Is it still a best practice to develop pipelines of talented people who can be popped into vacancies as they occur? CEOs like Kevin Ryan over at Gilt Groupe are fantastic at that.
In the '70s, every company used to do this. The single biggest block of time on the CEO's calendar was talent reviews where they assessed their people and tried to figure out what they needed next. Now people aren't even aware that their companies used to have all these development programs and job-rotation programs and things like that. Because they were hired from the outside, so they have no institutional memories.
I agree that using software to evaluate employment applications is like trying to do calligraphy while wearing Mickey Mouse gloves. But if you are deluged with thousands of applications, what alternative do you have?
That's part of the conundrum. At least initially, companies were using software to make it easier for people to apply for jobs. They seemed to think that if you just got lots of applicants, it boosts their quality. So there's no way you could process all these things by hand. They have to automate some of it. The question is whether they have to take all the human judgment out of it. As we've discussed, there's a problem with the way jobs are described and what the requirements are. Hiring managers say whatever they want and it gets coded into the software. There are lots of points where you could use software to do some of the screening for you. But in an effort to get their costs down, companies have taken all the humans out of the process, and with it all the human judgment. It ends up being pound-foolish.
Is there any data that compares the hiring success of large companies with that of smaller and start-up companies? Smaller businesses, I presume, are much less likely to relegate applicant evaluation to software systems. Many don't even have HR departments.
My guess is smaller companies are better at [hiring] for the reasons you are describing. If you look at it on paper the smaller companies would probably complain that their costs per hire are greater than those of big companies. But it's because of the quirkiness of internal accounting where all we can see are the current costs. We can't see long-term costs or the benefits of better hires. Also, people have to be broad in those kinds of companies. You can't have these long lists of micro-requirements. Smaller companies probably are paying more attention to attitude than to credentials and experience.
In the book, you mention Rich Sheridan, CEO of Menlo Innovations. Last year I sat in on a hiring session at his company. Twice a year, Menlo brings together all 30 or so job applicants for an evening and pairs them off to work on different projects and exercises. They switch pairs three times, and the stated objective is to make your partner look good enough to get hired. In a country that lives and dies by innovation, could we better compete if more companies were like Menlo and got innovative about how they hire?
You have to be innovative because clever applicants know how to game the system. One of the most effective ways to hire is with behavioral interviewing. Tell me about a time when you did blah blah. But applicants know how to answer those questions. So you've got to innovate to stay ahead of them. Some companies are very good at that. There are famous stories about Disney, which sort of misdirects applicants during group exercises, where you think you are supposed to demonstrate how smart you are but they are actually looking for something different. A generation ago companies used to be very smart about this stuff. They would spend days interviewing people. They used psychologists.
Since employers seemed determined to outsource training, should we be developing new kinds of vocational schools? Or at least opening more vocational schools?
Vocational education is a mess. It seems way under-funded. To the extent to which employers have a legitimate complaint around skill issues, it does relate to vocational education programs. But the schools have a legitimate complaint as well, in that the employers have to help them stay up-to-date. If you think about this as a supply-chain problem, it would be crazy for a company to say, we're getting a key component from suppliers but we're not going to talk to them. We're just expecting they are going to produce exactly what we want. That's the way most employers deal with schools.
How will we wean companies off cheap or unpaid internships and get them to adapt more substantive apprenticeship programs?
I don't think we can rely on enough employers to act because they are civic-minded. In the '90s, companies participated in these kinds of programs because they thought it was right for the community. And after a while they realized it was working for them as well. We have to help businesses understand that it's cheaper to develop people from within. Appeal to their self-interest. That usually works.
