‘Employment Churn’ Crisis, post recovery - An Hypothesis.

A small trickle of new jobs will cause a tidal wave of unexpected replacement hiring. Here's why you need to get ready now. Hopefully, it's not too late I believe.

In the recent trend of hiring and candidate sourcing, I have a strong urge to make a point that "employment churn" (fully employed people switching seats) will increase dramatically three to four months before any pickup in overall employment. This unplanned spike in voluntary turnover will leave many companies ill-equipped to handle the surge, since most are not considering replacement hires in their new hiring forecasts as a big item.

Based on some recent evidence, I believe that this spike will be more significant that anyone realizes. Worse, this could happen sooner than expected, blindsiding unprepared companies.
Here's some of the evidence supporting this view.

Over the past few weeks I've been asking people who are fully employed these two questions:

1. How satisfied are you with your current job?
2. Are you looking now for something better?

Interestingly, more people said they were satisfied than unsatisfied, but even those who were dissatisfied most said they weren't looking right now, probably because there isn't much worth looking at.

  

With a quick online research and analysis (frankly You can observe a similar effect by tracking the use of the word "jobs" in a Google search). Overall, 75% of the people said they would consider something if called, but only 20% of the most satisfied said they'd take the call.

  

Basically, the conclusions I have drawn from this survey (when validated by more candidates) is you should de-accelerate all of your active candidate sourcing programs immediately and aggressively ramp up your passive recruiting efforts.

 

What the survey results seem to indicate is that just having a job is far better than not having one, even if the job itself provides little personal satisfaction. Since there are so few good jobs out there, it's not worth looking for something else right now.

 

As you can predict, less than 10% of those unsatisfied and extremely unsatisfied with their current jobs are aggressively looking. And why would they? We've all read about low-ball offers, the number of applicants applying for each job, and the demeaning aspects of looking for a job in the current environment.

  

Given this situation, it's unlikely many fully employed people would be looking, risking the jobs they already hold. While still a huge number, one could conclude that the steadiness is a result of people not finding anything new. I'd further conclude, based on the survey results, that most of the people looking for these jobs are either the unemployed or those just entering the workforce.

 

It's also pretty easy to conclude that as soon as the economy recovers just a little, those least satisfied of the fully employed will leave first. This movement will then trigger the next rung of those slightly less satisfied to ramp up their job-hunting efforts.

 

This, in turn, will lead the next group to move up their efforts, and so on. Pretty soon, a minor increase in voluntary turnover will lead to a massive game of musical chairs being played out across the country. It will only take a little bit of new job creation to start this major movement.

 

If you too think there is a possibility of this type of scenario, here are four ideas (best of what I can think of) you might want to ponder at your next recruiting staff meeting:

• If you have any open reqs for experienced hires, don't expect to hire any good people who respond to your ads. You'll need to enter into the passive candidate market aggressively to fill these slots or ramp up your employee referral program. Here are links to LinkedIn and Broadlook webinars with some advice on how to use these tools to identify and call these people.
• Call Jobs2Web, or Chahiye Jobs and ask them to create talent hubs for you for your most critical positions. Here's a link to a sample of how your CRM system can be designed to convert a prospect into a candidate using a series of auto-response emails without the recruiter even picking up the phone. In case your organization does not have a CRM a simple trick with MSExcel and MSOutlook can serve the purpose equally. Lets call this the "Virtual Recruiter". The talent hub with this type of drip marketing is the shape of things to come.
• Figure out how you're going to attract strong, fully employed experienced people who currently consider their current job as far better than anything you have to offer. Consider that these passive candidates also represent 80% of the total candidate market, and it makes no sense to continue spending 80% of your resources on the other 20%.
• Become preventative. Figure out how to minimize the impact of voluntary turnover at your company. Minimize "disgruntled employee syndrome" in a period where jobs are going nowhere, salaries are being cut, comp increases are nonexistent, and benefits are declining. This is a tough challenge that needs to addressed, not ignored.

There's a lot to chew on here, but if we're moving through an inflection point right now, expect the ride to be comparable to a trip aboard the Enterprise through a black hole. Expect it to be much worse, if you decide to ride it out, without considering the consequences.

Finding a Job of His Own Dreaming

LAST November, I was laid off from a database marketing company in Louisville, Colo., a Denver suburb, for economic reasons. Six months later, I found another position, at Kutenda, a provider of online marketing tools for small businesses, in Broomfield, Colo., also near Denver.  

After a six-month job search — and some soul-searching — Joe Kroog, 36, is senior director of product management for Kutenda in Broomfield, Colo.

Several things about my job hunt surprised me, including its length. I thought it would only take a couple of weeks to find a new job, or at most two months. I never expected to be out of work six months.

Other people would probably say that six months doesn't sound bad at all, but it was to me. Even though the news media played up the job losses and how bad the economy was, I wasn't worried. I had been a technical product manager, and I thought I had good qualifications.

My wife, Jill, was supportive of my job hunt. She's a stay-at-home mom and entrepreneur who gives seminars to new mothers on achieving balance in their lives. She kept reassuring me that something would come along and that I shouldn't feel overwhelmed as the main provider.

We have two boys under the age of 6, and I wasn't financially prepared for such a long layoff. We were going through our savings, and we started discussing whether Jill should go back to work full time, or perhaps find a part-time job with benefits. We decided that she'd need a salary of at least $50,000 if we were to put the boys in day care. She took a full-time job until I was hired and now works as a marketing consultant.

Now that I've settled into my new company, I'm of two minds about that period of unemployment. On one hand, I still think that my expectation wasn't unrealistic. I honestly felt that I stood a better chance than many other candidates. It's my competitive nature.

On the other hand, I've talked to a number of executives in a business organization I belong to — vice presidents, chief information officers and chief financial officers — who were out of work much longer than I was.

I followed the standard advice, and I think I did everything a job coach would have told me to do. I tapped into a network of colleagues and friends and told everyone I was job hunting. I got a few leads, but the job possibilities all fizzled.

That motivated me to try to build a bigger network, but after a while I decided that this wasn't the best approach. I was spending too much time having to explain what I did as a product manager in the software industry. The role can differ, depending on the company and the industry.

I scoured the job boards and set up a search agent, which automatically sent job openings to me via e-mail. But nothing came of that, either. I looked for job leads on Facebook, too. Then I thought that Twitter might help. I tried following companies I had submitted a résumé to, and those I had heard were hiring. The volume of messages was overwhelming, however, and most of what I read had nothing to do with job leads.

Next, I set up a Google alert for job titles to see which companies were hiring, and I applied to them. That didn't turn up any interviews, either. I decided instead to try to learn more about the companies that were posting the jobs.

Once, I ended up helping a company president define the position he wanted to fill. He kept mentioning the title of product manager, but I told him that the company needed someone who was concerned about future product strategy, too. I explained that in my experience, small technology companies often start with a good idea, assemble a development team, build the product and start marketing it. At the same time, they need to design a plan that considers their customers and addresses the future of the product.

That conversation made me do some soul-searching. I decided that I wanted to do more of what I had described to that executive. I wanted to be a product marketing manager, more customer- and market-focused than in my former product-manager position, which was an operations role and more technical.

I visualized what I wanted this position to be like and wrote a list of bullet items about the job and my ideal company.

I wanted to lead a team in a technology company and be responsible for a product line, and I wanted the opportunity for advancement. I also wanted to be involved in online marketing, which I believe is the way of the future.

I LEARNED about Kutenda when a contact in a business marketing association said her company had a marketing position available. The role was marketing coordinator, which was too junior for me. But I had read about the company and was interested in its technology. Kutenda manages Web sites, pay-per-click advertising campaigns and e-mail campaigns.

I told the contact from the association that if the company needed help in determining future product features, I was good at that. She talked to the C.E.O., and I interviewed with him.

When the two of us sat down together, I told him my ideas, he liked what I had to say and he hired me. I had never talked myself into a role in a company before.

I'm working on product strategy and market plans, and I'm developing ideas for new products. I feel that I'm perfectly suited for the job.

Build an ‘Executive Referral Program’ to Supplement Your Executive Recruiting

Most corporate recruiting functions inexplicably restrict the effectiveness of their employee referral program by limiting senior management participation.

Instead, recruiting directors should design a unique "executive referral program" that encourages executives to make referrals for your high-level openings.

You might think a separate program is unnecessary because high-quality referrals should flow naturally from your executives as part of their job, but such an assumption would be a mistake. Instead, make every executive an "executive talent scout" by developing a specifically targeted executive referral program that periodically mines recruiting leads from your senior leaders. Such a program can produce amazing sourcing results without the need to pay either a referral or an executive search fee.

An Alternative to Executive Search

The explosion of social networking sites like LinkedIn and Facebook make it incredibly easy for almost anyone to identify and build relationships with talent for executive positions. As a result, now's a great time to bring executive recruiting in-house.

Unfortunately, many executives are not well-versed in leveraging such tools to optimize their networking efforts, nor are they well-practiced at periodically scanning their networks for talent that may be a great fit for the organization outside their own downstream.

Encouraging your executives to provide referrals by crafting a program that improves upon their networking skills and proactively pulls recruiting leads from said networks for open executive positions is a cheap and effective way to augment or replace the use of third-party executives.

Focus on Referrals From Top-Performing Employees

While any well-designed employee referral program should excel at producing quality hires, programs that specifically target proactive referrals from top performers consistently produce the highest level of results. Unfortunately, many organizations prohibit their top performers (who happen to be managers or executives) from participation in referral programs. If your firm truly promotes based on ability, it only makes sense that your senior managers and executives are "top performers."

It's imperative that your corporate referral effort include two specific subprograms: proactively approaching your top performers working in key jobs, known as a "give me 5" program; and getting referrals from senior managers and executives through a high-touch "executive referral program."

Why Executives Are a Powerful Referral Source

Successfully filling executive positions has the highest impact on the organization of any recruiting activity. Well-connected executives are likely to know, and thus be able to refer, more "outside" executives for these critical positions than anyone except a few superstar executive recruiters.

Executives are excellent referral sources because they generally have the most extensive networks of any employee group, save for your salesforce. Executives tend to travel more frequently, participate in benchmark studies, attend industry events, and assume leadership roles in professional associations and community boards.

Not only do your executives build extensive contacts through such efforts, they also build trust relationships (that are essential in recruiting). In addition, because of their work within professional organizations and their mentoring activities, executives are also likely to have extensive knowledge of "upcoming" talent in the industry.

Elements of a Benchmark "Executive Referral Program"

There is no standard format for executive referral programs, but some of the key components include:

• Proactive approach –- a critical design element of any top performer referral program is that you must proactively ask individuals for "names." They might know the best people but never find the time to refer them. Although traditional referral programs rely on employees to take the initiative, executives are different in that they are severely time-challenged. Start by filling the calendar with regular times to approach them throughout the year. Then have your designated executive recruiter contact them during slack times of the day (usually early morning or late evening). Also try to convince them to look through their PDA, mobile phone, and email contact lists for names that fit your criteria. Encourage HR generalists and other senior HR managers to pump them for names during regular interactions and especially after they attend major industry conferences and events.
• Immediate response –- the No. 1 success factor for long-term success in any type of referral program is responsiveness. The same holds true when it comes to executives referrals. If they make a submission and you don't respond immediately, the odds are that they will not make another. When an executive gets disenchanted, they will spread the word quickly among their peers, and participation rates will drop. Because a high volume of referrals automatically kills responsiveness, it's critical that you proactively limit the number of referrals to a few high-quality names per cycle per executive. In the same light, if an executive makes a referral and the person doesn't get selected, contact them and let them know precisely why.

Define Your Referral Targets Clearly

• Define your target jobs -– executive referral programs focus on getting your executives to refer highly qualified individuals for other executive jobs. Make sure that there is another process to handle "I have a friend" referrals for regular job openings.
• Educate them about "who" to look for -– Accepting or rejecting referrals is a highly political action, so the key is to start out with clear guidelines and targets. In particular, educate them about the firms to target, those that produce executives, and senior managers considered to be desirable skill-wise and compatible with your corporate culture. Have them seek out executives with skills and experience in the areas of innovation, technology, and international business. Encourage them to bring back the names of top individuals from conferences and benchmarking sessions. Also encourage them to provide you with information on how this referral's skills and experience fit your firm's needs. Whenever an excellent executive referral is hired, provide a summary of their qualifications to all executives so that they can better understand the level and the type of candidate that you're seeking.
• Educate them about who to exclude –- Make it clear that you want executives to proactively seek out talent and not to automatically make referrals of individuals who approach you looking for a job. In addition, the program needs to have guidelines that discourage the referral of individuals they have not had the opportunity to directly observe in a work-related setting. In the rare case where a friend or family member might have superior qualifications, require your executives to provide clear evidence of their experience working with them and how their qualifications are truly superior. If an individual submits questionable individuals, give them immediate feedback, and if it is repeated, exclude them from the program for a period of time.

Improve Participation Rates

• CEO support –- get the CEO to publicly announce support of the program in front of every executive and establish his/her expectations for participation. In addition, CEOs also need to actively provide names. To drive ongoing support, periodically make other executives aware that the CEO has found time to make executive referrals.
• Other executive support -– get the entire executive team to agree to respond rapidly to any referral in their functional area; the initial response should be within 48 hours.
• Set a quota or target –- sometimes you can increase participation rates by increasing expectations. Consider setting a "target" referral goal for each executive. If you can't get the CEO's approval for formal targets, consider setting "expectations" by providing but not requiring a suggested target number of referrals each quarter.
• Recognize them -– executives are well-paid individuals, so standard referral bonuses might not have a large impact. However, you might find that recognizing their success and sharing it with other executives and the CEO might significantly spur their participation.
• Reward them –- most executives do not require a bonus to make a referral. However, if rewards are offered for making executive referrals, provide an option for the executive to "opt out" of the bonus and instead donate the money to a charity of their choice or the standard corporate charity. You can also make providing successful referrals part of an executive's bonus formula, succession plan participation, or criteria for promotion.
• Add to job descriptions –- add to the job descriptions for all new executive positions the fact that they are expected to both encourage referrals from their employees and to make executive referrals themselves.
• Track and report referral rates -– executives are almost always highly competitive individuals. As a result, tracking and broadly reporting the forced-ranked performance of all executives will spur any slackers to increase their participation.

Implement Critical Program Features

• Assign a recruiter -– designate an individual recruiter to focus on executive referrals, answer questions, and seek out opportunities to talk with executives in order to gather names.
• Encourage a social media presence –- a good percentage of all referrals at least partially originate from social media sites. Executives, because of their title alone, can easily attract many followers on social network and social media sites. Encourage them to open profiles but also provide them with templates, coaching, and samples so that they can get up to speed quickly. Periodically assess their profiles and online activities and coach them on how to improve.
• Candidate experience –- any executive referral must be provided with an excellent candidate experience both during the initial referral and during the hiring process. Like or not, executives almost always feel that they are special, so you need to treat them exactly that way if you expect to land them now or in the future. Referrals need to be surveyed and metrics need to be kept to ensure that every aspect of the candidate experience process is positive and responsive.
• Fast-track assessment –- part of responsiveness includes assessing potential hires differently than most candidates. That means that you must contact them quickly and arrange for a candidate-friendly assessment process.
• Candidate feedback -– if an executive recommends someone, assume they are high-powered individuals with significant egos. As a result, you can't just reject them out of hand as you might a standard candidate. Instead, provide feedback and guidance as to why they were not selected. If you frustrate the candidates they refer, your own executives will stop participating in the program.
• Define who can make referrals — In order to increase responsiveness, limit who can participate in this special program. In most organizations, the number of qualifying executives and senior managers should be less than 25.

Miscellaneous Actions

• Make it a database -– in addition to focusing on filling immediate executive openings, set as a secondary goal to build and continually add to a "who's-who" database of all desirable executives. This means that top candidates not immediately hired remain in the database so executives and recruiters can build a relationship with them over time. There also needs to be a relationship-building process using CRM methodology to keep in touch with individuals who don't fit a current need but you might want to hire in the future. This database can also be used for benchmarking, product evaluation, and learning, as well as recruiting.
• Names-only option -– many executives know the names of other high-potential executives but they don't automatically have copies of their resume and often they're too busy to find the time to acquire it. Where possible, develop a process where they can merely provide names, and a recruiter will do the follow-up work necessary to capture the updated resume.
• Conflict-of-interest issues -– avoid the common assumption that allowing executives to make referrals will result in a conflict of interest (meaning that they will refer and hire individuals just for the reward). In my experience, the exact opposite is true and most executives will go out of their way to avoid this perception. Educate them in the program literature about the few cases when it's inappropriate to make referrals and always offer the option to refuse the reward or to donate it to charity.
• Use metrics -– implement tracking metrics to identify the effectiveness of executive referrals. Especially focus on metrics in the areas of candidate quality, candidate diversity, new-hire on-the-job performance, new hire retention rates, and executive referral program ROI.

Final Thoughts

Despite their extensive track record of success, employer referrals have been limited in scope. It's a missed opportunity not to use them in expanded areas, including university recruiting, recruiting contractors, and for executive search.

Like it or not, the expansive growth of the Internet has changed the world of sourcing and candidate relationship building forever. Where executive sourcing used to be the exclusive realm of a few highly trained external executive recruiters, it is now possible for others to supplement their work.

Now is the time to expand the scope and effectiveness of your employer referrals program. Act now before your recruiting workload increases and you won't have the time.

Finding Value in Social Networks

Like prospectors during the gold rush, recruiters everywhere are flocking to social networks in search of hires. But like the experience of many during the gold rush, getting results in not easy. Reaping the benefits of social networking requires engaging with those networks. There's plenty being written about how to do so, but to know if what you're doing is working, consider the following metric:

EE = (1-N) X (R/P)

Where:

EE = Effectiveness of Engagement, expressed as a percentage

Engagement, in this context, means getting ready access to employees' networks, regardless of the mechanism for doing so. Virtually 100% of employees have social networks and connect to them using different means (networking sites are not the only way to do so), but only a certain proportion of employees may be willing to give an employer access, by either making the contacts available or agreeing to forward job postings to them.

N = The proportion (%) of employee networks that an employer or recruiter has engaged with.
R = The average number of qualified referrals received per month per employee
P = The average number of postings accepted by employees to their networks per month

So if an employer is engaged with 10% (N) of employees' social networks, and on average each employee accepts 3 (P) postings per month, and produces 2 (R) qualified referrals:

EE = (1-10%) X (2/3) = 60%

If the same results are achieved by engaging with 50% of employee networks, EE = 33%

Engagement is more effective the larger the number of qualified referrals received for the same proportion of employee networks an employer is engaged with. However, this is not a bottomless pit. Research shows that beyond a certain threshold of postings, the volume of qualified referrals starts to flatten out and even reduce.

Reality Meets Hype

All that's being claimed about the potential of social networks as sourcing tools hinges on being able to increase N. But engagement takes time and effort and there are no shortcuts, which is why many of the claims being made about how social networks can revolutionize recruiting border on the ludicrous.

Take the buzz around Twitter as an example. Originally conceived as an answer to the prayers of narcissists and stalkers — okay, "to support the idea that people should enjoy an 'always on virtual omnipresence'" — it's now being touted as a critical tool for recruiters interested in social networking. The conventional wisdom is contradicted by a recent study from Harvard that shows it to be just a broadcast mechanism. Ninety-percent of tweets are generated by 10% of users. Across all Twitter, users the median number of lifetime tweets is one!

Social networking is about communities, where there's sharing of information, give and take, etc. for the members to stay connected with each other. Twitter is a one-way street — there's no evidence to show that it supports social networking. A recent interview with Twitter cofounder Biz Stone has him talking about companies using Twitter to sell pies, warm cookies, and respond to customer service requests. There's no social networking going on here, unless the pie eaters are sitting around the same table.

Some would claim that having a broadcast mechanism is precisely the point. A recruiter can broadcast jobs. That requires candidates to follow them or the employer. In which case, just how is this different than an e-mail alert? Job postings don't have the same shelf life as warm cookies, and a quick response usually doesn't alter the outcome.

Increasing N

Research on communities by the Pew Foundation and others shows that engagement requires starting in and participating in conversations. The main reasons people share are:

• To help someone who would benefit (81%)
• To give back, after benefiting from sharing (42%)
• To show enthusiasm (39%)
• To show dissatisfaction (19%)

Interestingly, only 5% of people share to be seen as experts.

However, to state the obvious, starting and participating in a conversation requires having something interesting to say that the community cares about. An excellent example of this is Elevenmoms on Wal-Mart's website. They have 20 moms blogging here. The blog is focused on a specific demographic with a very clear mandate of the type of community it supports. Try engaging with that one if you're not a mom. The point being, in case it still isn't clear, is that increasing N takes a lot of focused effort. As a recruiter involved in social networking, you need to figure out the engagement profile of your audience:

1. Where do they interact (or not interact)?
2. What topics get them excited?
3. What do they share?

Technology is the least useful thing here. Using Twitter is not going to help much, as the usage patterns show. There isn't a person on the face of the planet who has enough interesting things to say on a regular basis that they deserve to be followed. Any pronouncements people make, including what they have to say about their place of work or jobs, can always be searched for the few nuggets of useful information buried in the mountains of drivel. To increase N focus on a few communities you can engage with and forget toys like Twitter. Face it, unless your last name is Spacey or Kutcher you're not likely to have much of a following. And even if you get some, they won't stay: Nielsen Media estimates that 60% of Twitter users stop using it after a month.