Deciphering Recruitment Process - Part 1 : Shortlisting of Candidates

Recently i have read an article on "Lotus Notes" where as part of a study on Organization Culture, the resumes of first 40 employees including the founder were sent to HR department ( Changing their names, and this after the firm being extremely successful) for open positions in the organization.These people comes from extremely diverse set of backgrounds most of which are not related to the work done in the organization. Unsurprisingly, none of these people were shortlisted for any of the vacant positions in the organization.These are the very people who had built the organization to the heights it had reached but in the process also put in structures & policies in place which exclude people like them. If such a scenario is by choice, its fair enough.

But more often than not its the result of shortlisting candidates based on some set criteria like educational qualification, years of experience in particular functional area, industry, tools they have worked or clients they have served.All these factors serves as filters in navigating through the deluge of resumes received for every single position in an organization. The more employer of choice an organization is, the more stringent filters would be. Its true that such filters help in screening the initial lot and would be very effective when combined with an element of human judgement. But with the penetration of recruitment tools which does activities from shortlisting to sending standard regret mails, there is very little chance that some of the would be superstars   would ever get a chance to present their case.

But the problem with such a rigid process is that over a period of time, organization is filled with employees who are very much similar to each other because these people would have come with same or similar educational background, work experience and since people who would interview these candidates remain the same, the selected candidates would be effectively clones of existing employees. It might work very well for some organizations especially in the service sector where the focus might be more on following the existing processes rather than innovation and there is a requirement to higher volumes. 

But as the saying goes "one size doesn't fill all" ( or is it some thing different?), caution is required in over relying on technology for shortlisting candidates.True at very senior levels, generally the task is handed over to head hunters with specific requirements. But even at lower levels there are quite a few positions where it would make sense to deviate from regular standard requirements.It would reap benefits to keep a look out for such positions and ensure that shortlisting for such positions is not completely left on some predetermined filters alone but rather involve some one who can see the big picture rather than trying to tick mark the checklist of requirements required for that position.

One other most important and  anomaly found in shortlisting criteria is the number of years of experience. Now, every one agrees that years of experience does not directly correlate to expertise level. Even the recruiters knew about it. That's the reason one can find that even for positions asking for 5-7 years experience, more often than not, we can see people with much lower experience levels getting the job.Fair enough. But the most glaring mistake is when as a title for the position , it would be on lines of "Looking for experience levels of 2-4" and in the qualifications & experience section , it would be written Minimum 5 years of exp required. Next time, just have a look at job openings, keeping this observation and you would be surprised to see the frequency with which it keeps recurring even from the most reputed names

The point is that, these experience criteria is often taken on approximation or based on experience levels of some one doing the job currently which may or may not be a right indicator. It would make more sense to keep experience level generic like say 2-7 years and rather focus on kind of experiences one should have as a criteria for people to judge whether they would be considered for shortlist or not

to be continued.... :)

Tweet

Holistic View of looking at the utility of Variable Pay..... Part 1

Variable pay or performance contingent pay or pay at risk are various names used to denote that component of pay which employees receive only on attaining certain performance targets. In this sense, it is different from base pay ( Generally a combination of basic + Dearness Allowance in India) which is the worth of job and paid to employee irrespective of performance.

I take Agency theory in explaining the rationale behind the variable pay.As per this theory, Principals(stockholders of the company) are risk- neutral i.e. they would have diversified their investments across different investment options, where as Agents( Executives of the company)are risk-averse because their fortunes (Salary,Employment Continuity etc) are tied to a single organization. Hence under normal conditions, Agents try to take conservative decisions which protects their income even at the cost of lost opportunities to the organization. This is not in sync with Principals aspirations who want to have optimize returns from each of the investments. Hence to get alignment between the interests of Principal & Agent, a component of Agent's ( Executive) pay compensation is tied to the firm performance and paid only on achievement of firm objectives .

But the question is under what circumstances does variable pay is effective?

Now lets look at the possible areas where variable pay would be effective. For explanation , lets take variable pay as applied for senior management ( the proportion of variable pay in total compensation would be higher as one moves higher in the hierarchy as their actions can directly influence the organization's outcomes compared to some one at entry level)

Scenario 1:Low Risk Environment

For explanation, lets look at variable pay in companies which are well established in the market place and there are processes in place. Unless the efforts of senior management produces significant results, there is not much use in putting more variable pay because the higher the percentage of variable pay in overall compensation, more compensation the employee demands as he takes a risk by putting a portion of his earnings at risk. Infact in some cases he might be tempted to take decisions which may not be in the best interest of stockholders

Scenario 2: High Risk environment

This is the environment where outcomes are not as predictable as in case of scenario 1. There might be forces which are beyond the control of the executive. Now by putting a large portion of pay under variable pay might work both ways. If the organization performs well because of the overall market scenario, stockholders end up rewarding the executive for outcomes which cannot be directly related to him and when organization doesn't perform well, end up penalizing the executive even when he had done every thing right under this control .This might lead to competent people leaving the organization for places where their actions determine the fate of their compensation

Scenario 3: Moderate Risk Environment

This is the environment which falls some where in between scenario 1 and 2 where there is some level of certainity but at the same time scope for improving the performance of organization based on executive's actions. So this offers for perfect scenario for solving agency problem ( Agent acting to protect his self interest and not working for optimum results of principal)where in by tying up a portion of salary to the results and by providing increased chances of earning higher incomes based on results, alignment can be obtained between the objectives of stockholders and executive

To Summarize, in environment where outcome can be obtained by following set guidelines ( low risk environment) or where outcomes are beyond the control of executive ( high risk environment) , pay for performance may not be the right option where as for moderate risk environment, it is ideal to pay variable pay and at an increasing rate based on performance

Tweet

Should Self Rating be part of Performance Appraisal ?

Whether it is done annually as in most organizations or done as quarterly/Monthly reviews in few organizations, this is one area in HR regarding which most employees are aware of and have a opinion of their own - Performance Appraisals

Unless there are clear targets and a perfect measurement system to track them, there is always an element of subjectivity in appraisals which is the case with most white collar jobs.

Research from multiple sources has shown that people generally tend to have high opinion about their abilities and when given an option to rate themselves would generally self rate as above average or superior performers even though in reality they may not be as good as they thought them to be.

With this information known, how prudent it would be to have an option for self appraisal which some companies have as part of performance appraisal and which normally is executed before the supervisor gives his/her ratings.The rationale for such a practice
is that , it would give  supervisor information on what exactly employee thinks of his work abilities and can be part of performance discussion which happen as part of performance appraisal or while sharing the final rating. This makes sense because as a cultural trait,Indians generally do not voice their opinions in front of superiors and hence self ratings would give managers a sense of what their reportees think of themselves

But on the flip side, when an employee receives a rating lower than what he/she has rated as part of self appraisal, it would have a serious blow on self-esteem of such employees which then has a linkage to engagement level and turn over intentions for the employee to just name a few areas.With Normalization & bell curves being the norm of the day, where only a fixed percentage of employees can be given top ratings, there would definetely be cases where a self rated star performer might end up being an average performer thus having a serious impact on his self esteem and can then develop hatredness towards the person responsible for giving such a rating and suspicion towards the system

so would doing away with self ratings be a suitable alternative?

There are organizations where self rating is not part of Performance appraisals and the overall system seems to be working perfectly fine.But on closer look, one can see that in such organizations there is an element of participatory appraisal system where performance discussions are encouraged  and a strong redressal system in case if some one feels their performance ratings are lower than what they deserved are very much in place. If not, then it is nothing but a top down approach with employees having little say in system which affect them and will sooner or later have repurcusions to the organization in terms of increased turn over, lower productivity levels and negative attitude towards about work or organization.

So in conclusion, I would suggest that whether through self ratings or other mode,open discussion should be encouraged such that justice & fairness is felt by
employee which would increase his/her confidence in the system. If organization choose to have self rating, they need to have frequent performance discussions,apart from
annual appraisal where candid feedback on the performance of the employee will keep him realistic about his/her abilities.

Tweet