What are stock options worth in a job offer? 2 tests

What are stock options worth in a job offer? 2 tests

Question

Part of the compensation in my job offer will be in stock options. The company is a start-up a few years old that’s backed by private equity. I know this might seem crazy — joining a start-up in this economy. But I’ve made my decision. The company appears to be in a solid position to grow in the coming years. What I need your help on is this: How can I equate stock with straight salary? What kinds of things should I consider when factoring in the stock options to determine if this is the right way to go? Thanks.

Nick’s Reply

stock optionsHey, I don’t knock start-ups. As long as you’ve made your own judgment, and have done it carefully, the decision is yours. So let’s focus on your questions.

Stock options as pay

The best analysis of start-ups and “stock as compensation” that I’ve seen is in Sizing Up A Start-Up by Daniel Rippy, an oldie-but-goody you can buy used. Rippy’s book will be very helpful. But the important point is that you’re “throwing in” with the company. You’re accepting the risk that part of your pay is riding on the company’s success (and on the honesty of the investors and the management team).

What does it mean to accept stock?

Welcome to the lottery!

You can’t equate stock with salary. That’s why start-ups often assign significant blocks of stock to newcomers like you — the value is totally uncertain, and it can take a lot of iffy shares to make up for real dollars in salary.

Now, if that sounds anti-entrepreneurial to you, I don’t mean it to be. Start-up businesses are the economic backbone of our country’s future. I’m all for taking risks. But don’t lull yourself into accepting a job offer because of the stock.

Make sure you’re happy with the job and the income you’ll be earning. Consider the stock your lottery ticket. If you get rich, great. But don’t count on it. Even if you really believe in the company, remember that the value of stock at IPO time is determined by factors that are largely out of your (and the company’s) control: investors including private equity and venture capital firms, the economy, stock market psychology, competition, the weather, which side of the bed the chairman of the Federal Reserve woke up on, and so on.

2 tests for stock options

I’ll offer you two thinking exercises to help you figure out for yourself how to view stock options in your job offer.

First is a test that was suggested to me long ago by the CEO of a start-up. If you were not considering a job there, but this start-up’s stock were in fact available to purchase on the open market, would you buy some at the strike price today? (The strike price is how much you’d pay per share when your stock options are fully vested.) It’s an interesting question that forces us to realize that, if we’re considering stock options as part of salary, to accept those options is to make an investment in the company. Do you believe in the company enough to be an investor?

75% of start-ups fail

The second test forces us to eliminate the stock options from our calculation, as if the options will be worthless. While you could get rich from stock options, consider that, depending on the survey, 65%-75% of venture-funded start-ups fail.

You’ll know the company and the job are right for you if you’d take the job at the salary offered without stock. This helps us see stock more clearly as a reward and a bonus, and the salary as pay for our work. You can spend salary now. You cannot spend stock options.

Do you want to be an employee or an investor?

But don’t think only like an investor. Think like an employee. That company might fail and your stock options might be worthless, but you could win big. Between a good salary and the opportunity to develop your skills working in an innovative, leading-edge business where you get a chance to do work not offered elsewhere — this job might be perfect for you.

If you need help negotiating your job offer, please see Fearless Job Hunting, Book 9: Be The Master of Job Offers.

I believe the bottom line is that you can’t equate stock with salary. My advice is to decide whether you want to be an employee or an investor in this start-up company. You can be both, but don’t confuse stock options with salary. You’ll know the offer is right if you’re willing to accept the salary and put the stock in a drawer and forget about it for now.

Apply those two tests to this opportunity and be brutally honest with yourself about what motivates you.

Would you accept less salary in a job offer if it included stock options? Did you ever receive stock options as part of a job offer? How did it factor into your decision? Have you ever profited from stock options you got in an offer?

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The data say, Demand bigger salaries!

The data say, Demand bigger salaries!

Question

I’m about to get a job offer from a company I want to work for. They asked how much I want. The talent shortage must be producing bigger salaries in job offers, so I’m inclined to ask for the top of the range I’ve researched. But I’m also nervous about going too high and turning them off. Is there a safe middle ground?

Nick’s Reply

bigger salariesLike you, I like the middle ground. Most of the time. But this isn’t most of the time. In fact, I believe we’re living in a time when there’s good reason to take bigger risks to get bigger rewards.

Why? Because on the whole, companies are pulling down unusually higher profits hand over fist. They can afford to pay you more. There’s data to prove it.

Days of bigger salaries

This is the time to ask for more, even to demand it and gently signal that you will walk away from that hard-to-fill job if they don’t meet your salary requirement.

Savvy investors tell us that the big gains are made when we encounter unusual circumstances in which our chances of a big win are somewhat higher than normal. That can make it worth the attendant risk. Of course, only you can decide how much risk you will tolerate.

I would ask for more money. I’d ask for the top of the range or more. Now let’s discuss why job applicants should demand bigger salaries today.

Employers need to hire

I don’t need to link you to 10 articles about employers crying they can’t fill jobs because of “the talent shortage.” And I don’t need to give you an Economics 101 lesson in supply and demand. (Ah, what the heck! When supply of labor is down, wages go up.)

If so many employers are desperate to hire, they must be paying top dollar to get workers like you on board, right? Wharton labor researcher Peter Cappelli suggests that, on the whole, they’re not.

What do you mean, real wages are down?

In an October 2021 report Cappelli writes that “Wages are not rising dramatically, at least on average. A shortfall between a big demand jump and a modest increase in supply should not necessarily cause a shortage in a market economy. It should cause prices — in this case, wages — to rise.”

But despite their posturing about recruiting aggressively to fill those vacant jobs, Cappelli notes employers are not offering competitive market pay. In fact, he says, no matter what anecdotal stories the media broadcast, the data tell us “Real wages have fallen by the largest amount in decades.”

And that’s why you should ask for higher pay. In fact, if you don’t demand a higher job offer, you may be getting lower real pay than you even realize.

Inflation is hurting workers

Cappelli continues: “The idea that wages are rising dramatically just isn’t true…  workers are living in a world where their money isn’t going as far as it used to due to rising costs of goods and services.”

We call that inflation. “Real wages” are wages adjusted to account for rising consumer costs.

And, today, it’s even worse than Cappelli suggested last fall. In its April 12, 2022 Real Earnings Report, the U.S. Bureau of Labor Statistics tells us:

“Real average hourly earnings decreased 2.7 percent, seasonally adjusted, from March 2021 to March 2022. The change in real average hourly earnings combined with a decrease of 0.9 percent in the average workweek resulted in a 3.6-percent decrease in real average weekly earnings over this period.”

But inflation is enriching companies

Maybe employers just can’t afford to pay higher salaries, eh? Maybe you should bite your tongue and tell that employer you’d be happy in the middle of the salary range. Play it safe.

But you’d be wrong, and you’d be dumber than greedy corporations, says Lindsay Owens, the executive director of the Groundwork Collaborative. In I Listened In on Big Business. It’s Profiting From Inflation, and You’re Paying for It, Owens reviews hundreds of corporate earnings calls she’s listened to — “calls, where, by law, companies have to tell the truth.”

“The Federal Reserve chair, Jerome Powell, said that sometimes businesses are raising prices just ‘because they can.’ He’s right. Companies have pricing power when consumers don’t have choice.”

The examples she cites are chilling because CEOs brag about unheard-of profits triggered by economic factors that hurt consumers and, therefore, workers and job seekers.

  • “What we learned on these earnings calls was quickly reflected in data. Despite the rising costs of labor, energy and materials, profit margins reached 70-year highs in 2021. And according to an analysis from the Economic Policy Institute, fatter profit margins, not the rising costs of labor and materials, drove more than half of price increases in the nonfinancial corporate sector since the start of the Covid pandemic.”

Owens reports one profit brag after another during the earnings calls:

  • “As Hostess’s C.E.O. told shareholders last quarter, ‘When all prices go up, it helps.’”
  • “Executives on their earnings calls crowed to investors about their blockbuster quarterly profits. One credited his company’s ‘successful pricing strategies.’”
  • “Another patted his team on the back for a ‘marvelous job in driving price.’”
  • “The head of research for the bank Barclay’s said ‘The longer inflation lasts and the more widespread it is, the more air cover it gives companies to raise prices.’ More than half of retailers admitted as much when surveyed.”

Corporations can afford handsome job offers

Companies are intentionally jacking up prices to consumers to boost their profits — using inflation for “air cover” — while they pay lower real wages. Is there anything illegal about that? Probably not. Nor is there anything wrong with you jacking up the salary you want if a company is flush. And in this economic climate, it may be prudent to pursue only employers that are flush.

This is why, in today’s economy and job market, you should always be ready to ask for more money. I’m forever telling you to make sure your job delivers profit to your employer. Now I’m telling you to make sure employers that are bursting with colossal profits deliver a concomitant share to you in the form of higher salary. Lindsay Owens might say this is the best time in 70 years to go for the gold.

(See More Money: What to ask for in a talent shortage.)

Find one smart, good employer

Are all employers so greedy that they make below-market job offers so they can hoard profits? For that matter, are all employers laughing all the way to the bank? Of course not. But successful, smart employers see an opportunity to hire the best workers by sharing their good fortune via higher salary offers. Why work among pigs?

Even if, as the data suggest, most employers are killing real wages, a wise job seeker takes refuge — and finds hope and patience — in the knowledge that they need only one good employer to make them one outstanding job offer.

But you have to ask for — even demand — bigger salaries.

Peter Cappelli offers compelling tough love to employers, and advises “looking beyond just signing bonuses and modest wage increases, instead considering what’s possible in compensation in order to attract and retain the workforce you need and want.”

Could following my advice to demand bigger salaries lead a greedy employer to boot you to the curb because they’d like to hire you for less? Could the message in this column cost you a job offer entirely? Yep. So use your judgment and do the best you can.

Me? I’d ask for more because the data tell me profit-rich companies can afford it. If they’re not willing to share their rising profits with their workforce, I’ll go find an employer that will. It’s that kind of economy. The data tell us it’s that kind of job market.

Are bigger salaries a thing? Can you actually ask for the top end of a salary range and get it? What’s your experience? Got any examples of corporate greed and low-ball job offers? How have you gotten more money from an employer?

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HR Background Checks: Where does your info go?

HR Background Checks: Where does your info go?

Introduction

backgound checksWhen you grant employers permission to run background checks and credit checks on you, where does all that confidential information go?

Last year we asked Does Human Resources go too far? Now, a subscriber who is an HR professional suggests that Pandora’s Box has been opened. He points out that in their zeal to protect themselves and their companies, HR departments may be covering up illegitimate and possibly illegal practices.

When HR outsources background checks and investigations of candidates, is HR merely doing its job, or is it ensuring plausible deniability while letting loose an investigative demon that systematically violates people’s privacy and feeds the specter of identity theft? Does HR go too far when screening job candidates? Hold onto your seats. We’re about to take a rough ride through a nasty landscape.

I’m not disclosing our insider HR executive’s name for obvious reasons. I cannot confirm every claim he makes, but we spoke and I find him credible. If some of his insider claims seem farfetched, I’d love to hear any rebuttals. Here’s what he has to say.

An HR insider speaks up

Regrettably, all these [background investigation] procedures and processes are advocated by the Society of Human Resource Management (SHRM), as reading its web site will reveal. And, just as regrettably, many HR people fall right in line, like little ducklings swimming behind the mother duck of SHRM. It’s the latest rage, and every HR person wants to be a part of it.

Background checks galore

With thousands of people applying for each job and the jobless rate for skilled and white-collar workers at a recent all-time high, the applicants, like sheep being led to the slaughter, will subject themselves to almost any practice and jump through almost any hoop to get a job. The theory is that any job is better than no job.

The background-check processes are, the majority of the time, being outsourced to security companies that have turned these processes into a lucrative business:

  • background checks
  • personality testing
  • criminal checks
  • educational checks
  • military service checks
  • employment verification
  • reference verification
  • credit checks
  • drug testing
  • searches into legal agreements
  • scanning of your phone records
  • scanning of your Internet activities and e-mail
  • and so on.

This total invasion of privacy beyond your wildest dreams (actually, nightmares) is outsourced. The worst part is that much of the data and information these outsourced security agents collect is erroneous.

Have you been checked without knowing?

HR will narrow the list of candidates down, and then turn the outsourced security investigators loose on that list. Background checks are often done before the first interview, and before any sort of an agreement, authorization, or disclosure is signed by the job applicant.

You will never know about it until you order a copy of your credit report and find all the inquiries (that’s the first sign) and wonder, who in the devil is that who has run checks on you?

The larger outsourced security and investigative companies have started keeping databases of their own. One advertises they have a database of over 1.5 million people for employers to run their candidates against. If you have signed one disclosure for one employer, the investigations company that did the checks will keep the information about you in their database and then just re-sell the results to their next client.

Do you know where your background checks are?

They start with a name and phone number and e-mail address from a resume or application. Then, they cross-reference information until they get a date of birth or social security number and go from there. When an applicant walks into HR for that first meeting, they already may have been investigated. Never mind that much of the data gathered may be erroneous. The “data” was gathered at arm’s length, but the employer will treat it as absolute fact.

Security and background checking has become a lucrative business. The outsourced investigators are starting to sell that information amongst themselves, expanding their databases and increasing their profit margins. The shuffling around of this data only makes its accuracy even more questionable.

This is an industry that is almost totally unregulated. The multiple levels of outsourcing and subcontracting yield enough plausible deniability to the companies themselves, and their clients, that abuses run rampant.

Nick’s comments

The statement above was submitted to Ask The Headhunter unsolicited. I’m grateful for the permission to publish it. Once again, I cannot present it as fact — but I have encountered examples of many of the claims. If anyone in the investigations business would like to comment on these allegations, please do so below or feel free to contact me. This is worth discussing and researching further.

Where is the accountability in background checks?

When HR asks you to provide information that is confidential to you, or to sign permission for your background to be investigated, or to waive liability if your confidential information is leaked or misused, HR must be accountable to you. Whether or not we have hard evidence of abuse, I am convinced there is a serious problem with this part of the hiring process at many companies.

While some employers may be innocent, we need to ask whether they are being responsible. Others are overstepping the bounds of what is legitimate and ethical – and possibly legal — when conducting aggressive background checks on job candidates. Worse, employers may be putting you at risk because they presume to entrust sensitive information about you to third parties with whom they have only an arm’s-length relationship. Where is the accountability?

Do you know how your confidential information is being used?

Job applicants need to be aware of the risks they take when divulging information about themselves – any information. It seems that even your name, address and phone number might be enough to allow an employer’s investigator to access every nook and cranny of your life without your knowledge. If the law is being circumvented, then the law needs to be enforced – or our legislators need to start working on laws that will protect our privacy.

In this day of heightened sensitivity to security, it’s important to recognize that the problem lies not in checking people out. The problem lies in unethical, unwarranted and possibly illegal procedures conducted at arm’s-length from employers by third parties. In some cases, there’s a cascade: An employer outsources reference checks to Service A, which in turn outsources criminal and credit checks to Service B and Service C. (Read about one third-party investigations company that’s so “arm’s-length” it conducts automated background checks.) Who’s accountable — the independent investigative service, or the employer?

Time out for questions

A responsible employer should have good answers to these questions, and a job candidate should not hesitate to ask any of them before submitting even a resume. If this list seems over the top, perhaps it is. I think every item is legit, but you must decide which ones are important to you.

  1. What kinds of checks does the employer conduct? Are they legal?
  2. Is the candidate notified in advance and given the opportunity to decline to be investigated? Is the permission form clear and easy to understand?
  3. Who is conducting the checks — the employer, or a subcontractor who in turn subcontracts the investigations to yet another firm?
  4. What information is gathered? How is its accuracy determined? How valid and reliable is it?
  5. Does the candidate have an opportunity to review and confirm or contest the information?
  6. Is the information secure? Who has access to it? Is there a risk of identity theft?
  7. Who owns the information and what rights do they have to it?
  8. Is the information maintained in data bases not directly controlled by the employer? For how long?
  9. Is the information made available to any other parties at any time for any reason? Is the information re-used or sold?
  10. Does the candidate have the power to limit or rescind rights they have granted for use of the information?
  11. What responsibility and liability does the HR department accept regarding the collection and use of your private information?
  12. Last and most important, is the employer prepared to sign an agreement to protect you and your private information?

What are the risks if you apply for a job without answers to these questions?

Time for less invasive practices

Maybe the biggest question we’re left with is the one we originally asked: Does HR go too far when screening candidates? It seems that HR routinely abuses the job seeker’s frame of mind — often that of a terrified supplicant — when it indiscriminately demands all plus the bathroom sink before it consents “to proceed with your application.”

Does anyone seriously contend that HR doesn’t ask for more private information than it really needs? Having immense power over relatively helpless applicants is no justification for unnecessarily abusing them. I’ll echo our HR insider’s implied challenge to the SHRM: When’s the last time your august group recommended less invasive practices?

Until HR owns up to its responsibilities, maybe the job seeker’s best protection is to lay their own confidentiality agreement on the table – and decline to divulge anything until the employer signs it and makes itself accountable.

What’s your experience with background checks when you apply for a job? Have you encountered any of the issues our insider enumerates? If you work in HR, can you confirm or deny what he presents? What can job hunters do to protect themselves?

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Should I accept money from a headhunter to take a job?

Should I accept money from a headhunter to take a job?

Question

Just as COVID hit I worked with a headhunter who attempted to place me with a firm in New York. (I live in Boston). Everything was set, then COVID ended the deal. Two months ago, the recruiter called to inform me that he was ready to pick up where we left off. That is when I learned that the salary had decreased, they would not pay my expenses for another NY interview, and they would not pay any moving expenses.

The headhunter has not been forthcoming with me, and he was noticeably irritated with my questions about reimbursement for travel to NY, and uncomfortable about advocating my financial requirements. This morning he informed me that the firm was anxious to hire me and that he would pay me $1,000 in moving expenses if I took the job.

It seems a little shady to me. The way he worded his offer to pay my moving expenses was definitely suspect: “You go down there, accept the position and technically you will be working for them. Then I will pay you the $1,000 in moving expenses.” Is this normal?

Nick’s Reply

headhunterNo, it’s not normal. A headhunter could legitimately “chip in” part of his fee to help you offset your relocation expenses, but this kind of payment can also be construed as a kickback unless it is disclosed to, and approved by, the employer.

Is this a bribe?

Suppose the company finds out the headhunter gave you that $1,000 and accuses you of taking the job because the headhunter bribed you. Suppose that in three months — after the headhunter’s guarantee period to the company ends — you decide the job’s not right for you and you resign. To the company, it might look like you and the headhunter conspired to defraud it of the search fee. For that matter, how would you prove to the company that the headhunter didn’t split his fee with you 50-50? (For the benefit of the uninitiated, it’s worth noting that if this job pays $100,000, the headhunter’s fee could be $25,000-30,000. Half of that is a nice chunk of change.)

Ask the employer about the headhunter

This wouldn’t be the first headhunter who “shared the commission” with the candidate. It’s unethical and it demeans the headhunter, the candidate and the employer. Instead of negotiating a hire, a salary and a fee that’s fair for all parties, these “headhunters” take the low road and make the transaction sleazy. Now, we could assume the best intentions of the headhunter, but if you secretly take money from a headhunter when you accept a job, I agree it’s shady. I wouldn’t do it.

You need not agonize about this. The solution is simple. My advice is to ask the employer about the offer. Be up front and expect the same from the headhunter. If he’s being generous, then the company should know about it and have no problem with it. But it seems you don’t have the whole story. (See Why do headhunters act like this?) Go to the company and tell what you know, then ask them to confirm how this all came to pass. “I just want to be sure I’ve got the story straight before I accept the position. I want this to be on the up-and-up.”

If you have any doubts about this headhunter, talk to the company directly. I wish you the best.

Has a headhunter ever offered you part of the placement fee, or suggested something unethical to you? Maybe you’ve encountered other sleazy practices. Tell us about it.

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Must I “kiss ass” to get a job?

Must I “kiss ass” to get a job?

Question

My husband is a recent college graduate in need of a professional job. He’s had a couple of possibilities, but no offers or anything.

I know what the problem is. He’s going about it the old-fashioned way, by applying for “available” jobs he finds via the Internet. He dutifully fills out applications and sends resumes to places advertising jobs. Obviously he needs to get on the networking ball, but he’s having a difficult time with it, for two reasons.

First, he thinks it’s wrong. He wants to get a job on his merits, not because he “knows somebody.” He wants to feel like he earned the job by being competent, not by being the best ass-kisser or because somebody’s brother’s cousin’s friend has some pull with the company owner’s daughter’s dog groomer. I don’t know what to say to him about this, because I happen to agree. It feels like, at least in the current climate, success in a job search has relatively little to do with your actual ability to do the job.

Second, and this is the part I’d like your help with, it’s really a downright unpleasant thing to have to do. Calling up everyone you know, begging for a job and asking them to beg for you to everyone they know. I think it would be easier to ask people for money, frankly.

How do people do it? Do you reward yourself with a treat every time you make an icky phone call? Imagine your “contact” in nothing but their skivvies? Risk sinking into multiple personality disorder by dissociating yourself from the entire process?

Help, please!

Nick’s Reply

get a jobI understand your husband’s hesitation and his attitude, because I was a new college grad once. However, he is absolutely, positively, completely wrong.

It’s easy to assume that “who you know” is a corrupt way to get a job. The truth is, companies hire people they know because they’re less likely to encounter problems with “people they know.”

Need to get a job? We hire who we know.

A V.P. at a successful company explained it to me many years ago.

“We hire using our company’s ‘people filter’. We hire only people who are referred by our employees and by people we know. This assures us that we’re getting good people, because why would our friends and employees refer turkeys? It assures us that the new hire will work hard, because if she doesn’t it would reflect poorly on the employee who referred her. And, we are assured that the new hire will get lots of help and support — it’s a kind of guaranteed on-the-job-training.”

Know what? That V.P. doesn’t hire people just because they “know someone.” Good companies will still examine a highly-recommended candidate carefully. They will look at your skills and abilities, and hire you only if you’re right for the job. A good company won’t hire a turkey whose only credential is that she “knows someone.” But, that people filter is what gets a candidate in the door, and it’s what seals a relationship if all other criteria are met.

We don’t hire resumes or turkeys

You are worried that “success in a job search has relatively little to do with your actual ability to do the job”. Step back a minute. How is your husband demonstrating his ability to do the job? By sending employers a document with his name and credentials on it? Do you really think that convinces anyone he can do the job?

Contrast this with a candidate who talks to that dog groomer, who in turn introduces the candidate to a friend whose father owns the company. The friend talks with the candidate, satisfies herself that the candidate is talented, then refers the candidate to her dad, who refers them to a manager who is hiring. I’ll take that dog groomer over a scrap of paper any day — and so will most hiring managers.

When you send a company your resume, you’re not demonstrating anything. All you’re saying is, “Here are my credentials, all typed up nicely. Now, you go figure out what the heck to do with me.” Employers are lousy at hiring from resumes. A personal contact is your opportunity to actually show what you can do — it’s your opportunity to demonstrate your value and to suggest how you will help the company. (This won’t work if you’re a turkey!)

We trust our icky contacts

Your husband needs to get over this. (And so do you.) If you don’t follow my logic, consider this. Companies pay headhunters lots of money to deliver the very best candidates for a job. A $100,000 position will yield a $30,000 fee. Do you know why companies pay that kind of money? Because they don’t want to waste time with thousands of resumes of people they don’t know. They want the personal referrals of the headhunter. They’re paying handsomely for those icky contacts.

When you develop relationships that gain you a personal referral, you’re being your own headhunter. You see, companies don’t hire people they know in order to do a favor for someone. They hire people they know because of the trust factor. They’re simply more likely to get a good hire from someone they know.

Trust: Get a job without icky

Developing professional contacts is crucial to success. If you regard it as icky, then you’ve got the wrong idea entirely. Is it dishonest or immoral to make an effort to meet people who do the work you want to do? Is it ass-kissing when you call people in your field to discuss their business and to learn how you can make a contribution to their industry? Is it unpleasant to take a step into your chosen line of work — or is it just uncomfortable because you don’t know how to do it? (Please check Natural Networking: An end to stupid networking.)

If your husband can’t get comfortable talking to people about the work they do (and the work he wants to do), then I can’t help him. He’s going to have to learn the hard way.

Here’s the risk he takes. If he gets hired strictly on the basis of a blind resume submission, the odds that he will have the support and attention he needs to succeed are much smaller than if he gets hired through a personal contact. My friend the V.P. devotes lots of time to help his new hires succeed because he’s beholden to the people who referred the candidate — there’s personal responsibility and trust involved. You see, it works both ways: personal contacts yield good hires for employers, and they yield the best opportunities for job hunters.

Don’t kiss anything to get a job. Networking must not be icky. It should be a natural, satisfying experience of getting to know good people in your field — and helping them get to know you.

I wish you and your husband the best.

What’s your take on networking and using personal referrals to get a job? Maybe more important, why do so many people think networking is “icky?” Is networking a skill, or an attitude?

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Is “the hot job market” a load of crap?

Is “the hot job market” a load of crap?

Question

Here’s another article, this one from MarketWatch, about how The U.S. Jobs Market Is Scorching Hot. So why can’t I get interviews for a good job, much less a job offer? I’m pretty fresh out of school with desirable technical credentials and all I want is a good job at a good company. I’m not greedy about salary. If employers are so hot to trot and good people are so hard to find, why do they do 6 interviews on 6 different days then tell you it doesn’t seem you are really interested in their product line? Doesn’t the ability to learn quickly and work hard count? How long can a company leave a job vacant? I don’t know who’s measuring what, but the news about the hot job market is a load of crap. The job market stinks. Am I the only one that thinks so?

Nick’s Reply

hot job marketI’m inclined to agree with you. You’re not the only frustrated, befuddled job seeker. I get lots of mail like yours. People with solid credentials and experience — at entry and higher levels — are confused and angry.

What talent shortage?

Today there are around 11 million open jobs and 6 million people unemployed. There are far more open jobs than job seekers. Employers call this a talent shortage. “We can’t fill jobs!”

Here’s the rub. In 2016 I was hired to do a webinar for Kelly Worldwide. It was a conference of HR managers. Their #1 complaint? The talent shortage. But in 2016 around 20 million people were looking for jobs. There were around 5 million jobs open. I upbraided my HR audience for calling a 4:1 hiring advantage a “talent shortage.”

What’s changed? Nothing, really. The condition of the economy doesn’t matter. Employers keep making the same recruiting and hiring mistakes today as they did in 2016. They blame job seekers and they cry “talent shortage!” no matter how many people the Department of Labor says are looking for work!

Hot job market or HR failure?

Google’s former executive chairman, Eric Schmidt, said something back then that still applies today:

“Most companies hire for the position, not the person. So they look for a match on LinkedIn for all of the criteria. They have to have five years of this and 10 years of that — and that’s precisely the wrong way to go about hiring.” (Fortune, 9/4/14)

How could “talent shortage” explain two very different economies and job markets? I think Schmidt says it all. Employers own this problem. They don’t know how to recruit or hire, and they make the same mistakes in any kind of economy. The rest of us suffer for it.

But the question here is, does the job market really stink today?

Hot job market, or stinky load of crap?

I’m not an economist or an oracle. But I think members of this community have information, opinions and insights on today’s inscrutable job market. So this week I’m going to ask readers some questions. I hope the resulting comments will shed some light on what I agree is “a load of crap” about “the hot job market.”

Dear readers:

  1. Is the hot job market really a load of crap?
  2. Are you finding it easier or harder than “normal” (whatever that is!) to get a good job? Please indicate whether you’re just starting out like this reader, or unemployed, or want to make a job move to something better.
  3. What are the main obstacles and challenges that make your job search difficult today? Have they changed?
  4. What should employers do differently to recruit and fill jobs?

Is the reader who submitted this week’s question an anomaly, or is “the hot job market” an illusion? What do you think is going on and what should we do about it? I hope you’ll share your comments on the four questions. Thanks!

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Should I rat on a job candidate?

Should I rat on a job candidate?

Question

I find myself in the position of having to decide whether I should rat on a job candidate. My boss is about to interview someone who applied for a job in our group. I will not be involved. He is a former colleague from my previous employer, where he was a problem employee. He and I had a major falling out because I questioned a bad decision he made and then tried to cover up. It was very costly to the company. It was awkward but I had to “testify.” He got a “black eye” as a result, but the company didn’t know the half of what he had done. I have never told anyone here about it and the former colleague may or may not know that I work here. (Obviously, I didn’t say goodbye to him).

I have a very good relationship with my new boss but am afraid to tell her about this because I fear it may color her impression of me. Should I approach my boss about it? How?

Nick’s Reply

You have two responsibilities to your employer in this matter:

  • To do your job properly for the benefit of the company.
  • To do what you can to promote and protect your department’s and your company’s success.

You didn’t tell me the details of what transpired at your old company, and I don’t want to know them. I have to trust that your position in all this is above reproach. If it is, then I believe you must find the right way to notify your boss because if this person is hired, he will likely affect not only your ability to do your job, but everyone’s.

You need not rat on a job candidate

I suggest you tell your boss you are aware so-and-so may be considered for a job, then add, “May I make a suggestion?”

Stop there until you get the go-ahead to say more. If your boss declines your input, leave it alone. You aren’t in charge, and you’ll have to deal with whatever happens. If your boss clears the path, say, “If you do a careful reference check on this person, I won’t need to put myself in an awkward position by offering information that might seem self-serving.”

Note that you’re not disclosing what happened at the old company. You’re not ratting anyone out. You are making a suggestion to your boss about the hiring process. This may seem like I’m splitting hairs, but I believe it keeps you safe.

If your boss takes this at face value, let it go at that. Say no more.

Let another reference speak

If your boss encourages you to say more, make sure you’re in a private setting, whether on the phone, via Zoom or in person.

“Look, I don’t like to disparage anyone, and I know you can form your own opinion. I worked with him at my last company, and I wish that I hadn’t. I’d just as soon you got the story from someone else at the other company. The last thing I want is for you to think that I go around bad-mouthing people.”

You don’t have to rat on a job candidate. It’s better to let another reference outside your company provide the details simply because they won’t have the same vested interest you do. (You could suggest your boss learn a bit about how reference checking can be a competitive edge.)

If you don’t give your boss at least this much of a heads-up, it could hurt her and the company, and it could put you in the position of having to work with this person again. You’re not nixing the hire. (You don’t have that kind of power.) You’re encouraging your boss to look extra closely at the candidate. In my opinion, this meets your two obligations I mentioned above.

A circumspect reference

Your new boss may give you the okay to spill the whole story. Be careful not to compromise your own integrity as you tell it. Keep it brief and objective. In essence, you are providing a reference, so apply the same circumspection you would if a different employer contacted you for a reference on this candidate. Stick to the facts. Let your boss draw the conclusions, and encourage her to check with other references.

This is unfortunate, but I think you have to address it. I don’t think you’re ratting anyone out. This is business information. If you were your boss, wouldn’t you want to know? I believe my suggested approach demonstrates that, even if this matter is personal to you, you’re doing your best to handle it professionally.

If your boss hires this person anyway, you will probably have some other decisions to make. I hope for the best.

Is this “ratting on a job candidate?” What would you do? Is it possible for the reader to protect the boss’s (and company’s) interests without personal risk? Also, what would you do if you were the boss in this case?

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The 4 Questions™: Get a job with a mini-business plan

The 4 Questions™: Get a job with a mini-business plan

How to Get A Job Workshop

In the previous installment of this special How to Get A Job series we discussed how to get the inside track on the job you want. This requires connecting with the hiring manager’s circle of friends — people who can educate you and introduce you for a substantive, 10-15 minute talk with the manager. Now you need a mini-business plan using The 4 Questions™. — Nick

Make a mini-business plan: The 4 Questions™

So, what do you do in that brief talk with the manager? (This also works in a regular job interview, if you can take control.)

Outline your business plan for the job

The 4 Questions

Your objective must be to show the hiring manager you are worth interviewing at length. You much show (hint?) that you have a plan to do the job. It really is a mini-business plan. Your contacts to this point should have prepared you to demonstrate you’re there to talk more about the work than about yourself. Your brief talk must reveal that you can answer YES to what I call The 4 Questions™. You must leave the manager wanting more.

Please note that in the next section I’m giving you way more suggestions than would ever fit into a 15-minute talk! In fact, this should be more than enough to also structure a complete job interview later. (Some of the suggestions are realistic only for a full interview.) Choose what you think will work best for you — for the preliminary brief chat or the interview — then bend and shape it to suit your needs.

The 4 Questions™

In my experience, unless someone works out at least partial answers to The 4 Questions in advance, they have no business in a chat or in a job interview with a hiring manager. At least this much is necessary to make you stand out and to make you worth talking with.

1. Do I understand what the work is?
You should be prepared to discuss one or two problems and challenges the manager (or company) is facing. This is what you’ve gleaned from your new contacts! Consider it the minimum ante for your encounter. Even if your understanding is not very deep, you can diplomatically ask the manager what they’d expect a new hire to tackle, fix, improve, make better or otherwise bring to the team.

Another way to address this is to start a dialogue about what are the deliverables the manager expects. In other words, if you were hired, what would you plan to get done in the 1st month on the job, the 3rd month, the 6th 12th, 18th month, and at 2 years?

2. Can I do the work?
Your discussions with the people that got you into this brief talk should have prepared you for this question. Before your talk with the manager, you should have examined your enormous quiver of skills and abilities — but do not overwhelm the manager with your entire quiver! From these, you must thoughtfully select just a few specific “arrows” and demonstrate how you would use them to do the work the manager needs done. (Do not go on about all your “arrows!”) Briefly discuss these and ask the manager for feedback.

3. Can I do the work the way the company wants it done?
This is a matter of work ethic and style. Again, your preparatory discussions should have told you a lot about the company’s and manager’s approach to work. You should be able to say something about how you will fit into the culture (whatever that word really means!). There’s nothing wrong with asking the manager what qualities other successful employees share, and how they work together as a team. (A friend of mine asks Question 3 this way: Can you park your bike pointing the way everyone else does?)

4. Can I do the work profitably?
“Profit” can mean many things: More money, higher customer satisfaction, lower costs, higher revenues, more efficiency, and so on. What we’re really getting at is, will you deliver more than you cost? Can you estimate the added value you can bring to the job?

There is of course no way to state a “correct” number, simply because you don’t have all the information you need to make this estimate!  (Few managers could do this for their own jobs!) The secret to Question 4 is that it lends itself to a discussion. Ask the manager how the job contributes — or could contribute — directly to the department’s or company’s profits or success. Job candidates I’ve coached have wowed managers who have never encountered an applicant who so clearly shows they’ve thought hard about the bottom line — as much as they’re thinking about getting a job! Addressing this question is not about having a “right” answer. It’s about being able to “show your work” and defend your approach and conclusions. It’s about you and the manager rolling up your sleeves to figure this out.

The 4 Questions™ break the script

Perhaps the most fatal flaw about job interviews is that they’re devoid of back-and-forth about the work. I find that when a candidate helps a manager talk about the work that needs to be done, job interviews are dramatically more productive. As we discussed in the last column, we’re breaking the hiring script and creating an edge. The candidate that is prepared to talk shop stands apart.

If you suspect that answering The 4 Questions is also a good script for a full job interview, you’re absolutely right. In fact, some of what I suggest in the four questions above works better in a job interview than in the brief chat with the manager. Turn your job interview into a demonstration! I call this doing the job to win the job.

Never do this presumptuously. Ask the hiring manager (Never attempt this with HR!) for permission to present a mini-business plan for how you would approach the job if you were hired. Then pull out a tablet or ask the manager’s permission to go up to the whiteboard to draw an outline.

Your mini-business plan for the job interview

Lay out your plan. Keep it brief! I think it’s far better to actually sketch this out than to merely talk about it. Clearly, this is based on The 4 Questions, too.

  1. You understand the job. In just 3 or 4 bullet points, briefly outline your understanding of the work to be done: What are the outcomes (goals or deliverables) the manager wants? Coax the manager to help you get it right!
  2. You know how to do the work… List the tasks necessary to achieve the desired outcomes. This is your map, or plan, for doing the job. Then back it up. Explain how you’ll apply 3 or 4 of your specific skills appropriately. (Work this out well in advance!)
  3. …the way the manager wants it done. Query the manager about how the team’s style and culture contributes to (or interferes with!) getting the work done. This is a discussion that can give you insight on how to handle the rest of your interview!
  4. You can do the job profitably. This is the fun and risky part! Draw a line beneath your presentation so far, and write a number in dollars — your estimate of what you think you can contribute to the bottom line. (You must do your estimate in advance.) The number almost doesn’t matter! Explaining how you arrived at it, and the ensuing discussion, is what matters! It shows a smart manager that you’re not there just for a paycheck. You’re thinking about the company’s bigger picture, and you have at least attempted to tackle the bottom line.

I poll managers about how they’d respond to a job candidate who showed up with a mini-business plan like this. The answer is always the same: “Are you kidding? I’d be shocked and stunned and ready to talk!”

This works only if you choose targets carefully!

Remember our discussion about why there aren’t 400 jobs out there for you? There is no way you could perform like this for 400, or 100, or even 10 jobs! You must choose your target employers, managers and jobs with care. As you work out what you want to say to a manager, whether for a short get-to-know-you chat or for a real job interview, I think you will grasp why I say If you can’t pull this off, you have no business meeting with a busy manager!

What makes you a truly worthy job candidate? How would you apply The 4 Questions to get in the door and stand out in an interview? What is the minimum ante — or preparation — to warrant a meeting with a hiring manager? Does it seem to you that most job interviews fail to yield offers because the candidate isn’t ready “to do the job in the interview?” (Ah, that’s a loaded question!)

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How to Get A Job: Get the inside track

How to Get A Job: Get the inside track

How to Get A Job Workshop

In the first installments of this special How to Get A Job series we discussed the pitfalls of resumes, how to get the right job by pursuing fewer jobs, and how to turn people you don’t know into personal contacts that get you in the door. In last week’s Comments section, readers “filled in the blanks,” discussing how to turn new contacts into meetings with managers that might want to hire you. So, then what? Get the inside track before your next interview! — Nick

How to Get A Job: Get the inside track

get the inside track

You may have heard me say this before. Never give your resume to a manager that you haven’t already had substantive contact with. If you do, you cannot stand out when it counts — before the manager starts interviewing your competition.

You may also have heard me say this. If you lost out on the last job to someone that had the inside track, next time be the candidate on the inside track!

So, you’ve put to work the ideas we’ve already discussed in this series. You’ve been referred to a hiring manager (or other influential insider) by someone who recognizes that you may be able to bring value to the operation. This personal introduction is worth far more than any job application or “professionally written resume.” A manager is far more likely to act on a referral from a trusted source than on an unknown applicant.

Then what?

In psychology, a job interview is what we call a cognitive script. The questions and answers — even the behavior and how people dress — are preordained. (If you could be any animal, what animal would you be? What’s your greatest weakness? Where do you see yourself in five years? I call these the Top Ten Stupid Interview Questions.)

Now what do you do? You break the script and stand out.

Break the script

Almost every job-interview story line follows a conventional script. The process, the questions, the sweaty palms, the tricks, the clever comebacks — it’s all a kind of acting. Everyone acts a part.

This makes every job applicant like every other. The sameness is baked into the interview script everyone uses.

This is why, after a day of interviews, the hiring manager can’t distinguish Candidate 1 from Candidate 8.  You can’t get hired because you don’t stand out. You’re like an extra in a B movie whose ending you already know.

To get anywhere, you must stand out.

Get the inside track

The best thing you can do to stand out as more than just another job candidate is to break the script. Get the manager out of the same-old Q&A story. (What’s your greatest strength? Why are manhole covers round?) Do something your competition wouldn’t dare. Turn your conversation into something else — a discussion about the work. And start this new script before you even get a job interview!

Please get this straight. What we’re about to discuss is not what to say in a job interview. You must talk to the manager before you apply for the job.

This is what to say to a hiring manager even before they have seen your resume. How you handle this discussion can determine whether you earn a job interview as the candidate with the inside track.

How to Say It

Readers often tell me they understand what I’m recommending they should do, but they don’t know how to actually say it. So let’s run through some of your options, in “how to say it” format.

Now that a new contact has referred you to a manager you need to talk with, call (don’t e-mail or text) the manager. These suggestions may be used as alternatives to one another, or they may be woven together any way you wish to suit your style and approach. This is all about introducing yourself to the manager without a resume.

How to Say It #1

“I’ve been talking with so-and-so and so-and-so [people the manager knows] and they’ve pointed out to me that your operation is growing. They thought I might be helpful to you. Please correct me if I’m wrong, but I understand that two key problems or challenges that you are facing may be these…[briefly describe].”

If you approach a manager with an arrogant or presumptuous tone, they will blow you off. If you approach by saying, “So-and-so suggested that I give you a call,” that opens up the door. Always ask permission to continue.

How to Say It #2

“Thanks to some advice from so-and-so, I’ve been trying to study your business and I’d like to ask if you could give me a little more insight into where your business is going and where you might need some help.”

If you feel awkward and don’t want to come off as presumptuous, turn the discussion away from sounding like a pitch for a job.

How to Say It #3

“I have an interest in your industry. I’m not sending out resumes because I’m not applying for jobs, but people regard your company is a shining light in its industry. I’d like to learn more about [marketing, engineering, etc.] in your company, perhaps about your own department’s needs and about what you do before I apply for a job.”

If you’ve done your homework and spoken with insiders, you have three or four names to drop. Most managers will not ignore personal referrals, even if they don’t have an open job right now. More important, those people that referred you also tutored you in the manager’s business just enough that you’ve been able to formulate some good questions for a productive conversation.

Here’s a potent way to show the manager that you’re the one taking a risk.

How to Say It #4

“I don’t like applying for any job until I have learned enough to be able to go into the interview and demonstrate, hands down, how I can specifically contribute to the bottom line. If I can’t flesh out a plan, I wouldn’t expect any manager to interview me. I’m trying to develop that kind of understanding.”

Don’t ask for a meeting yet. Don’t hog the call. Be brief. Do not recite your resume or credentials! Let the manager talk. Whatever the manager might share with you, ask for a meeting shorter than any job interview; short enough that the manager may actually squeeze you in.

How to Say It #5

“Would you have fifteen minutes for me to stop by so I can get a little more insight about your operation, and about the work you hire people to do? I know you’re busy. I’ll be gone after fifteen minutes.”

Not many managers get phone calls like that. You’re clearly not asking for a job interview.

If you really want to be bold, try this.

How to Say It #6

“Look, I know you might think that I’m coming to you from out of left field, and if I seem like a know-it-all, please pardon me. So-and-so and so-and-so were kind enough to educate me about your company’s business. I’ve spent quite a bit of time trying to get a sense of how I might be able to contribute something to your operation. I’ve put together a very brief business plan I’d like to show you.”

(In the next edition, we’ll discuss how to create this “business plan for a job” that you can use both in your preliminary talk with the hiring manager and in your job interview.)

There’s another version of this you might like better. Can you see the powerful spin on it?

How to Say It #7

“It’s a fifteen-minute presentation. If you’ve got fifteen minutes for me, I’d like to come by your office. If after five minutes you don’t like what I have to say, stop me and I’ll leave, no questions asked. I’m not here to waste your time, I’m here because so-and-so suggested I speak with you — and because I think I can help you. But in any case, I won’t take more than fifteen minutes of your time. Promise.”

If you cobble together an approach from these suggestions, and a manager blows you off, it’s probably not a place you want to work. That’s not sour grapes. A manager who has time only for scripted interviews with people unknown isn’t a good business person.

Talk with the hiring manager before you apply for a job

To establish yourself as worthy of a manager’s interest, you must completely bypass the conventional recruiting and interview script. You must stand out from all other candidates. You must earn the inside edge by earning referrals and tutoring from people the manager knows and trusts.

There is no resume. There is no interview. The opportunity before you is driven by who knows you. Someone the manager knows. It’s driven by talking shop outside the job hunting and hiring script we all know and hate.

This is the substantive contact you need, and you should create it well before any job interview. This is your new script for talking about an opportunity, and these are some suggestions for how to say it.

How would you re-cast my suggested “how to say its” for your own use? Does this give you any other ideas about how to gain an edge over your competition, and how to position yourself? Does it make sense that, to stand out, you must do something “stand-0ut” before you apply for a job or go to a job interview?

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How to Get A Job: Network? I don’t know anybody!

How to Get A Job: Network? I don’t know anybody!

How to Get A Job Workshop

For several editions, we’re devoting the Q&A feature to a workshop. Instead of Q&A, this limited series of columns will be “All Answers,” or, if you will, “How To.” This week we continue with How to Get A Job: Network? I don’t know anybody! I hope you find this deep dive helpful, and that you will — as always — dive into the discussion in the Comments section below!  — Nick

How to Get A Job: Network? I don’t know anybody!

how to get a job networkEvery survey ever done shows that the single most successful path to a new job is personal contacts. Yet, time and again people complain to me that they just don’t know anybody who can help them gain entry to a particular company.

And that’s flat-out wrong.

Welcome to your new network

I’m going to enumerate some of the many people you know who can help you.

  • The reporter who wrote the story about the company you want to work for.
  • The manager featured in the article about how that company beat profit projections.
  • The friend whose friend works in the marketing department of your target company.
  • The accountant who works for the CPA firm that handles payroll for the company.
  • The purchasing manager who places orders with the company every week.
  • The lawyer who knows the lawyer who represents the company.
  • The stock broker who knows the analyst who follows the company’s performance.
  • The engineer who wrote the article about the new technology the company uses.
  • The sales rep who answers the phone to help customers in your region.

But, you say you don’t know all those people? That’s a minor detail! You just don’t know them yet. You probably know at least one of them, and the rest you can get to know by picking up the phone. Anyone you know about you can also get to know.

Get wired

If you try to avoid this critical step in your job search, you’re kidding yourself about where jobs come from. While you’re crying that you lost out to somebody who was wired for the job, you’re doing nothing to be the wired candidate for the next one. Jobs come from insiders that help you get the inside track because you got to know them first.

Contacts like these are on the critical path to your next job because they have the inside story about the companies and the managers you want to work for. You need to talk with them. This is how the best headhunters glean the hard-to-find information they use to land new clients and to find the best job candidates for those clients. They get to know the people they need to know.

Get to work getting to know people

People love to talk about their business. You’ve heard me say it before: You can almost always get someone’s attention by talking shop with them. (You don’t need to do the icky kind of networking!) By asking intelligent (well-researched!) questions about their work. By expressing your educated interest in work they do that you want to do, too.

As you start to gather their insights, you will learn a lot, and you will formulate more good questions. This leads you to talk to more people. “Well, gee, who else do you recommend I talk to in the company regarding the marketing department?” This is how you get in the door through personal referrals.

If this were easy, everybody would be doing it

You’ll know you’re doing it right when your supply of new friends overflows, and when you’re talking with them about their work — not about getting a job.

Here are a few of the things you should not say:

  • Let me tell you about myself…[and start reciting your resume]
  • Do you know about any open jobs?
  • Can you please pass my resume on to the company [or the manager or the HR department]?
  • Can you get me an informational interview?

It’s all about personal contacts, but not about awkward, mercenary networking. It’s about establishing a credible interest in a company, in educating yourself deeply, and in helping the business. Never ask directly for a job lead—you’ll just be referred to the HR department.

So get to work. Stop saying you don’t know anybody, or you’ll never land a great job through personal contacts — which is how most people find jobs.

Sorry, I didn’t say it was easy. If this were easy, everybody would be doing it.

Then what?

I throw it out to you!

  • What other kinds of new contacts are on the “critical path” to your next job?
  • Who can you contact next? (Not to talk about a job!)
  • What should you not say to new people you meet?
  • What do you say to new contacts you make, to help educate yourself about the company and to help get you to the right hiring manager?

Let’s talk about “Then what?” The Comments section below awaits your ideas, suggestions, frustrations questions and discussion. We’re all here to figure it out.

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