Introduction

  Most people in the employment industry agree that good people are hard to find.  Billions of dollars are spent annually to find and hire needed staff.  High employment levels, business growth, and cost cutting efforts by businesses are exaggerating the problem.  People change jobs frequently, creating continuous churning of people through jobs.  Electronic hiring has created a landslide of resumes flowing from one open job to another.  Human resources people are stressed to even handle the flow of  “paper work” for each job.  They have very little time to properly process the applicants as people.  Cost cutting in Human Resources departments and loss of experienced trained human resources people through retirement has reduced the ability of Human Resources departments to evaluate employment candidates thoroughly.  Many hiring managers are not impressed with the work of Human Resources departments but are no better trained to perform their human resources responsibilities during a hiring process.  Electronic hiring through impersonal job posting on web sites and on job boards has complicated the problem.  In summary, the current process is fatally flawed and business and workers are suffering.

In this first article in a two part series on Turmoil In Hiring High Performance Employees, Causes of Turmoil will be reviewed.  The second article will discuss ways to Dampen the Turmoil.

PART 1: CAUSES OF TURMOIL

Why is it difficult to hire productive people?  Why do employees leave their jobs on an average, at the national level, of three years, and, in high tech areas, approaching two and one-half years?  How does forced, early retirement affect the bottom line?   

These questions and others like them are at the root of the problem and will be discussed under three Causes of Turmoil: Inappropriate Hiring, Electronic Hiring, and Loss of Knowledgeable Workers.

CAUSE #1: INAPPROPRIATE HIRING

 
In 2006, 80% of open jobs were filled without being published outside a closed group of trusted sources.  These hidden jobs are filled primarily by trusted referrals from within a closed group of employees, recruiters, staffing service companies, business associates, friends, families, and other sources known to hiring managers and human resources people.  Most of the jobs were filled from the ranks of the employed, people moving from one job to another. 

Some of these hires were made without a formal resume.  A referral from a trusted source has a tendency to reduce the hiring process time and cost.  Overworked human resources staffs amplify this tendency.  HR staff may take the easy path of relying on the referrer’s skill in identifying candidates.  Similarly, hiring managers, needing to fill the job quickly, may also place too much reliance on the referrer’s competence to make a good selection..  Unfortunately, in many instances, reducing the time and cost of hiring allows and encourages the placement of a person in a job for which they are not the best candidate.  In the rush to fill an open position and based on an assumption about the quality of the trusted referral, some hires are made without the diligence necessary to confirm the candidates suitability for the job.   

A low quality referral is more likely from a non-paid or “gratuity” paid referral source.  Trusted referrals from employees, associates, friends, and family are more of an awareness of a person who might be appropriate for the job.  Referrers in this group are not going to make a close investigation of the real competence of the person being referred for the job.  The referral is viewed as a service to the requester.  Human resources people and hiring managers may give too much credence to the quality of the candidate coming from a trusted source.   

Another cause for an inappropriate hire is that a trusted referral may be an apparent immediate solution and other better people are not investigated.  Finally, referrals from the ranks of the employed come with an assumption of quality; employment confers the mantle of suitability.  Better candidates may be found elsewhere, even among the more mature unemployed. 

Clearly, suitability of the referral is much better when a referral is made from a trusted source that is paid, upon hire, for the referral.  The paid source is not going to refer substandard candidates because they want to get repeat business based on the quality of the people that are referred.  These sources use their professional skills and testing to select people who are properly qualified for the open position.  Unfortunately, these sources are very expensive with fees in the range of 20% of the annual salary of the person hired.  These sources are used for a limited number of hiring activities.  

Many companies will focus on no, or virtually no, cost referrals and will avoid paying fees to recruiters and other staffing companies in an effort to save money.  A price is paid for this avoidance in terms of less than optimum hires, reduced productivity, poor performance, and, sometimes, another round of firing and hiring.  The real cost of a “zero” cost bad hire is in the range of the fee paid to a paid employment source.

CAUSE #2: ELECTRONIC HIRING 

The situation is even worse when a business has to hire through electronic media.  The process is inefficient for all involved, is flawed in its execution, and places the hiring company in a high cost, hiring environment.

Businesses spent $13 billion dollars in 2006 on electronic publishing (posting) of available jobs.  Almost all of this money was spent on major job listing Internet sites such as Monster, Career Builder, Dice, and Craig’s List.  Hundreds of other for pay job listing sites and State, federal, local, and other non-profit job club listing sites also contained posted jobs.  Many jobs were listed on multiple sites. 

Four million people were hired through these postings.  The average cost of the hires through electronic job posting was $3,000.  Additional money was spent within the businesses to create the postings although some of that money was spent to create the listing on the company’s web site for publication within the hidden job market.   

Although $3,000 per employee hired is significantly less than the cost of paying a recruiting or employment fee, companies are no better prepared to properly screen and qualify candidates from the electronic source than they are from all other sources.  Human Resources departments are not highly funded and are frequently understaffed.  These departments do not have time to process all the candidates acquired by electronic means.  They rely on electronic screening of resumes using key words that are not known to qualified candidates.  Even with such screening, hundreds of resumes are selected for a single job.  Due to budget restrictions, many Human Resources departments are not staffed with highly trained evaluators and don’t have time to review all the resumes.  Each resume is reviewed in matters of seconds.  It is virtually impossible to select the right candidate under these conditions. 

Ineffective hiring processes are made worse when the hiring manager interviews the candidate.  Hiring mangers are trained in the specifics of their profession, not in human resources skills of interviewing and evaluating.  Managers may assume that the Human Resources department has been thorough in screening and evaluating the candidates forwarded to them.  Bad hiring decisions may be made. 

Some companies have turned to outside sources to investigate and evaluate candidates.  Costs of these services increase the cost per employee hired while reducing the risk of hiring an unqualified candidate.  Many of these services are mechanical and do not match the evaluative services of a paid, professional recruiter or employment service.  Some of the outside sources are equivalent in cost and service quality to directly paid recruiters and employment services.  In these cases, the total cost of hiring is more than if a recruiter and employment service had been used originally 

CAUSE #3: LOSS OF KNOWLEDGEABLE WORKER 

The primary cause of loss of knowledge workers is the convergence of the perfect storm of “disemployment”: short term thinking on the part of businesses, turnover, the pending retirement of baby boomers, and the ineffective use of older workers.  The first winds of the storm are being felt now. 

The first ingredient in the perfect storm is short-term thinking.  Businesses in the United States are paranoid about short-term profitability.  This causes decision-making that enhances quarterly profitability to the disadvantage of long range planning.  Long term plans and actions are needed to develop and improve a company’s workforce but are infrequently written.  Human resources plans, even if developed, cannot withstand the onslaught of decisions made about staffing based on business periods significantly shorter than those needed for effective and efficient staff development.. 

The second ingredient is turnover.  Turnover is not only associated with changes in staff but also with quality of work done.  Average time of employment in a single company is dropping rapidly.  Two and one-half years is frequently cited as the average time of employment in businesses in the San Francisco Bay area.  The days of long-term employment and retirement from a single employer are gone forever.  Furthermore, the days of retirement from a single profession are gone forever.  Employees do not have a focus on building a relationship with one employer and contributing their skills and knowledge to that company’s business process over an extended period of time.  Job-hopping does not build a skill set that can be useful over an extended period of time.  Technology changes are contributing to the feeling that little is permanent and necessary to be maintained.  Rapid turnover is accepted as the norm rather than a condition to be rectified. 

Another aspect of turnover is a mixture of employee values, expectations, and perspectives.  Three distinct cultures operate in the work force for the first time in United States employment. Baby boomer employees, mid-age workers, and new entrants in the work force have significantly different values, expectations, and perspectives about work and life.  Foreign culture workers create an overlay of complexity on this already complicated environment.  One human resource approach will not work for all.  Few companies are recognizing this in their employee policies.  Rather than fight the system, employees find changing jobs or professions an easy way to reconcile the differences. 

The third ingredient of loss of knowledge workers is retirement of baby boomers. Population pyramids in industrial nations are turning into diamonds with more middle-aged people than young or old. The US, Europe and Japan have been borrowing
talent from the rest of the world but the source is drying up.  In the United States, in the next twenty years, 40,000,000 workers will reach the age of 65.  If they retire when they reach 65, only half that number, 20,000,000 workers will be available to fill the knowledge gap in the highly productive employment years from 45 to 65.   

First signs of the coming gap are being observed now.  Cost cutting moves of forced early retirement and plant closing based on the cost of older workers are adding to the few early boomer retirements.  Outsource opportunities are decreasing and will become more expensive as the global economy develops.  The cornerstone problem of not enough workers will continue and will grow geometrically.

A fourth subject should also be considered in the loss of knowledge workers: ineffective use of older, often unemployed, people.  This subject will become more important as the ranks of unemployed people grow as a consequence of boomer forced retirement, whether through early retirement or as a result of reaching the “retirement age” currently set at 65.  A social and economic loss is occurring by not using the knowledge, skills, and work ethics of older workers.  Age discrimination and the perceived high cost of older workers are inhibiting the effective and profit creating use of older, unemployed workers.  A revolution by older workers is coming as baby boomers, who cannot afford to be without work, force social and business change as they have created change over the last 50 years of their impact on business and society. 

In the final analysis the key ingredient is lack of long term planning and development and execution of plans for the changes that have and are occurring in the field of employment. 

CONCLUSION TO PART ONE 

The situation will not get better.  Turmoil will continue in employment of high performance people and will get worse as baby boomers leave the work force.   

Ways to improve hiring practices, to respond to turnover, and to overcome labor shortages will be discussed in the next article in this two part series on Turmoil in Hiring High Performance People: Dampen the Turmoil. 
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 UNEMPLOYED, EXPERIENCED WORKER’S ROAD MAP TO EMPLOYMENT - A SUBJECT GUIDE  

THE UNEMPLOYED, EXPERIENCED WORKER’S DILEMMA

Experienced workers, employed for long, continuous periods do not maintain skills and contacts related to finding a new job.  When unemployed and having to find a job, they find it necessary to brush up and, in some cases, learn completely new skills in an unfamiliar environment.  This Subject Guide provides a bird’s eye view of the map for skill development leading to getting an interview and employment.  See below how to receive without charge our seven pages, white paper that provides the complete road map for getting a job. 

DEFINING AND TESTING 

MARKETING AND SELLING 

YOUR JOB TRIP SUPPLIES

Business Cards
Resumes
Letters
Qualification Summary
Email  

ELECTRONIC HIRING: JOB BOARDS, POSTINGS, AND RESPONDING

NETWORKING 

Family, Friends, and Social and Community Contacts
Electronic Communities
Job Clubs
Career Fairs and Business Events  

GETTING THE INTERVIEW 

INTERVIEW TECHNIQUESTHE JOB OFFER AND NEGOTIATING 

A FINAL WORD: PREPARE FOR FINDING A JOB WHILE ON THE JOB 

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