Thursday, July 27, 2017

Follow the Money

The inherent conflict of interest in recruiting

How do you measure the effectiveness of either your internal recruiting efforts or your outsourced solutions?  What is the overall cost of your recruitment activities?  What does recruiting mean in the digital age when resumes are everywhere and access to candidates is infinite?   These are common questions we face in this industry, but perhaps at the root of it all lies the conflict of interest between the HR/Recruiter and client.

In a recent interview, and #1 in a forthcoming series, with the founder of Wentworth Recruiting, a recruitment and talent acquisition consulting firm based in Southern California, we discussed the state of recruitment in the digital age. John Wentworth spoke candidly about the “elephant in the room," i.e. the inherent conflict of interest with outsourced recruiting business models.

He begins his tale in the mid 1970’s, as manager of the Carte Blanche HR department.  “I had no rational way to determine an annual raise for my in-house recruiter,” said Wentworth.  “We did not measure her performance in any meaningful way, so I had no way to incentivize productive work.  My best guess as a measurement tool was lack of complaints. Low number of complaints, high raise." 

He went on to tell the story of this particular recruiter invoking the "myth of difficult recruiting." The “myth of difficult recruiting” purports that the job is too hard for one individual in-house recruiter to manage and succeed at. Because they believed her complaint about the barriers to her success, they farmed the recruiting function out to an agency.  Then after a few months when the position went unfilled she complained about the agency not fulfilling their promise to get the job done. Somehow this recruiter still got her annual raise and the band played on.

Does this sound familiar?

John eventually left that position and went to work for a recruiting agency specializing in IT and working on a Contingency business model.  If you are not familiar, Contingency recruiting means the agency doesn't get paid until the person is placed.  In this situation, John encountered an attitude of impatience and disdain among his colleagues, who regarded the client as the unfortunate obstacle between them and their money. Hiring managers at their clients were demonized for ridiculous and irrelevant candidate requirements and for sluggish compensation policies. In Wentworth’s words, "we were taught to do whatever it takes to get the placement.  I will leave it to your imagination to figure out what that means.”  

The takeaway lesson in Wentworth’s last experience was that the contempt was transparent to the clients and this caused a relationship of distrust. This dynamic between recruiter and client has led to a negative reputation for contingency agencies across the board, driven by the flow of money which incentivizes the wrong behavior. “They didn’t trust us and we didn’t trust them,” said Wentworth. So a real partnership was not possible.” Without a good partnership, good recruiting is just not possible.

As John continues to describe his journey, he next went to work for a group practicing a more elegant recruiting model: Retained Search. In this business model clients generally pay a third up front, a third at a progress point and the last third either when filled or at a final progress point.  To his surprise the client was still the enemy but for a much different reason.  The internal pay structure (bonuses, commissions etc.) was based on the amount of money that was brought in and not connected to service performance.  The emphasis was on booking business, and not enough on filling jobs with the right candidates. The way the money flows incentivizes the wrong behavior, again.
  
In today's digital and social world, recruitment firms face a whole new slew of issues.  Before the digital age, human resources were much harder to find and the broker relationship had value. But today, that model is outdated because of the proliferation of and ease of access to previously difficult to find resources. It is why your insurance broker talks to you more about services and other products you can purchase from them to make your risk management easier. Same idea for us recruiters.

The dual challenge of moving beyond the brokerage function of client service and operating so that the money flows in the right direction to incentivize the right parties to do the right thing, continues to challenge today’s recruiting firms. At the Wentworth Company, we operate beyond the brokerage relationship by providing highly successful results through a data driven process that captures the culture of the organization, the design of the job and the compensation package. When you follow the money, it moves the wrong way with most recruiting models used today. At Wentworth Company, we take care to avoid the inherent conflicts of interest between the recruitment process and the client, so that the money moves in the right way, rewarding both sides with the benefits of successful placements.

In my next dispatch, we will explore this data driven process and the value it provides to clients in a world of LinkedIn, Ladders, Indeed and Glassdoor.

If you would like to talk more about these ideas, please reach out to Dennis Bernstein at dennis@rnr_llc.com.

Or visit www.wentco.com

Thursday, July 20, 2017

How Technology is Helping and Hurting the HR Recruitment Function



In the wake of Harver's successful raising of $8.1 M, everyone is talking about AI and its role in recruiting. The advantages of Harver are obvious: sophisticated tools measure candidates' characteristics while saving the cost of recruiter salaries spent on resume sorting.

The disadvantages of Harver, and all other automated tools, however, are several.

First, it's impersonal. Some recruiting firms like this; subscribing to the time=money rule, the time taken to actually talk with and interact with a candidate can be viewed as an unnecessary expense. But what is important to understand is that this impersonal quality places a burden on how this technology is used. 

Some candidates will not fill out these sorts of questionnaires until they feel that the employer is serious about their candidacy. So if Harver is used too early in the recruiting cycle, these candidates may be insulted and their enthusiasm for the company's job may be lower than if they are asked to fill them out after they have developed a desire for that job. In this time of increasingly tight labor markets, candidates' enthusiasm may very well make the difference between getting and not getting a hire for a hard to fill job. So, what may be convenient for the recruiter, if used incorrectly, can negatively impact the effectiveness of recruiting. Harver is just one of many examples of this. 

Additionally, there is some research that suggests that a when a candidate has a positive experience with a potential employer's recruiter, this makes them more likely to accept an offer from that company. This shows that human interaction between recruiter and candidate is influential on candidate decisions. And, of course, seasoned recruiters can get candidates to confess all sorts of things and discover inconsistencies in candidates' stories in other ways, both of which are very useful in understanding whether the candidate is a true fit with the company's job or not. Machines cannot do this, yet. 

Harver sells itself as a replacement for a resume, which is interesting to consider as a possible natural progression in our ever changing world. But the Harver system falls short in that it asks nothing about the specifics of the job. Knowing that a candidate has done this or that task, and at what level of proficiency, is critical information in employee selection. However, combined with an old-fashioned behavioral interview, the candidate information gleaned from Harver creates a very powerful suite of information to guide a selection decision. 

Last, effective prediction of on-the-job behavior (which is what we really are asking from the selection process) works like this:
1. You break the job and the work environment into measurable parts.
2. You create a way to measure each one of these parts and quantify the results.
3. You establish a target for how much proficiency you need in each of the parts of the job or the employee/culture relationship.
4. You measure how much a candidate has of the needed proficiency and score it on the scale you created.
5. You compare what you need to what the candidate has, part by part, and get a clear, vivid and relatively predictive score.

(Example: You need someone to lift 25 lbs. to their waist. You set up a scale from 5 lbs. to 45 lbs. (5 lbs., 15, lbs., 25 lbs., 35 lbs., 45 lbs.) You ask the candidate to lift various weights. Now you know what they can do and if it's enough.)
A big problem with tools like Harver is that you don't know what you need. So you get all sorts of scores for your candidate, but, absent goals or targets, you don't know if what the candidate has is enough. Until you have the statistical data to establish a bone fide correlation between candidate and position, using these tools as advisory is best. Yes, they can paint a good picture of the candidate, and this information is useful to recruiters, but the results should serve to augment a process based on personal interaction and attention paid to measuring up to a set of job skill criteria and fit to company culture. 

So, although the resume may be a dying vestige of a bygone era, skills still need to be measured and nothing can replace the value of human to human interaction.
John

John Wentworth
President
Wentworth Recruiting
310.732.2301 | 
johnwentworth@wentco.com
www.wentco.com

Tuesday, August 23, 2016

#5 in John's Thought-Leadership Audio Blog Series: For the Talent Mechanic: Fact-Based Talent Management

#5 in the Series: For the Talent Mechanic: Fact-Based Talent Management

In video #5, you will learn techniques to help make powerful changes in your organization. Get your data geek on with John and examine the data sets that help organizations to correlate sources to performance of hires. Learn the methods that support hiring people who resemble your most stable and productive employees and save time and money along with minimizing organizational disruption.
For #5 in the Series, visit HERE

John asks that you call or email if you'd like to chat about anything in these sessions. Having been recruiting and thinking about recruiting for 40 years, he "loves talking about this stuff!"

Johnwentworth@wentco.com
310-732-2301


#4 in John's Thought-Leadership Audio Blog Series: Fact-Driven Recruiting and Talent Management

#4 in the Series: A Sample Report

For facts to be useful, they must be boiled down to quantifiable data. In video #4, Wentworth will walk you through a sample report generated from a Wentworth Recruiting style data-driven performance management assessment. Reports such as this one set expectations on what to expect from a recruiting function so that hiring processes can become more predictable.

For #4 in the Series, visit HERE

John asks you please call or email if you would like to chat about anything in the Series that piques your interest. Having been recruiting and thinking about recruiting for 40 years, he "loves talking about this stuff!"
johnwentworth@wentco.com
310-732-2301