure) would...in Mr. Green's words...

  "suborn short-term politicking, brown-nosing, teaching-to-test, and self-promoting schemes for 'customer' satisfaction ('customers' here meaning students and administration). Integration and holistic views take a back seat to self-preservation.

Wow.  Let's turn that thought onto our employees... we don't want self-promoting schemes and we do want them thinking about the enterprise as a whole and what they can do to move the whole forward. 

When I read it, I immediately thought of the process most companies go through with their annual employee reviews.  Does the annual review suborn more "me" thinking and less "we" thinking?  Add to that the ongoing concophany of voices saying today's Generation Y workforce needs more, faster performance information.  Does that just exacerbate the "me" thinking?  Will constant performance reviews create an even bigger challenge for employers wanting to retain top performers?

Hello rock - meet hard place.

It's not about today - and it's not about last year

I think we need to redefine performance reviews and create a two-tier performance metric - one that is short-term, and one that is long-term.  We can debate the length of short and long - but the concept is... 

If our audience wants more feedback, more often - then let's institutionalize it, and make it part of the plan.  But, if the real goal is to develop longer-term relationships with our top performers, we also need a longer-term metric that adequately presents the individual's total performance.  We need both short and long-term measures.

So, from an HR perspective we should lobby for quick, up-to-date, performance "check-ins' that can be juxtaposed with long-term (annual and bi-annual?) metrics in order to create a more rounded view of the employee.

I don't know about you, but I'd hate to think that my 20+ year relationship with my wife was based on last week's inability to remember to pick up milk - nor would I expect that all the years of doing the right thing should overshadow a huge recent indiscretion on either of our parts (purely hypothetical folks!)

As a close for this post, I leave you with another excerpt from Mr. Green's discussion:

"As to motivation, the annual threat of unemployment is like hammering a nail with a sledgehammer. It works so well it smashes the nail.

The great thing about tenure is it permits a team-based, integrated view of things because it lasts more than a year. There's a limit to how short you can make a meaningful relationship and still call it a relationship. It’s ironic that “modern” business insists on applying a single ancient pagan harvest-based unit of time to all things temporal. Why not change tenure to 6.43 years?"


If we want long-term, quality individuals who perform at their best each day, we should be looking at both measures.  I know it might seem like more work - but hey - that's why they pay us.

Tuesday, January 06, 2009

Naked Budgeting - The Economy Just Made Your Comp Budget a Lot Skinnier...

Hey!! All you HR and Recruiting pros out there in America... Times are tight, no question... Snuggled up to the friendly Finance and Accounting pros in your organization?  If not, you should... Here's a little snigglet to make sure you have enough duckets to fund all the hyped pay-for-performance initiatives you are cooking up in the test tube you call a laptop...

The budget model?  It matters. 

Duhhhhh, you say.  You get the budget.  Hold on there, Donald Trump, because I'm not talking about theTurnover_factor fact you have all the salaries loaded into the budget.  I'm talking about the FORMULAS the Finance quants are using underneath the names and the numbers. 

The big one you need to be aware of is this - Does your comp budget model have a Turnover Factor, or do the funds vacated by positions that are vacant remain in the comp budget, available for proper use?

It matters a lot.  A turnover factor projects the amount of turnover a company/division/department is going to have during the budget year, then automatically reduces payroll by the appropriate amount.  The logic used when putting a turnover factor in the budget is that those funds should be unavailable in the budget since there won't actually be PEOPLE in those jobs (for that time period).

Details, details....

The effect of the Turnover Factor?  Your compensation budget gets a lot tighter, and you'll have a lot more variances to explain month to month.  And that kind of stinks... But it's actually the right way to do it from a business perspective...

Additionally, the Turnover Factor puts a LOT of pressure on the pay-for-performance system.  Have a lot of managers who have a hard time telling low-performing employees they're not doing that hot with no raise or a limited increase?  A turnover factor means you are dealing with a truly zero-sum game.  For every dollar your manager gives to a low performer, he won't be able to give that dollar to the star. 

Especially if you have a Turnover Factor - because there's no built in slush fund.  Budget 4% for increases?  With a Turnover Factor in play, that's exactly what you have - with your active employees.  Without the TF in play, you've got some wiggle room from a budget perspective.

The turnover factor's even more important than ever in a down economy, because few companies are taking the normal path with NEW budgeted headcount.  The economy's down, so that means that most companies are budgeting for zero, or very limited headcount growth from a FTE perspective.

Which means your built in slush fund is even tighter, especially if you have a turnover factor.

So give your Finance pro a pound today and learn more.  As your company grows, the Turnover Factor is a way of life, but maybe you can delay it a little bit longer.  Remember - you're doing it for the PEOPLE - and who could blame you for that? 

At the very least, take your financial analyst to lunch and tell them your turnover will be next to zero, which means you'll benefit from any vacant spots above your stated turnover level.

It'll be money well spent...

Monday, January 05, 2009

Crime and Company Culture - Broken Windows & Broken Companies

Broken window2 Everyone wants to work at a quality company.  Each of us wants to feel good about our place of employment and see our company's name on the "most admired" lists published each year.  It's an admirable goal and the right thing for your employees.  From a talent standpoint, it's critical.  Attracting the best and brightest - those you can rely on for superior performance year after year - is not only a function of great recruiting on the part of the recruiter, but also a function of the company's reputation in the market place.  Face it, it's easier to recruit for Google than for Countrywide Home Loans (voted wost company in America in 2008).

It's Not About the Big Stuff

When working with clients on ways to influence their employee behaviors and reinforce cultures, it seems that the first discussion is always about the "big" stuff - the program, the reward, the system.  The client almost immediately wants to launch something with a splash and show the employees they mean business with their reward and recognition initiative.

I'm not against big launches, but what's really important is the little stuff - not the big stuff.  I think we can take some direction from the "Broken Window Theory" (BWT).  While still a bit controversial among social scientists and psychologists, I believe there is enough directional evidence that we should pay attention to it.

For those that are unfamiliar with the BWT - it probably got its best press during the Rudy Giuliani years... 

"Thus, Giuliani's "zero tolerance" roll out was part of an interlocking set of wider reforms, crucial parts of which had been underway since 1985. Giuliani had the police even more strictly enforce the law against subway fare evasion, and stopped public drinkers, urinators, and the squeegee men who had been wiping windshields of stopped cars and demanding payment. Rates of both petty and serious crime fell suddenly and significantly, and continued to drop for the following ten years (see: the 2001 study of crime trends in New York by George Kelling and William Sousa). - wikipedia"
 
The concept is that by paying attention to small things like fixing broken windows, painting over graffiti, cleaning up areas of the city, cracking down on pettier crimes - it will have a positive affect on the people and a detrimental affect on crime.  By keeping up with little things in the environment it communicated to people that the area was a good place and that crime wasn't welcome.

Sweat the Small Stuff

When it comes to company culture and having a reputation that attracts and retains quality people, the small stuff is the important stuff.  If the boss adds a little to the expense account, maybe the CFO adds a little to the balance sheet.  If the person in the cube next to you treats a vendor poorly, then maybe that vendor adds a little extra to the invoice next time - or tells 100 people not to do business with you.  In fact, in November, CBS on line had an article entitled "Bad Behavior Contagious, Study Finds" - highlighting some of the research on this phenomena.  For me, steeped in social psychology and the impact of the social norms - it's a no-brainer.  But most folks blow off the effects of small behaviors.

Keeping your eye on the small stuff is probably the single biggest thing a company can do to influence culture.

Some Comic Relief

When thinking about the Broken Window Theory for this post, it reminded me of a Demetri Martin bit... for your enjoyment...


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Friday, December 05, 2008

Five Reasons Why You Shouldn't Fire an Employee Who Meets (and at times, exceeds) Expectations...

Five reasons you shouldn't fire an employee who meets and, sometimes exceeds, expectations?  Sure, I've got those for you.  The rundown:

1. The employee had done some good things in the past and is likely attractive to your competition.Auburntigers  Is the problem you or them?

2. The employee has had a rough stretch.  Giving the performance you've seen in the past, they're capable of getting back to that performance level.  Have you coached for performance?

3. THERE'S NO GUARANTEE THE TALENT YOU RECRUIT WILL PERFORM AT A HIGHER LEVEL THAN THE EMPLOYEE YOU HAVE, and some would say the odds suggest you'll get someone who performs at a lower level, or you'll lose time and money when you train them to that level of proficiency.

4. THERE'S NO GUARANTEE THE TALENT YOU RECRUIT WILL PERFORM AT A HIGHER LEVEL THAN THE EMPLOYEE YOU HAVE.

5. I repeat - THERE'S NO GUARANTEE THE TALENT YOU RECRUIT WILL PERFORM AT A HIGHER LEVEL THAN THE EMPLOYEE YOU HAVE.

What's got me thinking about this?  Simple.  The crazy, crazy people who make decisions to fire successful college coaches when they have a bad year.  The latest is Auburn University, running out football coach, Tommy Tuberville, this week in Alabama. 

From Ivan Maisel at ESPN:

"You're Auburn University and your cross-state rival Alabama, after lying dormant for a decade, has become formidable again. You've had a mediocre season and you won't play in a bowl game for the first time in nine years. But you're OK. You have a coach who has been the model of stability in an unstable business.

You've had Tommy Tuberville for 10 seasons. That became the longest tenure of any coach in the Southeastern Conference once Tennessee fitted Phillip Fulmer with a pair of cement coaching shoes. Even after going 5-7, your coach has won nearly 70 percent of his games against everyone (85-40, .680), and exactly 70 percent (7-3!) against the hated Crimson Tide.

Tuberville has won one SEC and five Western Division titles and been unbeaten one season. That 2004 team performed well enough to play for a national championship. Too bad the BCS ripped you off.

Having a coach like that is good. The last thing you want to do when facing Nick Saban Inc. is call in the moving vans and start over. Only someone with an athletic death wish would trade in a coach with 10 years of recruiting ties throughout the Southeast for a staff that might not be able to find 6A finalist Hoover High with a pack of bloodhounds and a Garmin.

You've got a new athletic director, too. Surely they wouldn't be stupid enough to make the same mistake and run off Tuberville. During games, he barely has a pulse. They call him the Riverboat Gambler for his play-calling guts. And big games? Not only is he 7-3 against Alabama, he has won nine of his past 14 games against top-10 teams.

Off the field, his players don't get in trouble. They go to class, too. In 2007, 20 players had at least a 3.0 GPA.

It's like they say on Wall Street. When the masses are selling, the smart guys are buying. The SEC masses are selling. Tennessee is starting over with 33-year-old Lane Kiffin. Mississippi State forced out Sly Croom. You want to know what not to do? LSU fans are grumbling about Les Miles one year after he held the crystal football!

Remember this scene the next time you're thinking about pulling the trigger on the salesperson who was at 160% of quota for 2 years, but has hit a rough patch over a two to three month period. 

The recruiting you do for the backfill is going to be a crapshoot. If you're lucky, you'll do as good, not better...

And Auburn University will be looking for another coach in 4 years.  Tuberville?  He'll be at an equal or better job somewhere else, making his former employer look foolish...

Wednesday, November 26, 2008

Where Are All the Qualified Candidates? Aren't We In a Recession?

Everybody assumes that every job you post will result in an onslaught of candidates during a down economy.  After all, you have people being laid-off in droves, why wouldn't recruiting be easier?  That case was also made in the lead article of the 11/27/08 edition of Workforce Recruiting titled "Unlike Most Employers, Mass Mutual is on a Hiring Spree".

A reporter from a local newspaper also recently forwarded me a study from SHRM called the "hiringBellcurve2007 difficulty index."  The running index was an ongoing survey designed to chart how hard it is to hire people at different points in time.  The index also suggested that it's getting easier to hire people in a down economy. 

Both are good thoughts, but both are wrong on many levels.  Here's why - stay with me on this one.

Voluntary turnover goes down during recessions. It’s a fact that during recessions, fewer jobs are available. It doesn’t take a Harvard MBA to determine that means fewer companies will be actively stalking your talent, which means reduced voluntary churn across your employee base

The good news is that with unemployment levels in the low single digits for the past couple of years, lower turnover is going to feel like a vacation.

The bad news is that when the economy turns bad, a lot of the talent you need for open positions (the high performers with skills that are a direct match) becomes risk-adverse, meaning they won't be interested in your opening.  After all, if the world around you is conducting layoffs and you feel like you are relatively secure where you are, why on earth would you look to change jobs in a recession?  All that will do, in the minds of the best candidates, is expose them to a situation where they don't have all the information and might get laid off three months into the new job.

Translation - I'm safe where I'm at, so I'm not going to put myself on the market right now.

Result - While there are many candidates in the marketplace, the ones you really need - the high performers with skills and experience that are a direct fit for what you need - are hunkered down inside their companies, and won't consider a move until the economy improves and the layoffs stop.

Recruiting's not easier in a down economy, because the candidates you really need for your openings aren't interested in moving.  They're hunkered down inside their current company, and they're not coming out of hibernation until the recession is over.  Retraining of employees is great, but that won't appease the hiring manager you have to deal with who expects a direct match to their needs.

For that hiring manager, retraining or accepting a candidate who's a 60% match, but available immediately, isn't something they're interested in.  Unfortunately, that means your time to fill is going to be higher than you would expect in a time of high unemployment, and it also means the average time required to find a job for some very credible candidates is going to be higher than it needs to be.

Recessions stink.  Who would have thought it's harder to recruit now than in the boom times?

Monday, November 24, 2008

Hey Talent Magnet - Layoffs or Salary Freezes? Which Would You Choose to Protect Your Employment Brand?

OK - you're the CEO, Director of HR or Director of Talent Acquisition, and you're at a 2009 planning meeting.  While no one can look into a crystal ball, it looks like your company will be impacted in a significant way by the economy, as the 90-day pipeline sits at 60% of it's usual level.

With that in mind, your company has always lived within its means.  You don't burn cash, so the BW pop up - cuts conversation turns to the best way to minimize the cost of talent as your firm rides through the downturn. Two options are presented to help your company reduce the cost of talent, and you're expected to weigh in with your preference.  Do you advocate:

A.  Layoffs to reduce cost (while maintaining your budget for annual increases, current level of benefits, etc.)

B.  A freeze in pay increases and tweaks other items like benefits to hopefully avoid the need to do layoffs and impact employees in your company.

What say you? Hit me in the comments with your thoughts, and be sure to give me your take related to which approach is better for your employment brand - meaning it will maximize your ability to attract and retain talent, both now and when the economy picks back up.   It's a tough, but real, spot.  After all, layoffs are never good for the brand when you're attempting to recruit, and salary increase freezes have never been known to maximize retention.

Notes on what's being seen nationally along these lines from Business Week:

"But there is one important way in which history is not repeating itself. Average annual earnings of workers fell for several years in the 1930s but have not fallen since. And it looks like they won't fall in 2009, either. Businesses are reporting that they plan to increase pay by roughly 3.5% in 2009 for U.S. workers, according to recent surveys by compensation consultants Mercer, Watson Wyatt Worldwide (WW), and Hewitt Associates (HEW). Salary increases are crucial because rising wages make it easier for some families to pay their debts.

The news isn't all good. Pay hikes may fall below current expectations, and while employers are planning to raise pay, they are simultaneously cutting jobs. The jobless rate hit 6.5% in October, and many economists think it could reach 8% by late 2009. Employers are also looking for less conspicuous ways to save on benefits, such as reducing 401(k) matches or increasing deductibles and co-payments in health plans. A Watson Wyatt Worldwide survey in mid-October showed that 26% of employers were planning layoffs or other reductions in force in the coming 12 months, while 25% planned to raise employee contributions for health care. In contrast, only 4% were planning to cut salaries. "Firms are cutting workers instead of wages," says Ethan S. Harris, co-head of U.S. economics at Barclays Capital in New York.

By raising pay while cutting jobs, companies can "thin the herd" while giving remaining workers "the big corporate hug they need," says William C. Yoh, CEO and president of Yoh, a unit of Day & Zimmerman Group that supplies high-tech temps. Starbucks (SBUX) recently announced it was cutting jobs but isn't cutting pay or benefits. "We have to take care of our partners [i.e., employees] and keep them engaged," says spokeswoman Tara Darrow."

What would you do?  Vote with your comment, and justify it from a talent/employment branding perspective....

The Contributors

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