Will a bad credit report cost you a job?

On November 25, 2019
Will a bad credit report cost you a job?

In the November 26, 2019 Ask The Headhunter Newsletter a reader questions the value of a credit report when judging a job applicant.

Question

credit reportIs a credit report from the big three credit reporting agencies (e.g., Experian) a good proxy for determining if a job candidate would be a security risk? Should a candidate be given the opportunity to explain and provide background about any items on a credit report that may appear as a negative to a potential employer? Or, should the credit check stand as a pass/fail test that a potential employer uses to determine if a candidate might be a security risk?

Nick’s Reply

You’re not asking how to avoid getting rejected for a job because of your credit report, but whether I think this would be justified or wise on the part of employers. We’ll stick to the topic here. If there’s enough interest, we can tackle the “how to” another time.

While we might make a case for employers doing credit checks on job applicants, it makes no sense to me why employers rely on such information to judge whether an applicant might be a security risk — especially not on a pass/fail basis. I haven’t seen any statistics on the actual correlation, much less any suggestion that credit records predict security worthiness. (If someone’s got statistics, please share in the comments section below.) The real risk to the employer is that it loses an otherwise excellent candidate to an assumption that credit behavior correlates with job performance and security worthiness.

Does a bad credit report make you a bad hire?

It might seem silly to make the comparison, but do we reject applicants who’ve been divorced because they are more likely to be bad business partners? Do we reject software developers because they don’t do proper maintenance on their cars? What about people with disabilities? Are they risky hires? Oops. The law protects them. Do you see where I’m going? I think employers should stick first to judgments about whether a candidate can do the job effectively, and second whether they fit the social norms of the organization.

In the U.S. there are laws that govern the use of credit checks on job applicants. Of course, these vary by state. I like Alison Doyle’s rundown on job applicant credit checks.
The challenge is how to assess those characteristics. While I’m not opposed to psychological testing and correlational evidence to make judgments like these, I think HR departments screwed the pooch long ago when they deftly transferred liability for hiring judgments to tests and indirect metrics of character. I believe this is a huge cause of HR’s “talent shortage” problem. These indirect assessment methods cost employers good hires. (See Big Data, Big Problems for Job Seekers?)

Employers need to teach hiring managers how to make better assessments and judgments of candidates directly and personally. It’s an interview skill. But how many companies teach interview skills?

Is your credit report a valid and reliable metric?

I agree that, if a credit check is to be done, the applicant should be allowed to explain the report – but that opens another legal can of worms. The applicant could potentially sue the employer for rejection based on misinterpreting the information. This, of course, is why the employer might use a credit report as a pass/fail metric without disclosing it to you. (For more about this, read my good buddy Suzanne Lucas’s warning to employers, If You Run Credit Checks on Your Job Candidates, Now Would Be A Good Time To Panic.)

Is there any defensible reason for basing a hiring decision on such a data point? It’s hard to make the case that it’s valid except as an indication of credit worthiness (and even that can be questionable). It’s worth looking up “validity” and “reliability” in the context of making assessments. Does a credit check really measure what you need to measure?

Employers have explaining to do

Here’s how I think I prove my point. I’ve never heard of an employee being terminated because the employer checked their credit report. If credit checks are such valid and reliable indicators of security worthiness (or any other job-related requirement), why don’t employers run reports on all employees annually to decide whom to terminate? I think HR has a lot of explaining to do.

Employers try too hard to offload candidate assessment to indirect metrics, and they do a lousy job of justifying themselves. In most companies, it seems HR’s first objective is to offload liability. I think the better practice is for employers to make their interviewing and reference checking more rigorous. To avoid unreasonable risk, make managers very good at interviewing and judging job applicants.

My snarky suggestion to job seekers is to ask a snarky but justified question if an employer brings up a credit check. “Can you show me empirical evidence that my credit report is a valid and reliable metric for judging me as a worthy hire?”

You’d be surprised how many successful people I’ve placed who had questionable “background checks.” It takes a lot more to really judge someone – or you miss some great candidates!

Have you missed out on a good job (or a good job applicant) over a credit check? Have you outwitted a negative credit report when applying for a job? Do you believe credit checks tell employers anything useful about a person? Is someone’s credit report a worthy pass/fail test for hiring?

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What’s the magic in a letter of recommendation?

On November 18, 2019
What’s the magic in a letter of recommendation?

In the November 19, 2019 Ask The Headhunter Newsletter a reader wants help writing a recommendation letter.

Question

recommendationI am writing a letter of recommendation for a co-worker who is interviewing for a new job. It’s sort of a quid pro quo situation. Both he and I are somewhat unsure of how to write one, especially when doing it for a co-worker.

I have looked online, but most of the advice is for a supervisor, not a peer. I don’t supervise him; I just collaborate with him occasionally. I think he’s an excellent worker, but I’m not sure how to write about it in a letter. I want to make sure I’m doing it correctly. I’ve never had the opportunity to write — or even to see — a real letter of recommendation before. Can you help me? Do you have a template? What’s the magic in a letter of recommendation?

Nick’s Reply

Recommendations are a powerful part of hiring and job hunting, but few people know how to use them effectively. The worst type of recommendation is the insincere, canned one.

A recommendation must be honest

I’m glad you think highly of your co-worker, because if you didn’t, I’d advise you not to write a recommendation. The power of recommendations lies in honesty. No one should feel obligated to recommend anyone else.

There is nothing wrong with saying to someone, “I’m sorry, but I don’t feel I could write you the recommendation you’d need to get the job you want.” If that seems rude, consider that a proper recommendation puts your neck on the line. It affects your reputation. If the person you recommend blows it, you will look bad and your reputation may be damaged in your professional community. And that’s as it should be, or the practice of making recommendations becomes worthless.

Recommendations create reputations

On the other hand, a carefully considered recommendation that results in a superlative hire reflects very well on the person doing the recommending. Credible, repeat recommendations that result in great hires can elevate your reputation to star status in your field, making you a go-to person for hiring referrals. That’s the best place to be when you go job hunting yourself.

But let’s get on to your situation.

Your personal guarantee

Producing a written recommendation for a co-worker is no different from doing one for someone you supervise. In both cases, remember that your main purpose is to provide a personal endorsement. A recommendation (or a reference) is a personal guarantee that the person you recommend is good at what they do: they are reliable, honest, and worthy of the job in question.

Yes, that’s serious stuff. That’s why we don’t write recommendations for just anyone, or just to be polite and friendly.

(For a special approach, see Referrals: How to gift someone a job and why.)

Get an interview

Your objective in writing a recommendation is to get the employer to interview your subject. That means your comments must be relevant and compelling, which in turn means your recommendation must fit the specific job. If the candidate can’t explain what the job is all about, then you can’t and shouldn’t write the letter.

Canned comments or a stiff, formal letter will not get anyone a job interview. My advice is to write simply, naturally, and casually. Avoid two-dollar words and phrases. Be friendly, blunt and brief.

What to write

Don’t follow a format. Just write naturally, covering a few key topics:

  • Who are you? What do you know or do that makes your comments relevant and compelling? You might be an expert in the work in question. Provide a very brief summary of yourself in order to establish your credibility.
  • How do you know the person? Do you know his work? Did he work for you, or with you?
  • What’s his work ethic? Is he self-motivated, or does he require close supervision?
  • What are his relevant skills and knowledge? Be specific.
  • How does the person stand out? Why should the employer drop everything and interview him?
  • What benefit do you think the person would bring to the employer? Can you offer any proof?

Don’t worry about templates. Don’t regurgitate someone else’s words. If you need a format, pretend you’re having lunch with the employer. Write what you would say. Be honest, or don’t provide the recommendation.

Endorse

As you wrap up your letter, make the one statement the reader is looking for: a clear endorsement. Use words that you are comfortable with. For example:

“I wholeheartedly recommend John as a smart, reliable worker who delivers what he promises.”

Finally, make the statement that says more than any other:

“If I were a manager, I’d hire Karen in a minute. As a co-worker, I hope I can work with her again.”

That’s the best endorsement in the world.

What’s better than a recommendation?

There’s something much more powerful you can do. Wait a day or two after sending the recommendation, then call the employer to make sure they received it. Reiterate your main message: “I’d hire John/Karen myself if I could.” This call is so unusual that it will always get the employer’s attention. Be careful, of course, not to seem like you’re trying to exercise undue influence. (See also The Preemptive Reference — it’s better than a recommendation.)

Recommendations are an important way of meeting other people in your industry and establishing a good reputation. (Networking, anyone?) That’s why it’s important to be selective about whom you give a recommendation. Recommendations and references are the glue that makes an industry stick together.

Do you recommendations even matter any more? What makes them work? What’s the best recommendation you’ve ever gotten (or given)? How do you advise this reader?

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Resumectomy: Surgery for job seekers

On November 11, 2019
Resumectomy: Surgery for job seekers

In the November 12, 2019 Ask The Headhunter Newsletter a reader proposes resumectomy to save the patient.

resumectomy

Question

Does it occur to anyone that there is something wrong when a very good (flawless) resume or LinkedIn profile returns nothing, no interviews, no jobs — not even a thank you for applying? Why do we use them? I’m looking for an alternative to a resume. Is there an alternative?

Nick’s Reply

People have been asking me about resumes a long time! Let’s try something. This is one of the oldest articles on Ask The Headhunter: Resume Blasphemy. It’s an exercise. It suggests an alternative to resumes. I’d like to ask everyone to please read it — it’s pretty brief. Then come back and continue here.

Have a resume, put it away

Everyone should have a good resume, and it should be clear, concise and easy to read. It should list places you’ve worked, job titles, education and time periods. Brief descriptions of what you did at each job are best.

That’s it. No fluff. No branding. Your resume is not a “marketing piece.” It’s a document that fills in the blanks about you for a hiring manager you have already had substantive contact with. Otherwise it’s just a dumb piece of paper or bucket of bits. Put it away until you talk with the manager.

Don’t use your resume “to get in the door.” Ten million other resumes are ahead of yours. And almost nobody reads them.

The purpose of the Resume Blasphemy article is to nudge people away from resumes as a job-getting tool. There is no such thing. You are the job-getting tool.

Resumectomy

Of course, I get loads of arguments, opinions and  “yes, buts” about my position on resumes. (My favorite is, “I know an algorithm is going to process it, but you can’t win if you don’t play.”) That’s why I’d like to ask you all to strap on a rubber apron and some gloves.

Let’s cut the resume open. Let’s do surgery. Maybe we should just remove most of it, do ya think? A resumectomy. Don’t mind the splatter. It’s all good.

3 Questions

Three questions for everyone:

  1. Do you even use a resume to get a job? If not, then what?
  2. If you do use a resume, what do you put on it that gets you in the door and gets you hired?
  3. What do people put on their resumes that sinks their efforts to get a job?

(If you’re a hiring manager, we’d all love to know how you’d answer those questions from your side of the desk.)

Okay, scalpel.

What’s that in there, in the resume? Is it alive? Is it beating? Or is it just mush? Should we take it out? Is a transplant in order?

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Does your job match its original job description?

On October 28, 2019
Does your job match its original job description?

In the October 29, 2019 Ask The Headhunter Newsletter an executive is concerned about the role of the job description in employee attrition.

Question

job description

I’m president of a $20 million company, privately owned. Due to unusual turnover, I met with my head of HR and the affected managers. They said the “talent pool” isn’t good any more. HR’s exit notes indicated poor performance and lack of skills as the reasons for termination. So why did you hire them, I asked. They were the best candidates, they said. Then I read the job descriptions they used. Lists as long as a 3 iron. Nine or 10 “tasks,” even more “qualifications required,” and then a stack of “we prefer that you haves.” I asked them, is there something wrong with our process? Are we asking for too much and not training new hires enough? What are your thoughts about a problem like this? It’s serious.

Nick’s Reply

Job descriptions? Here’s what I think of job descriptions and people that write them (with apologies to Monty Python):

I feel your pain. But the idea that the “talent pool” has deteriorated is balderdash. Your suspicion that there’s something wrong with the process is correct. The conventional interview and assessment process assumes that in six months a new hire will be doing what was defined in the original job description.

That’s almost never the case. I believe that’s a big reason why new hires fail. So, how can you hire for the changing nature of the work?

The job description

When a manager needs work done, HR uses a process that starts with the manager describing the requirements of the job. This conventionally includes the tasks, a list of necessary qualifications, and some flowery promises about the company environment.

HR adds whatever it believes will attract the best and most applicants. Too often, HR’s largesse exceeds the limits of reality. For example, a job for a programmer will require “at least 5 years’ experience” with a scripting language that was invented only two years ago. HR always figures more is better — but doesn’t bother to check with the manager. Or, a go-fer job in the marketing department is characterized as “Senior Marketing Staff,” because it should attract really talented go-fers.

What happens after the job description

Even if the job description is truthful and accurate, almost every job runs head-long into a wall. Six months into it, the new hire is not doing what they were hired to do, but different work and usually more work. That’s because most jobs evolve to fill the ever-changing needs of a business.

The problem is, employers don’t hire for changing needs. HR takes a blurry (and wishful) snapshot of “a job,” fixed in time and in someone’s imagination, larding it with enough “requirements” to make a purple squirrel gag. (There are other ways HR goes off the rails with its hiring methods. See Why does HR waste time, money and the best job candidates?)

Deliverables

Can a “job description” ever be a useful tool in recruiting and hiring? As a headhunter, I’ve always read job descriptions once, then tossed them aside. I call the manager and find out what kind of evolving work the manager really needs done over the next year or two.

Here’s what I ask about:

What’s the problem? What do you want your new hire to make, fix or improve?

What’s the deliverable? What should the new hire deliver to the person working downstream from them? For example, a design engineer needs to deliver a certain part of a subsystem design to the system designer or project manager. What does that part of the subsystem look like and what must it do?

What’s the schedule? What do you need the new hire to deliver or accomplish in the first week, month, three months, six and 12 months on the job? Be specific. The deliverables must be defined in objective terms everyone agrees on. They must be measurable in amount, degree and quality — what are the metrics?

How does the work fit? Finally, and perhaps most important, how will the new hire fit into the larger work flow and objectives of the team, the department and the entire company? This is key, because it suggests what else the new hire must be able to do or learn to do.

Please note that your HR people are in no position to ask these questions and to discuss the details that underpin them. Your managers must do it. While a good headhunter can help them, you don’t need a headhunter if you get on top of this yourself.

Are you doing what you were hired for?

There’s a thing I do when I speak to seasoned managers in executive MBA programs at Wharton, UCLA, Northwestern and other business schools. I ask for a show of hands:

“Who has a job where what you were doing six months into it matched the job description you interviewed for?”

Of course, I get a lot of hoots and LMAOs. No one has ever asserted they were doing what they were hired for to start with.

What to ask job applicants

I suggest you direct your managers to answer the questions above about every job they think they need to fill. My guess is they will find that some jobs have no justification or value. I think they will find that the work that needs to be done is best defined in terms of deliverables that continue to change.

Three good questions for job applicants might be:

  1. Can you please show us how you would deliver X, Y and Z in three months, six months and 12 months?
  2. How would you help these 3 other teams deliver their objectives?
  3. How would you help the company achieve goals A, B and C?

I won’t even get into discussing your company’s plans for new projects, products or services — but your managers need to assess whether job candidates can shift gears quickly to meet the company’s changing needs. One good way to do this is to have applicants spend time with your teams before you hire them, so everyone can see how everyone else thinks and works. (But don’t go here: I think they expect me to work for free.) Of course, it’s your responsibility (and your managers’) to show applicants how you teach employees to do new kinds of work.

Please forget about filling jobs. Think about hiring people who can do changing work and deliver specific outcomes, and who can intelligently discuss how they might contribute to your company’s specific objectives.

There’s not a job description in this mix.

Does the work you do today match the job description you were hired for? How should employers assess job applicants to maximize success for everyone? What’s the most effective way you’ve assessed or been assessed for a job?

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What are you afraid of when job hunting?

On October 21, 2019
What are you afraid of when job hunting?

In the October 22, 2019 Ask The Headhunter Newsletter the headhunter turns the table on readers who encounter hobgoblins when job hunting.

Nick’s Question

This week, I’m going to change up the Q&A. Rather than take a question from one reader and answer it, I’m going to ask all of you readers a question that seems to be at the root of many problems.

job huntingWhat are you afraid of when job hunting?

I’m prompted to ask you this question by the many Talk to Nick troubleshooting sessions I’ve done with people from all walks of work. Every one of them seems to be afraid of some aspect of the job search experience.

It literally scares them.

Successful, talented, competent people go job hunting only now and then — it’s not an experience they’ve mastered. So they tend to look for a safe, simple model of behavior to follow.

And the models they find are wrong. You can’t write a resume or profile, look for “matching” jobs, apply and get interviews and then job offers.

It doesn’t work.

Faced with this unfamiliar challenge — to pick a job and then get hired — where the usual rules of business fail, otherwise competent people become incredibly frustrated and confused. When they’re at their jobs, they know exactly what to say and do. But suddenly, they’re treading water, waiting for someone else to determine their future.

They try to control their panic as they realize it doesn’t matter how good they are at the work they do. The “employment system” demands something else.

But — What??

What frightens you when you’re job hunting? What do you dread?

Your reply

Post your responses in the comments section below, and let’s help one another out!

Please don’t be afraid to share your fears. We’re here to put an end to them and give you the confidence and control you need over your job search! So bare your soul and we’ll all do our best to find answers and solace among friends.

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I think they expect me to work for free

On October 14, 2019
I think they expect me to work for free

In the October 15, 2019 Ask The Headhunter Newsletter a reader wonders whether he’s being asked to do a job interview or to work for free.

Question

work for free

I’m interviewing with a large start-up co-working company. The position is in part a strategy role. They asked me to create a fairly involved business plan for a product launch that they are planning to offer in a few months. I am concerned that this is an effort to get free analysis out of me. They’ll take my plan and then leave me in the cold. Do you see a way to move forward without providing free consulting services?

Nick’s Reply

I think it’s actually a good sign when an employer asks you to “do the job to win the job.” In fact, I teach job candidates to offer to do the work during the interview process, to show they’re worth hiring. (See The shortcut to success in job interviews.)

But I draw a clear line between a demonstration and working for free.

Start doing the job

I suggest you take them up on their request. Tell them you’re excited about the opportunity.

How to Say It

“I’ll prepare a plan and show you what I can do. And by the way, if I can’t demonstrate how I can do this job in a way that will bring more profit to your bottom line, you should not hire me.”

That’s a very unusual, powerful position to take that will make you stand out. It also requires that you are prepared and know what you’re doing — or why attend such an interview?

Stop doing the job

Then deliver a skeleton of a plan — just one or two powerful pages — that will leave them wanting more. Yes, tease them. Leave plenty of room to hang details on the bones later. Don’t explain why you cut it short. Let them call you to say they want the rest.

When they ask you where “the beef” is, chuckle, then say the following.

How to Say It

“I love you guys and I think I could make a big impact on your launch. I’ve got the rest of my plan outlined and I’d be happy to flesh out the details for you when I start the job. Of course, I’d be glad to complete the plan in any case if what you really want is a consulting engagement. My daily consulting rate is $2,000 remote and $2,500 on-site.”

Say no more than that. Don’t quote an hourly rate. The best consultants quote daily. Then let them decide what they want to do.

Now wait for it

What’s important about this approach is that you’re not saying “No” to their request. You’re saying, “Yes, BUT.” Yes, you’ll produce what they asked for, but it’s not free.

Then wait for it, because it’s their move.

My guess is you’ll hear nothing back. If I’m right, I’d forget about them. They know you’re smarter than they’d guessed, and they’re cheapskates who aren’t going to pay anyone fair value even if they make a hire.

If they’re really interested in your ideas and willing to do business with you on the up and up, they will respond. They may not want to use you as a consultant, but they may suggest an alternative, fair way to proceed — as you just did.

Work for an offer but don’t work for free

Never work for free. I’ve seen this “put a plan together for us” gambit from unscrupulous employers many times. It doesn’t turn out well.

But give them a chance to appropriately explore with you the possibilities of working together. Determine whether they’re ready to pay you, one way or the other. Maybe they have integrity. This is how you find out.

Have you gotten burned by employers that want free work? How did you handle it? Do you agree that it’s a good idea to actually demonstrate how you’ll do a job? How do you tease without giving it all away for free?

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I will make your life miserable if you quit!

On October 7, 2019
I will make your life miserable if you quit!

In the October 8, 2019 Ask The Headhunter Newsletter a boss threatens an employee who’s going to quit.

Question

quitI am planning to quit my job, but my boss said to hold off on quitting until we can at least hire my replacement. Otherwise, he said, “I will make things very, very bad for you.” How should I respond to this?

Nick’s Reply

The challenges of quitting a job seem to be much on people’s minds. (See last week’s edition, Can we make employees pay for quitting?) Maybe it’s because more people are choosing to quit their jobs and move on?

Once you have decided to quit, you are already psychologically and emotionally “done” with the company. It’s best to leave as quickly as possible. The first mistake you made was to tell your boss you’re going to quit. (See Protect Your Job: Don’t give notice when accepting a new job.)

A boss who threatens you is not someone you should trust while he tries to find your replacement.

Don’t get burned when you quit

More resources

Resigning Your Job: Don’t tell

Parting Company: How to leave your job

Under normal circumstances, you should act responsibly when you quit. If you can, you should offer help transferring your work to another employee. But your boss turned this situation into an abnormal one. In any case, the company is no longer your responsibility. Don’t let anyone tell you it is.

Don’t burn a bridge if it’s not necessary, but be brutally honest with yourself: Your boss is trying to burn you. If you file a complaint against him with HR, all you will do is put yourself at more risk.

While some kindly HR person may try to do right by you, remember that HR’s first obligation is to the company, not to you. You’ll be gone; your boss will still be part of the company. Thus HR’s job is to protect your boss before it protects you.

How to quit

Your boss’s threat makes this easy. Tender your resignation in writing.

[Your resignation] letter should be just one sentence because — sorry to be the cynic, but careers and lives might hinge on this — it can come back and bite you legally if it says anything more.

“I, John Jones, hereby resign my position with Acme Corporation.”

That’s it. Sign, seal and deliver. Any other details can be worked out through discussion, including… when you’ll get your last paycheck. If you are forced to take legal action for any reason, or if the company sues you for, say, stealing information, anything you put in your letter can be used against you.

Excerpted from Parting Company: How to leave your job p. 46

I would hand it to the HR manager personally.

How to Say It

Then say this:

“I would offer you two week’s notice but my boss has made this impossible. When I told him I was resigning, he threatened me. He said, ‘If you quit before we hire someone else, I will make things very, very bad for you.’ So as you can see, it would be unsafe for me to continue working here. How you handle my boss is up to you, but I will not participate in it. Please be advised that if my boss makes good on his threat to harm me after I leave here, I will turn the matter over to my attorney. My resignation is effective immediately. I would like to work out the details with you right now.”

Then expect HR to promptly process your paperwork.

Don’t complain, don’t explain. Keep it short and to the point. It’s not your job to help HR deal with the manager. There is no upside to you, but there is considerable risk.

Do not disclose to anyone where you are going to work next. You just don’t know what a bitter boss is capable of; for example, attempting to nuke your new job by making a disparaging phone call to your new employer. (See the sidebar above, More resources.)

A caution about exit interviews

If they ask you to do an exit interview, decline politely but firmly.

The best time for an employee to discuss concerns, dissatisfactions and suggestions with his employer is while he is a committed employee, not on the way out the door. There is no upside for an employee in doing an exit interview, other than having the chance to vent. And the potential risks are significant enough to warrant caution.

From “Exit Interviews; Just say NO” in Parting Company: How to leave your job, pp. 53-57

Get out

Do you think for a minute that if you stick around until your replacement is found, your angry, resentful boss isn’t going to make your life miserable anyway? Even if you are reassigned until you actually depart, you’ll be looking over your shoulder. During that time, even HR could make your life miserable.

The best response to such a threat is to protect yourself and to leave as soon as possible. You owe nothing to a company that has threatened you. That’s right: When the manager threatened you, the company threatened you because he represents the company. So does HR. You really are on your own. Get out.

I wish you the best.

Has your boss ever turned on you when you announced you were going to quit your job? What did you do? Was HR helpful? How did it turn out?

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Can we make employees pay for quitting?

On September 30, 2019
Can we make employees pay for quitting?

In the October 1, 2019 Ask The Headhunter Newsletter an HR manager complains about the cost of employees quitting right after they complete training.

Question

quittingCan we charge new hires a penalty when they quit and leave us short-staffed? Can an employer state in an employment contract that if the new hire does not stay for a certain number of days, we retain the right to withhold $X to reimburse us for the time we spent training them? This Generation X and their job-hopping is costing this hospital tens of thousands and we are trying to find ways to teach them – work or lose money. Use us – lose money. We’re having a tough time with it. I did research. You came up.

Nick’s Reply

It’s troubling that any employer would ask this question, but even more troubling that you signed your e-mail with PHR after your name, which means you’ve passed the test for a Professional in Human Resources certification. Really: GenX is costing you money?

I’m not a lawyer. I suggest you reach out to a good employment and labor attorney for advice. However, my guess is that an employer can include any terms it wants in an agreement as long as they are not illegal. After all, no one is required to sign it. The question is, do you — a PHR — really want to go there?

Costs of training and quitting

Now I’ll give you my opinion: An employer should never require reimbursement for its time training new hires. It’s part of the investment we make in people. (This is different from a company offering paid education benefits – e.g., cash to help earn a degree relevant to the job. Education benefits are optional and usually granted under a separate written agreement.)

Quitting is an overhead cost. Not all people will stay, and you can’t make them pay you. Training on a new job, new skills, and time to come up to speed are all components of compensation — all of which they get to keep.

Training is part of what entices a person to accept a job. Who wants to make a move to a job that’s not going to improve their skills, knowledge and expertise – not to mention pay? (Some people will wisely trade higher salary for training and new skills. But in this market, I think they know they can expect both!)

If you don’t see my points, try this: Advertise jobs that require applicants to cover their own overhead costs. Tell them they must pay for training if they get hired. Lotsa luck.

The training investment

Training its employees is how every company helps improve and develop the overall worker pool. It’s an investment in the economy that everyone benefits from, even if in some instances it causes a loss due to worker mobility. If every company insisted on “owning” the training and experience it gives to new hires, how would the labor pool keep up with changes in technology? More to the point, how would you attract the best workers with nothing more than salary?

Of course, you should not hire anyone that you suspect plans on quitting after training is done. (I don’t think many job seekers play that game. More likely, some other factor is making them move on.) But it’s HR’s job — and the hiring manager’s — to assess and judge job candidates. Are we ready to take a risk with this particular candidate?

There are of course no guarantees to any business decision. Or, for that matter, to personal decisions. For example, can we get our money back if we decide to marry someone that decides to move on?

Who pays for quitting?

Your job in HR is to make good judgments and hiring choices. If the new hire quits too soon, should your pay be docked? Should the hiring manager’s pay be docked?

Let’s take this to the next logical step. If a new hire isn’t as productive as expected, should a company be able to recover the difference from them as restitution for lost profits? Where does this end?

You asked whether an employment contract might be the solution, by making reimbursement explicit. But, are you really prepared to give new hires an employment contract? Unless it’s for a C–suite position, I doubt it! If you in fact use employment contracts for all your hires, then I say more power to you – and include any terms you think you can get away with! Just remember that sound contracts are designed to benefit both parties. (See Employment Contracts: Everyone needs promise protection.)

For example, I’d advise any job candidate to consider signing your contract only if it includes compensating terms. For example, the hire will agree to reimburse you for training only if you agree to a severance package of $X if you terminate the hire at any time for any reason other than “cause.” Seems fair, doesn’t it? What fault of the new hire’s is it if your management team makes decisions that lose money and force a downsizing? Shouldn’t you be on the hook for the hire’s lost income?

Competitive edge

Quitting and job hopping are symptoms, not the problem. The problem is jobs and employers that don’t satisfy workers. People hop because you’re not being competitive. Your competition offers them a better deal that might include new skills and training in addition to higher pay. That’s why we refer to it as a job market.

Consider this analogy: If your company’s customers “hop” to a competitor that offers a better product, whose fault is it? Or, is it actually a signal telling you to improve your product? I suspect that other problems are triggering employees to hop after they complete training at your company. Your competitive edge is understanding why people stay.

Your assumptions may be the problem

I appreciate your company’s difficulties, but I think your attention is misplaced. Peter Cappelli, a labor researcher at the Wharton School, suggests that employers themselves own the problems they blame on workers. (See Why Companies Cannot Find the Employees They Need.)

The “talent shortage,” says Cappelli, is actually a problem of affordability. Employers are not willing to pay market value for the talent they need. (Just look at the paltry increases in pay reported by the Department of Labor, in a time when unemployment is low and demand is high.)

More relevant to your question, Cappelli’s findings suggest the real problem is a “training shortage.” Attracting and keeping good workers may be more difficult today because employers have drastically cut their investments in training and employee development. Employers seem to insist on “just in time labor” – people who’ve done the job for five years, already possess the requisite skills, and are willing to do the same work for a new employer for less pay. But who aspires to such an “opportunity?”

Your organization is doing the smart thing – providing training. But I think your assumptions may be incorrect. My advice is to offer training without a catch, then make sure something else isn’t triggering quitting. Use training as an enticement to attract the best workers. But also look at the other factors that help you keep your new hires. I’m not going to tell you what they are. You should figure it out and act to keep your employees happy. Isn’t that what HR’s job is?

I see you sent your e-mail after you viewed the Talk to Nick section of my website. If you’d like to schedule a consultation, I’d be glad to talk with you.

I wish you the best.

Who owns what you learn at a job? Should employers be able to recover employee training costs? Should you ever be penalized for quitting? Do job-hopping GenXers need a lesson?

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Should I let HR do it?

On September 23, 2019
Should I let HR do it?

In the September 24, 2019 Ask The Headhunter Newsletter an entrepreneur wonders if HR is necessary at all.

Question

HRI am starting a company. I have an absolute disdain for HR as a general rule and wanted to get your thoughts on a company running without an HR department. I feel like HR has hoodwinked so many executives into thinking they’re a necessity for any business, but there’s only a subset of things they do that are actually required. For example, making sure you’re not in violation of labor laws.

Which would you recommend: to have no HR department, or to severely limit HR to only those responsibilities that actually help the company (and hence reduce its size considerably)? One thing is sure: HR should never be involved in hiring decisions. I’ve never seen them help there.

Nick’s Reply

Good luck with your start-up. I’m sure HR folks will have something to say about this.

HR options

I think I would try a hybrid of no HR and limited HR. You can cover the compliance bases by contracting with a good HR consultant and by defining exactly what you want them to cover. But be careful – there are a lot of HR hacks out there. The good ones, however, will cost you and are worth what you’ll spend because they’ll advise you as well as do the work.

I understand why you’re so down on HR — you feel it’s not very helpful. You’re not alone — see FastCompany’s excellent Why We Hate HR. Make sure your HR consultant understands that they will have no decision-making authority, that they report to you, and that their scope of work is narrowly defined. Use them as you need them, just as you’d use any good consultant.

Limiting HR

If you find an HR consultant that’s actually good at recruiting, interviewing and managing the hiring process, you’ll be really lucky. There are some very good HR folks out there who work closely with managers to get jobs filled. They will embed themselves in a manager’s operation to learn how it works and what makes the manager tick. A good HR person will help the manager recruit and hire — but will not do the recruiting or hiring. They will process documentation and ensure the process is compliant with the law.

I think you can take care of important HR functions with just a good consultant for quite a while before you need to worry about hiring a full-time HR person.

HR & Legal

Keep in mind that many HR responsibilities are legal in nature, including  compliance. If you hire lawyers to advise you, make sure they have labor and employment expertise so they can backstop your HR consultant when necessary. Just be careful not to let the lawyers and HR gang up on you and rack up huge bills — or hobble your ability to run your business!

There’s a good, simple rule for managing HR, lawyers and other experts. Explain to them what your objective is; that is, what you want to do. They will often respond with myriad reasons why you mustn’t do it, or why it’s illegal, or why it won’t work. Thank them for their advice and cautions. Then instruct them to find a way to do what you want without violating the law, because that’s their job. If they push back, tell them to also provide you with a risk analysis, because that’s their job, too. Your job, as the principal of the company, is to decide how much risk you want to take — legal or otherwise. Never let a consultant make your decisions for you.

Do it yourself

I agree that HR should not control recruiting and hiring. (See Why HR should get out of the hiring business.)

I think the most important reason to limit any HR function is that being directly involved will force you to understand, grasp and grapple with the challenges of having others working for you. I’ve seen many companies fail because management left that to “experts.” So don’t “let HR do it.” Your people — your workers — are everything. They are your responsibility. The idea that someone else will manage your new company’s “human resources” is akin to suggesting that someone else is going to run your business. Perhaps that’s your goal ultimately, but until you learn the ins and outs of finding, hiring and managing people, you won’t have a business. (See Hiring Manager: HR is the problem, you are the solution.)

An HR function can be helpful if you, as head of the company, manage it like companies used to manage HR — actively. The trouble today is that HR is often left to its own devices because the C-suite sees HR functions as “icky but necessary, so let HR do it…”

Big mistake.

I wish you the best with your new business.

Can a new business operate without an HR department? If you could build an HR department from the ground up, what tasks would you have it handle — and which tasks would you never let it control?

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I want a live, breathing, credible headhunter

On September 16, 2019
I want a live, breathing, credible headhunter

In the September 17, 2019 Ask The Headhunter Newsletter a reader is looking for the good headhunter in hiding.

Question

How do you find a live, breathing, human and credible headhunter? Internationally? Nationally? Regionally? By State? The top “brands” of executive recruiters are as much of an abyss as job boards. Submit a resume, try to contact them directly — best of luck. Where are the “old school” professional headhunters that are proactive and follow up?

Nick’s Reply

headhunter

I’m afraid you’re dreaming of the good old days in your imagination, my friend. Good headhunters don’t do what you are looking for — and never have. They don’t find jobs for people. They don’t really want unsolicited resumes. They’re busy working on specific assignments to fill specific jobs. If you’re a good candidate for such an assignment, they will find you. That’s what they get paid for.

Headhunter =

Headhunter=“Head” + “hunter.” They hunt. They don’t gather resumes or candidates that come to them. That’s the good headhunters. You may be confusing them with the rest of people that call themselves headhunters. (See How to Judge A Headhunter.) The reason it might seem harder to find good headhunters today is that the explosion of online recruiting has spawned innumerable spammers calling themselves headhunters.

Like Human Resources (HR) people, 95% of today’s so-called “headhunters” aren’t worth spit. They’re keyword pushers dialing for dollars. They spam e-mail lists with “job opportunities,” pitching jobs to people they know nothing about. That’s not “searching” for the right candidates. That’s dumpster diving, and — as you suggest — it’s usually not done by humans anyway, but by spambots and algorithms. (See Suzanne Lucas’s excellent Inc. article, When a Headhunter Makes His Profession Look Bad.)

How to find a headhunter

The best way to find a good headhunter is to call the president, CEO, or manager you’d like to work for and ask what headhunter they use to fill key jobs. It’s the best way to get a credible referral — but even then, it’s no guarantee the headhunter will respond. I discuss this in depth in How to Work With Headhunters… and how to make headhunters work for you. This PDF book will tell you loads more about how to work with headhunters, how to vet them in detail – and how to avoid the charlatans.

The few good headhunters out there are worth their weight in gold. But one thing: The odds a headhunter will place you are tiny. Find your own job. That’s what the rest of this website is about.

The reader responds

I’m the President & CEO. Calling the manager is somewhat difficult.

Nick’s Reply

You didn’t say initially that you are a CEO or President. The odds are much higher that a headhunter would handle the search for such a role. But the idea is the same.

Where a headhunter looks for candidates

Headhunters are not likely to find you in their e-mail. That’s not where they look for good candidates, because there’s no more credibility in random incoming resumes than there is in the random e-mail solicitations people receive from spammers.

A good headhunter wants high-value referrals from business people he or she knows and trusts — the headhunter goes to them, not to the e-mail box. At your level, the searches they conduct are usually done quietly and confidentially. If you’re a good candidate, they will find you.

The board of directors

The suggestion I offered about how to find a good headhunter is still the same, but a C-suite executive would talk to members of boards of directors. This is actually more productive at your level, because board members often serve on multiple boards and have more and better connections — not to mention insights about opportunities. Ask them what headhunters they like when they need to fill a C-suite job. Their headhunter isn’t likely to help you directly, but might be a good conduit to a headhunter that’s working on a specific, relevant position.

What I’m really saying is that a good headhunter will find your name on the lips of other respected executives in your industry — because that’s who they’ll ask for candidate referrals. It’s better to invest your time being a respected and known member of your professional community than to chase headhunters. (See Shared Experiences: The key to good networking.)

How many good, credible headhunters do you know? Did you find them, or did they find you? How? What advice would you give to this CEO?

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