Principles for Hiring Good Employees

Myths That Need to be Busted

If there were two myths in hiring I’d say absolutely need to be busted, I’d say it’s these two:

1) Employees are a Cost.  This is utter bullshit.  In any exchange, it happens because of a reverse valuation; which means each person wants what the other has more than what they’re giving them in exchange for it.  If you value two things equally, there’s no need to exchange because it doesn’t matter.  In the context of employment, the employee wants the salary more than the time spent on the job, and the employer wants the work product more than the salary paid for it.  As such, employees are an addition to a company’s revenue stream.  When any individual trades something they have for something they want more than that thing, they have made a return, or a profit.  Same goes for employers.  So companies need to stop acting as if employees are a cost and see them for what they are: additions to their revenue stream.  They need to start realizing vacancies have a cost, both in lost revenue from that position, but also lost revenue for everyone who has to pick up the slack and so potentially not performing their primary duties to the best of their ability.  Over staffing is certainly possible, but as long as employees are seen as a cost, all companies are always over staffed, because at least on an accounting level, they would be better off without everyone.  Of course, if that happened then the company is gone too.

Newsflash for employers: you’re not doing anyone a favor by employing them.  It’s a mutual exchange that benefits both parties.  Pull your heads out of your asses and start treating your employees as what they are: revenue generators.

2) There’s a labor shortage.  Pure bullshit.  There’s a documented labor surplus, and I and other recruiters have routinely seen multiple instances of tens, hundreds, and sometimes even thousands of applicants for an open position where the hiring manager claims none are qualified.  It’s not the candidates, it’s not a labor shortage, it’s not the recruiters.  The problem is no accountability for hiring with the managers.  There’s plenty of qualified people out there, your hiring managers are not accountable, nor do you have an honest, realistic assessment of what you offer as an employer.  Every employer thinks they deserve the Fabulous 5%, the top performers in any industry.  Horseshit.  You’re an average company with average salaries and average managers, you’re going to get average people.  Fucking deal with it.  You’re not Google, you have no benefits, you offer mediocre to no time off, who the fuck do you think is going to want to work for you?  You had better do an honest assessment of where you stand.  Think of yourself as a manufacturer of employment opportunities.  And then realize that, if it were any other product, that if your market strategy was to bitch and moan about how inept your customers were for not being willing to buy your clearly superior product for the ridiculously high price you charge, you’d be out of business in a heart beat.  In this case the high price you’re charging is the ridiculous discount to the mean salary offered in the area that you expect people to take for the ‘privilege’ of working at your company.

It’s time for employers to pull their heads out of their asses and start taking ownership of the hiring process.  If employment at your company isn’t attractive that’s your fault, and you need to correct it.  Control bad managers, up your salaries to something more reasonable, and start holding people accountable for getting positions filled.  And for those places with screaming, abusive owners, have the balls to be the one who explains to them how pathetic that behavior is and how horrible it is for their own business.

And if you aren’t willing to do those things, then don’t blame everyone else for your problems.  You aren’t serving your customers right, and that’s your fault, not theirs.

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Book I’ve Added to My Reading List

There is a book out called “Why Good People Can’t Get Jobs” that is going right on my reading list.  There’s an interview here with the author, Peter Cappelli, that gives you the gist of what the book pinpoints as hiring issues.  It definitely looks like it’s worth a read.  Here’s a quote from the interview:

Employers, when they say they’ve got a skills gap, that there are no applicants out there who meet their needs, they are self-diagnosing the situation. What’s really happening is they’re just not able to hire, but you don’t know why that is, right? And the skills gap story is their diagnosis. It’s basically saying there’s nobody out there, when in fact, it turns out it’s typically the case that employers’ requirements are crazy, they’re not paying enough or their applicant screening is so rigid that nobody gets through.

In my experience this is so on point it’s ridiculous.  I can’t recall the number of times after multiple interviews and seeing God knows how many resumes, managers would claim they hadn’t hired anyone because they, “Hadn’t seen people.”  Then when you presented evidence that they had seen numerous people, they’d claim they hadn’t seen any qualified people.  And then, you’d go over the individual resumes of everyone who was interviewed and they’d be hard pressed to come up with reasons why any of them couldn’t do the job.

Another great point Cappelli makes is there’s no ERP system to track vacancies and revenue generation by employees.  Now, hiring is risky and people don’t want to make the decision until they have to, and when you couple that hesitance with a lack of true data as to how much a vacancy costs, you get at least part of the way to the current situation of tons of people looking for work and employers claiming there’s no one worth hiring.  It’s bullshit and it’s high time more people called these employers on their bullshit.

Donald Sterling Article

This Donald Sterling stuff I find interesting.  Not that he’s a racist, I mean you’ve got a super old dude with a mistress and a billion dollars, it doesn’t surprise me he’s off the rails mentally.  You looked under a rock and found an idiot, congratulations.  No, what interests me is the implications for recruiting and HR.  Specifically, see this article and my comment.

That Sterling is an asshole is a statement for which there is abundant evidence.  From a recruiting HR perspective though, we have to consider what it must have been like to hire for this guy, and for people to work for him.  He is a prime example of a less than stellar personality getting to the top of an organization and dribbling his poison on the whole thing.  He is a case study of the fact that sometimes the boss/owner/CEO, or whatever, is the fucking problem.

We live in a society, and I’m talking about the US here, that is essentially fascist at heart.  It’s soft fascism, we’re not dealing with Mussolini here.  But our economy is highly managed and for the most part in favor of businesses, generally medium to larger ones, with some small scale businesses also benefiting.  Labor has been manged into a perpetual surplus, and various other aspects of the economy, such as anti take-over legislation like Williams and Sherman and various state statutes, that make it easier for mediocre to incompetent C level execs to stay in charge.  I recall a talk show once where I believe T. Boone Pickens was on a panel with some such execs, and I believe the host asked one of them what they would do if they knew Pickens was checking out their company.  Their answer was of course that they’d look at their company and make sure it was operating as efficiently and as well as possible.  To which the obvious retort is: why the fuck weren’t you already doing that?

By choking off opportunity at home the re employment of the unemployed is delayed, and a permanent labor surplus results, driving down the cost of labor from where it would be in a less managed market.  This lets people like Sterling stay at the top in regular corporations because the employees are not in as strong a bargaining position as they would otherwise be.  They can’t demand the pay, benefits, time off, etc., that they would otherwise command.

However, people adjust.  They will, if they feel they are under compensated, adjust their output downward as much as possible while still maintaining their job.  In the end the market rules, and you get what you pay for.  And there is a limit to the amount of shit the US worker will take before he collectively tells the entire economy to go fuck itself.  C level types beware, information gets out and people know what your company is like now, they don’t have to rely on your marketing hype.  Simply saying your company is A Great Place To Work! doesn’t cut it when your Glassdoor and Indeed scores are below 2 stars.  The era of bullshit is over, the era of information has begun.  Get your act together and treat your employees well, or you run the risk of being the next, somewhat less sensational Donald Sterling.  You may not make the evening news, but people will know you’re an asshole, they will know you run a shitty company, and they will not want to work with you.

Principles of Hiring Good Employees – Salaries

Employees are not a cost, they are an addition to your revenue stream. You hire people to do something productive that you need. You pay them because what they produce is more valuable to you than the salary you give them. Therefore, they add to the value of your company.

The work product that a person produces should have a value to you, that is what the person should be paid for producing it for you. Attempts to bargain down the price based on past salary or other factors will only lead to turnover in the future. If a person’s work product is worth X dollars, you should pay them X dollars regardless of previous salaries above or below X. If they are earning significantly more than X, you are putting them in a situation in which their full capabilities will not be employed, they will likely leave sooner for an opportunity which allows them a higher salary and full use of their capabilities. If their previous salary is below X, they were likely undervalued and under utilized in their previous position, and if you bring them on at the same rate or with only a small raise, they will be likely to leave for a position paying closer to X once they realize their full value on the market. You are not the only employer looking for such product, other employers will bid up the price of labor to market levels. If you perpetually try to pay below market levels, you will have perpetual turnover issues, you will have trouble retaining the people you deem to be good hires, and you will have sub standard employees. Pay your employees what they are worth, treat them well, and you will retain them.

People who say salary is not a motivator, or even that it doesn’t matter, are flat out idiots, and often consultants who essentially get paid to tell corporate executives what they want to hear as opposed to the truth. No other form of compensation matters anywhere near as much, because no other form of compensation can be used to pay bills. If someone told you you can buy a Bentley for any price because there were all kinds of other reasons why you should own one, and all these other forms of payment the dealer would accept, you’d be an idiot to believe them. If you then went from dealership to dealership listing all these reasons why you should own a Continental GT, but only offering the price of a Honda Accord, you’d be laughed out of the dealership, and rightly so.

There is no magical reason your purchase of labor will or should be different. Keep that in mind the next time you low-ball a candidate on the offer.