Tuesday, August 21, 2012

Innovation in Job Advertisements

Given the best practices of job advertisements, many job ads became pretty uniform. Hence, it is quite refreshing when some HR departments act creatively to stand out from the crowd. 

In this post, I’d like to point out seven examples, five from Poland and two from Germany.

1.      Aplikom intends to motivate jobseekers to apply with inviting them to read their employees’ reviews of work at Aplikom.

2.      Corresponding to employee satisfaction, Atena added a sentence “90% of employees are satisfied with their work at Atena”.

3.      MobileMS that looks for sales people, listed the remuneration structure candidates can expect along with the total salary to be earned after 3, 6, and 12 months. The employer also shares their annual revenues so that candidates can better understand their income potential.

4.      On the opposite, Aviva’s requirements for a complete application are scary. Intern candidates are required to submit a photo, date of birth and marital status. Notably, the employer also provides an option to apply without those details by using their contact form.

5.      Instead, Edelight’s idea to attract candidates was to ask for their competency level at football table. Moreover, Edelight uses the job advert to cross-promote themselves as shopping destination. They wrote “By the way, you can find the right kind of attire for the job interview here: www.edelight.de/mode”.

6.      Switalski & Synowie’s attracted my attention, because they thank their applicants for submitting their application upfront.

7.      Flare Games job ad disconnects with best practices altogether. First, job duties are incorporated into the list of requirements. Second, no capital letters are used in the text. Third, text applies mathematical formula to define the talent wanted and geographic latitude and longitude of company’s headquarters. Finally, the job ad is enriched with a QR Code.

Tuesday, August 7, 2012

Screening interviews done by interns and candidate experience

For some time now, companies recruiting interns has promised those students meaningful projects and the opportunity to assume responsibility. Ever since, brewing coffee has been labeled as the most ungrateful intern’s task ever and many companies, MNC and start-up alike, will address brewing coffee or actually lack thereof in their job adverts. See e.g. the one below by McKinsey.

Indeed, short of staff start-ups tend to entrust interns with quite a bit. One such task is interviewing candidates. The learning curve is steep and the responsibility huge. Then, interns can influence candidate experience greatly.

To ensure a positive candidate experience, HR department should not only train the interns in interviewing skills but also design the interview sequences right and manage candidate expectations appropriately. In particular, some techniques include:

* Plan the interview as a three stage process, interview questions asked by employer, questions asked by candidate and outline of the recruitment process.
* Prepare the list of frequently asked questions by candidates and answers and train the interns in answering them
* Encourage interns to inform you of new questions asked by candidates and consult with you on the best answers
* Continuously help interns improve their interviewing skills
* Select the right interns to do the job

Last but not least, leaders should keep in mind, that no matter how smart and well trained the interns are, they will be hardly able to engage in a discussion with the candidate. As a result, most intern screening interviews are one way questionings. Experienced staff may perceive them as unprofessional and may not feel appreciated accordingly as one recent candidate at Fab shared on kununu.

Tuesday, July 24, 2012

Multiple job openings on single job advert

Traditionally, one main difference between online and newspaper job adverts was that the former one did not allow for listing several job openings within one job advert.

Obviously, there have been some changes since I recently came across the following advertisements.

While Cersanit looks for intern in four different departments with a single job advert, American Express is looking for customer service officers for high-end clientele in four different teams.

About the reasons for such job adverts I could only fantasize.

Tuesday, July 10, 2012

Recruiting 2.0 – Jobseekers’ ads, social media profiles and personal websites?

In the German employment market there are two kinds of advertisements. On one hand there are job vacancies posted by companies (Stellenangebote) und seeking job announcements posted by jobseekers (Stellengesuche).

Traditionally, jobseekers announced their readiness to work in newspapers. Today, this option is mostly used by handcraft workers, often looking for private arrangements. While white-collar jobseeker set-up a social media profile (notably with a status option “seeking employment”) or register with a large job boards and post their CV.

Companies actively looking for staff buy CV contingents on these job boards, allowing them to review certain number of jobseekers within a given time frame.

In career advice literature, some consultants suggest setting up a professional website outlining the jobseeker’s experience, sample projects, etc. in order to land a dream job.

Do private websites help jobseekers get on HR’s radar?

How effective are such private websites, considering the surplus of social media platforms?

How often do HR departments just google the talent in Internet in order to find private website profiles and thereby possibly a dream candidate?

Tuesday, June 26, 2012

Hiring People is not a Formula 1

Hiring decisions are made slowly. Only a few companies will use speed to their advantage. Ability to make the call allows those companies to spot talent and get it, when the opportunity arises.

With an average time to hire of 60 days, majority of companies really take their time with the recruitment process. There are many reasons why hiring cycle is long:
1.      Candidates must observe their notice period with their current employer.
2.      The candidate requirements evolve as the interview process starts, so that search criteria change and the process extends.
3.      A long-term vacancy causes hiring manager to reorganize the work so that s/he is no longer so committed to fill the vacancy and more picky about the new hire.
4.      HR and hiring manager hope that tomorrow will bring even a more perfect match between the vacancy and the candidate.
5.      Companies do not have a clear picture about vacancy costs. Not only in Dollars, but also in terms of team morale, job stretch and amount of overtime (and corresponding burn-out risk).
6.      Companies cannot set the right recruitment strategy for particular type of vacancy. They usually try least expensive recruitment channels, employee referrals and job ads. Only with rising desperation, companies engage with recruitment agencies, but even then they are concerned about the recruitment costs and tend to be not very committed to the candidates presented by external recruiters, often in connection with point 3.
7.      Companies stick rigidly to the budgets. They make a big issue over the difference between the budget and the salary expectations of the candidate. Sometimes, the deals are broken over 5K on an annual basis in the salary range of 60K. As the result, the vacancy remains vacant for another 4-8 weeks, hiring managers frustrated, HR busy with a rising frustration levels as well and finally applicants suspicious why they see the same job ad for weeks.
8.      The drive to save recruitment costs at the expense of productivity and ability to execute the business strategy is an overwhelming and recurring issue. Finance does not see through, HR cannot make a business case, time passes.
9.      The decision makers are unable to make the call. They have no stamina or no confidence, call it what you want, they’re simply indecisive and that’s bad for recruitment.

For SMEs speed can be a recruiting advantage. However, even so it is good for HR not to act on the decisions made immediately. Two lessons, I learned a few years ago.

First, it is good for the hiring manager and HR to sleep over a hiring decision. This happened to me twice and it should not happen the third time. When the hiring managers say “Please issue an offer”, it is good to wait one day to do it. On those two particular occasions, the hiring manager came to me the next day with a question, whether the offer has been made, because he no longer wants to hire the candidate. Since the offer was send, I could either withdraw the offer right away or maneuver the offer negotiation process in a way that the candidate did not accept it.

Second, it is also good that the candidate sleeps over the job interview held. Since good candidates do have more then only one option, it is good to give them time to reflect on the job role, the company and the interview itself. Making an offer to the candidate shortly after the interview was for many overwhelming. They later reveled that they would expect it on the third day or so.

Tuesday, June 12, 2012

Hiring Funnel and its controlling potential

Metrics and KPIs are used in order to improve performance. When applying hiring funnel and reporting input metrics, HR intends to improve their performance as well, particularly measured in terms of the final outcome. It means that quantity and quality of new hires must be achieved.

Questions remain, however, how the particular input recruiting metrics must change in order to achieve higher level of performance by HR department. Then eventually, HR must move from the historically determined target ratios to performance standards leading the department to the desired quantity and quality of new hires.

Let’s look at the example again; I reviewed in the previous post on that subject. Based on the historical ratios to meet the quantity target, HR needed to interview 18 candidates and receive 4.8 applications per day (or 144 applications in total during a month) in order to hire 3 sales persons.

Assuming that high potential sellers are less likely to change jobs frequently and apply for jobs more often, the ratios should decrease in order to increase quality of hires. So HR needs to receive more applications and interview more candidates in order to hire the high performers.

With the chunk rate of 30% after first month of hiring sales people, standard ratios should be set 1/3 above the historical values.

Hires-to-interview ratio moves from historical 1/6 to 1/8, so that HR should interview 8 (6 plus 1/3 of 6) instead of 6 candidates. As a result HR must interview 24 candidates in order to hire 3 of them and no one drops after first month.

Interview-to-candidates ratio of 1/8 moves to 1/10.6, so that HR needs to receive a total of 255 applications, or an average of 8.5 applications per day.

When planning the recruitment activities and efforts targeted at motivating more job seekers to apply, HR need to remember the general job seekers behavior and job posting nature. The former suggests that job seekers rest on weekends and public holidays and get mostly active on Monday and Tuesday with their application efforts, when they realize this week is going to be as every other week. The latter implies that job ads must be refreshed and posted frequently, as a two-week old job ad does not bring as many applications as a new one, because it does not show up in the top of the search results.

Tuesday, May 29, 2012

Call for more research on usage of employer rating sites

A few days ago I started a LinkedIn Poll on usage of review and ratings site, which basically looks like this:

In order to find out more about a prospective employer, when do you visit an employer review and ratings site?
*  Before sending off my application
*  After I've got invited for an interview
* After I've attended the job interview
* As soon as I receive the job offer
* Never

As long as the poll is active, you can see it in the right column of this blog. I look forward to the results. Thanks.

Out of interest I recently also checked German employer review site kununu.de to compare two companies, two established Internet Start-Ups, one in B2B, one in B2C field.

Results? The B2B company received nearly 60 ratings, while the B2C company only some 15. While the profile of the B2B company was viewed nearly 20,000 times, the profile von the B2C company has been opened nearly 5,000 times. The average rating of the B2B company was worst by around 0.3 percent point.

Is it possible, that
* the brand image of B2C company influences the perception of their employer brand and blocks job seekers to seek out more information about them .
* employer rating of B2B company are viewed more often because job seekers may not have any associations with the company
* The better brand image of the company, the less likely the employer brand will be explored via employer review site.

Or is the varying activity level of ex-/employees and job seekers on these two employer profile sites just a result of the time lag in their profile existence, information that cannot be obtained on the kununu-site. Nota bene, both companies have been heavily recruiting based on the number of job advertisements on their career sites and job boards in May 2012.

Tuesday, May 1, 2012

“Knowing-doing” gap and employer rating sites

Employees have always shared their opinions by word of mouth. In Web 2.0 they have the opportunity to do so on employer rating sites, such as glassdoor.com, employerinformation.co.uk, aboutacompany.com, kununu.com, opracodawcach.pl, etc.

Employer rating sites have three main stakeholder groups, candidates, ex-employees and HR departments. Current employees are an insignificant minority, as I don’t think they would be genuinely interested in sharing their opinion.

Candidates, particularly, the young internet savvy generation, are the recipients of information on potential employers. Hopefully while doing so, the readers use their critical mind when reading the comments. After all, each posting is a personal experience, though the personal circumstances of its author remain largely unknown.

Leavers are the content producers. While companies’ career websites provide subjective positive case studies, the opinions on employer rating sites are quite often negative, and in best case, more balanced. Particularly, non-voluntary leavers cope with the detachment from the company publicly and anonymously before moving on with life. This public criticism is an act of revenge.

The HR departments are the observers. Though, they too can engage in the conversation. HR needs to decide with the management whether the company will comment openly or not. Though people respect organizations if they respond to criticism, "it won't always be appropriate for organizations to respond online" accordingly to Vanessa Robinson, Head of HR practice development at the Chartered Institute of Personnel and Development.

Secondly, HR can also note those commentaries and pass them internally so that the company can act upon it. However, I am afraid that in this respect most of the management teams face the “knowing-doing” gap identified by Pfeffer and Sutton (2000). This “knowing-doing” gap describes the today’s general management practice at many companies. The problem is not that managers don’t know what do, but actually doing it. Then senior executives know exactly what they should be doing to improve, but lack the time, energy, techniques, commitment and maybe even incentives. As the result, employee feedback received on employer rating sites is pointless.

Jeffrey Pfeffer and Robert I. Sutton, The Knowing-Doing Gap: How Smart Companies Turn Knowledge into Action (Boston: Harvard Business School Press, 2000).

Tuesday, April 17, 2012

Leaver Journey

Similar to candidate journey, companies design leaver journey in order to ensure that each employee quitting the company is exited in a structured and orderly manner.

The leaver journey starts from the time the employee gives notice to his or her employer about the intention to quit (voluntary separation) or the company asks the employee to leave (involuntary separation). It ends formally when all tasks on employee departure checklist are completed.

In case of resignation, HR departments regularly conduct exit interview
* to assess the reasons for the employee leaving the company,
* to take the employee’s views on work and the company in general as well as
* to explore any “de-motivating” factors that led the employee to resign.

In case of involuntary separations, exit interviews are rare, as the leavers seldom cooperate. At the same time, any discussions beyond the termination chat are not easy to perform, neither by line-manager nor by HR. They are biased and besides this almost every list of exit questions addresses positive aspects of employment and this only increases leaver’s sorrow and regret.

Having no possibility to discuss the dismissal in an organized way, leavers do not have the opportunity to talk about their feelings, alleviate their emotions and verbalize their anger. Full of discomfort, desperation and bitterness, they go home and have all incentives that can cause harm to the company despite that their separation has been handled in a professional and mature manner. Stealing clients, poaching talent, failing a law suit resulting in financial burdens and bad press on employer ratings sites are only some of them.

As the fair and appropriate severance pay, may sweeten leavers unexpected turn in life, companies should go beyond it. Companies who want to mitigate risks of leavers’ “revenge” should help them to cope with the dismissal. Providing counseling, career, and job search support, delivered by an objective third party such as an outplacement provider, is one possible way.

Tuesday, April 3, 2012

Top HR Topics in 2012

The first quarter of 2012 past. Three HR Topics facing HR professionals this year have all to do with Employer Branding.

The first one is recruitment related topic, candidate journeys/experience and concerns future and potential employees. Designing candidate experience in a way that it ensures recruiters’ responsiveness can help companies to differentiate themselves in a war for talent.

The second topic relates to performance management and concerns current employees. Key issues include employee conduct, performance improvement plans and strategies for dealing with a problem employee. Designing full-filling jobs with the right performance metrics can help companies to create meaningful customer relationships and outperform their competitors.

The third topic pertains to leaver journeys/experience which affects departing and ex-employees. Companies need to design outplacement processes in a way that emotions are well managed, feelings are compensated, and financial matters are taken care of. Other issues are strategies and tactics for dealing with any potential ex-employees negative feedback on employers’ review and ratings site.

Tuesday, March 20, 2012

Job Agent is out - Career Agent is in

Job agent is a common service of job boards to keep candidates in the loop of new job openings in the “visible job market”. Job agent significantly decreases the amount of search activities performed by job seekers. However, candidates must still evaluate job ads, prepare their CV and cover letter and send them off.

To really ease the job hunt process, candidates in Poland (I did not find this service in other countries) may use career agent, a service rendered by professional career consulting companies. Essentially, a candidate commissions a career professional to actively promote his/her job application to the prospective employers for the period of 2-6 months while he/she can jump into the process when employer demonstrates interest in interviewing. The service include: preparation of CV and cover letter, social media profiling, job offer research and liaison with the prospective employers, job interview and salary negotiation coaching, as well as an individual marketing campaign in the “hidden job market”. Candidates can spend their time on other activities then applying for jobs and substantially lessen their frustration with the job hunt processes.

So how is all this relevant to HR? Should HR care that candidates’ applications are sent by third parties? Accordingly to some recent articles, HR does not appreciate to receive applications sent by helicopter parents. So, are they happy to receive them from career agents?

Given the war for talent, HR should be happy about quality candidates no matter how they get informed of openings and whether or not they contact the employer by themselves. After all, career agent is similar to head hunter who introduces talent to the company. There are important differences though. Whilst head hunters are paid by the company career agents are paid by the candidate. Notably, the remuneration include a basic flat fee plus a success bonus, around 60-80% of candidates first gross salary at his/her new employer. Second, while head hunter act in the company’s interests, career agents and parents always have the candidate in mind first. But unlike parents, career agents may help candidates to define career goals, help them find opportunities that balance their passions and market opportunities, and aid with candidates self-exploration.

What are the odd for career agents to boom? Can career agents get the foot through the door of e.g. German HR departments? Can in-house recruiters get used to dealing with candidate’s career agent just like it is normal for the casting director to deal with the actors’ agent? Would career agents be easier accepted when they represent senior candidates? What impression make candidates (senior or entry-level) who let themselves represent by a career agent? Why it can be beneficial for a company that candidates work with a career agent? And finally, are HR departments prepared to deal with career agents?

Tuesday, March 6, 2012

National Characteristics of Job Ads

At first, job ads seem to be uniform across the regions. Their components are pretty much the same: a short description of the employer, a teaser, a task list, a candidate profile, employer’s rewards to the successful candidate, and contact information. Yet, there are some characteristics of job ads that are unique to certain countries.

To circumvent scarcity of resources in human resource departments, many companies in Hong Kong, Poland and Great Britain opt for communication with shortlisted candidates only. Some companies will indicate their approach in the job ad by placing one of the following phrases:
* Only shortlisted candidates will be notified.
* We regret only shortlisted candidates will be notified.
* We reserve the right to contact shortlisted candidates only.

Another line often included in job ads in those countries is
* All data collected will be used for recruitment purposes only and will be used strictly confidential.

However, in Poland applicants are also asked to include consent with personal data processing. For example:
* Please include the following clause in your CV: I hereby give consent for my personal data included in my offer to be processed for the purposes of recruitment, in accordance with the Personal Data Protection Act dated 29.08.1997 (uniform text: Journal of Laws of the Republic of Poland 2002 No 101, item 926 with further amendments).

By indicating the salary range, HR and recruiters in Great Britain attach great importance to efficiency of recruitment process. In Poland, this practice is coming about slowly. In Germany, it is completely unusual.

Next, while indicating a contact person and a phone number is very common in German job ads, it is rather an exception in Poland. However, an emerging trend among local recruitment agencies in Poland is to invite questions to the job ad by skype or gadu-gadu (Polish instant messaging system). Skype and gadu-gadu nicknames are included as a result.

A rather recent note appearing in job ads in all analyzed countries, but yet not aimed at job seekers is the request to refrain from resume forwarding by recruitment agencies. Such request accompanies ads by global players such as Google and companies with well staffed in-house recruitment departments or established agency relationships. For example:
* To all recruitment agencies: Google does not accept agency resumes. Please do not forward resumes to our jobs alias, Google employees or any other company location. Google is not responsible for any fees related to unsolicited resumes.

Tuesday, February 21, 2012

How to get a job in HR with experience in operations?

Some people enter Human Resource management by design others, including myself, by luck.

If luck is not on your side yet, the management did not entrust you with the new role in in-house HR, you need to do something to impact your ability to work in HR field.

With solid experience in operations, but little to no formal education in HR and no experience in HR, this is what you can do:

* Try to take on additional tasks in your current job that take you in the HR direction. Make your workplace (boss and HR person) aware that you are interested in an HR role. Maybe there are ways the departments can share you. You can support HR Manager in a component of Human Resource management, like training, e.g. orienting new hires, preparing their training plan, conducting training sessions; or recruiting, e.g. scouting talent in social media, engage with users to recruit talent, conducting screening interviews.

* Consider taking a sabbatical to do a HR internship abroad, there are companies out there who paid will surely find you a placement.

* Consider taking up a voluntary HR assistant job with a local nonprofit organization in your neighborhood.

* Make your current skills and tasks relevant to HR. Don't expect your prospective employer to connect the dots in your CV. Get the support of a decent CV writer to take your current experience and make it sound useful in an HR department. There are many skills needed in HR department - project management skills, analytical and problem solving skills, (internal) customer orientation, excellent verbal and written communication skills, with an emphasis on tact and diplomacy.

* Look at niche job boards to find specific openings for HR professionals. Read the job ads carefully. Some companies look specifically for HR staff with experience in operations.

* Apply for term jobs (fill in for a person on sabbatical or maternity leave). These are usually not attractive to HR professionals with linear CV, so the competition might be not so strong.

* Inform your network on Xing, LinkedIn and even Facebook about your desired career direction.

* Network in HR groups on social media networks and engage in discussions.

* Get a twitter account and start twitting on you insight and link your experience to HR.

* Once invited for an interview, prepare well. Be enthusiastic and turn every HR need into an opportunity you could fulfill.

* Read books, blogs, and magazines on Human Resource Management and Talent Management.

* Get a formal qualification in HR – however, do not overestimate its value.

* Do not give up hope and use every chance to put a foot in the door in HR.

Tuesday, February 7, 2012

Capturing Attention and Definition of Passive Candidates

Companies searching for staff via job ads try to capture candidates’ attention with inducements in the summary teaser or first paragraph, luring position titles or addressing them informally to create familiarity and closeness.

Common wisdom suggests that messages sent to passive candidates in case of direct approach must have even greater power to capture people’s attention.

Then who are passive candidates? Ad definitionem, passive candidates are people, who are not actively looking to move, i.e. are not applying for jobs. If they do not search for a new job, they’re most likely happy in their current one and thus, unlikely to embark on a new one. Hence, a more accurate definition would describe passive candidates as those who do not actively look for jobs, but are keen to move. Consequently, people who do not consider any career move, are not candidates period.

And what about those who indicate that they look for new opportunity irrespectively of their status - employee or jobseeker in their LinkedIn or Xing profile. By being approached by the employer they too qualify as passive candidates.

The full definition of passive candidates could then be: people who are keen to move and are approached by a company instead of applying for jobs by themselves.

From the perspective of this belief, I doubt whether one can motivate a person not intending to leave his current employer to join the recruitment process of a next-employer-wannabe in hopes to land a new job. Neither a particular message will do nor the medium.

Take for example, an electronic greeting card. Cartoony or not, with animation, with music and what not, if the person is not ready for the next career move, s/he passes on the opportunity.

What about a visualization of a prospective title like the example below. A mixture of personalized job ad and a direct approach method.

How LinkedIn and Google figured out that I might be interested in B2C Marketing position, is still a mystery to me.

What will then help one to reach out to people initially uninterested in a job change possible?
I believe repetition makes poaching them possible. Sending multiple messages by various persons from the company instills the idea of moving and makes one more sensible for and critical of the conditions and career prospects at their current employer.

Tuesday, January 24, 2012

HR routine, German culture and catchy subject lines

Ever since, I also blog on career-related topics, I visit portals and read other blogs related to career, cv and cover letter writing, job hunt, etc as well. Karrierebibel is one of the premium addresses for that matter. Often ahead of the times as the recent blog shows.

The author pledges use of marketing or "catchy" phrases in the subject line of an application email sent by candidates. He suggests that subject lines are the opportunity to make the first impression on HR or hiring manager and hence should be written in a way that it attracts their attention and makes them interested in a candidate. He calls for abandonment of uniform subject lines (e.g. key account manager application) in favor of "catchy" phrases meant to emanate self-confidence and interest (e.g. your next key account manager).

Agreed. But yet disagreed.

Indeed, writing „application” in the subject line is boring. Especially, as application by e-mail are usually sent to an e-mail-address exclusively established for this purpose. On another hand, lucky those HR departments that receive applications with subject lines that include the position name. Those getting a reference to the job ad as well should consider themselves twice as lucky.

Disagreed because the advice misses the reality check with the HR routine. A few beliefs:
* HR folk like any other people like to have it simple, informative and to the point.
* HR appreciates candidates who make their life easy. One of the recruiters job is to keep track of applications received and there is nothing more annoying than not instantly knowing what position a candidate is applying for.
*“Catchy” lines make recruiters job cumbersome and get the job seeker the wrong kind of attention. Super out-of-the-box applications also in terms of subject line are usually a turn-off.
* Efforts put in phrasing subject lines go unnoticed as long as e-mail-applications are printed which I believe is still a common practice in German SMEs.

The advice is also disconnected with the German culture. German job seekers still struggle to make good advertisement for themselves in cover letters or show their motivation to do the job for the employer in question. They are culturally not programmed to show self-confidence. Americans are. Yet, a quick review of career advice sites in English shows that the majority recommends to refrain from marketing-like subject lines. Instead, they promote simplicity: Name, Position, Job Ad ID.
Notably, candidate’s name in the subject line is particularly of benefit, when HR forwards the short-listed applications to the hiring managers electronically.
Next, some folk suggests trying to stand out in the crowd of applicants by adding one of the following besides Name, Position, Job Ad ID:
* Putting the addressee’s name at the beginning of the subject line.
* Adding credentials behind once name
* Adding total number of years of experience
* Adding very unique and specialized skill

Lastly, whether marketing-like phrases can add to the success of a job application probably depends on the industry, which the author did not give any consideration to. For application in ad agencies, some creativity is beneficial for sure. For more conservative industries, keeping it simple should remain the rule.

My research shows that out of 2000 recent applications received at my current employer, only one candidate utilized the wording “gesucht? gefunden!!!” in the subject line. Needless to say: She did not get the job.

This blog refers greatly to the comments left by LinkedIn members.

Tuesday, January 10, 2012

Firing at start-ups

Constantly under pressure to attract and recruit staff, performance oriented organizations such as start-ups fire without hesitation. Moreover, many exhibit „hire and fire” mentality.

Start-ups fire for many reasons:

The management strives for high performing teams and consequently penalizes every under-performance. At some companies, ranking talent in terms of performance becomes a weekly exercise. The tool supporting it is based on the traffic light system. Accordingly, staff receives red, yellow, or green mark based on their performance. Reds are fired at the next round, yellows are being observed closely, greens are on the safe side for the week. No doubt, start-ups are too lean to accommodate staff that does not create value as the business model and strategy evolve.

Hiring mistakes must be corrected. Young management teams are not versatile in assessing candidate’s experience, skills and aptitudes. Too frequently, they reference back to their intuition and sympathy that they develop to the candidatesd during the recruitment process. Leaders later discover that the company and the employee isn’t a good fit at all.

Objective talent needs may change as the understanding of value creation process improves and customers’ expectations mature. This constant refinement of an ideal candidate put employees who do not develop or adjust to the new requirements at risk.

Upgrading talent is a must. Sometimes, having a mediocre talent is better then having a vacant position. As start-ups struggle to attract top-notch talent they need to compromise their position requirements in the meantime. Under time pressure to fill-in the position, they make the selfish decision to hire people who only partially fulfill the job requirements and replacing them with better talent as they come into radar.

Dismissals are a quick fix of wrong management decisions. On one hand, I recognize that start-ups must invest in building internal capabilities and hire ahead of the revenue, profits, and market share. On another hand, I believe it is advisable to follow a conservative approach when it comes to hiring. A helpful metric is a ration of cost center and profit center staff and a rule of thumb that a headcount increase follows a sustainable revenue and profit increase. Unjustified over-investment or investment in wrong departments may only require restraining costs at some point in time. Ironically, such firing waves can be than labeled lay-offs due to bad business conditions.