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.... :)

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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

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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.

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Recruitment Insights across Countries

Disclaimer: The opinions I mentioned are personal based on my limited interactions and may not be generalized :)


Thanks to the regional HR role, I had the opportunity of observing how people respond to interview process across different countries and how much culture of their country plays a role in their approach to the interview
So here goes , some experiences country wise

Indonesia:
Among the Indonesian candidates I have seen so far, no one confirms the offer during interview but would give a standard answer that they need to discuss with their wife before accepting the offer. Also during the salary negotiations all that matter is monthly net salary, medical and car benefits ( btw unlike in India, Indonesian employees are provided with car or car allowance from pretty early stage in their career). So year end allowance, quarterly pay out etc doesn't have their intended effect.
High cost of medical care and very bad public transport infrastructure explains the reason for Indonesian employee's high emphasis on these components.
 Will save detailed discussion on compensation in Indonesia for some other post

Now moving to one other very interesting country,

Australia:
It took me exactly 5 revisions and a call lasting for more than 1 hour before the candidate finally signed the 27 page employment contract. During the process the candidate appointed a lawyer for verifying the employment contract, who true to the fees he has taken, sent me close to 3 pages of comments and a lawyer from my side to finalize the contract.
The clarifications varied from as trivial ( Atleast in India) clauses like indemnifying the company in case if the candidate uses company mail in contravention to any local laws to his insistence on mentioning that he would be granted a week leave after one month of joining to attend his father's birthday.
Australians seem to be very particular about very minute details. For ex, when one of the employee resigned , he sent a mail stating that he would not be available for company purpose from so and so date from so and so time onwards. Car is definitely a provision and expected on day 1

South Korea:

The candidate we interviewed here was very insistent on adding a compulsory employment clause for 3 years irrespective of performance or business of the company. It may not be so much to do with culture specific as we are still establishing our permanent presence in Korea and the candidate is worried about stability. Nevertheless the clause stumped me because generally in these cases , candidates tend to demand a premium on salary for taking a job with ambiguity. Any how like in India , Employment contract is more open ended in Korea and candidate is quite ok after we shared our plans in Korea

The last of the series is Vietnam

Vietnam:

The candidate started the process by asking some questions even before the first  question was asked and the entire interview was more of conversation discussing about business of the organization rather an interview for the job. Final twist is when the question of compensation came up. The candidate said that he is not expecting to discuss about salary part in the first interaction, rather he will write to us his queries and if every thing goes fine, we can have a separate interaction to finalize the compensation

So that's about the experiences so far and honestly I have never read my employment contract so sincerely and with interviews for Singapore and Philippines lined up in the next few days , hoping for more enriching experiences

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Some quick thoughts on recruitment process

Recently I got to see the interview sheets ( where each panel member of the interview is asked to rate candidate on different parameters or competencies) and a final decision based on overall rating. One surprising finding is that the candidate who is shortlisted for further consideration is actually scoring low than some of the candidates who were rejected. The reason(s) in this case is pretty obvious. Lets see some of them:

• The interviewers went by their intuition on whether a candidate is good or not and used scoring sheets only as a justification at later point of time ( in this case they didn't bother to compare scorings with previous candidates). Each interview lasted on an average for more than 2 hours , so there is no doubt on how the candidates are assessed, but the point is the interview sheet which the company uses became more for the sake of record keeping rather than an evaluation tool

• Lets see another case. In this case the interview panel had thoroughly followed the process. But when it comes to making a final decision it depends on the senior most member in the panel, thus giving a scope of introducing bias in the system based on personal preferences of the senior most person.

There might be many other cases, but for now will stick to these 2 aspects as one can be solution to solving another.

when ever a senior member is involved in the panel, it makes a valid sense for each member to rate the candidate individually with explanations for ratings and discussion can happen based on the points written in the interview evaluation sheets. HR professional can facilitate this discussion phase as he is more likely to be objective as subject expert in the interviewing process

Now on a completely different topic, if a candidate is interviewed for a position which involves working in a team, it makes sense that the team leader who has a grasp on personalities of team members be involved in the interview process. It need not be leader in all the cases , some one who spent considerable time with the team can be a observer
In this case , the goal should not just be the best candidate but some one who can improve the performance of the team and who can assimilate better in the team
It should not be confused that selecting a candidate just to fit into the team at the cost of quality, some one who can question the underlying assumptions of the team and who can rationally question the team is fine , but some one who  can disrupt team cohesion would be a big NO

Lastly ,  As the saying goes "what u reap is what u sow",Getting right people on board helps achieving the organization goals in the long run

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The reason why most people in HR don't make it to the top

    
NOTE: This article is not written by me. Read it from http://www.linkedin.com/groupItem?view=&srchtype=discussedNews&gid=52264&item=268498134&type=member&trk=eml-anet_dig-b_pd-ttl-cn&fromEmail=&ut=0wvyit7bKhwBU1 written by Mr. Vinayak Nadkarni.
But content is so relevant that I can see HR professionals limiting themselves to lower levels day in and out
A must read for aspiring HR professionals
           

The reason why most people in HR don't make it to the top is because they have not groomed themselves to becoming ‘HR-driven business managers'. I can classify HR managers into five distinct categories based on the work they do:

 Level One: This is also the bottom most level, referred to as ‘HR administration' in which documentation, data gathering, record-keeping, and MIS are the main focus areas. This work is largely clerical and ‘outsource able'

 Level two: It revolves around monitoring and execution in which the focus is on collecting information, ‘reminding' people, getting forms filled and statutory obligations fulfilled. These may also include data analysis and feedback to the top management. The measures are quantified in terms of appraisal forms filled in time, capacity utilisation of training centres, recruitment and retention rates of employees

Level three: Here, designing and implementing are vital activities wherein the focus is on reviewing the existing systems, redesigning and starting new practices in performance appraisals, incentives/performance-linked pay, learning and development and employee engagement

 Level four: Here, one is busy strategizing, innovating, integrating and leading. In this level, the HR manager has to be aligned with business goals and his/her concerns shift from having a ‘good HR' to more of a ‘business driven HR' set-up. The HR person at this level is constantly looking for what is called as ‘next practices'. At this level, HR focuses on building leadership across the organization by using multiple tools including 360 degree feedback, development centres, top management team-building exercises, etc. Here, HR becomes talent-focused and the concern is on acquiring, retaining, nurturing and multiplying talent

Level five: And finally, this is the most evolved and progressive level focused on making HR a business partner. Here, managers realize that there can be no business without talented people at all levels and particularly at the top. They believe in the philosophy that people make business and therefore, ‘business-driven talent management' is essential. The focus shifts from tangibles to intangibles and from immediate and short-term performance goals to building long-term capabilities and from quarterly results to intellectual capital-building and shareholder value enhancement. Dave Ulrich calls this ‘outside–in HR'. I call this ‘business-focused HR'. The trouble with most HR people today is that they are stuck at the lower levels. A large number of them fail to grow beyond the first three levels. Many of them get habituated to hiring consultants and outsource their work rather than doing significant HR tasks themselves. How can you grow to be a CEO when you outsource recruitment, training, competency-mapping, employee engagement surveys and restrict yourself to being ‘materials managers' arranging for tender documents and finding out least expensive consultants? Shouldn't a modern-day HR manager understand customers and other stakeholders and direct the talent to be business-focused? Such HR managers can't grow to be CEOs. Our B-schools in HR do not prepare HR to be CEOs and in fact aim at preparing them for the first two or three levels of HR sadly.All CEOs are required to be good HR people and past leaders have demonstrated this. It is high time HR recognises the potential they are sitting on and change their ways.Almost all successful CEOs of the past and current corporate scenarios are good ‘people managers'.

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Employee Engagement Part 2- Need for Engagement

Here is the link for part 1:
http://anvesh87.blogspot.in/2012/04/employee-engagement-part-1.html

so why had Employee Engagement became such a Buzz word with organizations, especially in the recent past . Infact the word "Employee Engagement" is formally coined only in 1990's ( now don't sue me if it is not accurate) .
So does it mean that employees are not Engaged towards their work before 1990's ?.
if they are , why can't the companies continue with they had been doing for ages instead of going for some thing fancy .
Is "Engagement" a new management fad which is gonna passover with time ?

Having put so many questions , lets see whether there are answers for these questions and also as one of my profs say "back every thing with numbers", will also see what is the research done with respect to Engagement (quite a few consulting companies had done research in the topic)

If we look at the careers of our parents , i mean those who are the Generation X (born in 60s) and baby boomers (those who were born after world war 2) , we can observe a trend that most people stick to the same organization for years . The mantra here is "Job security" . organizations offered job security , pension benefits , medical benefits etc which in other way of saying you work for us for long term and we will take care of u  and employees did reciprocated with sticking to the organization for a long time

The situation has changed now . With globalization and changed business scenario, no company can guarantee an employee of a life long employement but instead the focus shifted to offering careers . It is now accepted that there would be attrition , the challenge is to retain the top performers to work with the organization for a long term and to help them perform at their peak capabilities . This is where our "ENGAGEMENT" concept comes into picture .

Now lets look at some of the outcomes of research done on Engagement:

• Towersperrin research on 50 global companies over a one-year period, correlating employee engagement levels with financial results:
• Companies with high employee engagement had a 19% increase in operating income and almost a 28% growth in earnings per share
• Companies with low levels of engagement saw operating income drop more than 32% and earnings per share declining over 11%

• Hewitt's study on 1500 companies over 4 year period:
• Engagement Level                                              share holder return
• 60-100%                                                              20.2%
• 40-60%                                                                5.6%
• below 40%                                                           -9.6% 

so it can be clearly seen that when less than 40% employees are engaged , the share holders returns are negative

there are many other studies done correlating engagement with customer satisfaction, profitability etc. Even though there might be difference in the numbers , but all studies show Engaged employees are assets to the organization and a source of competitive advantage

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