Recruiting Secrets of the Smartest Companies Around
How far will you have to go to find the best people? No matter what your business is, the answer is the same: further than you've ever imagined
CAMBRIDGE, MASS.--Totally Apocryphal Technologies (TAT), a fast-rising player in the rapidly expanding field of genetic engineering, recently announced that it would proceed with a controversial program to take tissue samples from top-performing members of its engineering, sales, and management staff. Rather than using the samples to screen for illegal drug use or preexisting medical conditions, TAT hopes to use its recently developed human-cloning technology to address a critical lack of available talent. In a recent statement, TAT CEO Hugh R. Keating described the project as "a logical application of our core technology in what continues to be an extremely tight labor market."
Sorry, but the story above is fictitious. And even if cloning should become an option for today's employee-starved companies, it will be too late for Mark Roesner. Only a year ago, with sales at his filtration-and-fluid-handling-products company doubling every year, Roesner decided to take a drastic step in response to the job glut: he sold his company. "One key reason was the current job market," he says. "I decided it was impossible to grow and maintain our profitability level."
Roesner's solution may seem extreme, but his predicament is all too familiar. Thomas Kenyon, president of Pettit Fine Furniture, in Sarasota, Fla., grew so frustrated with the dearth of good people that he recently declared a 90-day growth freeze for the $1-million furniture-manufacturing company. "We told our sales reps to put a moratorium on finding new dealers," he says. "It was frustrating, but I knew it was the right thing to do." Kenyon says he still has to limit his growth (for instance, by not expanding into the Washington, D.C., area, where there's some demand for his furniture) because of the difficulty in finding qualified woodworkers.
Right now lots of folks are infuriatingly stalled, tantalized by the opportunity for record revenue growth but limited by their inability to locate qualified personnel. Frazzled CEOs are also lamenting increased employee workloads and the concomitant decreased customer satisfaction. It's becoming clear that for fin de siècle entrepreneurial companies, successful recruiting will make the difference between growth and stagnation--maybe even between life and death.
And the human drought shows no signs of letting up. According to Bill Styring, senior fellow at the Hudson Institute, "It's going to get a lot worse." He points to the ratio of probable workers (ages 25-64) to probable retirees (ages 65 and over), which currently stands at four to one, as it has for the past three decades. However, in 2011 the first baby boomer will reach 65 and will be looking to retire, with 76 million fellow boomers right behind. That's when the ratio will start dropping, down to three to one in 2020, and to nearly two to one in 2030. "That's a demographic fact that business needs to deal with," he says. "The population of available workers is going to implode like you wouldn't believe."
As the need for employees becomes acute, CEOs are finding that their standby staffing methods aren't enough anymore. Two years ago, Lou Hoffman, president of a $5-million public-relations firm in Silicon Valley, was in the enviable position of being able to grow without necessarily adding new business, mostly because his high-tech clients were growing so quickly. If only he could find the staff to meet the demand.
Hoffman figured he needed to at least double the Hoffman Agency's staff of 25. He hired a recruiting consultant to generate leads. "Once we have the names, our close rate is pretty good," says Hoffman. "The problem was, our funnel was empty." Hoffman says his slot for group account manager--the chief liaison between the company and all its customers--went unfilled for 10 months, and his inability to meet client demand was starting to affect client satisfaction. Hoffman and other high-ranking officials took turns filling the void, but he says it was "only so long before clients started to feel there was no one giving them full-time attention."
That's when Hoffman realized his recruiting practices needed to be a lot more systematic. Previously the company hired on an as-needed basis, with Hoffman himself taking the hiring helm. Now, although his company wasn't always hiring, it needed to be always recruiting. Hoffman likens it to painting the Golden Gate Bridge: by the time the painting crew is done, it has to start over. By the time Hoffman's recruiting process has found a good candidate, he'll probably have a job for that person.
But for that to work, Hoffman's recruiting efforts needed to expand. So he replaced his 20-hours-a-week human-resources person with a full-time staffer hired primarily for her crack recruiting skills. "I know that sounds obvious," he explains, "but we were trying to limit 'unnecessary' functions, positions that didn't generate revenue. But it was foolish not to invest in full-time human resources." Hoffman also hired a 28-hours-a-week consultant to head up the company's on-line recruiting efforts, which include searching through Web databases, placing banner ads on third-party recruiting sites, and attending on-line career chats.
In addition to bringing in the specialists, Hoffman insisted that everyone join in the recruiting effort. Members of the management team are required to engage in two "profile-raising" activities a year, and also to make two recruiting-related phone calls a week. Hoffman also monitors the time it takes to fill a position and recruiting quality, which partly determine the size of employees' annual raises. At the account-executive level, Hoffman measures team-hiring input and recruiting-idea generation to "put recruiting on everyone's radar."
Hoffman has transformed his business so that it is now a recruiting firm as much as a PR company--which is what most growth companies will have to be to stay competitive. As Hoffman did, CEOs can start by rethinking what they've done in the past and trying one new idea at a time. The first group of ideas that follows consists of refreshing variations on familiar-but-stale standard tactics, whereas some of the other ideas that follow may seem downright outlandish. But in whatever direction you decide to go to expand your recruiting repertoire, sooner or later you're sure to come to this realization: what you're doing right now isn't nearly enough.
How to Hire: Part One
Sharpening the old tools
Classified Ads: New Looks, New Locations
When Hoffman did a reverse audit of his hiring practices in 1996, he found that no one he had hired in the previous two years had come to him through newspaper ads, on which he was spending upwards of $20,000. Like Hoffman, many company builders are finding newspaper ads increasingly ineffective: too much clutter and not enough quality response.
Those that still find newspaper ads useful have found that they need to make their ads stand out. Roger Mody of Signal Corp., an information-technology- services provider in Fairfax, Va., uses humor. One recent ad in the Washington Post featured a messy-faced Mody shortly after taking part in a company pie-eating contest, with the tag line "And you should see us on casual day." Other ads have featured stock photos of Wally Cleaver ("Gee whiz, Wally, Signal sure has some swell job opportunities!")
Increasingly, CEOs are widening their advertising efforts to include such nontraditional recruiting media as radio and TV. Recently, Michael Pehl of i-Cube, an IT-consulting-services company in Cambridge, Mass., began running a series of large billboards in the Boston area, including one targeting drivers exiting from Logan Airport that immodestly touts i-Cube as "An Incredible Place to Work." Even at a cost of $10,000 to $15,000 a month (including design fees), the billboards represent quite a bargain in Pehl's view. "We'd pay the same thing to run a tiny one-day ad in the Boston Sunday Globe," he says, "but the billboard sits there for 30 days."
Referral Bonuses: Bribe Strangers, If You Have To
Another long-standing practice that's getting refined in today's labor market is the venerable referral bonus. Paying employees to do your recruiting for you has always been a smart tactic--with the employee acting as a cost-effective quality check--but lately the bounties have been getting larger and more creative. To make sure employees are thinking about the long term when they refer prospects, Brett Brewster of Mitec Controls, a $5.5-million fire- and life-safety company in Norcross, Ga., spreads the bonus payments out: the employee gets half at the referral's 90-day mark and the rest when the referral has been working for six months. As an added dose of accountability, Brewster requires employees to spend time orienting the people they refer, which Brewster says improves the chances of retaining new recruits.
Linda Blaser, a contract recruiter for Exchange Applications, an IT company in Boston, has set up a referral program that gives employees more money for more valuable referrals: $3,000 for most positions and $5,000 for "hot jobs" that Blaser needs to fill with particular urgency. Recently, for every successful referral they made, employees were entered into a drawing for a Caribbean trip. Blaser periodically provides employees with a list of available positions and a fun reminder of the trip, such as a bag of fish-shaped candies. And it's not just Exchange Applications employees who can cash in. The company offers a $2,500 bounty to people outside the company, be they vendors, customers, strangers, even journalists. (You know whom to contact if you're interested.)
If you're growing particularly fast, you may want your referral program to inspire repeat participation. Michael Pehl of i-Cube has developed a program that rewards employees in ongoing quarterly and annual campaigns with progressive and changing incentives. For example, in addition to a $2,000 bonus, anyone making a successful referral for the third quarter of 1998 received a 32-inch TV. And if the candidate started in August, Pehl tacked on a VCR. Annually, anyone making three referrals receives a choice of either two mountain bikes or a year's worth of laundry and housecleaning services. For five hires the choice is between a spa trip and an adventure vacation. And anyone making eight successful referrals for the 1998 calendar year will receive a new Jeep Wrangler. "The most important thing about a recruiting system isn't what you do," says Pehl, "but that you have a framework in place to get people thinking about finding people."
Networking: Passively Schmooze, and You'll Lose.
Travel time needn't be just a chance to catch up on reading the latest books. Whenever Kathi Jones, human- resources and recruiting manager at Aventail Corp., in Seattle, is flying out on business, she arrives at the airport an hour early, and not because of increased security measures. She reads other people's luggage for company tags featuring the names of such big-time competitors as Cisco Systems and Raptor Systems, and takes the opportunity to chat up the owners of the luggage. She also keeps an eye out for folks wearing competitors' T-shirts and baseball caps and engages the sporty travelers in employment-related conversation.
When Barry Brodersen, cofounder and vice-president of Domino Equipment Co., in Clinton, Okla., hears about a particularly good service or construction specialist, he tries to get as much information about that person as he can and looks for opportunities to become acquainted. Once Brodersen pursued a hot service specialist (armed only with the fellow's name, a vague physical description, and the name of his employer), tailgating him for 30 miles. When they stopped, Brodersen introduced himself and said, "Why don't you come work for me?" Now the man is a service manager for Brodersen, whose company installs and services petroleum equipment.
While some people look for opportunities to reach out to others in their industries, others prefer to manufacture those opportunities. Dave Clark, president of Mindsource, a technical staffing company in Silicon Valley, has created a monthly industry-networking session called "Birds of a Feather" (BOF) at which he and his employees hobnob with other Internet protocol folk in the Silicon Valley area. Word has gotten around about the monthly fete--mostly through E-mail and various newsgroups--to the point where Clark says the gathering has become a "centerpiece for our particular niche." It has also, he admits, become a source for the occasional hire.
Campus Recruiting: Beyond the Old College Try.
One of the classic recruiting spots is the college campus, especially for companies seeking newly minted M.B.A.'s. Doug Evans, president of Doug Evans + Partners, an Internet, electronic-commerce, and technology consulting company in New York City, found that he needed a bit of chutzpah to get attention from the M.B.A.'s, whose eyes tend to fix on Fortune 500 names. Evans began planning in May 1996 for presentations he'd make starting that November. When he first approached Columbia Business School, he says the administration wouldn't even talk to him. When it finally responded, all it gave him was a tiny room from which to recruit. To achieve a larger on-campus presence, Evans called a client who was a Columbia grad, who helped him get the pricey-but-prime suite where IBM and Arthur Andersen made their presentations. Evans also networked with on-campus organizations, and he inundated candidates with E-mails, direct mail, and telephone calls to maximize attendance at his presentation. As a result of the Columbia presentation, he netted three new employees.
Résumés: Making a Paper Trail.
For some people the practice of ferreting out prospects borders on obsession. Cathy Lanier, president and owner of Technology Solutions Inc., a $3.3-million technology-staffing firm in Columbia, S.C., never throws a résumé away. She rarely seeks entry-level personnel, but nevertheless she enters every résumé she gets into a database. Then, every two years, Lanier peruses the database and sends out an E-mail questionnaire to see what prospects have added to their résumés, including a checklist of computer systems and languages in which she asks candidates to rate their proficiency. She also asks for their current location, salary range, and references. Most important, she says, is asking for a contact person who will always know the prospect's whereabouts in case she somehow loses touch. "It takes a detective mentality," she says, "getting enough information to track them down later if you need to."
When Herb Sizemore was CEO of Kansas Communications, in Lenexa, Kans. (he recently sold the company), he kept a file of all the "People on the Move" columns in his local paper and called people a year after they'd taken a new job to see if they were happy with their situation. Louise Wannier of Enfish Technology Inc. keeps a "people book" of everyone she meets and scans through it periodically, keeping in touch with key prospects.
How to Hire: Part Two
Picking up the new tools
New Sources: Casting the Widest Net.
In 1991, Jeff Moler, CEO of Protek Electronics Inc., a $9-million electronics designer and manufacturer in Sarasota, Fla., received a call from the local Easter Seals office offering physically and mentally challenged individuals for Moler's assembly line. Moler accepted, and he reports that with a little extra training, those recruits have become a tremendous asset. "But lately even they haven't been available," he laments. Apparently, other local companies have caught on, creating much local demand for handicapped workers. So Moler went offshore--1,500 miles, in fact--to set up a second manufacturing plant in Costa Rica. "It was the only answer," he says. "We couldn't find people fast enough." Costa Rica offered a large number of available, educated workers, many with technical-school or college backgrounds.
Of course, one relatively quick way to staff up is to buy another company. When Shiv Krishnan, CEO of Indus Corp., a systems-integration company in Vienna, Va., acquired the Washington, D.C., and North Carolina assets of Vigyan Inc., in 1996, one of his primary motivations was the 30 staff members he would be adding to his staff of 25. But Krishnan warns that there are perils to recruiting by acquisition, especially since sale-price expectations in the IT field are so high. "The culture fit has to be right," he says. "If not, they'll leave and you'll have to sit on these huge acquisition costs while 75% of your assets have walked out." He says he was able to avoid that by ensuring that his soon-to-be acquired personnel were open to an acquisition. The Vigyan staff were working with fairly old technology and relished the chance to move into new areas.
Internet Recruiting: Finding the Right Connections.
Recently, Dan Maude, president of Beacon Application Services Corp., a systems-integration company in Framingham, Mass., made the switch to recruiting exclusively from the Internet, primarily because it's effective and comparatively cheap. "A year's worth of Web recruiting for us costs less than one agency fee," he explains. It's also faster: rather than wait for candidates to see and respond to the Sunday help-wanted ads, he can post jobs and get responses in the same day.
Maude says he's found certain third-party-recruiting Web sites to be very effective, particularly Career Mosaic, the Monster Board, and Yahoo!. Maude's listings include a link back to Beacon's Web site and a special E-mail address to which candidates can send their résumés. Since Beacon Application Services is one of 61 exclusive PeopleSoft partners, candidates can also find out about job opportunities through a link from the vendor's master site back to the company site. Aside from links, there are other ways of attracting potential employees to your site. Tony Petrucciani of Single Source Systems, a systems-integration business in Fishers, Ind., offers Web surfers a free chance at such prizes as a PalmPilot personal organizer just for visiting the company's Web site.
Now you might be thinking, Sure, it makes sense for technology-based companies to recruit on the Web, but what about my business? Well, you can find more than just the tech types in cyberspace. Currently there are job-related Web sites catering to restaurant workers (www.starchefs.com), truck drivers (www.truckers.com), and funeral directors (www.funeralnet.com), to name a few.
Web-Spinning: Working the Virtual Room.
Beyond databases and Web sites, there are other corners of the Web that many companies are only beginning to discover. For example, there's Usenet, a Web-based network of topic-specific newsgroups or bulletin boards. Kathi Jones, at Aventail, starts at Deja News, where she can search for newsgroups that are of interest to her typical recruit and read through the postings to find the smartest posters. She also quietly lurks through Web-based forums or chats, where attendees share ideas and advice on technical questions.
Don't be discouraged if you can't find a Web forum to suit your needs. Toni Marie Finn of Creative Financial Staffing decided to create her own career-specific Web chat at www.wbs.net, a Web-based "community." She advertised the occasional forum on CFS's company Web site, as well as on other message boards and chat sites. Finn claims she got hundreds of attendants, from which she generated 24 quality leads and 12 interviews, which ultimately resulted in two hires. It cut her advertising costs by two-thirds, she says. "And," adds Finn, "I could interview over the Net, in real time."
Long-Term Prospecting: Cultivating Your People Pipeline.
Finn became very active in the local Chamber of Commerce partly to help create new training programs and internships to groom high school students for potential accounting careers. Finn also teaches a local Junior Achievement class on "Life after High School: How to Prepare for Work," which has actually already netted three temps for her to place.
Joe Martinez takes the outreach process a step further. The CEO of Productive Data Systems, an IT staffing and services company in Englewood, Colo., Martinez wonders why everyone seems to be screaming at Congress to increase the number of visas for high-tech workers from abroad. "There are a ton of people right here we can train to take these new, information-age jobs," he says. "Give the local people a chance, instead of importing these guys from India or Israel." Martinez has formed a nonprofit called Technology Transfer Solutions, which works with various Colorado organizations to help high school-equivalency students get entry-level IT jobs. Martinez concedes that the effort does not directly benefit his businesses--at least not yet. "We don't hire entry-level people, so it's not feeding right into our workforce," he says.
Andrew Levi took the spin-off strategy in a different direction: The president and CEO of Aztec Systems Inc., a systems-integration company in Dallas, started a separate recruiting company. Levi had grown increasingly frustrated with most of the more than 10 headhunters he had engaged. "They were charging these huge fees and delivering substandard people," he says. One particular recruiter had succeeded in bringing in a stream of decent candidates, so Levi approached her about starting up on her own under Aztec's aegis. Now that she's up and running, "our recruiting problem has totally disintegrated," says Levi. His current recruiting clients include companies that he otherwise competes against. Does that bother him? "Other people will place those people anyway," he says. "We might as well get the fees. And even if we don't place them with us, we build a relationship for down the road."
How to Hire: Part Three
Your new 'marketing' mind-set
Ultimately, getting your company geared up to become the recruiting machine it needs to be involves more than sharpening old hiring tools and acquiring new ones. More important is the mind-set you apply to the task. Think of the energy and discipline you bring to courting prospective customers, and you'll get some idea of the intensity you need to bring to the recruiting table.
In the first six months of 1998, Dan Maude took his employee base from 40 to 70, with a goal of having 100 staffers by year-end 1998. Recognizing that the process was more a marketing job than a classic "personnel" function, Maude put his vice-president of marketing at the helm of the recruiting effort. "Sales is not the problem," Maude notes. "Getting customers is the easy part."
Often the biggest selling point a growing company has, and the most difficult to copy, is its culture. Which is why Bill Ziercher, CEO of Sterling Direct Inc., a direct-marketing and communications company in Earth City, Mo., goes out of his way to make sure his company is a fun place to work. The company has ongoing "contests" such as "Pat the Pig," in which a porcine Beanie Baby sits on the sloppiest desk of week, with this week's winner awarding the pig to the next week's recipient. And then there's the "Smiley Face Game," in which, if a fellow employee goes out of his way to be nice to you, you can enter his name into a weekly drawing for a T-shirt, a free limo ride, even tickets to a Cardinals game. The company also holds regular events, such as a recent beach party, during which the lunchroom was equipped with a karaoke machine and Super Soaker water guns. Those who refused to sing got soaked. "But that wasn't a worry," says Ziercher. "Once you get acclimated to the culture here, you just jump on in." Fun events get employees talking. "Happy associates tell their friends," says Ziercher. "That helps you communicate to the outside world that this is a fun place to be."
To attract the best salespeople, Chris Taylor, cofounder of $18.5-million International Postal Consultants Inc. (IPC), which sells international-mailing services, uses a system whereby salespeople earn "royalties" on their accounts: in addition to a commission, salespeople receive a percentage of the profit an account brings in for the life of the account. "We wanted to make it open-ended," says Taylor, "so there wasn't any reason for them to leave and try it on their own." Doesn't Taylor consider the system overly generous? "We hope all our reps make huge six-figure incomes," he says. "A lot of people have said we're giving the shop away, but we've never lost a rep in six years." Plus, word gets around on the street that IPC has this lucrative commission plan, "and that makes recruiting a lot easier."
Brett Brewster of Mitec Controls has gone so far as to change the entire structure of his company to make it more attractive to potential recruits. "We had to find a new way to compete," he says. "We kept losing people to the high-tech industry." Brewster divided his company into five limited-liability corporations, surrounding each of five account managers with one to three testing teams each. Whereas those testing jobs used to start at $14 an hour, now the teams are paid based on the profitability of the account. For example, on a $2,000 contract, about $1,200 would go directly to the people on the team, after they paid for company costs, overhead, and their own materials. "So they work to be productive instead of just being on the clock," says Brewster. "Their overall income goes up greatly." So when Brewster is recruiting, he can point to people on his staff making upwards of $40,000, and to the fact that they have some direct control over how much they make.
As important as it is to get the word out about your company through as many channels as possible, it's also important to ask for and collect feedback. Beverly Kelly, human-resources manager at Robert Charles Lesser & Co., a real-estate consulting firm in Los Angeles, asks candidates about other companies they're interviewing with, and what makes a particular company attractive. She also queries current employees about what they liked and disliked about the hiring process. And she sends an E-mail inquiry to people who have declined an employment offer, asking why. Kelly says she's made numerous changes based on all that feedback, particularly on the company's Web site, which now features more "eye-grabbing" graphics, plus explications of the company's interview process, training schedule, and samples of client work.
Kelly has by no means finished tinkering; she thinks of her recruiting efforts as a self-correcting process. As does Lou Hoffman, who is optimistic about the changes he's making in his ever-evolving recruiting process. "We've seen some improvement, but we still need to get better," he says. "We started making changes two years ago, and it's really only kicked in in the past six months." Next, Hoffman plans to focus more on marketing to get the message out about his company. He's already created a corporate annual report for direct-mail recruiting efforts. He also hands them out at first interviews. "We thought it was the right vehicle to tell our story," he says. The report highlights the company's perks, which include an outside-training allowance, a paid-sabbatical program, profit sharing, and flextime. It also includes sample client-project case studies and even company revenues and gross revenue per employee. Thanks to his contacts in the business, the report costs him only $35,000 a year to produce, and Hoffman says that when he asks recent hires, as well as people who have declined recent offers, "What gave you a favorable impression about us?" the annual report nearly always comes up. "It gives people a sense of what we're about," he says. "None of our competitors has anything like that."
Additional reporting for this story was provided by Ilan Mochari.
But wait--there's more
For more information on recruiting and the tight labor market, see these articles from earlier issues of Inc. :
HANDS ON: " Beyond Campus Recruiting," April 1998.
OWNER'S MANUAL: " The People Chase," May 1998.
FURTHER READING: " Zero-Defect Hiring," March 1998.
FEATURE STORY: " Motherhood, Apple Pie, and Stock Options," February 1998.
FEATURE STORY: " How're You Gonna Keep 'Em Down On the Firm?," January 1998.
FEATURE STORY: " The Right Fit," Inc. 500, 1997.
WHAT'S HOT: " On-Line Recruiting," August 1998.
BUSINESS 101: " Think All Noncompetes Stink?" October 1997.