Author: Gina Ruiz

Corporate leaders are responsible for such things as strategic initiatives, shareholder value and shaping a company’s culture, yet the choice of who gets to make these decisions is often brokered by an external agent: the executive recruiter. In his new book Deciding Who Leads, Joseph McCool examines how executive recruiters drive, direct and at times disrupt the search for leadership talent. McCool recently spoke with Workforce Management staff writer Gina Ruiz.

Workforce Management: You say executive recruiting firms have failed at pushing diversity into the C-suite because they often poach from the same small, elite circles. How can employers who are committed to diversity get around this hurdle?

    Joseph McCool: Hiring companies should look at the diversity that exists within the search firm that they are interested in retaining. Executive search firms today are not nearly as diverse as their clients. I believe we would see some positive movement in the diversity challenge if search firms themselves became more diverse.

WM: Why do you believe recruiters are contributing to inflated executive compensation and how can companies combat this problem?

    McCool: Recruiters drive executive pay skyward because—unless there is a flat-fee arrangement in place—they are going to get more commission as the executive candidate’s compensation balloons. So they have a vested interest in pushing for higher compensation. Employers would be better served by agreeing on a fixed fee before any executive search begins.

WM: You mention that corporate leaders should be in the trenches recruiting. What percentage of their time should they spend recruiting and what would that do to executive search firms?

    McCool: They should spend at least 25 percent of their time on talent management issues. Succession plans should be living and breathing efforts—updated at least quarterly. Business would not necessarily dry up for executive search recruiters. Leaders who are invested in talent management will look to build pipelines, which would require their external services.

WM: Sometimes the most qualified executive who can fill a vacancy is an internal candidate. Can an executive recruiting consultant be trusted to deliver this type of objective recommendation?

    McCool: Executive search consultants get compensated regardless of whether their recommended hire comes from within the company or outside. There is plenty of room for potential conflict of interest, but not necessarily in this area.

WM: Where can conflict of interest arise?

McCool: The biggest one relates to client blockage—or the hands-off policy. This is tantamount to an oath in which recruiters promise not to poach executives from a company that has retained them to fill vacancies. They are bound to these agreements anywhere from six months to a year after a recruiting assignment is complete. The biggest recruiting firms have over 5,000 client companies—that places a lot of restrictions on where they can or cannot search for talent. This may mean that employers are not necessarily getting the best available talent in the market.

Employee referral programs consistently are recognized as among the most effective methods for attaining talent. Candidates are usually strong cultural matches with an organization who tend to hit the ground running and have a low likelihood of early departure.

    According to a 2007 CareerXroads survey, employee referrals are the No. 1 external source of hire—accounting from almost 30 percent of new talent. Twenty percent of survey respondents said one out of two employee referrals result in a hire.

    But for all the good that employee referral programs can yield, they also cause problems. It’s simple human nature; people often gravitate toward individuals with similar tendencies and characteristics. Employees tend to know—and recommend—candidates who resemble them in some way, whether it’s the same college degree, comparable professional background or the same country club.

    With that in mind, it becomes important for companies to realize that referral programs are not always the best recruiting approach.

    In fact, referral programs can sometimes thwart such objectives as changing corporate culture, assembling a workforce with a new set of skills or bolstering diversity, says John Sumser, a recruiting consultant and author.

    “If companies are trying to get out of a rut or rehabilitate a dysfunctional workforce, referral programs are going to hamper those efforts because all they will do is produce more of the same type of worker,” he says.

    Companies also should remember that employees may not always make sound decisions when it comes to referrals, basing a recommendation on family or a friendship rather than objective criteria like professional experience. This is a precarious situation because it can erode the quality of a referral.

    What’s more, employers unfamiliar with referral programs can inadvertently create an HR phenomenon known as inbreeding, which occurs when companies continuously recruit candidates that are virtual clones of the existing workforce population. It stifles the flow of fresh talent with new ideas, says Peter Weddle, CEO of recruiting consultancy Weddle’s.

    It’s a situation that can create insularity and complacency and harm an employer’s competitive edge, says Paul Rowson, general manager of WorldatWork in Washington. What makes the misuse of referral programs damaging is that given a positive reputation, companies often fail to recognize when these initiatives are hindering their efforts.

    “Sometimes companies will blindly push these initiatives forward without first determining whether it makes strategic sense,” Rowson says.

    There are safety measures to ensure that referral programs build a healthy and diverse pipeline of candidates, says Cathy Henesey, president of the Dallas-Fort Worth Recruiters Network. First, a company must determine whether such an initiative is suitable.

    “Companies that have a lot of workers who are similar to each other may want to emphasize other types of recruiting tools instead,” she notes.

Mitigating the potential for inbreeding
   AmTrust Bank’s employee referral program hit an impressive milestone thanks to an overhaul last year. Almost 80 percent of hires are now derived from referrals, up from 28 percent three years ago, says Ron Bower, director of talent sourcing at the Cleveland-based financial institution. Bower offered the statistic during a speaking engagement at April’s ERE Expo in San Diego.

    While some eagerly listened to Bower’s recruiting techniques, others thought such a heavy reliance on employee referrals could hinder workforce diversity. That hasn’t been the case at AmTrust, where diversity actually increased since the program was revamped, Bower notes.

    “We wanted to ensure that we would continue to receive a healthy pool of diverse candidates,” he notes.

    Workers learned about the bank’s job groups and were counseled on the types of professionals who would make good referrals based on education or experience. Throughout the process, AmTrust continuously reinforced the importance of diversity in the workplace.

    “It goes into every aspect of our corporate life,” Bower says. “We live by this principle.”

    Employees are encouraged to think beyond family and friends when recommending talent. Bower wants workers to think of every social setting as a potential opportunity for recruiting—whether it’s a trade conference, a restaurant or a baseball game—so they will scout for talent in varied locations and organically increase the diversity of referrals.

    Recruiters also play an active role by training employees, sharing tips on places to find talent and initiating a conversation with a potential referral to elicit their professional experience.

    “These are people who don’t recruit for a living, so we have to give them the tools to be successful,” Bower notes.

    Employees aren’t taught a recruiting pitch, but instead are encouraged to share their story about working at AmTrust—likes as well as dislikes.

    “The important thing is that they are genuine and honest with potential candidates,” he says. “Otherwise people are going to get turned off.”

    Bower says the company relies on its applicant tracking and talent management systems to keep tabs on recruiting efforts to ensure diversity.

    Tracking the demographic component of the existing workforce and whether employee referral programs are providing candidates who reflect diversity is important for compliance, says Dianna Johnston, assistant legal counsel with the Equal Employment Opportunity Commission in Washington.

    The EEOC issued a compliance manual in 2006 warning companies with homogeneous workforce populations against relying too heavily on employee referral recruiting tools.

    “Employee referral tools by themselves are not a problem,” she notes. “What creates an undesirable situation is when companies that lack diversity use them.”

    There have been cases in which companies were burned for misusing employee referrals, such as Carl Buddig & Co., a large meat processor in the Chicago area. The company had to pay $2.5 million and overhaul its recruiting process in September 2004 to settle a lawsuit that accused the company of systematically excluding black job candidates through its employee referral program.

    Johnston says companies should adopt steps that promote diversity throughout the entire recruiting process. Some best-practice measures include explaining to their external recruiting vendors that diversity is a key objective within the organization. They can also post job advertisements that encourage women and minorities to apply.

Protecting the quality of referrals
   When companies launch an employee referral program, they are essentially allowing workers to make talent selection decisions that may not always produce stellar results.

    For one, employees may not be objective recruiters. There are times when they refer the people they know best, not necessarily those who are the best qualified, Weddle says.

    “Employee referral programs become the employment equivalent of a ‘family and friends’ exercise if companies are not careful,” he notes.

    There are steps that companies can take to ensure they are receiving the highest-quality employee referrals.

    They should encourage workers to forward the best people in the field, regardless of whether they know them personally. Eli Lilly and Co. applies this talent acquisition strategy to its employee referral programs, he says.

    Another approach is to create an initiative that identifies the top-performing workers within the company and spend extra effort to raise awareness about the employee referral program among this group.

    “Instead of sending mass e-mail blasts to the entire workforce, there may be cases when companies want to pinpoint their efforts,” says John Hassett, senior consultant at Aon Consulting’s human capital practice. “Star performers tend to hang out with people who are as hardworking and motivated as they are.”

    Employees who make referrals typically receive a bonus for their efforts in finding talent. But companies that want to protect the quality of the referrals should put a cap on the amount they dole out, Henesey says.

    “If you offer too much money for referrals, your employees will basically turn into recruiters,” she notes. This is more likely to happen among low-wage earners, she explains.

    If an employee’s monthly wage is about $3,000 and they receive close to that amount for making a referral, there may be problems on the horizon, she explains.

    “They’ll want to recruit as many people as possible because it gives them a huge bump in their monthly income,” Henesey notes. In most cases, referral bonuses should not exceed the $1,500 to $2,000 range.

    In addition, companies can raise the bar on referral quality by asking employees to think critically before submitting a recommendation. One way is to ask them to write a short essay—only a couple of paragraphs—that explains why the candidate would make a good hire for the company.

    Shelly Peterson, a consultant at Mercer, agrees that employee referral programs should be structured and managed carefully. She also stresses that companies should continually evaluate their return on investment.

    “As with any other initiative, companies need to validate its existence,” she says.

    Determining the success of an employee referral program is difficult for many companies, according to Weddle, in part because organizations measure its success by looking at the levels of early attrition among referrals. It’s important, but ideally they should be looking at their job performance, he notes. Weddle says this level of in-depth analysis is rare because assessing performance and tracing it back to the source of hire requires a lot of time and effort.

    Another challenge is that companies could let the positive hype about employee referral programs get in the way of an objective evaluation. Companies occasionally adopt practices because they think it’s what they are supposed to do or because they heard it worked well for another firm, not because they have evidence of its effectiveness.

    Though it may be grueling, Weddle says it’s critical for companies to probe as deeply as possible when assessing their recruiting practices. The findings could debunk some of their preconceived notions about the efficiency of their talent acquisition approach, he explains.

    “You never know what you’ll discover,” he says. “You could wind up making significant changes to your mix of recruiting tools.”

Multi-state banking firm National City Corp. had its work cut out if it was going to grow its retail banking division.

    The Cleveland-based bank in early January eliminated 900 jobs as it closed its troubled wholesale mortgage division. The bank cut 3,400 jobs during the past year—primarily in the mortgage division—yet still planned to expand its 1,400 retail branches across the East and Midwest.

    One element in the search for everything from branch managers to tellers hinged on the bank’s ability to stand out in a cutthroat hiring environment where demand for qualified talent often outstrips the supply.

    “We were looking for ways to differentiate ourselves among our competitors,” says Cheryl Goodman, National City’s assessment consultant vice president.

    It was among the reasons National City adopted Shaker Consulting Group’s Virtual Job Tryout in early 2007. The system does what its name suggests—allows companies to audition candidates by measuring how they react to computerized simulations of specific job-related tasks.

    Beyond assessment, Goodman is counting on it to give National City a leg up on competitors by creating a distinctive recruiting experience.

    “This isn’t your run-of-the-mill paper-and-pencil assessment test,” she explains. “We think it creates a unique impression that lets us stand out among our peers in the industry.”

    National City, which employs 32,000 people, is part of a growing number of companies that rely on a new wave of virtual simulation tools for more than assessment purposes. They also leverage these platforms to put forth other strategic recruiting practices.

    Besides differentiation, Goodman says Virtual Job Tryout is also a good way to fortify the National City employer brand. The system works as an educational tool for candidates to learn what it’s like to be an employee at the company.

    “It gives us a way to share our story and what we’re all about,” she notes.

    The better acquainted that companies get with virtual tryout tools, the more applications they’ll discover for them, says Nov Omana, managing principal of consultancy Collective HR Solutions. He says more employers are realizing the secondary benefits such cutting-edge assessment systems can bring to their recruiting process. Omana anticipates the trend will widen.

    “Whether it is in the area of Second Life or social networking or virtual tryouts, I think we’ll see employers getting more creative in the years to come,” he notes.

Creating a unique experience
   “The days of handing a clipboard and pen to candidates are long over,” says Brian Stern of Cleveland-based Shaker Consulting. “Innovative companies are now looking for ways to create positive recruiting experiences to successfully vie for talent.”

    The level of interactivity that today’s virtual tryout tools deliver is unprecedented, he notes. Employers are able to customize simulations to specific job roles within a company; candidates can get a feel for the job.

    In National City’s case, Goodman set up individual simulation experiences for call center applicants and potential branch managers.

    Call center candidates were given scenarios to solve customer service problems, while branch manager applicants had to demonstrate their ability to foster relationships with clients and make quick personnel decisions.

    The experiences are interactive—with both video and audio, Stern notes. “Companies are creating a dynamic testing environment that engages the candidates,” he says.

    Delivering this type of innovative recruiting experience is particularly critical when it comes to Gen Y talent, Stern says.

    “This is a group of individuals that is not going to respond well to the old-school way of recruiting,” he notes.

The Gen Y factor
   Recruiting Gen Y’ers is an ongoing challenge for employers.

    “They are of a different breed than what recruiters are used to,” says Knowledge Infusion CEO Jason Averbook. “You would be surprised at the number of companies that simply don’t know how to communicate effectively with them.”

    Averbook says one way of attaining the attention of this segment of the workforce is adopting tools that are interactive in nature, as they stand a better chance of resonating with this audience. “Simulation tools are a good way of letting Gen Y’ers know that a company has kept up with the times,” he notes.

    Averbook warns that creating a cutting-edge recruiting experience without having a workplace environment matching that image could be counterproductive.

    “If you have a fancy assessment tool that impresses the socks off an applicant at the recruiting stage but then hand them a paper and pencil to do their job once you have thrown them over the hiring wall, you’re going to be in trouble,” he notes.

    Averbook says employees inevitably will become disappointed and could leave if their initial expectations aren’t met. He recommends companies put standards in place, not just during the recruiting phase but throughout an employee’s tenure.

    “This is a group of smart people,” he notes. “They’ll be able to see through the smoke and mirrors pretty quickly.”

Important considerations
   While job simulation tools can be instrumental in creating a hallmark recruiting experience, there are certain questions employers should consider before investing in a system, says Shally Steckerl, founder of JobMachine, a recruiting consultancy based in Norcross, Georgia.

    “These are great tools to have,” he notes. “But they are more beneficial for certain types of employers.”

    It could backfire for companies targeting high-end white-collar workers.

    “An MBA is not going to want to take this type of test,” Steckerl says. “That candidate is expecting to be wined and dined.”

    He recommends companies take a hard look at the sort of worker being recruited and whether such an assessment would be appropriate in that context.

    Steckerl also says job simulation may be more of a hindrance at companies handling a large volume of candidates.

    “The process gets to be too time-consuming when we are talking about thousands of applicants,” he notes.

    Further, he says such technologies are better suited to test soft skills. It’s an important feature, as intangibles are characteristics that are normally difficult to gauge, Steckerl explains. However, when it comes to measuring hard skills, such as engineering or program writing, a company may be better off using conventional aptitude exams.

    Before buying such a system, employers should assess virtual job tryout vendors because all are different.

    “There are several vendors out there, each with its own strength,” Steckerl says. “Companies need to do their homework to select the tool that is most compatible with the recruiting experience that they want to create.”

    In the case of National City, the company already had an established relationship with Shaker Consulting and was familiar with the product’s features.

    “We were secure in the choices we were making,” Goodman notes.

    The company is still tallying its numbers, but Goodman says she is content with its recruiting performance in 2007.

    Goodman says the assessment tool enabled National City to hire workers that came from sectors outside banking, so long as they had transferable skills. What’s more, she believes retention rates will improve because it provides a way to make hiring decisions that are more educated and scientific.

    She also sees an added bonus for using the virtual job tryout.

    “As far as I know, none of our local competitors offers this level of assessment,” she says. “I think it gives us an advantage.”

Companies hire extreme commuters because they often are the best and the brightest at what they do, workforce experts note.

    Unfortunately, retaining these employees can be somewhat of a challenge because besides struggling with the familiar causes of turnover—stress, dissatisfaction, lack of mobility—they also must contend with the mental and physical strain inherent in extreme commuting.

    Faced with the possibility that road fatigue could push valuable talent back out the door, some companies may try to convert extreme commuters into local employees—a task easier said than done, according to John Touey, principal at Salveson Stetson Group, an executive search firm in suburban Philadelphia.

    “Convincing employees to relocate is becoming increasingly difficult,” he says. “But it is well worth the uphill battle if it means holding on to strong performers.”

    To maximize the chance of success, companies need to have a clear understanding of the needs and personal circumstances of the specific extreme commuter, such as knowing if the employee has a spouse or children.

    With such insight, employers can offer options to make relocation less intimidating for the worker and family. If there is a working spouse in the picture, companies could offer relocation packages that extend career counseling and job placement services.

    It’s one way to diminish concerns of a working spouse, who may persuade an executive not to relocate for fear their own career will suffer with the move, Touey explains.
“The decision to relocate is often not solely up to the worker,” Touey notes. “There are other important forces at work that employers need to take into consideration.”

    Companies should not assume that just because an extreme commuter is acquainted with an area, that person also knows the benefits the new community has to offer. Employers should arm themselves with relevant information that could be used to entice extreme commuters into relocating.

    Touey suggests companies turn to the local chamber of commerce to gather valuable marketing data.

    “The primary purpose of these organizations is to boast about the place they represent,” Touey explains. Employers can find information about quality of life, schools, culture and health care to pass on to the long-distance commuter.

    Companies also should be realistic and realize that they will often be unable to sway an extreme commuter to relocate, Touey explains. If an employee has a child who is in high school, it’s unlikely the family would be uprooted before the academic year is over.

    In these instances, employers may want to weigh expanding the existing flextime benefits for extreme commuters and hope burnout doesn’t result in turnover.

John Maynard’s commute isn’t much different from those of most executives, in that he shuttles from one town to another to get from home to work.

    Except Maynard, CEO of the Employee Assistance Program Association, has spent the past four years shuttling the roughly 1,700 miles between his hometown of Boulder, Colorado, and the 5,000-member association’s headquarters in Arlington, Virginia.

    Maynard is among a new breed of executives who refuse to relocate for their job and instead opt for an alternate arrangement known as extreme commuting, which involves either making a weekly trek by plane or traveling daily by car for more than 90 minutes each way to and from work.

    “When they offered me the job, I said I was interested but that I would not want to relocate,” Maynard recalls. He didn’t want to leave Colorado primarily because of friends and family, but he also likes the lifestyle the Rocky Mountain state has to offer.

    “Many job candidates view relocation as a deal-breaker,” says Jeff Hocking, managing director of Korn/Ferry International’s San Francisco office. Fifty-five percent of the 198 international consultants who participated in the 12th edition of Korn/Ferry’s Executive Recruiter Index say it is more difficult today than it was in the past to persuade candidates to relocate for new job opportunities. Released November 12, the quarterly survey was administered to recruiters within the Americas, the Asia Pacific region, Europe, the Middle East and Africa.

    Hocking says the reluctance among candidates to relocate poses a competitive drawback for employers, many of whom are coming up empty searching for qualified talent.

    “There are many hurdles that employers must contend with to get good people in their doors,” he notes. “Unwillingness to relocate makes recruiting trickier.”

    High-profile companies including Hewlett-Packard and Sun Microsystems are adopting measures to facilitate extreme commuting, which often entails four-day workweeks, telecommuting and flexible hours.

    Almost 85 percent of the Korn/Ferry survey respondents say companies are at least somewhat open to having executives engaged in frequent traveling instead of relocating—a trend that is strongest among technology companies.

Extreme commuting not for everyone
    The hourlong Monday morning flights from San Diego to the Bay Area are filled with extreme commuters who don’t want to leave their little corner of paradise but still want to work for a prestigious Silicon Valley employer. Many commuters are high-powered sales executives, Hocking notes.

    This does not come as a surprise, as certain positions lend themselves to extreme commuting more than others—a factor companies should consider when recruiting and hiring, Hocking adds.

    “Employees who already do extensive traveling, such as sales executives, don’t need to be anchored in a particular city. For them, the face time that counts is the kind that’s spent in front of clients,” he explains.

    Other positions require deeper interaction with colleagues, which could mean the flexibilities that are often intertwined with extreme commuting—such as working from home or condensing the workweek—could hamper their activities.

    Whether an employer allows extreme commuting could depend on the type of corporate culture a company wants to foster, says Mark Stiffler, CEO of Chester, Pennsylvania-based Synygy, which specializes in compensation-related performance management.

    Synygy recently ended a company policy that facilitated extreme commuting. Some 25 of its 450 employees had been allowed to work from home up to two days per week, depending on the length of their commute.

    “It became evident that the initiative was not in sync with our core value of harnessing a strong team dynamic,” Stiffler says. “It’s disruptive to have people out of the office.”

    Stiffler, however, isn’t writing off extreme commuting altogether.

    “There are some instances that don’t require a daily presence,” he says.

    Regardless of whether extreme commuters are working from the office or utilizing a flexible schedule, Stiffler says ground rules need to be established.

    For one, there should always be transparency about where the extreme commuter will be on a given day.

    “This way, even when they’re not in the office, everyone knows how to get in touch with them,” Stiffler explains. In addition, he says it is important for employees who are often on the road to be consistent about their phone manner. “They should always answer the phone with a professional greeting and be ready to reply swiftly to clients.”

Keeping track of extreme commuters
   Since extreme commuters are often out of the direct eye of supervisors, it behooves employers to develop guidelines that ensure they are complying with their jobs properly, experts say.

    One good habit—useful not just for extreme commuters but for managing talent across the board—is for employers to determine how a specific position contributes to the overall success of a company.

    “Everyone plays a part in helping companies reach their objectives, from the receptionist to the CEO,” Stiffler says.

    It’s important for companies to have a clear picture of what an individual’s direct contribution will be, because only then will they be able to accurately assess how an employee is performing.

    In some cases this undertaking is fairly straightforward. The performance of a sales executive is closely tied to the dollar amount brought in during a given period of time, Stiffler explains. Other situations, however, are trickier because they may not be aligned with an identifiable metric.

    Regardless of how an employer chooses to evaluate performance, it needs to be conveyed clearly, Hocking says.

    “Extreme commuters are like every other employee,” he says. “They should be measured on their individual contributions to the company.”

The burnout factor
   “Extreme commuting is not for the faint of heart,” Hocking says. Yet, some 70 percent of participants in the Korn/Ferry survey say executives are increasingly open to extreme commuting.

    They choose a transient lifestyle for particular reasons. Family ties were cited as the primary factor, according to the study. Hocking says this is not surprising, considering that many executives happen to be at an age range—40 to 55—where they are married and have children.

    “It is a function of the demographic that’s in question.” he notes. “Rather than to uproot a working spouse from professional commitments or to go through the tricky process of transferring a child from school, extreme commuting is winning out.”

    Other factors besides family come into play. Lifestyle and housing market costs also influence extreme commuting, the Korn/Ferry report indicates.

    Whatever the reason for choosing extreme commuting instead of relocation, being on the road often takes a toll on workers, ultimately threatening productivity and adversely affecting retention.

    Jen Cassidy, a sales analyst for Universal Music, spent almost a year commuting 50 miles from Costa Mesa to Burbank, California. The trek took anywhere from 90 minutes to 2½ hours each way. She logged some 28,000 miles in her Honda Civic and spent about $4,200 on gas during that time.

    “You get to a point where you wonder; is this job even worth all the hassle?” Cassidy says.

    Despite rising by 5:45 every morning, she was almost always late because of traffic.

    “I would show up to morning meetings all flustered,” she says. “It was so frustrating because I had done the responsible thing by waking up early, but the road was always a nightmare.”

    The commute drained her energy and affected her attitude.

    But that changed November 1, when she relocated three miles away from work and reduced her commute time to nine minutes. Cassidy says her productivity has surged and that she is more engaged in her work.

    “I come in on time every morning,” she notes. “I’m much more willing to stay overtime if I need to.”

    Not all tales of extreme commuting conclude like Cassidy’s. The burnout sometimes leads directly to turnover, says Maynard, who makes at least one trip a month to the Employee Assistance Program Association’s Arlington headquarters and spends about 10 days at the office. The rest of the time he is either on business trips or working from home in Colorado.

    In the instances where an extreme commuter remains with a company, the physical fatigue often affects productivity. Consequently it behooves companies to make special considerations for extreme commuters, Maynard explains.

    He suggests that employers adopt an aggressive flextime policy. Depending on the position, an employee doesn’t have to work during the traditional 9-to-5 schedule. Allowing extreme commuters to come as early as 6 a.m. or as late as 10 a.m. significantly helps cut the amount of time they spend in rush hour traffic.

    Maynard urges employers to be creative and open-minded when it comes to extreme commuters.

    “You’ll be surprised at what you can achieve,” he says.

Jobster has joined forces with more than 230 employers to enhance its career networking platform on social networking site Facebook. The partnerships enable Facebook users to sign on to a new initiative, the Employer Talent Network, through which they can establish contact with companies they’d like to work for.

    Facebook users then can have their information forwarded to recruiters at specific companies for potential jobs or to learn more about that organization.

    The new application was created based on feedback Jobster gathered from Facebook users over the course of six months, says Christian Anderson, director of corporate communications for the Seattle-based career network company.

    “Users told us of various ways in which we could help them with their professional and career objectives, and we have responded,” Anderson says.

    The partners within the Employer Talent Network, which include Verizon and Boeing, benefit from participating in the network because they can gain access to a fresh pool of prospective workers, as there are more than 31 million active users on Facebook.

    Employers also can access information regarding potential candidates, such as career interests, location and e-mail addresses.

    Building the Employer Talent Network took significant coordination, Anderson says. Jobster talked to employers to explain the network, hosting webinars and other initiatives to educate the companies. The list of companies grew and interest continues to mount, Anderson says.

    Jobster says it has launched other upgrades, including the ability to let Facebook users track the professional trajectory of their network friends to facilitate communication between a user and somebody who can provide insightful career tips about working for a particular company.

The past several years have ushered in significant changes in the way the Office of Federal Contract Compliance Programs achieves its primary objective of guarding against workplace discrimination based on race, gender, religion and disability.

    Experts say the agency now relies on sophisticated techniques like linear regressions and statistical data analysis to make its auditing capabilities tougher than ever.

    “There is no doubt that the OFCCP will become to the HR community what Sarbanes-Oxley was for finance and accounting professionals,” says Ted Daywalt, CEO of military job board VetJobs and OFCCP committee chair for the International Association of Employment Websites, a trade organization.

    The changes first became evident in 2003, when the OFCCP created the Division of Statistical Analyses, spearheaded by director Michael Sinclair. The division’s goal was to bring a greater level of accuracy to OFCCP investigations, says Michael Biddle, a spokesman for the federal agency.

    Since that time, Sinclair has increased the number of OFCCP agents. In addition, he has developed training initiatives to help them master statistical analysis techniques, Biddle explains.

    It appears that Sinclair’s efforts are paying off: There has been a sharp spike in settlements derived from systemic discrimination cases. Last year, companies paid more than $51 million in settlements, almost doubling the $26 million from 2003.

    Employers of all sizes and across all industries are feeling the agency’s bite. Daywalt has heard of assessments that could cost companies millions of dollars if they are found to be in violation.

    Any firm—not just federal contractors, but also subcontractors doing indirect business with the government—are subject to OFCCP assessments. Daywalt urges companies to be conservative when it comes to determining whether they need to adhere to the OFCCP rules.

    “Everybody, not just big employers and vendors in the recruiting industry, is going to have to be on their toes when it comes to compliance,” Daywalt notes. “It won’t be cheap, but it is necessary.”

Employers across the country could receive a troubling piece of news in the mail this summer. The Department of Labor’s Office of Federal Contract Compliance Programs started sending audit notifications, kicking off its official probe into companies’ compliance with the Internet-applicant final rule.

    The mandate, which went into effect in February 2006, set standards in record-keeping practices for all federal contractors and subcontractors that rely on electronic data technologies to fill vacancies. The list of employers is diverse and substantive and includes most of the Fortune 500 as well as small and midsize companies from numerous industries. According to experts, about the only exception would be a hot dog vendor who doesn’t hire anybody.

    Experts also contend that process of online recruiting—not just the end results of who gets hired—will be under the agency’s microscope. The OFCCP’s intent is to discern whether systemic discrimination, whether deliberate or unintended, is unfolding in the workplace. Since electronic data technologies often have powerful filtering tools, such as electronic résumé searches and data screenings that can shape the makeup of an applicant pool, the selection process is a key area of focus for the agency.

    “This is not just about who ultimately got hired,” says Kurt Ronn, founder of HRworks, a national recruitment firm based in Atlanta. “It is also about the manner in which companies constructed the pools of candidates that they considered for a vacancy.”

    The fact that audit notifications were sent a year after the ruling was enacted could signal that the OFCCP is serious when it comes to enforcement, industry experts say.

    “The notifications came on the early side,” Ronn says. “Normally, the OFCCP waits for two years after a ruling has been around so that there is enough rope to hang violators.”

    Experts encourage employers to prepare for a potential audit by understanding the OFCCP’s three primary focuses.

    At the most basic level, the agency will try to determine whether an employer kept a detailed record of the applications they received via electronic data technologies, such as a job board. In addition, the OFCCP will take a critical look at the basic qualifications that a company sets forth for a job vacancy. Finally, the agency will scrutinize the data management technique an employer uses to select the résumés.

Record-keeping requirements
   One of the most important aspects of the Internet-applicant rule is that it finally establishes a formal definition of an online applicant—something government contractors had requested for several years.

    There are several elements that define an online applicant, says Matt Halpern, partner at Jackson Lewis LLP, a national workplace law firm. To begin with, an individual has to express interest in a position using electronic data technologies, such as sending a résumé via the Internet. In addition, a company has to look at the information that was received and evaluate whether the person meets the basic qualifications required for the job. Lastly, the individuals must remain in the running to be considered for the job. If they express any disinterest in the position, they are no longer considered applicants.

    Once a government contractor establishes that an individual fits the definition of an applicant, it is required to keep detailed records. Employers will have to elicit key information from online job applicants such as race, gender and ethnicity. This data will play a critical role helping the agency determine how the employer’s pool of candidates compares with the makeup of the broad workforce.

    The OFCCP will specifically stack up the proportions of minorities and women applicants to the company against the relevant labor force statistics.

    For instance, if an employer has a vacancy for an engineering position and only 2 percent of the total applicant pool is composed of women, the auditor will examine how this figure relates to the broad engineering industry.

    There could be a reasonable explanation for the low percentage of female applicants—perhaps engineering is a profession that attracts few women. If through research, however, the auditor finds that women make up a large percentage of the broad engineering population, the investigation will deepen. The auditor’s goal will be to determine whether any steps in a company’s selection process have an adverse impact on female applicants.

    Government contractors are not the only group being affected by the OFCCP ruling. Talent management vendors across the country must make significant adjustments as well. SilkRoad Technology has had to update its applicant tracking platform, OpenHire.

    “We retooled the system to help recruiters comply with the specific OFCCP reporting requirements,” says Peter Hauschild, manager of implementation services for the Winston-Salem, North Carolina-based company. “The entire ATS community has had to mobilize for this ruling.”

    The revisions to OpenHire mean it can now provide more detailed reports about the ethnicity of applicants. Now more than ever, it’s important for employers to become familiar with the reporting capabilities of the ATS providers, Hauschild says.

    Employers should also be mindful that online applicants can come from a variety of sources—not just job banks, résumé databases or via e-mail. There are six Internet-related technologies and applications that the OFCCP has identified as recruiting tools for online applicants: job banks, résumé databases, e-mail, electronic scanning technology, applicant screeners and applicant tracking systems.

    But this list is bound to change with new technologies coming online. When in doubt, err on the side of caution, Ronn says.

    “If contractors review or accept applications electronically, the new rule applies, even if it’s something they don’t think is likely, such as a fax,” he notes.

    Fax machines can transmit digitized signals that can be sent and received via e-mail, which is why companies need to keep a record of any activity through a fax.

    Auditors will investigate not just the pools of external job candidates, but also the list of internal applicants a company evaluates for a vacancy, which is why records need to be kept on both sets of applicants.

Qualified candidates
   Basic qualifications such as skills, education and experience are the criteria that an employer deems necessary for a candidate to perform a particular job.

    Workforce executives must pay close attention to how basic qualifications are worded, as OFCCP auditors will analyze them for signs of potential discrimination.

    One of the most important points for employers to remember is that basic requirements must be established before any recruiting efforts begin, Halpern says. In addition, the basic qualification standards must be relevant to a position and be objective.

    It is legally acceptable for an employer to request a bachelor’s degree in accounting for a certain position, as it ensures a certain level of education and skills. Making a seemingly innocuous tweak to this wording, however, could draw serious scrutiny from the agency, Ronn explains.

    If an employer went beyond requesting a bachelor’s degree in accounting and asked that the diploma come from an Ivy League school, such standards are considered non-objective. More important, as far as the OFCCP would be concerned, is that it could have an adverse impact on the number of women and minorities who apply for the position.

    It is the type of basic qualification that could raise a red flag for the OFCCP auditors, particularly if they find that a statistical disparity exists in the percentages of women and minorities within the company’s pool of applicants and those figures found in the relevant labor force.

    “Companies are going to have to give some serious consideration to how they word basic qualifications,” Ronn says. “It can make or break their fate during the audit process.”

    Drawing up acceptable basic qualifications, however, will only go so far in keeping a company in compliance. Execution is another key component. Employers must make sure that everyone involved in the recruiting and selection of talent uses the vetted wording for basic qualifications.

    “It is critical for everybody to be on the same page when it comes to language,” Ronn says. “It gets risky when recruiters begin to deviate from the established definition and introduce concepts that may or may not be acceptable.”

    Ronn recommends that companies launch formal training campaigns for recruiters and hiring managers, since they are the ones on the front line. First, they should be informed of the agreed-upon basic standards. They should also be instructed on why it is important to stick to those definitions.

    It is important that the educational initiative extend beyond internal staffers who are responsible for recruiting and hiring. Under the new rule, employers will also be held accountable for the actions of the external staffing and recruiting agencies that they retain to hire talent.

    Besides basic qualification standards, OFCCP auditors will be studying the kinds of online searches that recruiters use to narrow the pool of applicants from the thousands of résumés that they receive. Online searches will be an area of focus because they can shape the composition of an applicant pool.

    Training and education programs in this arena will also play a critical role in keeping employers compliant. Recruiters and hiring managers will have to be educated on how to carry out online searches that are objective and relevant, Ronn says.

    Inserting words such as “Perez” or “Harvard University” during online searches could include or exclude certain groups of candidates—ultimately spelling trouble for an employer.

Data management technique
   Keeping up with the tremendous volume of résumés that pour into companies can be a daunting task. As a result, employers have had to develop data management techniques that help them narrow the number of résumés they receive—from the thousands to maybe a few dozen.

    OFCCP auditors will be taking a critical look at how companies do this. Here too, employers are required to choose their preferred method of data management before any recruiting efforts take place.

    Initially, employers cannot make data management selections by looking at the qualifications of applicants, since that could potentially be considered a biased process. Instead, it will have to be based on other methods, like picking résumés in random order or perhaps by selecting the first 100 résumés that were received. Whatever method they use, it must be race and gender neutral, Ronn explains. After whittling down the stack of résumés to a manageable number, employers can then sift through the applicants’ qualifications to take the necessary next steps.

    The important thing for employers to remember is to have a solid understanding of their recruiting process and to develop a well-defined plan to tackle the new ruling.

    “It is important to plan ahead,” Ronn says. “Being compliant today is trickier than ever.”

Monster’s Talent Management Suite is a powerful tool. The software allows executives to manage a broad range of complex HR activities—applicant tracking, onboarding, employee development, performance management and salary analysis—from a convenient, centralized command system.

    What’s turning heads, however, isn’t so much the platform’s functionality, but the price tag. Subscription fees range from $5,000 to $10,000—a bargain, considering employers generally spend $100,000 to $200,000 to get this type of sophisticated system from an assortment of vendors, says Mike Madden, senior vice president of product at Monster.

    The affordability of Monster’s Talent Management Suite is no discount-bin special or a gaffe by the billing department. It’s part of a broader, calculated strategy to go after smaller employers. The so-called Big Three job boards—Monster Worldwide, CareerBuilder and Yahoo HotJobs—are rolling out lucrative products at affordable prices for companies with workforces of 1,000 to 5,000 people.

    The shift is a drastic departure from the time when big, high-profile clients got the VIP treatment and smaller employers were largely ignored, no matter what the corporate rhetoric.

    Pursuing small and medium-size companies makes sense, since many employers in the limited pool of Fortune 1,000 companies are already locked into deals with job boards. The largely untapped small and medium-size markets could provide billions of dollars in new revenue, job board executives say.

    With stakes so high, job boards are aggressively developing targeted products and pricing structures that cater to the needs of smaller clients. The industry is also encouraged with this strategy as it has proved to be highly successful for other HR technology vendors, such as applicant tracking system companies.

    Industry experts say this strategy brings together the best of both worlds, generating economic growth for job boards while putting cutting-edge technology and recruiting tactics into the hands of smaller employers.

Establishing a foundation
   Strategic workforce management practices, such as employment branding and marketing, are often foreign concepts to small and medium-size employers, which is why job boards are going to great lengths to educate this segment of the market.

    “Our sales process is practically a consultancy service,” says Dave Dalton, director of business-to-business marketing at HotJobs. “We often have to explain basic recruitment methods that are second nature for big corporations but uncharted waters for small employers.”

    The success of Yahoo Media, one of HotJobs’ most recent launches, hinges largely on the job board’s ability to educate its clients. Not only must HotJobs describe the product’s capabilities, it also must provide a framework explaining the product’s usefulness. Yahoo Media enables clients to post branded banner advertisements on various Yahoo Web sites, which attract niche audiences through interest-specific online content.

    In the case of large companies with savvy HR executives, little hand-holding would be required because they recognize the inherent value of targeted recruiting. The opposite, however, holds true for smaller employers that generally aren’t familiar with sophisticated recruiting practices and don’t realize that reaching niche audiences can yield successful results. Consequently, HotJobs has to go the extra mile in explaining the product, Dalton notes.

    “Small and medium-size employers in the trucking industry are not only made aware that they can post ads onto Yahoo’s NASCAR site,” he says. “We arm them with additional knowledge by emphasizing that some 80 percent of truckers are fans of NASCAR and could potentially be drawn to this type of Web site content, which can then enable companies to target qualified talent more effectively.”

    CareerBuilder also is chasing smaller clients, betting heavily on the largely untapped market and using training and development as a strategic cornerstone. The underlying philosophy is to expose potential clients to sophisticated talent management approaches in hopes of brokering new deals, says Jason Ferrara, director of corporate marketing for the Chicago-based job board.

    Two years ago, CareerBuilder created a specific marketing group—dubbed the Small Business Unit—to offer clients guidance on what it considers to be best practices in recruiting tactics. Employers are coached on everything from developing a corporate brand to writing job postings that are clear and enticing.

    They are taught to emphasize key attributes about their unique environment—a move intended to make them as appealing as large employers with recognizable brands.

    “Small businesses have a lot to offer employees,” Ferrara says. “Our job is to help them highlight these characteristics so they can have a shot at competing with big-name corporations.”

    Some of the attributes mentioned in the descriptions could include a small company’s ability to offer more hands-on responsibilities to employees, deeper participation in the community and a more flexible work-life balance.

Tailored offerings
    Education is just one of the many tactics job boards are using to attract smaller clients. There’s also a trend toward generating products and services that are priced more affordably and sold in smaller bundles that are easier to deploy.

    It came as little surprise when Monster announced last year that it would eliminate the traditional per-application pricing structure on its Monster Performance Assessment tool and offer one with a more affordable pricing model. The applicant screening program, which once cost thousands of dollars, can be bundled in smaller service packages that start around $100.

    “Small companies can now get their hands on sophisticated automated tools that make their life easier,” Madden says. Monster believes the performance assessment tool will be particularly useful for smaller clients, which are generally short-staffed and don’t have the resources to sift through heaps of résumés in search of suitable candidates. The software picks the candidates that best match the requirements for the position.

    “The assessment tool does the prioritizing for the companies,” Madden says. “All they have to do is select their favorites from the narrowed list.”

    Monster has stiff competition when it comes to courting small clients. This segment of the market has become so strategic for HotJobs that the company takes their needs into consideration once the new products and services are conceptualized.

    “They are not afterthoughts,” Dalton says. “Our goal is not to create a product and then trickle it downstream, but to develop something that from its inception serves all of our clients.”

    With this line of thinking in mind, HotJobs decided to make the Yahoo Media products scalable. Customers can negotiate a predefined price for subscribing to the service, virtually eliminating the risk of overspending. In addition, the media products are offered on a pay-per-click basis, which can be cost-effective for employers on tight budgets.

    CareerBuilder also is taking significant steps to meet the needs of smaller clients. Whenever possible, job openings for its Small Business Unit are filled with individuals who have experience in selling products and providing services to small-business clients. Their market knowledge is used to effectively sell as well as proactively develop offerings that are suitable for this segment.

    “We recognize that the needs of small clients are very specific,” Ferrara says. “Our goal is to have representatives who understand how these businesses function and offer them tools to make life easier.”

A trend that’s here to stay
   Small and midsize employers are in luck because, for the foreseeable future, all signs indicate that job boards will continue to cater to their needs. It is a trend that extends well beyond the industry. Many providers of applicant tracking systems, such as Taleo, have made significant inroads in the small and medium-size markets.

    The company launched Taleo Business Edition, which was specifically tailored for this segment, two years ago. The offering is affordable, costing about $1,000 annually for basic users, says Jason Blessing, general manager of Business Edition. The company is able to bring in some 150 small and midsize customers each quarter.

    “It has become a very important part of our strategic pillar,” Blessing notes.

    Besides deploying significant resources to introduce targeted products and services, job boards have launched other efforts that extend the trend, industry experts say. One of the catalysts for partnering with newspapers and other media outlets is so that job boards could expand their reach.

    “Forging alliances with newspapers gets more feet on the ground and increases the job board’s ability to get in touch with smaller employers,” says Jim Townsend of Classified Intelligence.

    As appealing as this segment may be for job boards, they should establish certain boundaries, Townsend explains. Given the high degree of education and hand-holding these clients require, job boards should have certain established limits.

    “Bringing up to speed an employer that only recruits using ‘for hire’ signs is not going to be cost-effective,” Townsend says. “Converting them into clients wouldn’t be the best approach.”