Consulting: Welcome to the cluster-f*ck economy

On April 24, 2017

In the April 25, 2017 Ask The Headhunter Newsletter, a reader deals with modern employment: consulting.

Question

I’ve accepted an offer for a job at a company, but technically I’ll be an employee of the Consulting Firm that recruited me and is billing me out. There’s a third company involved, the Screening Company.

consultingToday I received an e-mail from the Screening Company, asking for W-2s from the employer I worked for between 2005-2011. I happen to know that companies verify prior employment electronically, so I asked the Consulting Firm why they needed W-2’s. He said the Screening Company couldn’t confirm my employment. This made no sense to me. I said I would call the Screening Company to work this out, since there was a number on the e-mail for customer service. The recruiter at the Consulting Firm said not to do that, and that I should download the W-2s from the IRS.

I called the Screening Firm anyway, and asked a customer service rep why they needed W-2s to confirm prior employment when I know they can do it electronically. She said the Screening Firm didn’t need W-2s for employment verification, and that it was the Consulting Firm that required W-2s.

But then she said they do call prior employers, in addition to doing electronic verification, and that my former employer did not respond to their request. “Would it be sufficient if my former employer called you?” I asked. She said, “Sure.” So I called the HR department at my former company and asked if they had any outstanding requests to confirm my employment. The answer: No. (Say what??) I asked if they would call the Screening Company on my behalf and they said they would only respond to a faxed request with a copy of my consent, and gave me their Employment Verification fax number.

Fair enough. So I forwarded the fax number to the rep at the Screening Firm and then e-mailed the recruiter at the Consulting Firm to keep him in the loop. I said if they had any other concerns to please contact me.

I already have the offer in hand. I never disclosed my salary history during the hiring process. Why would the Consulting Firm want my W-2s? What exactly is the Screening Company’s role? Why did the Consulting firm claim the Screening firm needed the W-2’s and then tell me not to communicate with the Screening Firm? I have more questions, but can you help me with these?

Nick’s Reply

I don’t see how your prior W-2 (salary) information is anyone’s business. If the Consulting Firm does its job right, it knows you’re qualified to do the job its client needs you to do. Otherwise, what’s it charging its clients for? What does it matter where you worked in 2011 or what you were paid? Just sayin’.

You’re asking good questions, but there’s a bigger question: Why are there so many middle-men involved in this?

A cluster of companies

You’ve got:

  • The Consulting Firm that recruited you. That is, your actual employer that will sell your work.
  • The company where you will actually be working. That is, the Consulting Firm’s client.
  • The Screening Company, which processes the hires that its client, the Consulting Firm, makes. The Screening Company seems to be handling the Human Resources tasks for the Consulting Firm.

I’ll hazard a guess that there’s a fourth entity — yet another firm that will process payroll, taxes, and benefits.

There’s a term for the amalgamation of arm’s-length client relationships and consequent finger-pointing that make up this employment game: Cluster-F*ck.

I have no idea how any of these entities can even stay in business with so many hands in the till. You’re not hired to work; you’re rented out to do work. The price being charged for your work far exceeds what you’ll see in your paycheck. Everyone’s getting paid for your work; everyone’s getting a taste of your pay. Good luck figuring it out, because I wouldn’t even start trying to. All I see is a hole in the economy, where money goes without the creation of any value. (See Consulting Firms: Strike back and stir the pot.)

This is not consulting

You’re not being hired by a consulting firm to help it consult to its clients. You’re hired by this Consulting Firm so it can rent you to another company. That’s not consulting. (And don’t confuse what your Consulting Firm is doing with headhunters. See They’re not headhunters.)

Real consulting is an honorable business that creates value. One company turns to another for specialized help: a consulting firm. The consulting firm employs experts in its field that are organized, usually as a team, to solve a client’s problems. Day-to-day work is not the product. A solution, delivered to the client, is the product.

The consultants report to a manager at the consulting firm, not to a manager at the client company. The consulting firm’s employees likely work on multiple client projects at a time. They’re never not working. They’re never “on the beach,” as modern rent-a-worker companies like to call unemployment. (See Will a consulting firm pay me what I’m worth?)

The deal you’ve signed up for is not consulting. None of the companies you describe seem to be responsible for you — or to you. One hires you. You work for another. A third handles the transactions. (I still think yet another will handle HR tasks, like processing payroll and taxes, and administering benefits, if there are any.) When you have a question, each points a finger at the other.

Work for your employer

You’re asking good questions. I don’t have any answers. You’re being forced to deal with middle-men whose roles are questionable. In a well-organized, well-managed business, the functions of all those middle-men are functions of the company itself. A competitive enterprise leverages its expertise with all those functions to produce profit. Beware employers that you don’t actually work for.

consultingMy advice is, work for your employer. Avoid any drain of economic value from your work. Don’t let middle-men interfere with the employer-employee relationship. The risk you take when you participate in this kind of cluster-f*ck economy is that you are not the worker. You are the product. You become an interchangeable part. Worse, you become a returnable interchangeable part.

If the Consulting Firm is paying a Screening Firm to confirm who you are and to handle other transactions with you, so it can charge its client for those services, then what value is the Consulting Firm delivering to its own client?

The employment industry has become one of the biggest rackets going. It really is a clusterf*ck. With workers like you in the middle. But as someone advised a long time ago when a dangerous political entanglement could not be unraveled, “Follow the money.” The real problem here is with the company that’s paying multiple entities so it can rent you. Are you comfortable with this arrangement?

Who do you work for? Who pays you? Are you being paid for the value you create in the economy, or are middle-men draining your value?

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Forget Glassdoor: Use these killer tips to judge employers

On April 17, 2017

In the April 18, 2017 Ask The Headhunter Newsletter, a reader needs to get past the Glassdoor company reviews to find the truth about an opportunity.

Question

I was recently asked to interview at a company that at first I was excited to have a chance at joining. Their industry is interesting and familiar to me, and the position itself is a great next step in my career.

glassdoorAfter my interview was scheduled I did my due diligence and started doing research to prepare. Sh*t hit the fan when I got to employment reviews on sites like Glassdoor and Indeed.

Except for the one or two company-planted positive reviews, the clear majority for the past four years have been scathing and disheartening. To summarize: Employees say upper management rules with an iron fist, takes credit for employees’ successes, and compensation is not competitive.

I can understand a couple of bad reviews that might be from disgruntled people, but with a consistent theme delivered on multiple websites spanning a few years, I’m beginning to second-guess my effort.

My big question to you is: What is the best way to bring up my findings to learn the truth? I feel I absolutely have to ask because I not only want to see how they answer, but I also want to see if they own up to the need to change. I’m worried they’ll blacklist me for bringing it up, and I’ll never know whether the environment is truly terrible or not. I want to approach this with respect and good manners so that I don’t look like a bad seed trying to be planted.

How do I look behind the curtain? Is this worth the effort or should I just run now?

Nick’s Reply

I wouldn’t trust Glassdoor to help me judge a company any more than I’d trust Indeed or LinkedIn to connect me with a job. (See Can I trust Glassdoor reviews?, LinkedIn: Just another job board and The Bogus-ness of Indeed.com.) All those websites make money when you keep looking for jobs — not when you find one!

I’d invest more effort to get the truth about this company firsthand, but only if the company passes the first test. So let’s cut to the chase.

The first test

I doubt you’d take this job in if the compensation is not competitive. So let’s get this deal-breaker out of the way because it may save you further effort and later frustration.

Since they asked you to interview, it’s incumbent on them to provide information you need. I’d ask about compensation before taking any more steps. It’s best to ask the hiring manager this question, but if HR is the best you can do, that’s fine.

Make a phone call. (Do not use e-mail. This is too important.)

How to Say It
“What’s the pay like for this job?”

That’s it. Do not elaborate. This simple, off-the-cuff, obvious question says it all. It’s friendly and it’s clear.

If they won’t give you a salary range, I’d thank them for their interest (always be polite) and explain that you can’t invest your time in interviews if you’re not all on the same salary page. If they decline to state a range and instead ask you your current salary or your desired range, I’d politely reply that they’re asking you to interview — and they need to confirm the salary range. (See The employer is hiding the salary!)

If they won’t tell you, you’re done.

Glassdoor reviews are not enough

I’m not a fan of company reviews, especially the way Glassdoor presents them. There’s no accountability. Anyone can post anything anonymously. Nonetheless, when strong criticism spans lots of time and multiple websites, you’re right to be concerned. Just remind yourself that every bit of the criticism could be wrong. Could. It probably isn’t, given the extent of it. But you seem to want to find out for yourself, so take the next step.

Since you’re still excited about the job as you understand it, it’s worth going in to find out for yourself what’s up. You don’t need to confront them with the online reviews. In fact, I would not, because consider their best defense. If I were the employer, I’d respond that those reviews are not proof of a problem and the critics are all hiding behind anonymity.

The company can quickly render your question as a fact-less accusation, and you’ll come off like a person who makes decisions and judgments without solid evidence. Glassdoor is not solid because critics are not personally accountable.

If you had nothing else to go on but all you’ve read, and you had to make a choice right now about this company, the prudent decision is probably to walk away. But you can get firsthand evidence on which to base a sound judgment — and you should, because online reviews are not enough to make a defensible judgment.

Killer methods to judge the employer

Here’s what I’d do. Go to the interview. Answer their questions, and ask the normal kinds of questions you’d ask even a very good company. Then use one or more of these killer employer-vetting techniques. Here’s what to ask the employer (preferably the hiring manager):

How to Say It
“If you could change anything about your company instantly, what would you change?”

See how they handle that. If they’re aware of their online reputation, it gives them a chance to explain without you actually bringing it up.

How to Say It
“I’d like to meet some of the people I’d be working with if I were hired, and I’m willing to invest some extra time to do that. I’d also like to see where I’d be working. Can you give me a cook’s tour of your facility? If today’s not a good time, I’d be glad to come back.” If they let you do this immediately, that’s a good sign. If they put it off, do they quickly schedule that next visit, or do they never get back to you?

Ask the employees

If you get the tour and have a chance to meet other employees on the team, try to get a few minutes with each one privately. Ask this question.

How to Say It
“So, what’s it really like to work here?”

Do not share what you’ve read online. Let them talk. Their reactions will tell you all you need to know. Remember: Your goal is not to show how much you know, because that gains you nothing. Your goal is to confirm what you’ve read and to learn even more.

Leverage the job offer

This is the most powerful way to judge an employer. If you get an offer, they’ve demonstrated they want you — and they want you to say yes. They’re waiting. People don’t realize what incredible leverage they have at this point. It’s the most control you’ll ever have in negotiations. It’s time to vet the company.

Tell them you’re thrilled to get the offer – “Thank you!” Then take more control and learn the truth.

How to Say It
“Before I accept your offer, I’d like to meet some of your key people – managers of departments related to the department I’d be working in. I’d like to make sure I’m a fit for your team and I’d like to get the bigger picture of the work environment.”

For example, if you’d be working in manufacturing, you’d want to meet the heads of engineering and product development, because they create the products your team builds. You’d want to meet heads of sales and marketing, because their job is to make money from what manufacturing produces. If they’re not all great people doing great work, then your team (and you) will fail. Get the idea?

Find your own truth

Glassdoor and online company reviews are not the truth. They’re the partial, questionable truth. The best way to get the whole truth about a company is to talk to key people inside, and to talk with people you’d be working with every day. There is no need to bring up Glassdoor reviews. (You might find that the company’s reputation online is not deserved.) Get the facts for yourself.

Any company that declines to let you meet the people I’ve suggested – even though it’s an unusual request – probably has too many skeletons in its closet, or has a lousy attitude about transparency.

Formulate these questions in a way that’s comfortable for you. Don’t use my exact words. I like that you want to be respectful and well-mannered. Always assume the best, and politely ferret out the truth. Then deal with it, either way.

I hope this is helpful. It’s probably more work than you’d like to do, but consider what you’re investing here – the next several years of your work life. It’s worth the extra effort to find your own truth.

If you need more suggestions about how to vet this company, these two books will help. Check the tables of contents at these links:

Fearless Job Hunting, Book 5: Get The Right Employer’s Attention
(See especially, “How to pick worthy companies,” “Is this a Mickey Mouse operation?” and “Scuttlebutt: Get the truth about private companies.”)

Fearless Job Hunting, Book 8: Play Hardball With Employers
(See especially, “Avoid Disaster: Check out the employer,” “Due Diligence: Don’t take a job without it” and “Judge the manager.”)

Do you trust anonymous company reviews? How do you get the truth about a company?

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References: 5 reasons to withhold them

On April 10, 2017

In the April 11, 2017 Ask The Headhunter Newsletter, a reader rejects recruiters who demand references before an interview.

Question

referencesWhat do you think of recruiters demanding the identity of my references  — and demanding to check them — often before there’s even any expression of interest from the hiring manager? Some recruiters get seriously butt-hurt when I won’t instantly hand over references, and claim they won’t submit me otherwise.

I would be nuts to have my references called every time some recruiter decides it would be convenient to check them. I never give references except directly to hiring managers after a successful interview with said hiring managers. Am I wrong?

Nick’s Reply

Your policy is a good one.

Most people view requests for their references as a good sign. They readily turn over a list of names because they assume the request means an employer is seriously interested in interviewing or hiring them. That used to be a reasonable assumption, but not any more.

Many reference requests are unreasonable, unwarranted, and sometimes even fraudulent — and you should know when to politely but firmly decline them. But before you try to decide whether a recruiter’s (or employer’s) request is legitimate, first consider whether whether you’re even being recruited! (See How to screen headhunters.)

Are you being recruited?

Not everyone that solicits you for a job is recruiting you. Learn to distinguish a solicitation from a real recruiting call. In today’s highly automated job market, this is a difficult distinction for most people. (See How HR optimizes rejection of millions of job applicants.) Let me try to explain with an analogy — a solicitation I actually received.

I got a call from a company that wanted to sell me an extended warranty on my car.

“Wow!” I said. “That’s great! This is just what I need! Tell me more.”

For five minutes the caller explained all the benefits. A one-time fee would get me no-cost repair work and parts for virtually anything that might go wrong with my car for the next three years. She even patiently explained the exceptions. I told her I was ready to sign up. “What’s the make, model and year of your car?” she asked, as she started filling out the form for me over the phone.

“It’s a 1959 Chevy Bel Air 4-door,” I said.

She burst out laughing. “Sorry, I can’t sell you an extended warranty for a car that old!” she said.

“Then why did you call me?” I asked.

“I didn’t know what kind of car you have!” she replied, and hung up.

Her call was a blind solicitation. Like most recruiters, that telemarketer had no idea whether I was a potential customer. Nor do most people soliciting you for jobs have any idea whether you’re a realistic candidate. “But that’s why they’re contacting me! To find out!” you might respond.

No, that’s why they’re wasting your time. When a real recruiter contacts you, it’s because she has already spoken to people that know you and recommend you. (And that car warranty telemarketer would know what kind of car I own.) That’s likely how she got your name! She wouldn’t contact you otherwise. She doesn’t need your references until after she has interviewed you in detail, or after her client has interviewed you for a job.

When a “recruiter” asks for your references prior to an interview, politely but firmly decline and end the call, because you’re not being recruited. You’re being solicited by someone who has not done any work to justify contacting you. The “recruiter” wants you and your references to do all the work of proving you’re qualified for the job. In short, that’s not a recruiter calling. It’s a telemarketer. It’s why — two weeks after you’ve submitted all your information and gotten yourself all worked up about “an opportunity” — they never call you back. You’re a 1959 Bel Air. (See Why HR should get out of the hiring business.)

Reference theft

If that extended car warranty telemarketer calls you, would you give her the names of three of your friends, along with their phone numbers and makes and models of their cars?

Of course not. You know she’s going to call them with the same sales pitch she gave you. So, why would you give an unknown “recruiter” the names and contact information of three people who know and respect you?

In today’s dialing-for-dollars recruiting world, three credible referrals are worth a lot of money. Odds are good that the “recruiter” wants nothing from you but three new names. The caller is stealing your references under false pretenses — and even creating competition for the job being pitched to you.

That’s reference theft. It makes you a sucker because you’re doing the recruiter’s job for him. And it earns you the ire of three busy people who used to respect you.

Rules for references

Consider using these rules when anyone asks for your references.

  • Before you disclose anything about yourself, ask what the recruiter already knows about you. A good recruiter will not contact you unless she knows more than is on your online resume or profile. She’s already talked to people who recommend you — or she would not bother recruiting you. A real recruiter does not need to ask you for references. That would be like asking you on a date, but only after requesting a list of your friends and family.
  • Get the recruiter’s own references first: Names and contact information of three managers who have hired through the recruiter. Contact those managers to confirm the recruiter. I’d also ask for three people the recruiter has placed, and I’d talk with them. Does this seem like an awful lot of work to you? Don’t worry — you will rarely have to make those calls, because you will rarely encounter a recruiter who actually has references. But a good recruiter will be happy to comply, because the recruiter already knows you’re a worthy candidate and he’ll do anything reasonable to impress you with his excellent credentials.
  • Don’t invest until an employer invests in you. Remember: An employer or its recruiter contacted you, not the other way around. They want you to do something — to consider a job. They should invest in a face-to-face job interview to demonstrate their sincerity — and to show they’re worth your further consideration. If you’re satisfied the employer is worthy and that you really want the job, then it’s time to provide your references.
  • Find out who is going to contact your references and how. Do you really want a third-party “background checker” to call your references? How about an HR clerk who doesn’t understand the work you do? If it’s a legit reference check, will it be done via phone or e-mail? Or will it be an online form? Which of these reference-checking methods do you think will portray you best? Hand over references only to the hiring manager, and then ask the manager to make those calls personally. (See Automated Reference Checks: You should be very worried.)
  • Find out who will have access to your reference report. Nowadays many reference investigations are done by third-party services. That means once your references are checked and filed, the reference-checking firm can sell them again and again to other employers — perhaps without your knowledge. A bad reference or a poorly handled reference can dog you for years, and you’ll never know why you’re being rejected again and again.

Inappropriate reference requests are a tip-off

Most good employers recruit you because someone that knows you recommended you. Real recruiting is not blind solicitation.

Inappropriate requests for your references are actually a good tip-off that you’re not dealing with a real recruiter. Hang up, or delete the e-mail. Real recruiters contact you only after they have checked you out. Respectful employers won’t ask for your references until after there’s mutual interest in taking discussions further. They will treat you deferentially because they’ve already invested a lot of time in you — before they got in touch.

You’ll know a good recruiter and employer from what they say when they contact you. But don’t kid yourself — they’re rare. Your next job will likely come from your own personal contacts, not from a recruiter. Don’t expect those odds to change just because you’d like them to. (Don’t know how to develop personal contacts? Start with this simple suggestion: Meet the right people.)

Protect your references

We haven’t even discussed the problem of letting many recruiters bother the people who volunteered to serve as your references. That’s because we don’t have to. You know better than to permit it. You know not to abuse your references.

Now let’s close on this complaint you made: “Some recruiters get seriously butt-hurt when I won’t instantly hand over references, and claim they won’t submit me otherwise.”

As you’ve already surmised, they have no idea who you are or whether you’re a reasonable candidate. If they’ve got you on the hook, but you won’t sell out your best professional references for a long-shot “opportunity” that you know nothing about — then they’ll drop you. Good.

If you’re having difficulty telling the difference between being solicited and being recruited, try the rules of references above. The first rule alone should usually be sufficient to save your valuable time, and to protect your valuable references.

When do you turn over your references? Have your references ever been abused or misused? Do you respond to recruiters who don’t know the first thing about you?

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Age Discrimination: The green antidote

On March 21, 2017

Quick Question

age discriminationWe all know age discrimination is not legal. I’m an analytical chemist with a graduate degree and 40 years experience in analytical chemistry. Although I would love to retire and enjoy my grandchildren, I still have the desire (and mental capacity) to work. My issue is simple. I can’t get past the front door. Employers just look at the experience in years and it becomes a matter of “Let’s interview him so we can check off the EEO box.”

What’s the best way for anyone over the age of 50 to meet age discrimination head-on?

Nick’s Quick Advice

Part of what you’re experiencing — perhaps 20% — is definitely age discrimination. But the big backdrop is automated recruiting. That’s what is killing job opportunities across all age brackets. (See Why am I not getting hired?) In other words, your obvious concern is actually overshadowed by a far bigger problem.

Age discrimination is just part of it

I think 50% of rejections are about the algorithm missing the match. 30% is the personnel jockey reviewing the match and deciding this chemist can’t really do that particular job. Of course, that personnel clerk knows little if anything about chemists, chemistry, or the actual job, but since executive management doesn’t care what HR knows, you’re still screwed.

The best way to meet this problem is to avoid all automated recruiting tools that funnel you to personnel jockeys. You just have to get over the idea that “this is how hiring is done.”

It’s the people

The only solution I know is to carefully select companies you’d like to work for, figure out what problems and challenges each faces, and triangulate to find people who know people at the company. It’s all about the people who are near the job.

  • Hang out with them.
  • Talk with them, whether by phone, e-mail, discussion forums or over beers.
  • Make friends.
  • Then ask for advice and insight about that particular company.
  • Finally, request an introduction to someone in the department you want to work in.

Then repeat with each level of contacts as you get closer to a hiring manager. Never submit a resume or ask about jobs or job leads. Talk shop. This approach takes a while, but it works. Most managers prefer to hire through trusted referrals.

The Antidote: Get the manager past the grey

So you’re not looking for a job. You’re looking for people connected in some way to the company who will talk shop with you. That leads you to managers.

There’s an antidote to age discrimination. It doesn’t always work. For it to work, you must be talking with an employer whose goal is making profit. So pick employers carefully.

Your age doesn’t matter when someone tells a manager, “Hey, this person can do XYZ for you” — and XYZ is what the manager is dying to have done as soon as possible. At some level, XYZ always means making a business more profitable — always. (See Stand Out: How to be the profitable hire.)

When you show a busy manager the green, the manager looks past the grey. Here’s the catch: If this were easy, everyone would be doing it. So get to work.

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What the Federal Reserve doesn’t know about recruiters

On March 13, 2017

In the March 14, 2017 Ask The Headhunter Newsletter, we look at what some economists at the Federal Reserve say about jobs.

federal reserveRecent reports from the Federal Reserve suggest that switching jobs — and probably employers — is the best way to boost your salary and your career.

In this special edition, we’ll explore what the Federal Reserve doesn’t know about recruiters, and why you should stay away from recruiters who waste your time with been-there-done-that jobs and lower salaries.

Are recruiters killing careers and the economy?

The best recruiters and headhunters boost employers’ productivity by finding discounted talent and up-and-coming talent to fill jobs those people may not have done before. By stimulating capable job candidates with new, motivating career challenges, insightful recruiters help create value for an employer — and boost our economy.

But untrained, inept recruiters lack insight and foresight. They don’t bother to understand an employer’s future needs or a job candidate’s untapped potential. They look for quick and easy “perfect matches” turned up by automated recruiting algorithms. These keyboard jockeys do little but process resumes whose key words match key words in job descriptions. They add no value. They kill career growth and job productivity.

Inept recruiters far outnumber good ones, and that’s killing our economy. Companies aren’t filling jobs with the best hires. But the fault lies with employers themselves, and with Human Resources executives, who buy — hook, line and sinker, and at enormous cost — the reductionist job applicant sorting systems that drive hiring today. (See Why HR should get out of the hiring business.)

New research and analysis from Federal Reserve economists reveals a problem of mismatches between workers, salaries and productivity, but fails to identify and discuss the structural cause of the problem — counter-productive recruiting.

The mad rush to fill jobs mindlessly

With the Department of Labor reporting lower unemployment and increasingly scarce talent, employers are rushing to fill jobs by relying on methods that yield staggeringly low signal-to-noise ratios.

By design, these systems actively solicit as many applicants as possible for each job. (Consider the applicant funnel ZipRecruiter, which exhorts HR managers to post a job on “one hundred-plus job sites.”) The ease with which these systems enable and encourage job seekers to apply for any job in a mindless feeding frenzy contributes to understandably low yields. Then HR managers, who fail to realize that more is not better, claim to be shocked and cry “talent shortage.”

When matches are made, they’re often undesirable to the candidate. It’s a common complaint among Ask The Headhunter readers: Employers want to hire you for a job only if you’ve done that job for three, four or five years already — and they’ll often pay you less. Even when they offer you a raise, the job is usually a lateral move. It’s not a career opportunity or a chance for you to hone new skills  — it’s just an easy database match.

This seems to be much more than a job-seeker frustration. According to economists reporting from several branches of the Federal Reserve, it may be one of the causes of inflation and lower productivity. (See Bloomberg Businessweek: Job Switchers Solve An Inflation Mystery.)

But the economists don’t attempt to explain why employers are making such short-sighted, self-defeating hiring decisions — and I think it’s because the problem is so pervasive that it’s invisible. Although job seekers have long been very vocal and angry about it, the backdrop of reductionist, rude, automated recruiting across America seems to be such a necessary evil that no one but the job seeker sees or questions it. (See HR Technology: Terrorizing the candidates.)

The compelling need to fill jobs obscures the importance of planning to hire strategically and wisely — not just to fill round holes with round pegs quickly. American companies seem unaware of their mad rush to fill jobs mindlessly, and economists seem content to accept the prevalent recruiting infrastructure without reviewing it, simply because employers are content to keep paying for it.

This seems to be what the Fed’s economists don’t know about recruiters and the job market.

The failure is on the front line

Job seekers report wasting enormous amounts of time today fielding fruitless recruiting inquiries and participating in interviews for the wrong jobs. The question arises:

Why do employers look for perfect matches between workers and jobs?

The assumptions behind this quixotic search are incorporated into the ads that candidate vendors like Indeed, LinkedIn and ZipRecruiter run constantly:

  • Employers must hire without training anyone or allowing time for a learning curve.
  • Perfect hires are best.
  • Talent can be had at a discount.
  • Employers don’t have time to find talent on their own.
  • Every job can be posted to “a hundred-plus” job boards instantly.
  • “Big data” makes perfect hiring possible.
  • More job applicants is better.
  • And so on.

These assumptions push employers head-long into automated recruiting. But when we start questioning those assumptions, we’re left with the boots on the ground that create the biggest constraint on hiring the best talent: Inept recruiters on the front line.

When complex factors make it difficult to suss out what triggers the choices business people make, I get lazy. Though I’m not a scientist, I was trained as one, and I find that even if a problem seems complicated, it’s best to start with the law of parsimony: The simplest explanation is probably the right one.

If employers had better recruiters, they’d hire better people, increase productivity and stimulate the economy.

Yet, an employer’s first contact with an engineer, a scientist, a software developer, a machinist, an accountant — anyone the employer needs to hire — is through a person who is probably the least likely to understand qualities and characteristics that make the candidate the best one for the employer. It’s a person least likely to understand the work and the job. Except in rare, wonderful cases where employers have very good recruiters, it’s an incompetent recruiter.

Because employers believe they now have “intelligent applicant systems” at their disposal, many (I think most) dispense with highly trained and skilled recruiters. Employers on the whole have unsophisticated, untrained recruiters who quickly eliminate the best candidates because they’re rewarded for making the easy choices, not the best ones.

The Federal Reserve connects the dots between talent, pay and productivity

Bet you’ve been waiting to see how the Fed fits into this. Let’s dive in.

The job boards say employers can hire the best talent for less money because their databases are bottomless and the perfect candidate is in there, if you just keep looking.

But the Federal Reserve says higher productivity coupled with better career opportunities and higher salaries is better for everyone — and for the economy.

Consider the ambitious little Bloomberg Businessweek article referenced earlier, Job Switchers Solve An Inflation Mystery, that deftly puts the jobs puzzle together:

“Labor economists… are increasingly studying how job-hopping Americans drive compensation gains and affect the traditional interplay of low unemployment, wage gains, and inflation.”

It turns out those economists are now focused on what we already know: The surest way to get a big salary boost is to change employers and stretch yourself.

Consider this handful of factoids and data cited by Bloomberg, from economists at the Chicago Fed, the Atlanta Fed, the New York Fed, and the St. Louis Fed:

  • “23 percent of employees are actively looking for another job on any given week, putting in four or five applications over a four-week period.”
  • “Employers are poaching workers, as 27 percent of offers to the employed are unsolicited.”
  • “Job switchers earned 4.3 percent more money in July 2016 than a year earlier, while people who remained in the same job enjoyed only a 3 percent increase.”
  • “The so-called quit rate, a favorite indicator of [Fed Chair Janet] Yellen that measures voluntary separations from an employer… has almost recovered to levels seen before the recession of 2007-2009.”
  • “Job-to-job changes and the threat of job-to-job mobility are strongly predictive of wage increases.”
  • “Job switching is ‘a good sign for the economy’ and ‘an indication of dynamism,’ according to the [Atlanta] Fed’s [President Dennis] Lockhart.”

And note this nugget of gold in the Bloomberg story:

“While [St. Louis Fed economist David] Wiczer said that the bulk of wage hikes occur from job switching, he cautioned that the gains are highly cyclical, as the median job switcher didn’t reap much of a salary increase during recessions.”

What this means to you: With the economy shifting from recession to inflation, your best bet to make more money today is to switch jobs. I’ll stick my neck out and say that my reading of the Fed analysis — and my own experience and reports from Ask Headhunter readers — is that that you also need to switch employers if you want that dramatic pay increase.

But you can and should optimize that bet by making sure the next job you take also enables you to be more productive. Of course, recruiters sabotage that objective almost daily when they solicit you for jobs that would set your career back five or ten years.

Warning! Warning!

We already know that most recruiters love to stick you into a “new” job that’s not new at all. They don’t get paid to give you a chance at career development — or to help a manager hire for the future. They offer the same job you’ve been doing because you’re the least risky choice for them.

They pluck you from thousands of job applicants only when their database algorithms show that you’re already doing the exact job they’re trying to fill. There’s no need to train you. You will require no learning curve. You are the safest bet and, if you’re unemployed, the recruiter knows he can probably nab your desperate ass for less than you were earning at your last job because you need a job.

But that recruiter is dangerously naïve. The “perfect match” won’t increase productivity because you’re being plugged into the same job you were doing elsewhere, and your motivation is going to plummet along with your value.

Even if the new job pays more than your last one, this is a huge red flag for employers, warns Giuseppe Moscarini, a visiting scholar from Yale at the Philadelphia Fed:

“What we should worry about are wage raises for workers who stay on the same job and are not getting more productive.” [Bloomberg Businessweek]

Whether the “same job” is at the same employer or a new one, Moscarini suggests wage inflation without higher productivity seems to fuel inflation in the economy.

Recruiter failure

I don’t think employers or economists see the razor that’s cutting into productivity and economic growth. But it should be clear to any Ask The Headhunter reader.

It’s the recruiters.

Most recruiters look for an exact match of a resume to a list of key words in a job description. They’re not assessing job candidates to find value a competitor missed or the value an employer can leverage into higher productivity and profit over time. They tell managers to interview any candidates the automated recruiting system flashes on their displays.

Recruiters, who are an employer’s front line in the talent war, are generally not equipped to do their own jobs. They’re doomed to fail because they’re not really recruiting. They’re checking boxes on a database app. The result is hires that are less than optimally productive.

Job Seekers: Follow the money!

The Fed economists are offering job seekers and career-oriented workers a gift of tremendous insight, even if it seems obvious: Your smartest career move may be to switch jobs and employers.

Pursue only jobs that offer you substantially more money and require you to stretch your skills and capabilities — that is, to do more productive work that’s more profitable for you.

That strategy, they also suggest, may be best for employers and for the economy.

Smart workers don’t change jobs or employers without an opportunity to learn and develop new skills, to take on greater responsibility or authority, to stretch themselves — and to make more money. Those who accept been-there-done-that jobs do it reluctantly or because they feel they have no choice, especially if they’re unemployed.

The Fed tells us not only that lots (23%) of employees are actively looking for new jobs, but that competitors are trying to steal them away. Done for the right reasons and for the right opportunities, switching jobs and companies can pay off big. Employers give people who switch 40% higher raises than they give to people who stay where they are (4.3% vs. 3%).

So, follow the money. When a recruiter pitches you a re-run job for little or no extra money, suggest he go find a job he’s better at — because he’s not helping you or the employer. He could be killing your career and the economy. Has anyone told that to the Fed’s economists?

Did you get a better raise for staying in your job, or for switching out? What was the percentage? Did a recruiter move you into another same-old job, or help you advance your career? What’s your take on the Fed’s findings and conclusions?

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The only 2 reasons to tell recruiters your salary

On March 6, 2017

In the March 7, 2017 Ask The Headhunter Newsletter, a reader questions advice about divulging salary information to recruiters.

Question

recruitersI have your book, Keep Your Salary Under Wraps, about how to avoid telling an employer your salary history. I agree: Disclosing salary hurts your ability to negotiate the best job offer.

But now HR expert Liz Ryan asks, Should you tell a recruiter your salary? (Recruiters Don’t Need Your Salary History — But Here’s Why They Want It.)

She says absolutely not, and hundreds of people have posted their comments. Can we hear from another HR expert? I want to know what you say. Is telling a recruiter your salary different from telling an employer?

Nick’s Reply

I’m not an HR expert and I’ve never worked in HR — perish the thought. I always worked on the outside as an independent headhunter. According to Liz Ryan’s LinkedIn profile, her experience is in HR, not in independent recruiting or headhunting. That might explain our difference of opinion.

I don’t think you should ever disclose your salary history to any employer. (See Should I disclose my salary history?) But that’s not what Ryan’s column is about. What she is recommending is a dangerous whitewash of a more complicated issue. She’s saying you should never disclose your salary to a recruiter or headhunter.

2 kinds of recruiters

Let’s be clear on one thing, because it’s important. When she says don’t tell a recruiter your salary, Ryan is referring to a third party recruiter, or a headhunter — not a recruiter working in the employer’s HR department. (When you disclose to an employer’s recruiter, you’re disclosing to the employer.)

The recruiter she’s talking about will earn a fee if you are hired, and also stands to gain tremendously if you’re happy with your job offer and new job. Although the terms are often used interchangeably, to avoid confusion here, when we’re talking about an independent, third-party recruiter, we’ll call that a headhunter. A happy, newly placed candidate refers more great candidates that are worth a lot of money to a good headhunter.

Ryan is wrong because a headhunter’s motivation is very different from an employer’s. A good headhunter can use your salary history to help you, not hurt you, in part because the headhunter wants valuable referrals from you after you accept a new job she’s helped you land.

Employers and headhunters have different motives

Never tell an employer your old salary because he’ll use it to cap any offer he makes to you. In other words, your old salary becomes what’s known in behavioral economics as an anchor. It pulls down the job offer. (If your old salary is higher than the employer hopes to pay, you might be rejected outright, but that’s another discussion. Please see How do I prove I deserve a higher job offer?)

A headhunter actually earns a higher fee when your job offer is higher, so she’s motivated to get you the best offer possible without jeopardizing an offer altogether.

There’s no good reason to give employers — or their recruiters — your salary history.

But the only good reason to tell a headhunter your old salary is if it’s going to help you get a higher job offer.

And that’s where Ryan blows it while she bangs the drum to say no. She’s confusing motives, and that’s naïve. There’s more to it.

When to tell a headhunter your salary

testHere are my two rules about salary disclosure:

  1. If it’s an employer asking — the hiring manager, the HR manager, the HR recruiter, or the company’s online application form — do not disclose your salary, ever.
  1. If it’s a headhunter or third party recruiter, disclose your salary only if:
    (a) The headhunter agrees not to disclose it to the employer without your express permission. No exceptions.
    (b) The headhunter explains how she’s going to use the information for your benefit — and the reason had better be good.

If the headhunter can’t pass tests (a) and (b), don’t tell.

A good headhunter’s obligations

While a headhunter is paid by the employer and thus has a fiduciary duty to get the best deal for the client, the headhunter is also beholden to you if she wants introductions to more good candidates — and a sterling reputation in the professional community she recruits in.

So a good headhunter will not use your salary history to low-ball your job offer for the benefit of her client. If you think she’s going to do that, then walk away immediately — because that’s not a headhunter you want playing middle-(wo)man for you with any employer. (See How to Judge A Headhunter.)

When Ryan says not to disclose salary to a recruiter, what she should be saying is, Walk away from any headhunter you’re not sure you trust.

And that means most headhunters that solicit you — because they’re not headhunters. They’re unsavory spammers and telemarketers dialing for dollars. They’ll never do a good job for you. Work only with the best, or don’t work with a headhunter at all. Satisfy yourself that the headhunter is going to optimize your job offer — and, more important, get you in front of the right manager for the right job. Those are the headhunter’s obligations to you.

Now let’s discuss what Ryan avoids.

Why disclose your salary to a headhunter?

What legitimate reasons could a good headhunter possibly have for wanting to know your salary? If it’s me, I want to understand how your career growth and salary growth reflect one another so I can make a good placement — for you and for the client paying my fee.

  • Do I think you’re over-paid? Under-paid?
  • Do I think you’re squandering your abilities for too little money?
  • Is your salary expectation unreasonably anchored by your current salary?
  • How does that affect how you behave in interviews?

I’d rather discuss these questions with you before you talk with my client, because it could affect how I advise you to interview and negotiate.

Maybe you’re on the wrong career trajectory. You might be earning at the top of the range for, say, a digital design engineer. If you want to be an R&D engineer, you may have to take a step back in salary to shift to the new career direction. I want to prepare you for that. I don’t want you to get sticker shock after you’ve invested your time in interviews with my client.

If you don’t trust a headhunter like you’d trust a doctor when sharing your personal information, then don’t work with that headhunter. If a headhunter isn’t discussing these questions with you, run.

The 92% salary increase

I’ll give you an example of when it pays to tell a headhunter your salary. I recruited a candidate who was earning $40,000. I helped him get a 92% salary increase.

He was hoping to get a 10% salary bump. After a lot of assessment including talking with his references and having him talk with an industry expert whose opinion I respected, I knew he’d be great for a very different kind of job with my client.

If I hadn’t asked for his salary history, he’d have blown the interview, because the job paid over $70,000. His jaw would have dropped if this came up in the meeting with my client, and he’d have betrayed his old salary if only in his body language. My client never would have offered what he was worth. I’d have had no idea, if I didn’t know the candidate’s salary.

We had a long talk about how to behave while discussing a job that would almost double his salary. Based on the candidate’s aptitude, I negotiated a $77,000 job offer. My client never batted an eye, and never learned what its new hire had been earning. The candidate and his wife were able to buy their first house. I earned a nice fee — and several great referrals. The new hire performed so well that I got more search assignments.

I asked for, and got, the candidate’s salary history — but I never disclosed it. I used it to coach him properly so he could get a better deal.

If you’re not satisfied a headhunter is going to work that way with you, hang up the phone or delete her e-mail.

Liz Ryan is wrong

A headhunter is not an employer. Different rules apply when a job seeker deals with a headhunter. It’s up to you to understand the differences. That’s why I wrote a 130-page book about How to Work with Headhunters, and how to make headhunters work for you. What I just explained is in the book.

Liz Ryan sometimes offers good advice. This time Liz is wrong. She sounds right because she’s being contrarian, but she’s whitewashing a question that requires more insight and discussion.

Her advice to not disclose your salary is reasonable only if you’re dealing with a questionable or unsavory headhunter or recruiter — but in that case, you shouldn’t be working with that recruiter anyway! Just as there are lots of lousy HR people who will waste your time, there are loads of unsavory headhunters. (See Why do recruiters suck so bad?)

Know when to say yes

If you’ve properly vetted the headhunter, and the headhunter gives you satisfactory answers to the two tests I posed above, you might gain a lot by letting the headhunter know your salary history so she can assess and coach you properly. Make sure the headhunter will:

  • Keep your salary information confidential — that is, won’t disclose it to the employer — and,
  • Use the information to your advantage.

A good headhunter stands to make a lot of money by helping you get the right job for the best possible salary. And the headhunter’s client never needs to know your old salary. But it’s up to you to draw a line in the sand. Don’t be afraid to say no — and know when to say yes.

9 tips for dealing with recruiters and headhunters

If you don’t know how to separate good headhunters from unsavory ones, check the nine tips in The truth about headhunters.

Do you tell recruiters your salary? Why? If you’re not sure why, then don’t do it. How do you handle headhunters and employers’ own recruiters? How do you keep control of being recruited?

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Should I quit before finding a new job?

On February 28, 2017

Quick Question

quitWould you ever advise quitting a job before having another one lined up? I have completely lost faith my employer and job and I fear getting fired or worsening what’s left of my relationships here. I’d like to quit now. Is that a bad idea? Thanks.

Nick’s Quick Advice

People do it all the time — they quit their job before finding a new one. I suggest taking a little time to think it through. Emotions can carry us away and lead us into poor decisions. Time has a way of separating our feelings from the facts. (See Is it time to quit my job?) I’m not saying you should not just up and quit — that’s up to you.

There’s also the “how” of quitting to consider. For more about this, see Quit, Fired, Downsized: Leave on your own terms. Make sure you control your exit and that “the door doesn’t hit you on the way out.”

Think before you quit

But if there’s no urgent reason to act now, pause and:

  • Consider what options you really have, and,
  • Map out the possible consequences of whatever you decide.

That is, is quitting your only option? Can you transfer to another job or department or company location that might solve your problem? And, if you quit suddenly, how will that affect your life?

Here are some other questions to consider:

  • Can you afford a protracted unemployment if you quit without a new job?
  • Do you have enough savings to tide you over for 3-6 months — or longer?
  • Do you have good job prospects that you could develop quickly?
  • Considering the area where you live and work, are you job hunting in a field where being unemployed will affect how you’re perceived in job interviews?
  • Will being unemployed help you devote the necessary time to job hunting? Will it improve your state of mind?

Depending on your answers, quitting immediately could be a good idea. But only you can make the judgment.

Unemployment bias and misery

As a headhunter I’ve never worried that a good candidate was presently unemployed — but some headhunters, recruiters, HR people and employers have a bias against unemployed people. It’s goofy — it reveals that employers and recruiters don’t trust their own judgment of a person’s value, and they don’t know how to identify discounted value that they can capitalize on. But you may find yourself dealing with that bias.

If you’re planning to get a new job through strong personal contacts, those contacts may have enough positive data about you that irrational biases won’t affect you.

The flip side of bias against unemployed job seekers is bias against demoralized, discouraged and unhappy job seekers. If staying at a miserable job while you’re interviewing for new jobs renders you ineffective, then it may be better to just quit and get excited about getting that new job!

I don’t offer quick and easy answers because there are none. My mentor taught me long ago: “Use your judgment, and do the best you can.” Focus on the two bold-faced words. Think about the benefits and risks, and go from there. I really think that’s how to go about it. I wish you the best.

(If you’re going to quit, do it right. Take a look at the topics list for my PDF book, Parting Company: How to leave your job. How you leave can affect a lot of things you may not be aware of.)

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WANTED: Top talent to work for dog food

On February 27, 2017

In the February 28, 2017 Ask The Headhunter Newsletter, the talent (a nurse) would rather walk dogs than work for kibbles and bits.

talent foodQuestion

There’s no skills shortage, no matter what anybody says. If there’s a shortage why am I working as a waitress making more than I could nursing, which I’m certified in? I have a college degree, because I was told it was necessary in today’s market to compete. One interview after another is a waste of time. HR tells me I “look good” and to expect a call. And the permanent and contract offers I’ve gotten — I could walk dogs and make more. There’s so much talent that hospitals just wait for somebody who will work for peanuts. And they are rude. Does anybody want to hire an experienced RN for a living wage?

Nick’s Reply

Two reports from the Pew Charitable Trusts issued late last year tell us a lot about the problems you’re describing — but you’re not going to like what they say:

Imperfect candidates need not apply

A lot of healthcare facilities need experienced RNs (registered nurses) and require degrees. But they don’t want to pay for your degree and experience. I suggest you send a few quotes from Pew to your legislators.

“Hospitals, nursing homes, home care agencies and doctor’s offices, like a lot of employers across the country, have a specific resume in mind. Employers often want new hires to have experience in a specialty such as operating room nursing.”

They’re looking for perfect candidates. (See The Training Gap: How employers lose their competitive edge.) The problem is clear: Employers don’t want to invest in training, on-the-job experience and development, or in a learning curve. They want someone who’s been doing the exact job for three years already. The question is, why would someone like that change jobs just to get the exact same job?

Where are competitive wages?

Pew offers a suggestion that healthcare administrators should be spanked for pretending not to understand:

“A long-term solution for the nursing workforce also would have to resolve critical pay issues, including whether Medicare and Medicaid fee schedules support competitive wages, and figure out how to make sure nurses don’t get burned out and quit.”

Pew also addresses another common problem:.

“Employers also have a retention problem. Being a nurse is demanding, and new nurses, like new teachers, are particularly likely to leave their jobs: About 20 percent of new nurses quit within a year, according to a 2014 study.”

Duhhh… Do you think it has something to do with the fact that you can make more money waiting tables at a good restaurant? (For tips about negotiating a job offer upwards if you manage to get an offer at all, see Negotiate Even The Worst Job Offers: Say Yes, IF.)

Meatball management

This is not a problem just in healthcare. The Pew reports cover all kinds of jobs, and reveal that employers across industries are eyeing talent they want but refuse to pay for it.

“To [the head of Minnesota’s Labor Market Information Office] … the focus on work experience suggested that employers were being too picky. They wanted to hire someone who could be fully productive on day one. But at the same time they weren’t willing or able to pay enough to attract that perfect candidate.”

There’s that problem again: Cheapskate employers.

An accounting manager told me last week that his company — whose business and profits are “growing like gangbusters” — has a customer support staff of seven. “We really need 15 just to support the customers we already have,” he complained. “But it’s impossible to find qualified people.” I asked what the job pays. “$7.50 an hour,” he answered. “Our turnover is over 20%. It’s terrible.”

No kidding.

Pew suggests businesses’ eyes are bigger than their budgets. But it seems the real problem is a kind of cognitive deficit in the ranks of management.

“It’s worth noting that employers can’t always diagnose their own problems. Only 22 percent of employers surveyed by Utah’s Department of Workforce Services last year named low wages as a hiring problem, but 68 percent of those employers were offering below average wages.”

Someone is thinking steak, while budgeting for meatballs.

“We want college degrees we don’t need!”

Then there’s the claim employers make that today’s workforce just isn’t well-educated. Or, is it possible that employers want more education than jobs require?

Pew hits the nail on the head again:

“The overwhelming majority of open production jobs across south central Minnesota don’t require a college degree, in fact. Nor do almost two-thirds of openings statewide.”

Yet employers ask for a degree — just because they can. It used to be a nurse needed only a certification to get a job in a hospital. It seems now hospitals want education they don’t need — but aren’t willing to pay for.

Reports Pew:

“In New York, for instance, there are more licensed RNs in the state than there are jobs for them. So employers are raising the bar, saying, ‘Hey, if I can get a [nurse with a] bachelor’s degree, why not?’ said Jean Moore, director of the Center for Health Workforce Studies at the University of Albany.”

WANTED: Top Talent Cheap!

So there you have it. The Pew Charitable Trusts suggest employers are the problem, not nurses, or anyone else. While more training and education can certainly be beneficial to anyone who wants to excel in their line of work, it seems employers think training, education, and talent shouldn’t cost much to hire.

I wish I could give you an answer to your problem. And I wish the Pew reports covered the other elephant in the room — recruiting tools used by employers that make it easier to reject good applicants than to hire them. For more about that, see Employment In America: WTF is going on?

Meanwhile, what are we going to do about cheap employers?

Is there a talent shortage, or a shortage of good pay for good workers? Are modern, automated recruiting systems the solution, or do they just make it easier for employers to reject imperfect job applicants who won’t work for peanuts?

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Referrals: How employers waste proven talent

On February 15, 2017

Quick Question

How far down the employment ladder do the Ask The Headhunter principles of the job market go? Do personal referrals and recommendations help at all levels?

referralsMy daughter worked an entry level position for a clothing chain in New York, and left to move to California.  Her three managers each wanted her to stay, and said they would act as references, because she showed initiative on the job. Since she did what needed to be done instead of just what she was told to do, they wanted to keep her with the company, even if not in their store. She followed the chain’s instructions, and brought a completed application to a store that has openings in California, according to their website. Despite that, they told her they don’t have openings.

Does the principle of getting a position by being recommended by someone known to the manager apply even at this level? Or do stores fill half their entry level positions with people they don’t know?

Nick’s Quick Advice

Your question is about how your daughter can get a job using insider referrals. But the real story here is how employers waste proven talent. First let’s help your daughter get the job.

I think hiring by insider referrals is actually more likely with lower level jobs than higher level, simply because it’s not very risky. Even if the manager makes a mistake, it’s not like they just hired a pricey executive.

  • It’s faster. If the employer has good information about a candidate, it’s just a quicker hire.
  • It’s easier. Because lower-level jobs attract lots more applicants than higher-level jobs, the employer usually loves to avoid culling through thousands of applicants. Hiring by trusted referrals is much less work.

Lazy referrals

I think your daughter didn’t get invited for a job interview because her old managers are lazy. It sounds like they urged her to apply at the new location because they think so much of her, and offered to be references, but it ended there. They basically told her to apply like thousands of other people would.

Those managers didn’t pick up the phone to call managers at the California location to actively recommend her in advance of her applying. That means they did nothing.

If they want to help her and help their company, they should pick up the phone. Their offer to be references — after she applies, and after she’s selected for an interview, and after someone in HR asks for references — is meaningless. References aren’t referrals.

How to Say It

If I were your daughter, I’d contact her old bosses, tell them what happened, send them copies of the open job postings, and say this:

“Your faith in me and your recommendation to the California store mean a lot to me. Would you please call the manager of the store in California, explain your thoughts about me, and suggest she or he interview me? Your call will make me stand out among other applicants they don’t know — and it will help them fill the job faster and with less work.”

What I really want to suggest she say in the last part is, “…it will help them fill the job faster and with less work, you dopes!” But of course, she should not add that.

How employers waste proven talent

Here we have an employer that has valuable, proven talent in hand, ready to fill another job in the organization, but doesn’t even know it, because its managers don’t truly understand what that means. It’s partly due to the managers at the old store, and partly due to the company’s failure to actively promote internal employee mobility.

If those three managers won’t do as your daughter asks, then they’re not helping your daughter, and they’re hurting their company. Wasting talent is worse than letting people steal clothes off the rack. See References: How employers bungle a competitive edge.

I hope your daughter makes that call and I wish her the best.

Have you ever gotten a new job in your own company with a solid internal referral? Have you helped someone in your company make an internal move?

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Topgrading: Employers looking for liars

On February 13, 2017

In the February 14, 2017 Ask The Headhunter Newsletter, a reader discovers topgrading and the A, B, Cs of hiring.

Question

As an employer and interviewer I’ve been reading about topgrading and would appreciate your thoughts and expertise on this topic.

  • How familiar are you with it?
  • Have you performed many topgrading interviews?
  • Have you seen many companies using it? How well did it work for them?
  • Do you know any topgrading experts I could connect with and learn from?

topgradingNick’s Reply

I don’t have to drink cynicism to know it’ll poison me. And I think topgrading is as cynical a way to assess job applicants as any job-interview tool you’ll encounter.

Topgrading was invented as a selection technique by Brad Smart at General Electric, during the tenure of “Neutron Jack” Welch, the CEO who invented stacked ranking of GE employees. It’s hard to tell which idea was the parent and which the evil spawn.

Also known as “rank and yank” and “forced ranking,” stacked ranking  was how Welch routinely got rid of 10% of his workforce. Managers were forced to rank all employees and to fire the bottom 10% — supposedly the weakest ones. As you can imagine, a team of top workers runs paranoid when everyone knows 10% will be cut regardless of how productive they are.

In other quarters, the practice is known as an HR Witch Hunt.

Topgrading is really nothing more than stacked ranking applied before hiring.

I’ve never performed a topgrading interview because I want to go to heaven. And I don’t have clients that use it because I wouldn’t subject my job candidates to it. If you want to find a topgrading expert, you’re on your own.

What is topgrading?

It’s worth understanding what topgrading is, especially if you’re going to be subjected to it when you’re applying for a job.

Like stacked ranking, it assumes that there are three kinds of workers. A people, who are worth keeping or hiring. B people, who aren’t. And C people, who have a kind of corporate leprosy or pellagra and will infect your A people if you let them in the door. (Don’t worry, there’s a way to keep them out — we’ll get to it.)

If you view the world as A, B and C people, you have no business in business. You’re a cynic who likes everything neatly labeled, and who likes things that don’t change.

The other big idea in topgrading is that you can figure out who’s an A, a B, and a C. Of course — here it comes — you can pay Topgrading, Inc. to learn how to separate the As from the Bs and Cs. The company claims its sorting method yields 75% A hires.

If you believe that, you probably have a stockbroker whose stock picking method delivers 75% winning investments. Which means you lost all your money to Bernie Madoff.

You might well ask, if Topgrading delivers 75% A hires, why isn’t every company using it? You might well ask.

A bad attitude

Ranking people to identify who will and won’t succeed isn’t so much a mistaken idea as it is a bad attitude.

Topgrading is based on a cynical premise — that candidates lie in job interviews. That’s a hoot coming from the guys who invented it — interviewers from GE who fooled loads of companies into using stacked ranking.

I’m not a fan of tricky interview methods. It would be interesting to see a corresponding methodology that attempts to identify employers who lie in interviews, and when they’re recruiting.

Consider what Topgrading, Inc. says to managers who’d like help hiring more effectively:

  • “there’s no verifying if candidates tell you the truth”
  • “Topgraders hire A players most of the time using because they use the ‘truth serum’ technique”
  • “It is an inexpensive tool that scares away low performers”

It sounds like a panacea for managers who believe most job applicants — non-A people — are liars that need to be scared away. Perhaps an effective sorting technique for companies is to look at which managers want to use topgrading, and fire them to get rid of the cynics.

The big idea

There’s just one big idea in topgrading: a technique used to expose all the liars who apply for a job.

Topgrading, Inc. calls this big idea “Threat of Reference Check” or TORC. It’s simple. You threaten all job applicants with reference checks before you even let them in the door. Here’s how they explain it:

“Because candidates know they will arrange reference calls, they tell the whole truth. And finally, you verify everything by talking with bosses (and others YOU choose); there is no phone tag because candidates arrange those calls.”

Get it? This threat “scares away low performers.”

An HR exec unloads on topgrading

Mike Smith is an HR executive in the San Francisco Bay Area who produces a blog called Back West. He rips the heart out of topgrading in Talent Wars: The “A” Player Hoax.

Smith says topgrading is a lie, and cites “performance research wonks” whose work suggests topgrading is simplistic:

“The prevarication that success comes to companies that systematically hire and develop only ‘A’ players is twofold:

  • “One, that talent is innate and that you really can’t do much to develop the 65% of your workforce that are “C” players, and
  • “Two, that filling your roster with all stars – and forgetting about things like right role, right culture, right boss and workgroup – is the simple (although it’s simplistic) fix.

Smith offers this caution to gullible employers: “Performance, both with individuals and organizations, just doesn’t work that way.”

The stack crashes

I think the best evidence that topgrading is crap lies in the highly publicized crash of Neutron Jack’s stacked ranking.

In 2014 The Wall Street Journal declared, “It’s Official: Force Ranking Is Dead.” The HR blog, Namely, tells how GE settled a $500 million lawsuit alleging forced ranking was biased against women. Yahoo! got sued over a claim that forced ranking was rigged — against men. In 2015, The Atlantic ran story about How Millennials Forced GE to Scrap Performance Reviews.

It turns out you can’t invest your money using a special method that ensures 75% of the time you’re going to win. And you can’t ensure 75% of your hires will be A people because, well, there’s no such thing as A, B and C people — or a way to separate them into bins.

Topgrading ranks right up there with Jack Welch’s two-dimensional vision of how to manage people — “rank and yank.”

There are far better, more direct ways to assess job candidates. For example, invite them into live, working meetings of your team, and watch how they behave and perform. (See Big Data, Big Problems for Job Seekers?)

Run

The prevalence of indirect job candidate assessment methods like stacked ranking and topgrading has led management in America off a cliff. Perhaps it’s because managers expect just-in-time, perfect hires. They have no idea how to develop and invest in their employees. If they did, they’d know how to find them and interview them, too. (See HR Technology: Terrorizing the candidates.) If managers were looking for talent, they wouldn’t be using techniques that focus on finding liars.

If you’re a job seeker, and a company tells you it does uses topgrading interviews, I think that should tip you off to find out whether management also practices stacked ranking — openly or surreptitiously. If it does, my advice is, Run. It’s not healthy to work for cynics. Find an employer that respects you. (See Smart Hiring: A manager who respects applicants, Part 1.)

Have you been topgraded, sliced, diced and cut from the list? Ever been stack ranked, yanked and jerked around? Ever interview with a company that assumes you’re a liar? If you think tograding is a great idea, tell us the A, B, Cs of how it works for you.

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