Unemployment 3.7%, slow-down in hiring up 84%

Unemployment 3.7%, slow-down in hiring up 84%
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hiring

For a flat fee, an employer that’s hiring can get over 9 million resumes from ZipRecruiter. That’s great news, because with unemployment in the U.S. at record lows (3.7% in July 2019), employers need more job applicants!

Not. Actually, employers are drowning in resumes and job applicants.

News I want you to use

The HCM Technology Report says Indecisive Hiring Managers Cause Employers to Lose Talent. Do ya think???

“In 2018, hiring managers took 33 days to make an offer after interviewing a candidate. That’s an 84 percent increase compared to 2010. The extended timeframe led to a 16 percent reduction in accepted offers.”

What changed in 8 years? An employer can get over 9 million resumes for a few bucks.

And you wonder why hiring managers take forever to decide whether to hire you? More jobs stay vacant longer because HR and hiring managers are so overwhelmed with wrong job applicants that they can’t decide who are the good ones.

What hiring slow-down means to job seekers

  • You need to account for poor management when you interview for a job.
  • You should avoid the cattle call of the job boards.

What this means to employers

HCM says:

“Companies that encourage decisive behavior by hiring managers reduce time-to-fill by 17 percent.”

“Hiring managers should spend more time engaging with candidates. This is critical… because candidates trust hiring managers four times as much as they trust recruiters.”

Maybe HR departments should turn off the fire hose of resumes and teach hiring managers how to hire.

There’s lots more news you can use in the HCM Technology Report.

How long did it take to get hired or rejected by the last employer that interviewed you? Did the hiring manager seem to know what they were doing?

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At last: HR gets an upgrade!

At last: HR gets an upgrade!
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HROur good buddies across the pond at BBC News have revealed HR’s newest weapon against to help job candidates get hired. (Oops.)  Yep — HR has gotten an upgrade! Recruiting robots!

News I want you to use

Read it on BBC News: Meet Tengai, the job interview robot who won’t judge you

If this seems far-fetched, some employers in the U.S. are already using robots to interview you on your mobile-device camera — and then other robots (algorithms) watch your interview video to decide whether you will “proceed to the next step.”

Look, Ma! No hands!

A couple of years ago, we covered a U.S. company the BBC references — “HireVue, a US-based video platform that enables candidates to be interviewed at any time of day and uses algorithms to evaluate their answers and facial expressions.”

Look, Ma! No hands! human HR managers! Or you could just Tell HR you don’t talk to the hand.

Heads up! Like it or not, you’re going to encounter recruiter bots. Maybe you already have. 

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Dirty little (HUGE) salary secrets revealed

Dirty little (HUGE) salary secrets revealed
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  • How do you decide whether an employer is going to give you a fair — or better than average — salary shake in the coming years, if you accept a job there?
  • How do you judge whether that employer is still going to be in business a few years down the road, before you accept its job offer?
  • Should you take that job?

News I want you to use

salaryHere’s an inside look at how investors judge companies on how they pay their people — in particular, their CEOs and, for our purposes, how CEO pay compares to the median pay of all a company’s employees.

The 100 Most Overpaid CEOs:
Are fund managers asleep at the wheel?

In March 2019  As You Sow, a shareholder advocacy group, revealed some dirty little (HUGE) salary secrets that job candidates can use.

As You Sow monitors, among other things, CEO pay and evaluates its impact on investors. It turns out big institutional investors really do give a rat’s patootie about how much CEOs are paid — because it seems to correlate with a company’s performance and success.

Thanks to the 2010 Dodd-Frank financial reform bill, shareholders gained access to new information this year. Companies must now disclose the ratio of pay between the CEO and the company’s median employee, shining a brighter light on how high CEO pay has become. This new information can also be used in other ways.

Yep! It’s news we can use!

What this means to you

Digest as much of this report as you can, and let’s discuss what it means to you as you pick your next employer.

Will a company give you a fair salary shake? Skip to the appendices in the report (pp. 19-25).

  • Pick a company.
  • Take a look at how much it pays its CEO.
  • Then look at the median pay of all its employees.
  • Before you accept a job offer, follow the money!

Some good bits

As You Sow reports that:

The companies with overpaid CEOs we identified in our first report have markedly underperformed the S&P 500. Two years ago, we analyzed how these firms’ stock price performed since we originally identified their CEOs as overpaid. We found then that the 10 companies we identified as having the most overpaid CEOs, in aggregate, underperformed the S&P 500 index by an incredible 10.5 percentage points and actually destroyed shareholder value, with a negative 5.7 percent financial return… Last year, these 10 firms again, in aggregate, dramatically underperformed the S&P 500 index, this time by an embarrassing 15.6 percentage points.

Sheesh! Gotta wonder how the HR departments at these companies explain to job candidates how CEO pay reflects company performance. Do the candidates know to ask?

When shareholders were evaluating compensation packages in spring 2018, they had a new piece of information: the ratio of the pay of the CEO to the pay of the corporation’s median worker… The average of these CEO pay to median worker pay ratios as of Sep. 5, 2018 was approximately 273:1.

Betcha didn’t know the CEO of CSX Corp. makes over $150 million — 1,531 times more than the median employee. The ratio of Oracle Corp.’s CEO compensation to the median at the company is 907:1. Comcast’s CEO gets 458 times more than the company’s median employee salary.

Remember: The benchmark average ratio is 273:1.

Sheesh! Gotta wonder how the HR departments at these companies explain such dirty little (HUGE) salary secrets to incoming job candidates. Do the candidates know to ask?

Shareholders freak out

As Bloomberg columnist Nir Kaissar noted in a recent editorial, “As the grim pay disclosures pile up year after year, the backlash against the corporate elite will intensify. If corporate boards can’t find a better balance in their pay structure, outside forces will, and at a potentially far greater cost to companies and their shareholders.”

Opposition to high CEO pay has risen, and more companies have seen their CEO pay packages receive less and less support from their shareholders.

And we’re talking big shareholders:

California Public Employees’ Retirement System (CalPERS)… voted against 45.4 percent of pay packages of the S&P 500 companies; it voted against 73 percent of the 100 most overpaid CEO pay packages.

New York State Common Retirement Fund… voted against 26 percent of pay packages of the S&P 500; it voted against 53 percent of the 100 most overpaid CEO pay packages.

But what about the rank and file?

Big institutional investors are not voting against big pay packages for top executives — but they are voting against huge pay disparities that seem to reveal underlying problems.

Are employees at these companies freaking out? If you’re applying for a job at a company with a huge CEO-to-median-pay ratio — well, would you apply for a job in such a company?

What do you think it would mean for your compensation over time?

Should you take that job?

How to use it

When HR asks if you have any questions, try this one, courtesy of the good folks at As You Sow: What’s the ratio of your CEO’s pay to the median employee salary here?

How else can we use this news?

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Employers are hiring all wrong

Employers are hiring all wrong
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Most employers don’t know whether their hiring methods actually produce good hires, or how much time or money it costs to fill jobs. They don’t review the outcomes of their methods.

“Obsessed with new technologies and driving down costs, they largely ignore the ultimate goal: making the best possible hires,” says Wharton labor researcher Peter Cappelli, in the Harvard Business Review article, “Your Approach to Hiring Is All Wrong.”

What this means to you

Go around the recruiting and hiring systems employers want you to use, because they don’t work.

Summary

Cappelli says the root cause of most hiring is drastically poor retention. You’re most likely to change jobs and employers because your current employer is unlikely to promote you and provide new opportunities internally. This creates churn in the labor market and, ultimately, results in tremendous costs to fill jobs — an average of $4,129 per job in the United States.

Excerpts

Where are the hiring metrics?

Only about a third of U.S. companies report that they monitor whether their hiring practices lead to good employees; few of them do so carefully, and only a minority even track cost per hire and time to hire. Imagine if the CEO asked how an advertising campaign had gone, and the response was “We have a good idea how long it took to roll out and what it cost, but we haven’t looked to see whether we’re selling more.”

Failure to develop employees

In the era of lifetime employment, from the end of World War II through the 1970s, corporations filled roughly 90% of their vacancies through promotions and lateral assignments. Today the figure is a third or less. When they hire from outside, organizations don’t have to pay to train and develop their employees. Since the restructuring waves of the early 1980s, it has been relatively easy to find experienced talent outside. Only 28% of talent acquisition leaders today report that internal candidates are an important source of people to fill vacancies—presumably because of less internal development and fewer clear career ladders.

More is bad, so scare away the applicants

Recruiting and hiring consultants and vendors estimate that about 2% of applicants receive offers. Unfortunately, the main effort to improve hiring—virtually always aimed at making it faster and cheaper—has been to shovel more applicants into the funnel.

Much better to go in the other direction: Create a smaller but better-qualified applicant pool to improve the yield… If the goal is to get better hires in a cost-effective manner, it’s more important to scare away candidates who don’t fit than to jam more candidates into the recruiting funnel.

Hiring good employees

How to determine which candidates to hire—what predicts who will be a good employee—has been rigorously studied at least since World War I. The personnel psychologists who investigated this have learned much about predicting good hires that contemporary organizations have since forgotten, such as that neither college grades nor unstructured sequential interviews (hopping from office to office) are a good predictor, whereas past performance is.

Since it can be difficult (if not impossible) to glean sufficient information about an outside applicant’s past performance, what other predictors are good? … There is general agreement… that testing to see whether individuals have standard skills is about the best we can do… Only 40% of employers, however, do any tests of skills or general abilities, including IQ. What are they doing instead? Seventy-four percent do drug tests, including for marijuana use…

The advice on selection is straightforward: Test for skills. Ask assessments vendors to show evidence that they can actually predict who the good employees will be. Do fewer, more-consistent interviews.

HR vendors: Fresh & cool but unvalidated

Be wary of vendors bearing high-tech gifts. Into the testing void has come a new group of entrepreneurs who either are data scientists or have them in tow. They bring a fresh approach to the hiring process—but often with little understanding of how hiring actually works… These vendors have all sorts of cool-sounding assessments, such as computer games that can be scored to predict who will be a good hire. We don’t know whether any of these actually lead to better hires, because few of them are validated against actual job performance.

Wild HR technology

When applications come—always electronically—applicant-tracking software sifts through them for key words that the hiring managers want to see. Then the process moves into the Wild West, where a new industry of vendors offer an astonishing array of smart-sounding tools that claim to predict who will be a good hire. They use voice recognition, body language, clues on social media, and especially machine learning algorithms—everything but tea leaves. Entire publications are devoted to what these vendors are doing.

News I want you to use

What all this tells us is that employers suck at hiring, and if you follow the rules the Employment System itself is likely to prevent you from landing a new job — because it doesn’t work. Go around!

Employers don’t assess outcomes of hiring methods

It’s impossible to get better at hiring if you can’t tell whether the candidates you select become good employees. If you don’t know where you’re going, any road will take you there. You must have a way to measure which employees are the best ones.

Why is that not getting through to companies? Surveyed employers say the main reason they don’t examine whether their practices lead to better hires is that measuring employee performance is difficult.

Treat your job search like a business task

Like the sales manager who asks, “Is what we’re doing generating sales?”, you must learn to ask, “Is what I’m doing getting me job offers?”

Your boss checks to see whether the work you are doing yields the expected results — that’s a business task.

  • Pursue companies carefully — don’t chase job postings
  • Look for managers who know how to recruit and hire
  • Control your interactions with every employer

Just because employers behave like dummies when it comes to hiring doesn’t mean you have to play along or encourage them. Apply your business skills to the business task of getting the right job.

Organizations that don’t check to see how well their practices predict the quality of their hires are lacking in one of the most consequential aspects of modern business.

The truth hurts employers, but it hurts job seekers even more. I’ve only touched on what you can do to capitalize on Cappelli’s findings and suggestions. How can we use this news?

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