Personnel Planning and Recruiting PDF

5 Personnel Planning and Recruiting Yosuke Tanaka/Aflo Foto Agency/AGE Fotostock LEARNING OBJECTIVES 5-1 Explain the main techniques used in Company’s employment planning and forecasting....

5 Personnel Planning and Recruiting Yosuke Tanaka/Aflo Foto Agency/AGE Fotostock LEARNING OBJECTIVES 5-1 Explain the main techniques used in Company’s employment planning and forecasting. Strategic Goals 5-2 Explain and give examples for the need for effective recruiting. 5-3 Name and describe the main internal sources of candidates. Employee Competencies and Behaviors Required for Company to Achieve 5-4 Discuss a workforce planning method you would use to improve employee engagement. These Strategic Goals 5-5 List and discuss the main outside sources of candidates. ruitment an Rec acemen d Pl t 5-6 Explain how to recruit a more ent al diverse workforce. Environm Leg Tra elopment De inin v Strategic and 5-7 Discuss practical guidelines for obtaining g a nd application information. HR Policies and Practices Required to Produce Employee Competencies and Behaviors ike most luxury hotel businesses, Four Seasons L Co s n m tio e pe builds its strategy around offering superior cus- Rela ploye ns a Em tion tomer service, and doing that requires staffing its hotels with highly motivated and high-morale employees.1 Therefore, in thinking through how to WHERE ARE WE NOW … recruit employees, Four Seasons managers sought In Chapter 4, we discussed job analysis a way to use recruitment to encourage the employee and the methods managers use to create job descriptions, job specifications, and motivation and morale that would lead to improved competency profiles or models. The purpose customer service. We will see what they did. of this chapter is to improve your effective- ness in recruiting candidates. The topics we discuss include personnel planning and forecasting, using promotion from within to foster engagement, recruiting job candidates, and developing and using application forms. Then, in Chapter 6, we’ll turn to the methods managers use to select the best employees from this applicant pool 127 128 Part 2 rECruitMEnt, PlaCEMEnt, and talEnt ManagEMEnt Introduction Job analysis identifies the duties and human requirements of each of the company’s jobs. The next step is to decide which of these jobs you need to fill, and to recruit and select employees for them. The recruiting and selecting process can be envisioned as a series of hurdles, as illustrated in Figure 5-1: 1. Decide what positions to fill, through workforce/personnel planning and forecasting. 2. Build a pool of candidates for these jobs, by recruiting internal or external candidates. 3. Have candidates complete application forms and perhaps undergo initial screen- ing interviews. 4. Use selection tools like tests, background investigations, and physical exams to screen candidates. 5. Decide who to make an offer to, by having the supervisor and perhaps others interview the candidates. This chapter focuses on personnel planning and on recruiting employees. Chapters 6 and 7 address tests, background checks, physical exams, and interviews. WLE KNO DG Workforce Planning and Forecasting E BASE Workforce (or employment or personnel) planning is the process of deciding what positions the firm will have to fill, and how to fill them. Its aim is to identify LEARNING OBJECTIVE 5-1 and address the gaps between the employer’s workforce today, and its projected Explain the main techniques workforce needs. Workforce planning should precede recruitment and selection. used in employment planning After all, if you don’t know what your employment needs will be in the next few and forecasting. months or years, why are you hiring? One consulting firm’s approach illustrates workforce planning.2 First, Towers Watson reviews the client’s business plan and workforce data (for instance, on how sales workforce (or employment or personnel) planning influence staffing levels). This helps them better understand how projected business The process of deciding what posi- plan changes may influence the client’s headcount and skills requirements. Second, tions the firm will have to fill, and they identify what positions the firm will have to fill and potential workforce gaps, by how to fill them. making workforce supply and demand projections; this helps them understand what new future positions they’ll have to fill, and what current employees may be promot- able into those positions. Third, they develop a workforce strategic plan; here they prioritize key workforce gaps (such as, what positions will have to be filled, and who do we have who can fill them?) and identify specific (training and other) plans for filling any gaps. Finally, they implement the changes (for instance, new recruiting and training programs), and use various metrics to monitor the process. Towers Watson Figure 5-1 Steps in Recruitment and Selection Process Employment Recruiting: Candidates Candidate planning and Build a pool forecasting of candidates becomes employee Applicants Use selection Supervisors and complete tools like tests others interview final application to screen out candidates to make forms most applicants final choice The recruitment and selection process is a series of hurdles aimed at selecting the best candidate for the job.  ChaPtEr 5 PErsonnEl Planning and rECruiting 129 the dashboards, which are part of towers Watson’s workforce planning internet software, help clients manage the workforce planning process. Source: © Towers Watson 2012. Used with permission. clients can use its special “MAPS” software to facilitate the workforce planning pro- cess. MAPS contains dashboards (see the four exhibits above). The manager uses these, for instance, to monitor key recruitment metrics, and to conduct a detailed analysis of the current workforce and historical workforce trends. Workforce planning embraces all future positions, from maintenance clerk to CEO. However, we’ll see that most firms call the process of deciding how to fill executive jobs succession planning.3 Strategy and Workforce Planning Workforce planning shouldn’t occur in a vacuum. Instead, workforce/employment planning is best understood as an outgrowth of the firm’s strategic and business plan- ning. For example, plans to enter new businesses, to build new plants, or to reduce activities will all influence the number of and types of positions to be filled. At the same time, decisions regarding how to fill these positions will impact other HR plans, for instance, training and recruitment plans. The Strategic Context feature illustrates. IMPROVING PERFORMANCE: The Strategic Context Four Seasons As noted, Four Seasons builds its strategy around offering superior customer service, and that requires highly motivated and high-morale employees.4 How can Four Seasons use its recruitment practices to en- courage such motivation and morale? One way Four Seasons does this is by filling hotel positions around the world with internal transfers. In one recent year, for instance, about 280 employees relocated from hotels in one country to another within the Four Seasons chain. Employees love it. It gives them a chance for adventure and to see the world, while building a career with a great hotel chain.5 And it’s great for Four Seasons too, because the resulting high morale and motivation supports Four Seasons’ strategic goal of superior customer service. In other words, Four Seasons uses recruitment practices that produce the excellent service the chain needs to achieve its strategic goals. Source: Based on Robert Hackett, “a global opportunity,” fortune, volume 171, number two, February 1, 2015, page 22. If your professor has assigned this, go to the Assignments section of mymanagementlab.com to complete these discussion questions. Talk About It 1: Can you think of any other benefits Four Seasons may derive from its policy of transferring employees among its hotels? What are they? 130 Part 2 rECruitMEnt, PlaCEMEnt, and talEnt ManagEMEnt Like any good plans, employment plans are built on forecasts—basic assump- tions about the future. As at Four Seasons, one basic employment planning decision will be whether to fill projected openings internally (with current employees) or exter- nally (by bringing in new people). Therefore, you will usually need three sets of em- ployment forecasts: one for personnel needs (demand), one for the supply of inside candidates, and one for the supply of outside candidates. With these, the manager can identify supply–demand gaps, and develop action plans to fill the projected gaps. We will start with forecasting personnel needs/demand. Forecasting Personnel Needs (Labor Demand) How many people with what skills will we need? Managers consider several fac- tors.6 For example, when Dan Hilbert took over staffing at Valero Energy, he reviewed Valero’s projected retirements, growth plans, and turnover history. He discovered that projected employment shortfalls were four times more than Valero could fill with its current recruitment procedures. He formulated new person- nel plans for boosting employee retention and recruiting and screening more candidates.7 A firm’s future staffing needs reflect demand for its products or services, adjusted for changes the firm plans to make in its strategic goals and for changes in its turnover rate and productivity. Forecasting workforce demand therefore starts with estimat- ing what the demand will be for your products or services. Short term, management should be concerned with daily, weekly, and seasonal forecasts.8 For example, retailers track daily sales trends because they know, for instance, that Mother’s Day produces a jump in business and a need for additional store staff. Seasonal forecasts are critical for retailers contemplating end-of-year holiday sales, and for many firms such as land- scaping and air-conditioning vendors. Longer term, managers will follow industry publications and economic forecasts closely, to try to get a sense for future demand. Such future predictions won’t be precise, but should help you address the potential changes in demand. The basic process for forecasting personnel needs is to forecast revenues first. Then estimate the size of the staff required to support this sales volume. However, managers must also consider other factors. These include projected turnover, decisions to upgrade (or downgrade) products or services, productivity changes, financial resources, and decisions to enter or leave businesses. The basic tools for projecting personnel needs include trend analysis, ratio analysis, and the scatter plot. trend analysis TReNd ANAlySIS Trend analysis means studying variations in the firm’s employment Study of a firm’s past employment levels over the past few years. For example, compute the number of employees at the needs over a period of years to end of each of the last 5 years in each subgroup (like sales, production, secretarial, predict future needs. and administrative) to identify trends. Trend analysis can provide an initial rough estimate of future staffing needs. However, employment levels rarely depend just on the passage of time. Other factors (like productivity and retirements, for instance), and changing skill needs will influ- ence impending workforce needs. ratio analysis RATIO ANAlySIS Another simple approach, ratio analysis, means making forecasts A forecasting technique for deter- based on the historical ratio between (1) some causal factor (like sales volume) and mining future staff needs by using (2) the number of employees required (such as number of salespeople). For example, ratios between, for example, sales suppose a salesperson traditionally generates $500,000 in sales. If the sales revenue to volume and number of employees salespeople ratio remains the same, you would require six new salespeople next year needed. (each of whom produces an extra $500,000) to produce a hoped-for extra $3 million in sales. Like trend analysis, ratio analysis assumes that things like productivity remain about the same. If sales productivity were to rise or fall, the ratio of sales to sales- people would change.  ChaPtEr 5 PErsonnEl Planning and rECruiting 131 scatter plot THe ScATTeR PlOT A scatter plot shows graphically how two variables—such as A graphical method used to help sales and your firm’s staffing levels—are related. If they are, then if you can forecast identify the relationship between the business activity (like sales), you should also be able to estimate your personnel two variables. needs. For example, suppose a 500-bed hospital expects to expand to 1,200 beds over the next 5 years. The human resource director wants to forecast how many regis- tered nurses the hospital will need. The human resource director realizes she must determine the relationship between hospital size (in number of beds) and number of nurses required. She calls eight hospitals of various sizes and finds this: Size of Hospital Number of Registered (Number of Beds) Nurses 200 240 300 260 400 470 500 500 600 620 700 660 800 820 900 860 Figure 5-2’s graph compares hospital size and number of nurses. If the two are related, then the points you plot (from the data above) will tend to fall on a straight line, as here. If you carefully draw in a line to minimize the distances between the line and each one of the plotted points, you will be able to estimate the number of nurses needed for each hospital size. Thus, for a 1,200-bed hospital, the human resource director would assume she needs about 1,210 nurses. While simple, tools like scatter plots have drawbacks.9 1. Historical sales/personnel relationships assume that the firm’s existing activities and skill needs will continue as is. 2. They tend to reward managers for adding employees, irrespective of the company’s needs. 3. They tend to institutionalize existing ways of doing things, even in the face of change. Computerized systems and Excel spreadsheets help managers translate estimates of projected productivity and sales levels into forecastable personnel requirements. Figure 5-2 determining (1,210) the Relationship Between 1,200 Hospital Size and Number of Nurses 1,000 Number of registered nurses Note: After fitting the line, you can project how many employees 800 you’ll need, given your projected volume. 600 400 200 200 400 600 800 1,000 1,200 1,400 Hospital size (no. of beds) 132 Part 2 rECruitMEnt, PlaCEMEnt, and talEnt ManagEMEnt Computerized forecasts enable managers to build more variables into their personnel projections. Thus, at Chelan County Public Utility District, the development man- ager built a statistical model encompassing such things as age, tenure, turnover rate, and time to train new employees.10 This model helped quickly identify five occupational “hotspots” among 33 occupational groups at the company. This in turn prompted Chelan to focus more closely on creating plans to retain and hire, for instance, more systems operators.11 MANAgeRIAl JudgMeNT Few historical trends, ratios, or relationships will continue unchanged into the future. Judgment is thus needed to adjust the forecast. Important factors that may modify your initial forecast of personnel requirements include decisions to upgrade quality or enter into new markets; technological and administrative changes resulting in increased productivity; and financial resources WLE available, for instance, a projected budget crunch. KNO DG Forecasting the Supply of Inside Candidates E BASE The personnel demand forecast provides only half the staffing equation, by answer- ing the question: “How many employees in what positions will we need?” Next, the manager must forecast the supply (availability) of inside and outside candidates. Most firms start with possible inside candidates. The main task here is determin- ing which current employees are qualified or trainable for the projected openings. Department managers or owners of smaller firms can use manual devices to track employee qualifications (or will simply know who can do what). For example, you personnel replacement charts can create your own personnel skills inventory and development record form.12 For Company records showing present performance and promotability each current employee, list the person’s skills, education, company-sponsored courses of inside candidates for the most taken, career and development interests, languages, desired assignments, and other important positions. relevant experiences. Computerized versions of skills inventory systems are also available.13 position replacement card Personnel replacement charts (Figure 5-3) are another option, particularly for A card prepared for each position the firm’s top positions. They show the present performance and promotability for in a company to show possible each position’s potential replacement. As an alternative, with a position replace- replacement candidates and their ment card you create a card for each position, showing possible replacements as well qualifications. as their present performance, promotion potential, and training. Figure 5-3 Personnel Division or Management Vice President Replacement chart Showing development Needs of Potential Future divisional Vice Presidents Vice President Vice President Vice President Production Sales Finance Jones, D. Able, J. Smith, B. Required development: Required development: Required development: None recommended Job rotation into None recommended finance and production Executive development course in strategic planning In-house development center—2 weeks PRESENT PROMOTION PERFORMANCE POTENTIAL Outstanding Ready now Satisfactory Needs further training Needs improvement Questionable  ChaPtEr 5 PErsonnEl Planning and rECruiting 133 Larger firms obviously can’t track the qualifications of hundreds or thousands of employees manually. They therefore computerize this information, using various packaged software systems such as Survey Analytics’s Skills Inventory Software. Skills inventory systems such as one from Perceptyx (www.perceptyx.com) enables employers to collect and compile employee skills information in real time via online employee surveys. Skills inventory programs help management anticipate staffing and skills shortages, and facilitate workforce planning, recruitment, and train- ing.14 They typically include items like work experience codes, product knowledge, the employee’s level of familiarity with the employer’s product lines or services, the person’s industry experience, formal education, industry experiences, foreign language skills, relocation limitations, career interests, and performance appraisals. The usual skills inventory process is for the employee, the supervisor, and human resource manager to enter information about the employee’s background, experience, and skills via the system. Then, when a manager needs someone for a position, he or she uses key words to describe the position’s specifications (for instance, in terms of education and skills). The computerized system then produces a list of qualified candidates. As the user of one such system said, “The [SumTotal] platform allows us to track and assess the talent pool and promote people within the company. … The succession module helps us to identify who the next senior managers could be and build development plans to help them achieve their potential.”15 The employer must secure all its employee data.16 Legislation gives employees legal rights regarding who has access to information about them.17 Internet access makes it relatively easy for more people to access the firm’s computerized files.18 The U.S. Office of Personnel Management recently lost data on as many as 14 million current and former employees this way.19 Figure 5-4 summarizes some guidelines for keeping employee data safe. MARkOV ANAlySIS Employers also use a mathematical process known as Markov analysis (or “transition analysis”) to forecast availability of internal job candidates. Markov analysis involves creating a matrix that shows the probabilities that employees in the chain of feeder positions for a key job (such as from junior engineer, to engineer, to senior engineer, to engineering supervisor, to director of engineering) will move from position to position and therefore be available to fill the key position. Forecasting the Supply of Outside Candidates If there won’t be enough skilled inside candidates to fill the anticipated openings (or you want to go outside for another reason), you will turn to outside candidates. Forecasting workforce availability depends first on the manager’s own sense of what’s happening in his or her industry and locale. For example, unemployment rates above 7% a few years ago signaled to HR managers that finding good can- didates might be easier.20 The manager then supplements such observations with formal labor market analyses. For example, look for economic projections online from the U.S. Congressional Budget Office (www.cbo.gov) and the Bureau of Labor Statistics (www.bls.gov/emp/ep_pub_occ_projections.htm). You may also want to Figure 5-4 keeping data Safe Since intruders can strike from outside an organization or from within, HR departments can help Source: Reprinted with screen out potential identity thieves by following four basic rules: permission from HR Magazine, Perform background checks on anyone who is going to have access to personal information. November 2005. © SHRM. If someone with access to personal information is out sick or on leave, don’t hire a temporary employee to replace him or her. Instead, bring in a trusted worker from another department. Perform random background checks such as random drug tests. Just because someone passed 5 years ago doesn’t mean their current situation is the same. Limit access to information such as SSNs, health information, and other sensitive data to HR managers who require it to do their jobs. 134 Part 2 rECruitMEnt, PlaCEMEnt, and talEnt ManagEMEnt forecast specific occupations. O*NET (discussed in Chapter 4) reports projections for most occupations. The U.S. Bureau of Labor Statistics publishes annual occupa- tional projections both online and in the Monthly Labor Review and in Occupational Outlook Quarterly. Today’s emphasis on technology means many applicants may lack basic skills such as math, communication, creativity, and teamwork.21 Such needs, too, get fac- tored into the employer’s workforce and training plans. Predictive Workforce Monitoring Most employers review their workforce plans every year or so, but this isn’t always sufficient For instance, having failed to do much formal workforce planning, Valero Energy almost lacked sufficient time to implement a plan to address replacing employees who would soon retire. Workforce planning therefore often involves paying continuous attention to workforce planning issues. Managers call this predictive workforce monitoring. For ex- ample, Intel Corporation conducts semiannual “Organization Capability Assessments.” The staffing department works with the firm’s business heads twice a year to assess workforce needs—both immediate and up to 2 years in the future.22 Boeing Corp. considers various factors when predicting talent gaps as part of its “workforce model- ing” process. These include Boeing workforce characteristics such as age, retirement eligibility for employees with various skills, economic trends, anticipated increases or decreases in staffing levels, and internal transfers and promotions.23 The accompanying HR as a Profit Center feature shows an example. IMPROVING PERFORMANCE: HR as a Profit Center Predicting Labor Needs Valero Energy created a “labor supply chain” for improving the efficiency of its workforce planning, recruit- ing, and hiring process. It includes an analytic tool that predicts Valero’s labor needs based on past trends. And, it includes computer screen “dashboards” that show how components in the staffing chain, such as ads placed on job boards, are performing according to cost, speed, and quality. Before implementing the labor supply chain system, it took 41 pieces of paper to bring on board an employee and more than 120 days to fill a position; each hire cost about $12,000. The new system eliminated most of the paper forms needed to hire an employee, time to fill fell below 40 days, and cost per hire dropped to $2,300.24 Source: Based on Ed Frauenheim, “Valero Energy,” Workforce Management, March 13, 2006. If your professor has assigned this, go to the Assignments section of mymanagementlab.com to complete this discussion. Talk About It 2: Explain how Valero might use the Towers Watson workforce planning process on pages 128–129. Matching Projected Labor Supply and Labor Demand Workforce planning should logically culminate in a workforce plan. This plan lays out the employer’s projected workforce and skills gaps, as well as staffing plans for filling these gaps. For example, the plan should identify the positions to be filled; potential internal and external candidates or sources for these positions; the training and promotions moving people into the positions will entail; and the resources that implementing the plan will require, for instance, in recruiter fees, estimated training costs, relocation costs, and interview expenses.25 succession planning The ongoing process of system- Succession Planning atically identifying, assessing, and Succession planning involves developing workforce plans for the company’s top developing organizational leadership positions. Succession planning is the ongoing process of systematically identifying, to enhance performance. assessing, and developing organizational leadership to enhance performance.26 It  ChaPtEr 5 PErsonnEl Planning and rECruiting 135 entails three steps: identify key position needs, develop inside candidates, and assess and choose those who will fill the key positions.27 First, based on the company’s strategic and business plans, top management and the human resource director identify what the company’s future key position needs will be. Matters to address here include defining key positions and “high potentials,” reviewing the company’s current talent, and creating (based on the company’s strat- egy) skills profiles for the key positions.28 After identifying future key positions, management turns to creating candi- dates for these jobs. “Creating” means identifying inside or outside candidates and providing them with the developmental experiences they require to be viable can- didates. Employers develop high-potential employees through internal training and cross-functional experiences, job rotation, external training, and global/regional assignments.29 Finally, succession planning requires assessing these candidates and selecting those who will actually fill the key positions.30 exAMPle At Dole Foods, the new president’s strategy involved improving financial performance by reducing redundancies and centralizing certain activities, including succession planning.31 Dole contracted with application system providers (ASPs) to handle things like payroll management.32 For succession management, Dole chose software from Pilat NAI. The Pilat system keeps all the data on its own servers for a monthly fee. Dole’s managers access the program via the Web using a password. They fill out online résumés for themselves, including career interests, and note special considerations such as geographic restrictions. The managers also assess themselves on four competencies. Once the manager provides his or her input, the program notifies that manager’s boss, who assesses his or her subordinate and indicates whether the person is promotable. This assessment and the online résumés then go automatically to the division head and the divisional HR director. Dole’s senior vice president for human resources then uses the informa- tion to create career development plans for each manager, including seminars and other programs.33 Watch It! How does a company actually do workforce planning? If your professor has assigned this, go to the Assignments section of mymanagementlab.com to complete the video exercise titled Gawker Me- dia: Personnel Planning and Recruiting. LEARNING OBJECTIVE 5-2 Why Effective Recruiting is Important Explain and give examples for Assuming the company authorizes you to fill a position, the next step is to build up, the need for effective recruiting. through recruiting, an applicant pool. Employee recruiting means finding and/or attracting applicants for the employer’s open positions. Recruiting is important. If only two candidates apply for two openings, you may have little choice but to hire them. But if 10 or 20 applicants appear, you can use employee recruiting techniques like interviews and tests to screen out all but the best. Finding and/or attracting applicants Even when unemployment rates are high, many employers have trouble finding for the employer’s open positions. qualified applicants. One survey found that about two-thirds of the manufacturing executives surveyed a few years ago faced a “moderate to severe shortage of skilled labor.”34 With manufacturing jobs increasingly high-tech, the available jobs require more math and science than most applicants possess.35 A recent Lloyd’s of London risk index listed “talent and skill shortages” as the number 2 risk facing businesses today (“loss of customers” was number 1).36 Of course, it’s not just recruiting but effective recruiting that is important. Consider one study of recruiter effectiveness.37 Subjects were 41 graduating college 136 Part 2 rECruitMEnt, PlaCEMEnt, and talEnt ManagEMEnt Figure 5-5 Recruiting yield Pyramid 50 New hires 100 Offers made (2:1) 150 Candidates interviewed (3:2) 200 Candidates invited (4:3) 1,200 Leads generated (6:1) students who’d been on several job interviews. When asked after the initial job inter- view why they thought a particular company might be a good fit, 39 mentioned the nature of the job, but 23 said they’d been turned off by the recruiters. For example, some were dressed sloppily; others were “barely literate”; some were rude; and some made offensive comments. Also potentially undermining one’s recruiting is the fact that some recruiting methods are superior to others, depending on the job, and that recruiting depends on nonrecruitment issues such as pay.38 We’ve also seem that employment law prescribes what you can do.39 Even the employer’s “brand” or reputation will impact recruiting success. Most obvi- ously, it is futile to recruit if the employer’s reputation is that it’s an awful place to work. How does the employer want others to see it as a place to work? The branding often focuses on what it’s like to work at the company, including company values and the work environment.40 GE, for instance, stresses innovation (hiring “bright, interesting people working together on new and exciting projects”).41 Others stress being environmentally or socially responsible.42 The Recruiting Yield Pyramid Filling a relative handful of positions might require recruiting dozens or hundreds of recruiting yield pyramid candidates. Managers therefore use a staffing or recruiting yield pyramid, as shown The historical arithmetic relation- in Figure 5-5, to gauge the staffing issues it needs to address. In Figure 5-5, the com- ships between recruitment leads pany knows it needs 50 new entry-level accountants next year. From experience, the and invitees, invitees and interviews, firm also knows the following: interviews and offers made, and of- fers made and offers accepted. The ratio of offers made to actual new hires is 2 to 1. The ratio of candidates interviewed to offers made is 3 to 2. The ratio of candidates invited for interviews to candidates interviewed is about 4 to 3. Finally, the firm knows that of six leads that come in from all its recruiting sources, it typically invites only one applicant for an interview—a 6-to-1 ratio. Therefore, the firm must generate about 1,200 leads to be able to invite in 200 viable candidates of which it interviews about 150, and so on. kNOW yOuR eMPlOyMeNT lAW Recruiting Employees As we explained in Chapter 2, numerous federal, state, and local laws and court deci- sions restrict what employers can and cannot do when recruiting job applicants. In practice, “the key question in all recruitment procedures is whether the method limits qualified applicants from applying.”43 So, for example, gender-specific ads that call for “busboy” or “firemen” would obviously raise red flags. Similarly, courts will often question word-of-mouth recruiting, because workers tend to nominate candidates of the same nationality, race, and religion.44 Other laws are relevant. For example, it is illegal for employers to conspire not to hire each other’s employees. Yet Apple and Google recently paid over $400 million to settle a claim alleging that they did just that.45  ChaPtEr 5 PErsonnEl Planning and rECruiting 137 THe SuPeRVISOR’S ROle Line and staff cooperation in recruitment is essential. The human resource manager charged with filling an open position is seldom very familiar with the job itself. So, for example, the recruiter will want to know from the supervisor what the job really entails and its job specifications, as well as informal things like the supervisor’s leadership style and how the team gets along. HR in Practice at the Hotel Paris As they reviewed the details of the Hotel Paris’s current recruitment practices, Lisa Cruz and the firm’s CFO became increasingly concerned. They found that the recruitment function was totally unmanaged. To see how they handled this, see the case on page 168 of this chapter. WLE Internal Sources of Candidates KNO DG E BASE Recruiting typically brings to mind LinkedIn, employment agencies, and classi- fied ads, but internal sources—in other words, current employees or “hiring from within”—are often the best sources of candidates. LEARNING OBJECTIVE 5-3 Filling open positions with inside candidates has advantages. First, there is really Name and describe the main no substitute for knowing a candidate’s strengths and weaknesses, as you should internal sources of candidates. after working with him or her for some time. Current employees may also be more committed to the company. Morale and engagement may rise if employees see pro- motions as rewards for loyalty and competence. And inside candidates should require less orientation and (perhaps) training than outsiders. There are other advantages. External hires tend to come in at higher salaries than do those promoted internally, and some apparent “stars” hired from outside may turn out to have excelled more because of the company they came from than from their own skills. One executive recruiter argues that internal candidates are always better than external ones unless the internal candidates simply can’t pass muster. One study con- cluded that firms that hired their CEOs from inside rather than outside performed better. On the other hand, some firms—particularly those facing enormous chal- lenges—such as IBM and Ford Motor Company—did extremely well by bringing in outside managers (respectively, Louis Gerstner and Alan Mullally).46 Hiring from within can also backfire. Inbreeding is a potential drawback, if new perspectives are required. The process of posting openings and getting inside appli- cants can also be a waste of time, since often the department manager already knows whom he or she wants to hire. Rejected inside applicants may become discontented; telling them why you rejected them and what remedial actions they might take is crucial. There are some practical rules to use in determining whether to go outside or promote from within. For example, if you need specific skills that aren’t currently available in your company, or have to embark on a tough turnaround, or face a situation in which your current succession planning or skills inventory systems are inadequate, it may be best to look outside. On the other hand, if your company is thriving and you have effective succession planning and skills inventory systems, have the skills you need internally, and have a unique and strong company culture, then look within.47 Finding Internal Candidates In a perfect world, the employer will adhere to formal internal-recruitment policies and procedures. These typically rely heavily on job posting and on the firm’s skills invento- job posting ries. Job posting means publicizing the open job to employees (usually by literally post- Publicizing an open job to employ- ing it on company intranets or bulletin boards). These postings list the job’s attributes, ees (often by literally posting it on like qualifications, supervisor, work schedule, and pay rate. Qualifications skills invento- bulletin boards) and listing its attrib- ries also play a role. For example, they may reveal to the company’s recruiters those em- utes, like qualifications, supervisor, ployees who have the right background for the open job. Ideally, the employer’s system working schedule, and pay rate. therefore matches the best inside candidate with the job. In practice, this doesn’t always 138 Part 2 rECruitMEnt, PlaCEMEnt, and talEnt ManagEMEnt happen. For better or worse, internal politics and having the right connections may well lead to placements that seem (and indeed may be) unfair and suboptimal. Rehiring someone who left your employ has pros and cons. Former employees are known quantities (more or less) and are already familiar with how you do things. On the other hand, employees who you let go may return with negative attitudes.48 Inquire (before rehiring) about what they did during the layoff and how they feel about return- ing. After a probationary period, credit them with the years of service they had accumu- lated before they left.49 LEARNING OBJECTIVE 5-4 Employee Engagement Guide for Managers Discuss a workforce planning Promotion from Within method you would use to improve employee engagement. Many employers encourage internal recruiting, on the reasonable assumption that doing so improves employee engagement. Thus, as IBM shifted from supplying mostly hardware to consulting, it assessed its skills gaps and instituted workforce plans to train current employees for new jobs; this assumedly fostered employee engagement. Similarly, International Paper appointed a single person “to provide support to all [business units], Staff Groups and Regions for Workforce Planning and Engagement.”50 Other employers, faced with strategic shifts, simply dismiss employees who don’t “fit.” FedEx has had strong internal recruiting and promotion-from-within policies almost from its inception. FedEx’s commitment to promotion from within grew out of founder Frederick Smith’s belief that “when people are placed first they will pro- vide the highest possible service, and profits will follow” (go to www.fedex.com, then to United States, about FedEx, FedEx overview, and then corporate philosophy).51 FedEx weaves together promotion from within with other policies—including annual employee attitude surveys, employee recognition and reward programs, a leadership evaluation process, extensive employee communication, and an employee appeals process—to foster employee commitment and engagement. FedEx’s approach underscores the need to take an integrated approach to fostering employee engage- ment. For example, as we will discuss further in Chapter 8 (Careers), promotion- from-within is futile without effective performance appraisal and training practices. Also, as at FedEx, effective promotion from within requires a system for access- ing career records and posting job openings, one that guarantees eligible employees are informed of openings and considered for them. FedEx calls its job posting system JCATS (Job Change Applicant Tracking System). Announcements of new job open- ings via this online system usually take place each Friday. All employees applying for the position get numerical scores based on job performance and length of service. They are then advised as to whether they were chosen as candidates. A manager interested in fostering his or her employees’ engagement can draw several useful guidelines from FedEx’s promotion-from-within system: show a genu- ine interest in your employees’ career aspirations; provide career-oriented appraisals; have a formal job-posting system; see that your employees have access to the training they need; and balance your desire to keep good employees with the benefits of help- ing them learn of and apply for other positions in your company. WLE KNO DG Outside Sources of Candidates E BASE Employers can’t always get all the employees they need from their current staff, and sometimes they just don’t want to. We look at the sources firms use to find outside candidates next. LEARNING OBJECTIVE 5-5 List and discuss the main out- Informal Recruiting and the Hidden Job Market side sources of candidates. Many (or most) job openings aren’t publicized at all; jobs are created and become available when employers serendipitously encounter the right candidates. The author  ChaPtEr 5 PErsonnEl Planning and rECruiting 139 of Unlock the Hidden Job Market estimates that perhaps half of all positions are filled informally (without formal recruiting).52 Similarly, one survey found that 28% of those surveyed found their most recent job through word of mouth. Nineteen per- cent used online job boards, 16% direct approaches from employers and employment services, 7% print ads, and only 1% social media sites (although 22% used sites like LinkedIn to search for jobs).53 Recruiting via the Internet Most employers recruit through their own websites, or through online job boards such as Indeed and CareerBuilder. For example, the CareerBuilder.com iPhone application lets someone search nearly 2 million jobs on CareerBuilder.com, the largest U.S. job site.54 Users may search for jobs by keyword, read job descriptions and salaries, save jobs to a list of favorites, and e-mail job links to anyone on their contact list. Employers increasingly use niche job boards such as jobsinsports.com and vetjobs.com.55 Online recruiting is getting more sophisticated. One example is the virtual office tour.56 In China the local office of Accountants Deloitte Touche Tohmatsu Limited posted a virtual office tour on Weibo (similar to Twitter’s messaging service). People visiting the site can virtually enter each of the company’s offices in Asia, walking through meeting rooms and talking virtually with local employees, to get a feel for what working in that office is like. There are many other such online recruiting tools. For example, ResumePal (see www.jobfox.com) is an online standard universal job application. Job seekers submit it to participating employers, who can then use the standardized application’s keywords to identify viable candidates more easily.57 McDonald’s Corp. posted a series of em- ployee testimonials on social networking sites like Second Life to attract applicants.58 Other employers simply screen through job boards’ résumé listings.59 Monster helps employers integrate streaming video into their job postings.60 The dot-jobs domain gives job seekers a one-click conduit for finding jobs at the employers who register at www.goto.jobs. For example, applicants seeking a job at Disneyland can go to www.Disneyland.jobs. HireVue “lets candidates create video interviews and send them to employers to review, share, and compare with other applicants.”61 Virtual (fully online) job fairs are another option. Here online visitors see a similar setup to a regular job fair. They can listen to presentations, visit booths, leave résumés and business cards, participate in live chats, and get contact information from recruiters and even hiring managers.62 Fairs last about 5 hours. PROS ANd cONS Online recruiting generates more responses quicker and for a longer time at less cost than just about any other method. And, because they are richer and more comprehensive in describing the jobs, web-based ads have a stronger effect on applicant attraction than do printed ads.63 But, online recruiting has two potential problems. First, older people and some minorities are less likely to use the Internet, so online recruiting may inadvertently exclude more older applicants (and certain minorities).64 The second problem is Internet overload: Employers end up deluged with résu- més. Self-screening helps: The Cheesecake Factory posts detailed job duties listings, so those not interested needn’t apply. Another approach is to have job seekers com- plete a short online prescreening questionnaire, then use these to identify those who may proceed in the hiring process.65 Most employers also use applicant tracking systems, to which we now turn. Improving Performance Through HRIS: Using Applicant Tracking A deluge of applicants means that most employers now use applicant tracking soft- ware to screen applications.66 Applicant tracking systems (ATS) are online systems that help applicant tracking systems employers attract, gather, screen, compile, and manage applicants.67 They also provide (ATS) other services, including requisitions management (for monitoring the firm’s open Online systems that help employers jobs), applicant data collection (for scanning applicants’ data into the system), and attract, gather, screen, compile, and reporting (to create various recruiting-related reports such as cost per hire and hire manage applicants. by source).68 Most systems are from application service providers (ASPs). These 140 Part 2 rECruitMEnt, PlaCEMEnt, and talEnt ManagEMEnt basically redirect applicants from the employer’s to the ASP’s site. Thus, applicants who log on to take a test at the employer are actually taking the test at the ASP’s site.69 Major suppliers include Automatic Data Processing (ADP.com), HRSmart (hrsmart.com), SilkRoad Technology (silkroad.com), and Monster (monster.com).70 As one example, a bank uses its ATS to bump applicants who don’t meet the basic job requirements; it then e-mails them suggesting they review the bank’s site for more appropriate positions. This bank then uses either phone interviews or au- tomated interview systems to whittle down the applicant pool to a few candidates. Then its recruiters interview those at headquarters and send them through the final selection process.71 One Ohio-based nursing care facility company arranged to have the recruiting dashboard vendor jobs2Web integrate its dashboard with the employ- er’s applicant tracking system. The recruiting manager now uses the dashboard to monitor recruitment data trends on things like which recruiting sources are doing the best job of attracting applications.72 Trends shaping hr: SCIENCE IN TALENT MANAGEMENT Most employers use tools like job boards to produce large numbers of recruits, and then use ATS and screening systems to cut those numbers down. Google’s “People Operations” (HR) group is more scientific. When their research showed that tools like job boards weren’t cost-effective for them, they created their own in-house recruiting firm. This in-house team uses a proprietary candidate database called gHire. Google’s recruiters continually expand and winnow this candidate list, by searching social net- working and other sites, by searching who’s working where, and by reaching out to prospective hires and maintaining dialogues with them, sometimes for years. These in-house recruiters produce hand-picked candidates and account for about half of Google’s yearly hires.73 Google’s career website is another big source of candidates. Applicants not only apply through it, but can share examples of their skills with Google employees, and through them discover what Google employment is like. Google also actively solicits employee referrals. Because inside referrals turned out to be great candidates, Google analyzed how to boost employee referrals. It found that higher referral fees weren’t the answer, (since Googlers loved recommending great candidates). Instead, Google streamlined the selection process, so more referrals got hired. Google uses outside recruiters sparingly for special assignments, and dropped job boards several years ago. 74 IMPROVINg ONlINe RecRuITINg eFFecTIVeNeSS The employer’s online effort needs to be thought out. For example, one survey of Web-based recruiting uncovered these applicant objections: Job openings lacked relevant information (such as job descriptions); and, it was often difficult to format résumés and post them in the form required.75 Employers take several steps. Most place employment information one click away from their home pages.76 Applicants can submit their résumés online at most Fortune 500 firms’ websites. Fewer companies give job seekers the option of complet- ing online applications, although that’s what most applicants prefer.77 Furthermore, the best Web ads don’t just transfer newspaper ads to the Web. As one specialist put it, “Getting recruiters out of the ‘shrunken want ad mentality’ is a big problem.” Figure 5-6 is an example of recycling a print ad to the Web. The ineffective Web ad has needless abbreviations, and doesn’t say much about why the job seeker should want that job.78 Now look at the effective Web ad in Figure 5-6. It provides good reasons to work for this company. It starts with an attention-grabbing heading and uses the extra space to provide more specific job information. Many employers include the entire  ChaPtEr 5 PErsonnEl Planning and rECruiting 141 Figure 5-6 Ineffective and effective Web Ads Ineffective Ad, Recycled Effective Web Ad from Magazine to the Web (Space Not an Issue) Process Engineer Pay: Do you want to help us make this a better world? $65k–$85k/year Immediate Need in Florida for a We are one of the top wastewater treatment companies Wastewater Treatment Process in the world, with installations from Miami to London Engineer. Must have a min. 4–7 to Beijing. We are growing fast and looking for an years Industrial Wastewater experienced process engineer to join our team. If you exp. Reply KimGD@ have at least 4–7 years’ experience designing processes WatersCleanX.com for wastewater treatment facilities and a dedication to make this a better world, we would like to hear from you. Pay range depending on experience is $65,000– $85,000. Please reply in confidence to KimGD@ WatersCleanX.com job description.79 Ideally, an ad also should provide a way (such as a checklist of the job’s human requirements) for potential applicants to gauge if the job is a good fit.80 Finally, online recruiting requires caution for applicants. Many job boards don’t check the legitimacy of the “recruiters” who place ads. Many applicants submit per- sonal details, not realizing who is getting them.81 U.S. laws generally do not prohibit job boards from sharing your data with other sources. One job board reportedly had personal information on more than 1 million subscribers stolen.82 Trends shaping hr: DIGITAL AND SOCIAL MEDIA Anyone seeking a job should probably sign up with LinkedIn. Accenture predicts that about 80% of new recruits will soon come through prospective employees’ social media connections.83 Recruiters use social media recruiting in several ways. They dig through social websites and competitors’ publications to find applicants who may not even be looking for jobs. They seek passive candidates (people not actively looking for jobs) by using social networking sites such as LinkedIn Recruiter Lite (a premium service) to browse members’ résumés and to find such candidates.84 Many firms use Twitter to announce job openings to job seekers who subscribe to their Twit- ter feeds.85 Theladders.com’s Pipeline™ networking tool lets recruiters maintain a dialogue with prospective job seekers even before they’re interested in seeking a job. Others use Facebook’s friend-finding search function, and Twitter, to learn more about prospective and actual candidates. TalentBin searches sites such as Pinter- est to find qualified tech workers.86 Many employers have social media strategies and career pages that establish an online presence highlighting the benefits of working for them.87 At one diversity conference, consultants Hewitt Associates displayed posters asking attendees to text message hewdiversity to a specific 5-digit number. Each person texting then became part of Hewitt’s “mobile recruiting net- work,” periodically receiving text messages regarding Hewitt openings.88 LinkedIn Recruiter Lite not only lets employers post jobs on LinkedIn. The employer can also conduct its own LinkedIn search for talent, by using Recruiter Lite’s search filters to search through LinkedIn’s database to find the most relevant profiles (including names and profiles). Recruiters can then use LinkedIn’s InMail to send short personalized messages to people they’re interested in. And by joining relevant LinkedIn groups the recruiter can discover other LinkedIn group members who might be potential hires.89 This not only helps them generate more relevant applicants, but provides a form of “crowdsourcing,” by letting the recruiter mine the applicants’ sites 142 Part 2 rECruitMEnt, PlaCEMEnt, and talEnt ManagEMEnt for feedback from the person’s blog comments and his or her likes/dislikes. Recruiters also post job openings on professional associations and other social networks.90 Cloud-based applications such as Oracle Talent Acquisition Cloud enable employers to integrate recruiting with related activities including requisitions management, applicant tracking, and interview management. The Oracle Taleo Social Sourcing Cloud Service is integrated with social sites like LinkedIn, Twitter, and Facebook. It notifies the company’s current employees about open positions, and then scans their social con- nections for referral suggestions that they may want to make to friends, or directly to the employer. With the My Staffing Pro applicant tracking system, applicants can apply on Facebook, share job openings, connect with managers, and log in with the social profile. Recruiters can post job openings on Twitter and Facebook, accept applications via Facebook, and more easily screen out the best applicants. Advertising While Web-based recruiting is replacing traditional help wanted ads, a glance at almost any paper will confirm that print ads are still popular. To use such help wanted ads successfully, employers should address two issues: the advertising me- dium and the ad’s construction. THe MedIA The best medium—the local paper, The Wall Street Journal, The Economist, for instance—depends on the positions for which you’re recruiting. For example, the local newspaper is often a good source for local blue-collar help, clerical employees, and lower-level administrative employees. On the other hand, if recruiting for workers with special skills, such as furniture finishers, you’d probably want to advertise in places with many furniture manufacturers, such as the Carolinas, even if your plant is in Tennessee. The point is to target your ads where they’ll reach your prospective employees. For specialized employees, advertise in trade and professional journals like American Psychologist, Sales Management, Chemical Engineering, and Women’s Wear Daily. Help wanted ads in papers like The Wall Street Journal can be good sources of middle- or senior-management personnel. Most of these print outlets now include online ads with the purchase of print help wanted ads. Technology lets companies be more creative.91 For example, Electronic Arts (EA) uses its products to help solicit applicants. EA includes information about its intern- ship program on the back of its video game manuals. Thanks to nontraditional tech- niques like these, EA has a database of more than 200,000 potential job candidates. cONSTRucTINg (WRITINg) THe Ad Experienced advertisers use the guide AIDA (attention, interest, desire, action) to construct ads. First, you must attract attention to the ad, or readers may ignore it. Why does the ad in Figure 5-7 attract attention? The phrase “next key player” helps. Next, develop interest in the job. For instance, “are you looking to make an impact?” Create desire by spotlighting words such as travel or challenge. As an example, having a graduate school nearby may appeal to engineers and professional people. Finally, the ad should prompt action with a statement like “call today.” Job applicants view ads with more specific job information as more attractive and more credible.92 If the job has big drawbacks, consider a realistic ad. When the New York City Administration for Children’s Services was having problems with em- ployee retention, it began using these ads: “Wanted: men and women willing to walk into strange buildings in dangerous neighborhoods, [and] be screamed at by unhinged individuals….” 93 Employment Agencies There are three main types of employment agencies: (1) public agencies operated by federal, state, or local governments; (2) agencies associated with nonprofit organiza- tions; and (3) privately owned agencies.  ChaPtEr 5 PErsonnEl Planning and rECruiting 143 Figure 5-7 Help Wanted Ad That draws Attention Are You Our Next Key Player? Source: “Help Wanted Ad That Draws Attention”, in Giom- betti Associates, Hampden, MA. PLANT CONTROLLER Northern New Jersey Reprinted with permission. Are you looking to make an impact? Can you be a strategic business partner and team player, versus a classic, “bean counter”? Our client, a growing Northern New Jersey manufacturer with two locations, needs a high-energy, self-initiating, technically competent Plant Controller. Your organizational skills and strong understanding of general, cost, and manufacturing accounting are a must. We are not looking for a delegator, this is a hands-on position. If you have a positive can-do attitude and have what it takes to drive our accounting function, read oh! Responsibilities and Qualifications: Monthly closings, management reporting, product costing, and annual budget. Accurate inventory valuations, year-end physical inventory, and internal controls. 4-year Accounting degree, with 5–8 years experience in a manufacturing environment. Must be proficient in Microsoft Excel and have general computer skills and aptitude. Must be analytical and technically competent, with the leadership ability to influence people, situations, and circumstances. If you have what it takes to be our next key player, tell us in your cover letter, “Beyond the beans, what is the role of a Plant Controller?” Only cover letters addressing that question will be considered. Please indicate your general salary requirements in your cover letter and email or fax your resume and cover letter to: Ross Giombetti Giombetti Associates 2 Allen Street, P.O. Box 720 Hampden, MA 01036 Email: [email protected] Fax: (413) 566-2009 PuBlIc ANd NONPROFIT AgeNcIeS Every state has a public, state-run employment service agency. The U.S. Department of Labor supports these agencies, through grants and through other assistance such as a nationwide computerized job bank. The National Job Bank enables agency counselors to advise applicants about available jobs in other states as well. Some employers have mixed experiences with public agencies. For one thing, applicants for unemployment insurance are required to register and to make themselves available for job interviews. Some of these people are not interested in returning to work, so employers can end up with applicants who have little desire for immediate employment. And fairly or not, employers probably view some of these local agencies as lethargic in their efforts to fill area employers’ jobs. Yet these agencies are useful. Beyond just filling jobs, counselors will visit an employer’s work site, review the employer’s job requirements, and even assist the employer in writing job descriptions. Most states have turned their local state employment service agencies into “one-stop” shops—neighborhood training/ employment/career assessment centers.94 At Oregon State’s centers, job seekers can use “iMatch” skills assessment software, while employers can get up-to-date local economic news and use the center’s online recruitment tools.95 More employ- ers should be taking advantage of these centers (formerly the “unemployment offices” in many cities). Most (nonprofit) professional and technical societies, such as the Institute for Electrical and Electronic Engineers (IEEE), have units that help members find jobs. Many special public agencies place people who are in special categories, such as those who are disabled. PRIVATe AgeNcIeS Private employment agencies are important sources of clerical, white-collar, and managerial personnel. They charge fees (set by state law and posted 144 Part 2 rECruitMEnt, PlaCEMEnt, and talEnt ManagEMEnt in their offices) for each applicant they place. Most are “fee-paid” jobs, in which the employer pays the fee. Use one if: 1. Your firm doesn’t have its own human resources department and feels it can’t do a good job recruiting and screening. 2. You must fill a job quickly. 3. There is a perceived need to attract more minority or female applicants. 4. You want to reach currently employed individuals, who might feel more comfortable dealing with agencies than with competing companies. 5. You want to reduce the time you’re devoting to recruiting.96 Yet using employment agencies requires avoiding the potential pitfalls. For example, the employment agency’s screening may let poor applicants go directly to the supervisors responsible for hiring, who may in turn naively hire them. Conversely, improper screening at the agency could block potentially successful applicants. To help avoid problems: 1. Give the agency an accurate and complete job description. 2. Make sure tests, application blanks, and interviews are part of the agency’s selec- tion process. 3. Periodically review equal employment data on candidates accepted or rejected by your firm, and by the agency. 4. Screen the agency. Check with other managers to find out which agencies have been the most effective at filling the sorts of positions you need filled. Review the Internet and classified ads to discover the agencies that handle the positions you seek to fill. 5. Supplement the agency’s reference checking by checking at least the final candi- date’s references yourself. Recruitment Process Outsourcers Recruitment process outsourcers are special vendors that handle all or most of an em- ployer’s recruiting needs. They usually sign short-term contracts with the employer, and receive a monthly fee that varies with the amount of actual recruiting the em- ployer needs done. This makes it easier for an employer to ramp up or ramp down its recruiting expenses, as compared with paying the relatively fixed costs of an in-house recruitment office.97 Large RPO providers include Manpower Group Solutions, IBM, and Randstad Sourceright.98 Temporary Workers and Alternative Staffing Employers increasingly supplement their permanent workforces by hiring contingent or temporary workers, often through temporary help employment agencies. Also