G A T E S , D E A N D R A 1 1 2 3 T S G A T E S , D E A N D R A 1 1 2 3 T S Chapter 8 Staffing | 333 Fortune 500 employers, use temporary employees, and the rate of growth of use of such workers is expected to be twice the rate of overall job growth between 2008 and 2018.4 Care must be used, however, in determining whether temporary employees are actually “employees” of the organization that is contracting for their services rather than employees of the staffing agency. In 1997, Microsoft Corp. was accused of misclassifying thousands of present and past employees as temporary independent contractors rather than as Microsoft employees. A lower court ruled against Microsoft who appealed the decision but then settled the case for $97 million prior to the final ruling.5 In addition to hiring temporary employees from an agency, an organization can subcontract work to an outside vendor; this is usually done on a project basis. Larger organizations can also move permanent employees from department to department as needs dictate. This promotes efficiency through lower costs and flexible utilization of employees. These in-house “temporary” G status, including benefits; are generally more committed to the employees have more permanent organization; and know the inside A workings of the organization. They can be extremely useful when regular employees take extended vacation or sick leaves. In-house temporary employees proTflexibility and efficiency than it would garner from outside temvide the organization with more porary employees; also, in-house employees have more variety in their work assignments. E The use of temporary employees has greatly increased in recent years and to the point where an entire industry has been createdSfor the employment of temporary workers. The “contingent workforce” industry involves 5.7 million workers, or 4 percent of the U.S. workforce.6 Employees in almost every job category are now being,considered and employed on a temporary-for-permanent basis without any promise or legal obligation for continued employment. Short-term temporary employment has also found its way into the executive ranks, including the CEO office.7 Interim CEOs are typically D who wish to return to work for a limited time commitment to help retired or laid-off senior executives a particular organization or contribute and build their résumés and professional networks while they E seek more permanent employment. Similar to other levels of temporary employment, contingent executives can also allow a trial A period of employment for consideration of permanent employment. Reading 8.1, “Temporary Help Agencies and the Making of a New Employment Practice,” traces the Nmovement and explains its current uses and potential. rise of the temporary employment D R If an organization decides to hire permanent employees, the first critical question it needs to address is whether to recruit internally or externally. Recruiting from the current employee pool A Internal Versus External Recruiting can benefit the organization in a number of ways. First, the organization already has performance data on employees. Ample opportunity has been afforded to observe the applicant’s work habits, skills and capabilities, ability to1get along with others, and fit with the organization. Second, promotion from within motivates employees. Employees feel that the organization is 1 trying to provide them with promotional and developmental opportunities in reward for their performance and loyalty. Third, training and socialization time are reduced. Current employees know 2 the organization, its procedures, politics, and customers and have already established relationships with coworkers. Consequently, 3 they need far less formal or informal socialization time than those hired from the outside. Finally, internal recruiting is often much faster and far less expensive than T for applicants. going outside of the organization S Internal Recruiting at Cisco Systems Cisco Systems, Inc. is a San Jose, CA–based multinational designer and manufacturer of networking equipment. With more than 65,000 employees worldwide, Cisco has constant and evolving staffing needs as a leading global technology company. To assist with internal recruiting, Cisco has developed a program called Talent Connection, which seeks to identify qualified employees who might not necessarily be looking for another position in the company. Employees are encouraged to create profiles on an internal website that company recruiters can peruse to recruit internal candidates, much in the same way they recruit 9781305234758, Strategic Human Resource Management, Fourth Edition, Mello - © Cengage Learning All rights reserved No distribution allowed without express authorization 334 | Part 2 Implementation of Strategic Human Resource Management external candidates. To date, half of Cisco’s employees have registered with Career Connection, and these internal “passive candidates” have saved the organization millions of dollars in search-firm fees and other recruiting costs while simultaneously raising employee satisfaction with career development opportunities by nearly 20 percentage points.8 Internal recruiting can provide significant productivity gains for employers as well. A recent study conducted at the University of Pennsylvania found that salaries received by external recruits are, on average, 18 percent higher than those paid to internal recruits. Perhaps more important, external recruits received lower performance reviews than internal recruits during their first two years on the job.9 Another study that analyzed the 2,500 largest publically traded companies around the world found that chief executives recruited from the outside are twice as likely to fail and be forced out than those promotedGfrom within.10 This result is attributable to the fact that insiders typically have a strong ability A to understand how to bring about change in an organization. As a result, insiders typically deliver better returns for shareholders.11 T Although internal recruiting has advantages, this approach also has some disadvantages. First, internal recruiting can become very political and competitive, particularly when coworkers apply for E the same position. Dysfunctional conflict may result, and collegiality and interpersonal relationships can be strained. Second, those employees not S selected for the position can suffer from diminished morale and performance, particularly when they feel equally or better qualified than the candidate selected. , Third, the organization can become inbred through excessive internal recruitment. Continuing to promote from within can encourage maintaining the status quo. An organization that needs to improve organizational processes should usually recruit from the outside. Finally, Dinefficiency by creating multiple vacancies. For instance, excessive internal recruitment can cause if a senior-level manager leaves the organization and is replaced by a direct subordinate, that E subordinate’s job will then need to be filled. As this promotion chain continues down the hierarchy, an initial vacancy could spur promotions for a large number of people. Nearly all employA ees require a certain period of time to learn a new job. Even when an employee has worked in N position requires adjusting to new responsibilities and the organization for several years, a new redefining interpersonal relationships D with coworkers. Internal recruiting can exacerbate this effect by creating a large number of employees having new positions. Until these employees gain the level of competence that theirR predecessors had and sufficiently redefine their working relationships, inefficiency will result. A Internal recruiting has its advantages and disadvantages. It is probably best utilized when the organization pursues a strategy related to stability, faces few major threats from its external environment, and is concerned with maintaining the status quo relative to its operating systems. When 1 time and/or money are limited, internal recruiting can also be beneficial. External recruiting also has advantages 1 and disadvantages. Not surprisingly, the advantages of external recruiting are consistent with the disadvantages of internal recruiting. External recruiting 2 useful for organizations with volatile external environfacilitates change and tends to be more ments. External recruiting can allow an3organization to expand its knowledge base beyond that of its existing employees and bring in new ideas and viewpoints; external recruits are not bound by T They can bring a fresh approach to problems that have existing ways of thinking or doing things. plagued the organization. At the senior level, candidates are often recruited for their history of S bringing about high-level change in other organizations. External recruiting, however, can be expensive and time consuming. Employees from outside the organization will often need a longer socialization period to know the organization, its products or services, coworkers, and customers. External recruits are also unknown entities in that the organization has no experience working with them. Although an applicant may have outstanding skills, training, or experience and may have had past success in another organization, those factors do not guarantee similar success with a new organization or an ability to fit with a new organization’s culture. Finally, external recruiting can have detrimental effects on the morale of those employees who have applied for the job internally but have not been selected. Exhibit 8.1 summarizes the strategic issues surrounding internal versus external recruiting. 9781305234758, Strategic Human Resource Management, Fourth Edition, Mello - © Cengage Learning All rights reserved No distribution allowed without express authorization G A T E S , D E A N D R A 1 1 2 3 T S G A T E S , D E A N D R A 1 1 2 3 T S G A T E S , D E A N D R A 1 1 2 3 T S 338 | Part 2 Implementation of Strategic Human Resource Management Because Internet recruiting is worldwide, it gives an employer global exposure to potential applicants, which can be critical if particular language skills or cultural backgrounds are needed. Technology-based employers have found the Internet to be a fertile recruiting ground for applicants who are technologically savvy. For example, Cisco Systems receives more than 80 percent of its résumés electronically.20 The main reason employers use the Internet for recruiting is to attract “passive job candidates,” those who might not be actively seeking a new job. Eighty-four percent of employers stated that the recruiting of passive job candidates was the main reason they used the Internet, and particularly social networking sites, for recruiting. Cost-effectiveness and opportunities for employment branding, to be discussed later in this chapter, were given as secondary reasons for recruiting online.21 Interestingly, the strategies used by recruiters often do not fit the job search strategies being G of personal and professional contacts to obtain employused by applicants. Networking, or the use ment, is the strategy of choice for theAmajority of job seekers: Seventy-eight percent use this approach.22 Sixty-seven percent of recruiters, however, find that the Internet is their top source for attracting new employees.23 This is T not to say that job seekers do not use the Internet, as they have been shown to utilize more search tactics than recruiters,24 but, rather, implies that HR proE fessionals need to think carefully about their recruiting sources and think strategically about how best to achieve the recruitment goals they S have set. Internet recruiting has become increasingly popular with employers and can cut the search , 25 Sophisticated technology allows employers to quickly process time by as much as 75 percent. process large numbers of applications through the use of spiders, which are programs that search résumés for specific characteristics or words. One recent survey found that the percentage of large D to screen résumés was in the high 90 percent range.26 employers who utilize software programs Employers such as Starbucks, which received 7.6 million applications for employment in the past E year, and Procter & Gamble, which received nearly 1 million applications for 2,000 vacancies during the same time period, need to placeA a heavy reliance on electronic screening of résumés. Such screening systems can be programmed to scan for keywords related to skills, experience, former N means by which an employer seeks to identify appliemployers, schools attended, or any other cants with particular backgrounds and result D in significant cost savings for the employer. A typical large employer spends approximately 7 percent of its recruiting budget on applicant screening and R tracking systems.27 Many employers attempt to attractA applicants by developing Web sites that provide information about the organization that can allow applicants to determine if there might be an optimal “fit” between their career goals and the goals of the organization, guide candidates through the application process, and even allow prospective applicants to take a virtual tour of the organiza1 tion. While Internet recruiting can speed up the employment process, it is also fraught with some potential challenges that must be weighed 1 by an organization considering Internet recruiting.28 The first of these challenges is ensuring security. Online recruiting means that the employer 2 unknown sources. Many of these communications will will be receiving electronic inquiries from include attached files, making viruses a3security concern; another consideration is ensuring that those visiting the Web site do not obtain access to unauthorized areas of the site. A second chalT lenge is that overreliance on Internet recruiting can result in a disparate impact against certain protected classes of applicants. Studies have shown that members of certain ethnic minority S groups, women, and older individuals either may not have access to or be less likely to use the 29 Internet. A survey conducted by the Society for Human Resource Management found that 95 percent of employers utilized LinkedIn to recruit job applicants.30 Another recent study found that 85 percent of LinkedIn users are white and 63 percent are male.31 Similarly, Facebook is used by 58 percent of employers to recruit candidates32 and 78 percent of Facebook users are white.33 Employers tend to use LinkedIn more for professional and managerial positions and Facebook more for hourly positions.34 Individuals with disabilities may also have conditions that limit or prevent their ability to easily access the Internet as well. Consequently, employers may unintentionally screen out large groups of potential applicants who are members of protected classes in the interest of the efficiency afforded by Internet recruiting. Finally, 9781305234758, Strategic Human Resource Management, Fourth Edition, Mello - © Cengage Learning All rights reserved No distribution allowed without express authorization Chapter 8 Staffing | 339 Internet recruiting can complicate reporting of data related to compliance with federal and state laws. A difficult question arises as to whether an individual who sends an unsolicited résumé via the Internet needs to be “counted” and considered an “applicant” for the purpose of federal reporting. The EEOC and Office of Federal Contracts Compliance Programs (OFCCP) have continuously wrestled with the definition of “job applicant” for reporting purposes; combining this with the greatly increased number of job applicants that result from Internet recruiting creates a challenging situation for employers. E-cruiting at Air Products and Chemicals, Inc. One organization that has developed a satisfactory strategy for reporting its Internet recruiting activities to federal agencies is Air Products and Chemicals, Inc. (APC). Based in Allentown, Pennsylvania, APC supplies gases G and chemicals to various industries as well as to the federal government. With 16,000 employees worldwide, including 9,000 in the United States, APC falls under the purview of theAOFCCP as a government contractor. As APC began to use the Internet for recruiting with greater T frequency, a conflict arose relative to its reporting with the OFCCP. The OFCCP considered résumés submitted electronically as an expression of interest in employment, and APC’sEreading of that résumé constituted acceptance of it, making the submitting party an “applicant” for reporting purposes. Because the organization could S not control who submitted unsolicited résumés, it found itself at a disadvantage relative to its affirmative action goals. APC,eventually solved the dilemma. Each unsolicited résumé received an automatic e-mail reply, instructing the individual to apply for a specific open position listed on the company Web site. Only when a position was chosen would the individual be considered an “applicant.” In addition, D applicants were required to submit information identifying their race and gender. This system met with the OFCCP’s enthusiastic approval and has E of Internet recruiting while satisfying the OFCCP’s reporting allowed APC to reap the benefits requirements for federal contractors.35 A N An organization’s existing employees can often be a very valuable source for recruiting new employees. Consumer products D manufacturer Johnson & Johnson relies extensively on its employee referral program to recruit newRhires. Johnson & Johnson offers up to $1,500 for each employee recruit, paid in full two weeks after the new employee’s start date.36 Hartford-based Lincoln Financial’s A of all external hires and saves the organization more than 97 referral program results in 55 percent percent of the costs it would incur by using an executive search firm.37 One innovative approach to staffing has existing employees recruit themselves, as illustrated in the following vignette. 1 1 Staffing at St. Peter’s Health Care St. Peter’s Health Care is an2Albany, New York–based hospital that, like many healthcare institutions, suffered from a3severe shortage of qualified nurses. Nurses hired from outside agencies to assume unstaffed shifts not only commanded a premium price but were also T procedures at St. Peter’s. To alleviate this problem, St. Peter’s unfamiliar with operations and launched an online bidding system by which any nurse could bid for an open shift. Nurses S must be existing employees or approved to work for the hospital and bid on shifts for a certain pay rate per hour. Nurse managers have the authority to accept or reject any bid, and applicants whose bids have been rejected are free to rebid at a lower pay rate. Because the hospital cannot mandate overtime for workers, this system allows maximum flexibility for both St. Peter’s and nurse-employees. St. Peter’s recently filled 43,400 available hours under the bidding system at an average pay rate of $37 per hour. Two-thirds of those hours were filled by existing employees. Outside agency nurses would have cost the hospital $54 per hour. In addition to the cost savings, turnover among nurses has decreased from 11 percent to below 5 percent annually, and both patient and employee satisfaction have increased.38 9781305234758, Strategic Human Resource Management, Fourth Edition, Mello - © Cengage Learning All rights reserved No distribution allowed without express authorization 340 | Part 2 Implementation of Strategic Human Resource Management Organizations can also address their staffing needs by turning to other organizations and outsourcing all or part of their staffing. Employment agencies, more commonly called staffing agencies or staffing services, can locate and prescreen applicants for an employer. Because locating and prescreening applicants are often the most time consuming, expensive, and laborious processes for managers, many organizations are quite willing to use staffing agencies to perform these functions. In addition, the risk of running afoul of the law and having initial screening influenced by the biases of current employees is minimized because the staffing service is often able to bring a more objective perspective to the process. In addition to traditional staffing agencies, there are several other kinds of organizations that may help an employer with external recruiting. The first of these are state job service agencies. State job service agencies are public funded by the federal government but are operated by individual states. All citizens who file unemployment compensation claims are required G and remain actively looking for work as a condito register with the state job service agency tion of receiving ongoing unemployment A compensation. Employers can call and list positions with their state job service agency for no fee and, at the same time, assist those who have T lost their jobs. Another source of prospective employees is the Private Industry Council (PIC), a local agency E that administers federal funds to assist individuals who are hard to employ in finding jobs. These individuals are generally those who depend S on public welfare assistance but have either limited or no marketable job skills or lack the means to obtain appropriate training. Employers who are will, can obtain assistance in locating such applicants from ing to train individuals for entry-level jobs the local PIC. If the organization provides training and then subsequently hires the individual referred from the PIC for a permanent position, then the employer can seek partial reimbursement for the wages paid during the training D period from the PIC. The PIC receives federal money for such reimbursement under the Job Training Partnership Act. E Executive search firms are a specialized type of staffing agency that assist organizations in filling skilled technical and senior- and executive-level management positions. Executive search firms A usually charge significant fees for their services; these fees are paid by the employer. Searches are N of time and for a set fee, which is paid regardless of usually conducted for a contracted period whether the search is successful. Estimates D are that fewer than 50 percent of searches are successful during the contracted time period.39 Rsuccess, the services of executive search firms continue Despite their relatively low rates of to be in demand because search firms Aprovide employers with several benefits. First, search firms are usually better and faster than the organization’s in-house recruiters in locating talent. The majority of search firms focus on specific industries, and they have extensive networks and numerous contacts. Consequently, they can locate and attract candidates who are not 1 actively looking for new jobs. Although most employers would not directly call someone who works for a competitor to recruit that1individual, an executive search firm can and does. The executive search firm can also keep the organization’s identity confidential during the recruit2 ing and prescreening process. Some organizations have hired executive search firms to contact their own employees in efforts to determine whether the employees might have any interest in 3 leaving the organization. Although this kind of behavior may be unethical, it shows that execT a means of secretly recruiting candidates. Finally, utive search firms can offer an organization executive search firms will often, upon request, provide their client organizations with a writS ten and signed “anti-raiding” agreement, whereby the search firm promises not to contact or recruit any of the organization’s employees for a given time period in searches being conducted for other client organizations. One recent study of executive search firms criticized their common practice of identifying potential recruits based on their job titles and the match of these titles with those for the positions being recruited rather than focusing on the skills of candidates and the responsibilities of jobs. As a result, many search firms promote only lateral moves, rather than placing recruits into new job functions or positions of increased responsibility. Similarly, search firms were found to limit applicant pools by focusing their recruiting on large, well-known, high-performing organizations.40 9781305234758, Strategic Human Resource Management, Fourth Edition, Mello - © Cengage Learning All rights reserved No distribution allowed without express authorization Chapter 8 Staffing | 341 Outsourced Recruiting at Kellogg Michigan-based cereal manufacturer Kellogg recently revamped its recruiting function for all its nonhourly employees. With more than 14,000 employees worldwide, coordination of the recruiting function had become cumbersome, prompting Kellogg to outsource its entire exempt recruiting operation. Because the industry is highly cyclical, Kellogg did not want to have to continuously hire and lay off recruiting staff and sought a system that was more flexible and better aligned with its business needs and strategy. When Kellogg needed to hire 200 new salespeople in a short time, the vendor was able to fill the positions much more quickly and efficiently than Kellogg would have been using its own staff and an outside search firm. The vendor’s performance is overseen by a project manager at Kellogg and evaluated according to a variety of metrics, including cost, timeliness, quality of applicants, service to manG agers, and diversity. During the first year of implementation, the outsourced recruiting program saved Kellogg more Athan $1.3 million and reduced the average cost per hire by more than 35 percent.41 T E In contrast to Kellogg, an increasing number of larger organizations are bringing their execuS tive recruiting functions in-house. Time Warner found that bringing their previously outsourced executive recruitment function ,in-house saved time, improved retention, and allowed its recruiters to better determine candidate “fit” with the company culture. It also has saved the organization more than $100 million in search firm fees in less than 10 years.42 Sears Holdings, Hilton Worldwide, and PepsiCo, along withD more than 25 percent of other Fortune 500 companies, have all recently moved their executive search functions in-house, largely facilitated by the use of social media sites such as LinkedIn. E Campbell Soup Co. saved more than $3.5 million by moving its executive recruiting in-house and cites the added benefit of ensuring that candidates who have A been passed over remain on good terms with the organization.43 Many organizations use college N and university on-campus recruiting as a means of attracting a relatively large number of qualified applicants. Campus recruiting can generate a large applicant pool in a short time period at aD minimal cost and, therefore, create efficiency in the recruiting process. However, this can also create R inefficiencies because of having to screen an excessively large number of applicants. Campus recruiting can often result in motivated, highly skilled, energetic applicants, but these applicantsAare usually available only at certain times of the year; they may also have very limited prior work experience. Success in the classroom does not necessarily translate to success in the workplace. Campus recruiting involves higher risk, given the practical inexperience of most applicants; however, 1 there is a potential for higher return, given the intelligence, level of training, energy, and ambition that many applicants possess. 1 To alleviate some of the difficulties associated with campus recruiting, an increasing number of employers are offering co-op 2 and/or internship programs. Such programs allow both the employer and student a trial period with no obligation. Employers have an advantage in 3 positions; students gain marketable experience for their recruiting interns for permanent résumés. This experience canTprovide interns with an advantage when they apply for fulltime employment upon graduation. Seventy percent of HR professionals prefer to hire a candidate who has an internship S in the candidate’s career field over an applicant who has more general experience.44 College Recruiting via Internships at Microsoft Redmond, Washington–based Microsoft is one of the most sought-after employers in the world. The software giant receives upwards of 50,000 résumés a month and is clearly an “employer of choice” for many applicants. One way to heighten one’s chances of obtaining employment with Microsoft is through interning at the organization. While the internship program itself is highly competitive, it provides Microsoft and interns with an opportunity 9781305234758, Strategic Human Resource Management, Fourth Edition, Mello - © Cengage Learning All rights reserved No distribution allowed without express authorization 342 | Part 2 Implementation of Strategic Human Resource Management to try each other out for a limited time period. Microsoft provides paid internships to approximately 800 college students each summer. After a rigorous screening process, fewer than 10 percent of applicants eventually end up with Microsoft for the summer. Those who are selected receive “competitive salaries,” company-subsidized housing, training, and full benefits. Microsoft, with employee turnover at less than 6 percent, hires as much as 45 percent of its interns for permanent positions. Microsoft expects that after the 12-week internship concludes, each intern will be ready for permanent full-time employment.45 While internships are becoming increasingly popular among both employers and students, organizations need to be mindful of potential legal issues involving internships. The United States Department of Labor has taken the position G that interns should be paid at least the federal or relevant state or local minimum wage by private section for-profit employers. Public section and A greater latitude regarding compensation for interns, nonprofit organizations are generally afforded particularly if these workers are classified as “volunteers” or “trainees.”46 Such classification of T workers is typically not found in the private, for-profit sector unless there is a partnership with an educational institution whereby the E student receives academic credit and the skills being acquired can be used in a variety of employment settings rather than being specific to the organiS zation providing the internship. Employers also need to be wary ,of intentionally or unintentionally discriminating on the basis of age for internship applicants who may be older, particularly those who have lost their jobs and are seeking a career change or who have retired. Finally, employers of interns need to ensure that workers have the legal right to work in the United States and that their policies comD ply with federal and state immigration laws. This is particularly important as an increasing number of foreign students come to study domestically. E A Once a sufficient pool of applicants hasN been recruited, critical decisions need to be made regarding applicant screening. Selection decisions D can and do have significant economic and strategic consequences for organizations, and these decisions need to be made with great care. Before the R the organization needs to determine if the methods application of any selection tools or criteria, being employed are both reliable and valid. A Reliability refers to the consistency of the measurement being taken. Ideally, the application Selection of any screening criteria should elicit the same results in repeat trials. For example, if an applicant is asked to take a pre-employment test, the test should have consistent results each time it is administered to an applicant. Similarly,1when different interviewers evaluate an applicant’s ability to make spontaneous decisions, they 1 should assess the applicant’s skill level similarly. Consequently, in planning a screening process, the organization needs to ensure that there is reliability 2 on two levels: across time and across evaluators. Because many factors can impact 3 assessment, 100 percent reliability is rarely, if ever, achieved. An individual might score poorly on a test on a given day because of a preoccupaT reliability, which is the correlation among different tion with personal matters. Interrater judges who interview an applicant, is often low because these evaluators may bring different S perceptions and biases to the process. However, low interrater reliability is not always bad. A supervisor might evaluate an applicant by using different criteria from those a subordinate might use. Such differences in perception are important in getting a holistic assessment of a potential employee. Low reliability is often the result of one of the two types of errors in assessment. The first of these is deficiency error. Much as the name implies, deficiency error occurs when one important criterion for assessment is not included in the measure. For example, if the test for an applicant for an editor’s position did not attempt to measure the applicant’s writing ability, deficiency error would be present. The second type of error is contamination error. Contamination error is caused by unwanted influences that affect the assessment. If an interviewer is under intense time pressure to complete 9781305234758, Strategic Human Resource Management, Fourth Edition, Mello - © Cengage Learning All rights reserved No distribution allowed without express authorization Chapter 8 Staffing | 343 other tasks and rushes the interview process so that it is impossible to gather sufficient information on a candidate, contamination error would result. Similarly, if a test measures knowledge, skills, or abilities that are not essential for the job and the evaluation of these noncritical factors impacts the ratings for the more important dimension, contamination error would result. Reliability is a prerequisite for validity. A test cannot be valid without first being reliable. Validity refers to whether what is being assessed relates or corresponds to actual performance on the job. It examines whether the skills, abilities, and knowledge being measured make a difference in performance. Validity is critical not only to ensure proper selection, but it also becomes the chief measure by which employers defend discrimination allegations in court. Although no laws specifically require employers to assess the validity of their screening devices, illustrating that specific criteria are valid selection measures and are, therefore, job related is the major way for employers to respond to such claims. G that support selection criteria. The first is content validity. There are two types of validity Content validity illustrates that A the measure or criterion is representative of the actual job content and/or the desired knowledge that the employee should have to perform the job. Content validity is determined through the processTof job analysis, which is discussed in Chapter 6. For example, to receive a real estate license and work as a licensed salesperson or broker, an individual must pass an E examination that tests knowledge of job-related concepts, activities, and processes. Content validity, in and of itself, does not guarantee S successful performance on the job, much as completing a prerequisite course in a degree program does not guarantee successful completion of a later course. , is empirical, or criterion-related, validity. This measure demonThe second validity measure strates the relationship between certain screening criteria and job performance. If individuals who obtain higher scores or evaluations on these screening criteria also turn out to be high performers D is established. on the job, then this type of validity It is important to realize that reliability alone is not sufficient for determining the appropriate E screening criteria. These criteria must also be valid. Validity not only ensures the best possible strategic fit between applicant and A job, but it also ensures that the organization will have a readily accepted means of defending discrimination charges at hand. Criteria cannot be valid that are not N can be reliable without being valid. It is critical for decision already reliable. Conversely, criteria makers to understand this difference D and develop their screening criteria accordingly. Interviewing R A decisions The first set of critical in the selection process involves the interviewing process. Employers first need to determine who should be involved in interviewing applicants. A number of different constituents can provide input. 1 Prospective immediate supervisors, peers, and/or subordinates might be asked to participate in interviewing candidates. Coworker input can be critical in organizations that emphasize teams and 1 project groups. The input of customers might also be sought, particularly for employers in service industries. Those involved in selecting 2 appropriate interviewers must consider the different perspectives that different individuals or groups offer and the relevance of these perspectives for selecting the best applicant. Interviewers 3 should be chosen from diverse racial, ethnic, age, and gender backgrounds. Another decision mustTbe made as to whether interviews will be conducted in an individual or group format. Group interviews can save time for both the organization and applicant, but Spersonal atmosphere for applicants. Group interviews may make they often involve creating a less it more difficult for interviewers to get a sense of the applicant’s interpersonal style. Interviewing applicants involves making subjective assessments of each applicant’s qualifications for a job. However, interviewers commonly make interpretation errors that should be avoided in an effective interviewing process. Among these are similarity error, in which the interviewer has a positive disposition toward an applicant considered to be similar to the interviewer in some way; contrast error, in which the candidates are compared to each other during the interview process instead of the absolute standards and requirements of the job; first impression error, in which the interviewer immediately makes a positive or negative assessment of the candidate and uses the remaining interview time to seek information to support that contention; halo error, in 9781305234758, Strategic Human Resource Management, Fourth Edition, Mello - © Cengage Learning All rights reserved No distribution allowed without express authorization 344 | Part 2 Implementation of Strategic Human Resource Management which a single characteristic, positive or negative, outweighs all other dimensions; and biases that are based on the interviewee’s race, gender, religion, age, ethnicity, sexual orientation, or physical condition rather than factors that relate to job performance. One recent study examined the effects of interviewee behavior on the assessments made by those conducting interviews.47 Two different interviewee behaviors, ingratiation and selfpromotion, were examined related to interview outcomes. Ingratiation involves displaying behavior that is perceived to conform to the desires of the interviewer, while self-promotion involves the assertion of the interviewee’s own strengths and competencies. The study found that ingratiation played a bigger role in interview outcomes than any other factor, including objective credentials. This added potential bias on the part of interviewers needs to be controlled to ensure the efficacy of the interview process. Group interviewing allows different interviewers to compare and contrast their interpretaG Consequently, this often helps overcome many of the tions of the same interview information. errors that individual interviewers might Amake. One interviewing technique that has become increasingly popular in recent years is behavT ioral interviewing, which involves determining whether an applicant’s anticipated behavior in a variety of situations and scenarios posed in interview questions would be appropriate for the E employer. Behavioral interviewing can be used with experienced applicants as well as with those who have little or no professional workSexperience because it asks about situations the candidate might likely find him or herself facing on the job. Behavioral interviewing with candidates who have professional experience can also ,involve candidates presenting real-life situations in which they were involved and how they handled them. To use behavioral interviewing, the first step is to determine the most important behavioral characteristics required for a given jobD or to work in a certain unit. These can be identified by examining the key traits displayed by high-performing incumbents. Behavioral interviewing E assumes that candidates have already been screened for technical skills and focuses more on the human interaction traits and people skills A an applicant would bring to a job. Questions might be what an applicant did in a certain past situation or might do in a given situation as well as things N would opt to change about a given situation. Behavioral he or she most enjoyed, least enjoyed, and interviewing is used extensively by Dell D Computer, AT&T, and Clean Harbors Environmental Services.48 Dell collects data from 300 of its executives to determine the qualities most needed for success within the organization. AT&T R has developed a series of behavioral questions that address the core competencies of organization,A interpersonal communication style, decision making, and problem analysis. Clean Harbors, which specializes in cleanups of hazardous materials in the environment, looks for problem-solving ability, openness to new ideas, and enthusiasm.49 Behavioral interviewing generally reduces potential employer liability because of its focus on 1 specific behaviors that are considered critical for effective performance. Typically, in asking interviewees to provide examples of behavior, 1 job candidates might be asked to describe situations, explain actions taken and the reasons for such actions, and explain outcomes. Proper behavioral 2 interviewing will involve all three dimensions of questioning: situations, actions, and outcomes. Exhibit 8.4 provides some examples of 3 behaviorally based questions. Regardless of who conducts the interviews and whether they are administered in a group or T made as to whether the actual format or process of the individual format, a decision needs to be interviews should be structured or unstructured. Structured interviews follow a set protocol: All S interviewees are asked the same questions and are given the same opportunity to respond. There is standardization in that it becomes easier to compare applicant responses to identical questions, and legal liability can be minimized because all applicants are treated the same. However, structured interviewing provides limited opportunity to adapt the interview process to any unique circumstances surrounding any applicant. An unstructured interview is totally spontaneous and one in which questions are not planned in advance. The topics of discussion can vary dramatically from one candidate to another. Such a process allows interviewers to gain a greater sense of the applicant as an individual, but it often makes comparison among different candidates difficult. A semistructured interview would fall somewhere between these two extremes. With a semistructured interview, the interviewer asks 9781305234758, Strategic Human Resource Management, Fourth Edition, Mello - © Cengage Learning All rights reserved No distribution allowed without express authorization G A T E S , D E A N D R A 1 1 2 3 T S G A T E S , D E A N D R A 1 1 2 3 T S Chapter 8 Staffing | 347 are sociability, agreeableness, conscientiousness, emotional stability, and intellectual openness. Personality testing can be useful to anticipate how employees might behave, particularly on an interpersonal level, but personality tests can be problematic on two levels. First, personality testing has been successfully challenged in many courts because of the impact of certain questions on members of protected classes. Second, few, if any, jobs require one specific type of personality to ensure success. No employer has ever been able to argue successfully in court that a specific personality type or dimension was necessary for effective job performance. As a result, 82 percent of employers do not utilize personality testing in the hiring or promotion of employees. The few organizations that do utilize this testing tend to limit its use to mid-level managers and executives.54 Personality testing is easier to defend, however, when certain personality traits can be directly attributed to superior job performance and an absence of such traits attributed to poorer performance. Yankee Candle, based in South Deerfield, Massachusetts, asks each of its managers G assessment and then compares the results with individual to complete a standard personality store performance. This has allowed A the organization to develop a behavioral profile of highperforming managers, which considers traits such as sense of urgency, independence, motivation, T to detail, and becomes the basis for assessing applicants for communication style, and attention future employment.55 E Under the Americans with Disabilities Act, physical testing can be done only after a job offer has been made unless an employer S can show that there are specific, critical physical requirements for job performance. The use of honesty testing has been declining since Congress passed the Employee Polygraph Protection, Act in 1988. This Act, which prohibits such tests, is problematic and generally unreliable. Research has shown that employee theft is usually influenced more by factors external to the individual (pay inequity, working conditions, or abusive treatment from superiors) than internal factors,D such as inherent dishonesty. Drug testing has been challenged in the courts under the legal doctrine of invasion of privacy; however, no federal right-to-privacy staE tutes prohibit testing of either on- or off-the job drug use by employees. Drug testing is, however, coming under increased scrutiny Aby the courts, and rulings favoring employers versus employees/ applicants have been inconsistent. If any drug testing is conducted, those who sanction and N that they do not unduly target members of protected classes. administer the tests need to ensure D R Call Center Staffing at Capital One A Capital One is one of the largest suppliers of consumer MasterCard and Visa credit cards in the world, with more than 44 million cardholders and more than 20,000 employees. More than 75 percent of its employees are call-center customer service associates, and 3,000 new 1 call-center employees are hired annually. The tremendous growth of the organization required that it develop a strategy 1 for staffing its call centers that would recruit and retain the best individuals, reduce turnover and associated costs, and increase sales volume. After a three-year planning period, 2 Capital One rolled out its company information-based strategy (IBS). A major component 3 of IBS is the proprietary database software that allows Capital One to achieve its staffing goals. Applicants for call-center associate jobs can either call a T proceed through a battery of screening questions or answer toll-free telephone number and the same questions online. These questions relate to the job characteristics deemed to be S most critical to success as a call-center associate at Capital One. Those who receive acceptable scores are invited to a regional assessment center, where they undergo an average of five hours of additional computer-based tests and assessments spread over a two-day period. The IBS uses multiple technologies, including real-time automated decision making, simulations, and online videos. The IBS has decreased time-to-hire by 52 percent, increasing the rate at which Capital One can hire by 71 percent. Moreover, the system has resulted in a 12 percent increase in the number of calls handled per hour, a 36 percent increase in the rate of closing sales, an 18 percent decrease in unproductive downtime, and a 75 percent decrease in involuntary attrition during the first six months on the job.56 9781305234758, Strategic Human Resource Management, Fourth Edition, Mello - © Cengage Learning All rights reserved No distribution allowed without express authorization 348 | Part 2 Implementation of Strategic Human Resource Management The most important criterion for determining whether testing will be effective and withstand any potential legal challenges is whether the testing is specifically related to the job for which an applicant has applied. Job relatedness is most commonly shown through validation of a specific test. There are three types of validation: content validity, criterion-related validity, and construct validity. Content validity involves the use of specific job requirements as a means of testing, where the applicant is tested on skills that will be used on the job. For example, an applicant for a bookkeeping or accounting position might be asked to post ledger entries or prepare a financial statement accurately. Criterion-related validity involves the testing of attributes that have been shown to correspond to successful performance on the job. For example, an applicant could be asked to complete a simulation based on actual experiences incumbents in the position have encountered. Construct validity is similar to criterion-related validity but focuses on traits, such as honesty and integrity, rather than on specific skills. G A Simulation Testing at Toyota T In 2005, Toyota Motors needed to fill 2,000 jobs from tens of thousands of applicants for E its new $800 million assembly plant in San Antonio, Texas. Applicants for these positions began their application process notS via an application form or interview but, rather, at a computer screen, performing a job simulation. Skills such as the reading of dials and , and assemblage of components and processes were gauges, identification of safety issues, measured as well as candidates’ abilities to assess and solve problems and learn. Applicants were also provided with video links where they could actually see and hear about the jobs for which they were applying from D current employees. Those who successfully completed the simulation were invited to return for a hands-on opportunity to demonstrate their E skills. Online simulations such as these allow employers to make better hiring decisions, allow prospective employees a better A sense of the reality of their jobs, and reduce both recruiting costs and employee turnover. Toyota estimates that the use of this screening proN associated with the opening of the San Antonio cess saved the organization $2.6 million plant. The assembler testing processDhas been cited as a “best practice” at Toyota and is being used to assist with the opening of new plants in Canada and Europe. The simulation R process is also being expanded for administrative jobs.57 A References and Background Checks 1 selection process; however, most prospective employers Reference checking is usually part of the do little more than waste valuable time1during this process. Generally, employers contact individuals whose names have been provided by the applicant, despite the fact that common sense 2 a reference who would provide a negative recommendictates that an applicant would not submit dation. However, few employers bother 3 to investigate the applicant’s background any further. Employers can and should call individuals other than those named by the applicant. When conT requests can be made for additional contacts within tacting references the applicant has provided, or outside of the organization. Once an individual has worked within a given industry in a given S geographical location for a few years, he or she becomes well networked within the local industry. These contacts can and should be used for checking references. There are often far fewer degrees of separation between an applicant and an employer than the employer might imagine. Much like testing, reference checking was often done after the interviewing process and usually as the final step in the selection decision. More recently, however, many organizations have begun checking references prior to interviewing to allow them to eliminate candidates and gather information to be used later in the interviewing process. One potential limitation with reference checking is that many past employers will not provide any information at all; they may do nothing more than verify the dates of employment, position held, and/or salary level. Increasing liability for libel, slander, and defamation of past employees 9781305234758, Strategic Human Resource Management, Fourth Edition, Mello - © Cengage Learning All rights reserved No distribution allowed without express authorization G A T E S , D E A N D R A 1 1 2 3 T S G A T E S , D E A N D R A 1 1 2 3 T S G A T E S , D E A N D R A 1 1 2 3 T S 352 | Part 2 Implementation of Strategic Human Resource Management The second trend in staffing is candidate relationship management (CRM). CRM involves building a relationship with job applicants that transcends the current hiring cycle and process. Similar to employment branding, CRM is designed to engage candidates in an ongoing manner and heighten the image of the organization as a desirable place to work. It may be the case that a position is not available for a strong candidate at the time of candidate inquiry, there may be more desirable candidates than there are current openings, or a candidate may have personal circumstances that prevent acceptance of an offer of employment at a particular point in time. CRM involves the creation of an ongoing relationship with potential employees that can be capitalized on when a position becomes available within the organization and/or the candidate becomes available. The end result of this activity is the creation of a pipeline of talent that remains interested in and available for employment with an organization over time. CRM activities usually center on the creation and maintenance of a database of possible canG communication with these individuals to keep them didates for employment as well as regular engaged and their interest level elevated. A Many CRM activities parallel those that organizations have developed with key customers to maintain and nurture the client relationship. Prospective T links to blogs, birthday cards, and other corresponemployees can be sent e-mails, newsletters, dence to keep the organization in the forefront of their minds. Such activities tend to be extremely E cost-effective relative to later savings realized in terms of both time and direct out-of-pocket 67 recruiting expenses. S , CRM at Whirlpool Whirlpool Corporation is a global D manufacturer of major home appliances under brand names that include Maytag, Amana, E KitchenAid, and Jenn-Air. Candidate recruiting at Whirlpool is treated as an opportunity to market both the organization and its product A or potential customer, so Whirlpool’s Exceptional lines. Every job candidate is an existing Candidate Experience (ECE) program was designed to develop both the employer brand N and customer loyalty. The ECE involves a three-stage D process—initial candidate touch points, candidate engagement, and candidate closings—with the goal of providing an exceptional experience R a positive impression of the organization, regardless to ensure that the candidate leaves with of whether an offer of employmentA is made. The first stage-initial candidate touch points focuses on consistent, positively branded messages about the organization and its products, which are designed to create an inviting image. Candidate engagement ensures that every candidate is treated warmly and engaged 1 during the interview process. This includes gifts of Whirlpool products in appreciation for the time candidates spend during the interview pro1 cess. The final stage—candidate closings—attempts to ensure that all job candidates remain customers for life, regardless of the outcome of the interview. 2 Whirlpool realizes that prospective and existing employees have many choices for employment and that top performers 3 have near-limitless choices. The ECE is designed to ensure that Whirlpool is not only successful in recruiting the best available talent but that the process also creates ambassadorsT of the company and its products.68 S CRM activities go beyond simply engaging current and prospective applicants in seeking to attract applicants from unconventional places. Two commonly overlooked sources of employees are customers and former employees. Recruiting employees from an organization’s customer base can be convenient, cost-effective, and result in highly qualified, enthusiastic employees who already believe in the organization and its products or services. Targeting customers who may not currently be on the job market can increase both the quantity and quality of the 9781305234758, Strategic Human Resource Management, Fourth Edition, Mello - © Cengage Learning All rights reserved No distribution allowed without express authorization Chapter 8 Staffing | 353 employer’s applicant pool. Existing customers have experience with the organization’s products and services and can provide additional insights into the development and marketing of the organization’s offerings. A perennial favorite on Fortune magazine’s “TOO Best Companies to for Work For” list is The Container Store, which recruits employees almost exclusively from its customer base.69 A number of organizations are increasingly utilizing former employees as a target applicant pool. This activity has been prompted by a fundamental shift in the employment relationship from the traditional, long-term “loyalty” paradigm to one that is more short-term and transactional in nature.70 Former employees can be a valuable resource to an employer, given that they know the organization’s products/services, culture, market, and customers. Many employers are also creating alumni networks for former employees, keeping these individuals in touch via social events and written and electronic communications. Former employees can be similar to internal hires in G that they result in lower recruiting costs and a shortened timeto-hire cycle, given that they A are known entities within the organization. Former employees can also bring a heightened sense of the marketplace, depending on their interim employment. Former employees also tend toTbe more productive because of the loyalty and goodwill created by the employer as part of the re-employment decision.71 Returning employees have higher E retention rates than other employees, and re-employment also allows employers to recoup some of the training and development costs of these former employees as well as benefit from S any additional training and skill development that the employee has obtained since leaving the , organization.72 CRM has another important dimension: public and customer relations. Job candidates who have a negative experience as part of the application process can affect an organization’s sales D found that 8 percent of job applicants who had a negative expeand reputation. One recent survey rience with an organization had sufficient anger and resentment to cause them to end their relaE tionship with the organization as customers and share this resentment with others.73 Job applicants may resent the fact A that the organization considers them “good enough” to be a customer but not so as an employee. CRM, particularly in those organizations who market directly to consumers, need to ensure N that all job applicants, particularly those who were not hired, are treated with respect throughoutD the application (and rejection) process. The third trend in staffing is a heightened awareness of fit between an applicant and the R number of employers are using various types of assessments organization’s culture. An increasing in screening employees to determine A whether there is an optimal “fit” between an applicant’s interpersonal style and preferences for certain types of work environments and the organization’s culture. One recent study found that more than half of hiring managers ranked fit as more important to their hiring decisions than either analytical thinking of communication skills, citing its 1 positive impact on retention.74 Assessments can take various forms including complex surveys, in-depth questioning, and spending 1 extended periods of time with prospective coworkers. They can also involve simple questions such as “if you could be any superhero, who would it be?” 2 your personality?” (Johnson & Johnson), “what animal are (AT&T), “what color best represents you?” (Bank of America), and “describe your perfect last meal” (Whole Foods).75 3 Assessments for fit can allow job candidates to self-select out of the application process and T help to avoid some of the above-mentioned issues, which can be associated with candidates who are not selected by the employer. While these assessments can become an important part of an S organization’s staffing strategy, they run the risk of having employers select candidates who might not be the most skilled or talented applicants. On the other hand, fit is a stronger predictor of retention than skills and can result in significant savings for an employer relative to recruiting and orientation or onboarding costs. Online retailer Zappos doesn’t assess job candidates for fit but realizes its importance in creating a high-performance work environment. As a result, the organization will offer new employees who might be struggling $40004,000 to resign after a week of employment rather than continue to invest in training an employee who simply doesn’t get along with coworkers.76 9781305234758, Strategic Human Resource Management, Fourth Edition, Mello - © Cengage Learning All rights reserved No distribution allowed without express authorization G A T E S , D E A N D R A 1 1 2 3 T S G A T E S , D E A N D R A 1 1 2 3 T S G A T E S , D E A N D R A 1 1 2 3 T S Chapter 8 35. Roberts, B. “System Addresses ‘Applicant’ Dilemma,” HR Magazine, September 2002, 47, (9), pp. 111–119. 36. Martinez, M. N. “The Headhunter Within,” HR Magazine, August 2001, 46, (8), pp. 48–55. Krell, E. “Personality Counts,” HR Magazine, 50, (11), November, 2005, pp. 47–52. 56. Romeo, J. “Answering the Call,” HR Magazine, October 2003, 48, (10), pp. 81–84. 57. Winkler, C. “Job Tryouts Go Virtual,” HR Magazine, 51, (9), September 2006, pp. 131–134. 58. Meinert, D. “Seeing Behind the Mark,” HR Magazine February 2011, 56, (2), pp. 31–37. 59. “SHRM Board Oks Investment Advice, Safety, Reference Positions,” HR News, May 2002, p. 11. 60. Meinert, 2011, op. cit. 61. “The Use of Social Networking Websites and Online Search Engines in Screening Job Candidates,” Society for Human Resource Management, August 25, 2011. Available at http://www shrm.org/research/surveyfindings/ articles/pages/theuseofsocialnetworkingwebsitesandonline searchenginesinscreeningjobcandidates.aspx E Hirsh, S. “Software King Builds Young Careers, Too,” Baltimore Sun, March 9, 2003, p. 1 D. 62. Ready, D. A., Hill, L. A. and Conger, J. A. “Winning the Race for Talent in Emerging Markets,” Harvard Business Review, November 2008, pp. 63–70. Thornton, G. R. “Employing Interns,” Society for N Human Resource Management, July 14, 2011. Available at http://www.shrm.org/templatestools/toolkits/ D pages/employinginterns.aspx 63. Ladika, S. “Trouble on the Hiring Front,” HR Magazine, 51, (10), October 2006, pp. 56–61. 64. Ibid. 65. Brandon, C. “Truth in Recruitment Branding,” HR Magazine, 50, (11), November 2005, pp. 89–96. 66. Fleck, C. “Not Just a Job,” Staffing Management, 6, (1), April 1, 2010. Available at http://www shrm.org/ Publications/StaffingManagementMagazine/Editorial Content/Pages/0410fleck.aspx 67. Frase, M. “Stocking Your Talent Pool,” HR Magazine, 52, (4), April 2007, pp. 67–74. 68. Weirick, K. “The Perfect Interview,” HR Magazine, 53, (4), April 2008, pp. 85–88. 69. Arnold, J. “Customers as Employees,” HR Magazine, 52, (4), April 2007, pp. 77–82. 70. Pulley, J. “When the Grass Wasn’t Greener,” Staffing Management, 2, (3), September 2006. http://www .shrm.org/Publications/StaffingManagementMagazine/ EditorialContent/Pages/0607_pulley.aspx 71. Weaver, P. “Tap Ex-Employees’ Recruitment Potential,” HR Magazine, 51, (7), July 2006, pp. 89–91. Ibid. 38. Robinson, K. “Online Bidding Fills Nursing Jobs,” HR Magazine, December 2003, 48, (12), p. 44. 39. Fisher, C. D., Schoenfeldt, L. F. and Shaw, J. B. Human Resource Management, 4th ed. Boston, MA: Houghton Mifflin Co, 1999, p. 274. 41. 42. G Hamori, M. “Who Gets Headhunted—And Who Gets A Ahead?” Academy of Management Perspectives, November 2010, pp. 46–59. T Martinez, M. N. “Recruiting Here and There,” HR E Magazine, September 2002, pp. 95–100. S Lublin, J. S. “More Executive Recruiting Shifts InHouse,” Wall Street Journal, October 10, 2012, B8. , 43. Ibid. 44. Taylor, S. “The Lowdown on Internship Programs,” HR Magazine, November 2010, 55, (11), pp. 46–48. D 45. http://www.shrm.org/research/surveyfindings/articles/ pages/shrmpollpersonalitytestsforthehiringandpromotionofemployees.aspx 55. 37. 40. A 46. 47. Staffing | 357 R Higgins, C. and Judge, T. “The Effect of Applicant A Influence Tactics on Recruiter Perceptions of Fit and Hiring Recommendations: A Field Study,” Journal of Applied Psychology, 89, (4), pp. 622–632. 1 48. Poe, A. C. “Graduate Work,” HR Magazine, October 2003, 48, (10), pp. 95–100. 1 49. Ibid. 50. Zielinski, Dave. “The Virtual Interview,” HR zine, July 2012, 57, (7), pp. 55–57. 51. Ibid. 52. Ibid. 53. Goldberg, L. R. “An Alternative ‘Description of Personality’: The Big-Five Structure,” Journal of Personality and Social Psychology, 59, (6), December 1990, pp. 1216–1229. 54. SHRM Poll: Personality Tests for the Hiring and Promotion of Employees. Society for Human Resource Management, December 16, 2011. Available at 2 Maga3 T S 9781305234758, Strategic Human Resource Management, Fourth Edition, Mello - © Cengage Learning All rights reserved No distribution allowed without express authorization 358 | Part 2 Implementation of Strategic Human Resource Management 72. Pulley, 2006, op. cit. 76. 73. Weber, L. “Angry Job Applicants Can Hurt Bottom Line,” Wall Street Journal, March 14, 2012, B8. Hill, L. “Only BFFs Need Apply,” Bloomberg Business Week, January 7–13, 2013, pp. 63–65. 77. Herring, C. “Does Diversity Pay? Race, Gender, and the Business Case for Diversity,” American Sociological Review, 74, April 2009 pp. 208–224. 74. Rivera, L. A. “Hiring as Cultural Matching: The Case of Elite Professional Service Firms,” American Sociological Review, 77, (6), pp. 999–1022. 75. Poundstone, W. “How to Ace A Google Interview,” Wall Street Journal, December, 2011 C1-2, pp. 24–25. G A T E S , D E A N D R A 1 1 2 3 T S 9781305234758, Strategic Human Resource Management, Fourth Edition, Mello - © Cengage Learning All rights reserved No distribution allowed without express authorization G A T E S , D E A N D R A 1 1 2 3 T S 360 | Part 2 Implementation of Strategic Human Resource Management How did temporary employment evolve from a small, peripheral practice to one that is large and central to contemporary hiring practices? Much is known about the historic rise of the temporary help services industry, which actively worked to enlarge and legitimate this previously marginal employment relationship. In the 1970s and ’80s representatives of the industry directly marketed their product— temporary laborers—to hiring managers, overcoming their resistance to using nonpermanent workers (Ofstead, 1999). Convincing hiring managers to transition from the stopgap to the staffing model of using temps required work and persuasion. Temporary staffing agencies had to appease hiring managers’ anxieties about the logistical complexities of bringing in temps, and overcome their reluctance to change longstanding employment practices of hiring permanent workers. Industry representatives worked to convince hiring managers that using temps would not compromise trade secrets, that the costs associated with training and retraining workers would not be prohibitive, and that temps could be loyal to the companies that employed them (Vosko, 2000, p. 149). The THS industry also fought its case in the courts and reshaped labor law, striving to generate new demand for its product and improve the competitive conditions under which it operated (Gonos, 1997). The industry lobbied and worked through state and federal courts to become legal employers of temporary workers. This accomplishment had two profound implications: First, it meant that the temporary agency, rather than the hiring company, became the employer of record and that firms rid themselves of legal obligations to a subset of their workers. Second, given that managers in hiring firms did not actually have to fire and hire temps themselves— given that they could simply inform agencies if they didn’t want a particular temp to return or if they needed a fresh supply of temps—the corporate world gained great latitude in its use of labor. On top of these institutional and legal changes, THS industry leaders cultivated a new, positive image of temporary workers in the popular media, paving the way for greater acceptance of temps and greater skepticism about permanent workers’ productivity and work ethic (Smith & Neuwirth, 2008). Writing articles in personnel and business magazines, many THS leaders highlighted the value of their new product, emphasizing the hidden costs of permanent labor; discussing groups of people (besides married women) who had the capacity to be good temporary workers; and identifying new occupations, industries, and task niches where temporary workers could be used. Through these combined measures, the industry engaged extensively in market-making activities. But what few understand is the active work undertaken by temporary help placement agencies to create a highquality, marketable product: good temporary workers and workforces. Since the late 1990s we have interviewed and observed temporary workers, interviewed production and hiring managers, and worked in the office of a temporary help service agency in Silicon Valley (an agency we call Select Labor).3 Our focus during this time has been on the labor market segment that includes office, assembly, warehouse, and other types of entry-level temporary agency workers and the agencies that employ them. Although there are other types of temporary workers, such as high-level contractors (Barley & Kunda, 2006), day laborers (Bartley & Roberts, 2006), and contract company employees, temporary agency workers constitute the largest proportion of the temporary workforce (Dey, Houseman, & Polivka, 2007). We found that both temporary help service agencies and the industry atG large have a significant interest in constructing a labor force A of good temporary employees, creating temporary jobs, and reshaping managerial practices to optimize outT for both temps and hiring firms. comes E Our findings help correct an outdated image of temporary employment and temporary workers. Contrary to the perception of temporary help agencies as machines that eat S and spit out workers, treating them as if they were disposable, , interchangeable commodities, temporary help agencies even have created a set of practices that buffer their workers from the most insecure and exploitative aspects of temporary D employment. Indeed, some of their screening, selection, and retention practices closely resemble those used when compaE nies hire workers on a standard basis. Temporary workers, frequently assumed to be disposable, are in contrast often A valued workers whom companies and agencies seek to use onNa steady, long-term basis. D The paper unfolds as follows: First, we look at the economics of temporary help agencies as a way of understanding R unique position of serving two “masters”: their tempotheir rary A workers (their products) and the companies who employ their workers (their clients). In the second and third sections of the paper, we look at Select Labor, a temporary help agency that we studied over several years, and use the case 1 to show how temporary agencies work to get the best possible employees and also how they must negotiate and work with 1 client companies to ensure a good “fit” for the temporary 2 they place there. workers 3 T The Economics of Temporary Help Agencies S To understand the rise of temporary agencies, it is first important to look at the economics of THS agencies. These agencies compete with one another and earn their profits in a variety of ways. Most fundamentally, they sell services: expertise and ability to assist with recruitment, screening, hiring, placing, monitoring, and firing temporary workers and managing payroll (temps are on the agencies’ payroll, not the payroll of the hiring companies) (Pfeffer & Baron, 1988). They also help companies develop and manage tempto-perm programs, set up on-site offices (“vendor on 9781305234758, Strategic Human Resource Management, Fourth Edition, Mello - © Cengage Learning All rights reserved No distribution allowed without express authorization Chapter 8 premises”), and sometimes transport temps to their work sites (Vosko, 2000). Agencies can compete for new clients (the hiring companies that need temps) by offering smaller markups than their competitors do. An agency profits from every hour its temps are employed because of the markup, a standard practice whereby a client firm pays an hourly wage for each temp plus a negotiated additional amount that goes directly to the agency and constitutes the agency’s profits (Gonos, 2000/01). Hourly wages for temporary workers are often benchmarked to prevailing regional wages for entry-level jobs, although agency representatives often play G a role in negotiating higher wages for their temps (Smith & Neuwirth, 2008). A Beyond being economically competitive, agencies can T also compete with one another by selling quality temporary workers. Temporary workers are the grist for the THS mill, E and agencies work in a field that is dense with other agencies 4 striving to place their product first. The increased emphasis S on providing quality temps parallels the larger preoccupation , with “quality service” that has swept through American business over the past few decades. As companies compete to survive, they strive to distinguish themselves by the high D quality of the goods and services they provide to consumers (Martin, 1994). Client firms play their own role in pressuring E agencies to produce a pool of good temps: They threaten to use the temps of other agencies if they are not satisfied with A one agency’s workers (Peck & Theodore, 1998). Companies N may demand “good” quality temps because they are concerned with productivity, skills, effort, and motivation D (Nollen & Axel, 1998, p. 138). R Promoting an image of temporary workers as good workers and actually creating temporary workers who can A live up to that image leads THS agencies to adopt a unique set of practices. A good temp, we argue, is a specific type of worker but also an image, a sales pitch, and a source of com1 petitiveness for the THS industry. Sometimes temporary workers measure up to this ideal; sometimes they don’t. 1 Sometimes people want to be good temps; sometimes they 2 don’t. What is important is that promising then constructing good temporary workers is at the heart of the mainstream 3 temporary placement industry. T S Characteristics of a Good Temporary Employee There are multiple dimensions that can come into play in selecting and making an employee not simply a good worker but a good temporary worker, and ensuring that an agency is not simply a purveyor of generic labor but of a reliable, oncall workforce of temps. In theory, a good temp has specific characteristics. The first concerns attitude. Agencies look for job applicants with attitudes and dispositions appropriate for temporary work (Cappelli, 1995). Successful temporary workers must understand and accept the unique terms of Staffing | 361 temporary employment. When people are new to temporary employment it is imperative that they are or become familiar with the concept of “at will” employment and the fact that there is no employment guarantee; that a job might last just a few days but that it might last several months or more with no guarantee of a permanent position; that the agency will receive a portion of every hour’s wages paid by the client firm as a result of the markup; that their hourly wage almost certainly will be lower than the hourly wage of their permanent counterparts, even though they may work side by side doing exactly the same tasks5; and that the agency, not the client firm, is their boss. These conditions can signal to applicants that they are second-class citizens, posing a challenge to the companies that hire them. For example, these terms may be troubling to an individual who is determined to land a permanent, secure job—and as American Staffing Association data show, the majority of people who take a temporary job do so with the hope that it will lead them to permanent employment (Berchem, 2006, Figure 6). An individual with predictable resentment, anxiety, and possible confusion about having to accept temporary employment would likely be a difficult person to place and keep on the job. Even a person who prefers a temp job because it allows him to attend school or raise a family can find it impossible to succeed in these pursuits given the inherent unpredictability of a “no guarantee” job. This person may not want a permanent job but still may desire something relatively stable. For these reasons, a desirable attitude might consist of a demonstrable level of mental flexibility and a willingness to work on an open-ended basis. We expect such characteristics of good employees, but the idea that good attitude would be expected of temporary workers runs counter to traditional notions of temps as disposable labor. It is incumbent on agencies to select or create workers with reasonable attitudes, as illustrated by our data. The second characteristic of a good temp has to do with a minimum level of competence, responsibility, and adaptability. Even jobs that appear to be unskilled nearly always require some ability and judgment. An ideal temp would be able to walk into a variety of situations and get to work. A materials handler position, for example—where someone delivers materials and supplies to various production units in a workplace—might be thought of as a position requiring primarily physical strength and endurance, but it can entail greater complexity (such as social-relational competencies). Language competencies might be essential in such jobs, as might the capacity for teamwork. Individuals with previous experience in an environment characterized by authoritarian management might be ill equipped to survive in a production setting that stresses participation and initiative. Someone who has worked in a professional position in a law office may feel qualified for a white-collar work environment and be frustrated and resentful if sent to a comparatively de-skilled 9781305234758, Strategic Human Resource Management, Fourth Edition, Mello - © Cengage Learning All rights reserved No distribution allowed without express authorization 362 | Part 2 Implementation of Strategic Human Resource Management white-collar job, repetitively entering data. For these reasons, we might say that a good temp will be adaptable and able to learn, and that agencies must engage in selection methods more extensively than might be anticipated (Wilk & Cappelli, 2003). Additional Challenges Affecting Temporary Help Agencies A good temporary workforce is something above and beyond a good temporary worker. Temp placement agencies need to be able to guarantee that if a hiring company places an order for a batch of temps, the agency will be able to quickly produce decent temporary workers in volume, a strong motivation for having a just-in-time pool of good temporary workers. Inherent in the promise of producing a batch of temps on demand is the promise of a steady stream of temps who can be sent and will stay for the duration of a project, whether it is fulfilling a one-time order that requires assembling 1,000 servers or, testing circuit boards in a company that has a freeze on hiring permanent workers but has authorization to hire temporary workers—all in positions that are defined as temporary, may last months, and will ultimately disappear. For this reason, agencies can be committed to retention and minimizing turnover of good temps (Autor, 2001). In the era of widespread and long-term use of temporary workers, agencies lose if turnover is too high. As when companies hire permanent workers, invest in their training, and pay a cost if they quit prematurely, temporary placement agencies invest in their temps and pay a cost if temps walk off the job without completing the job assignment or refuse to return to an assignment. Having to continually create new temps becomes a burden to the agency. This cost has been underestimated in previous studies, which insinuate that, from the perspective of the agency, entry-level temporary workers are interchangeable, almost disposable. On the contrary, THS agencies incur fixed costs that they strive to minimize. Every new job applicant must be administratively processed: tested, screened, and interviewed for a job. Agency staff must nurture their social relationships with temps, particularly good temps who are valued members of a temporary pool and will work diligently for long periods of time in one temporary position. Since the agency profits from every hour a temp is employed, it is ideal that any given temp work as long as possible in one position, without disruption or the need to find a replacement. These relations build momentum and endure, and losing them means the agency has to begin all over again with new “raw material.” Hiring companies (the clients of the temp agencies), too, must train and retrain new temps, leading shop-floor managers to try to avoid turnover of long-term temps (Smith, 2001). Having to deal with a hiring company where bad management practices lead temps to quit their assignments poses a distinct challenge for a placement firm that wishes to maintain a steady and reliable supply of temporary workers. In the following pages we use case study data to detail how an agency manages these contradictory issues. These strategies, we argue, are at the center of the growth, the normalization, and the continuation of temporary employment in the United States. How an Agency Constructs Good Temporary Workers and Workforces For Select Labor, a pseudonym for the agency we studied, G attracting, developing, keeping, and controlling good temps was A by no means automatic or straightforward. Just as the THS industry has had to work over decades to achieve T legitimacy for a new type of employment relationship, so too E did Select Labor have to repeatedly build and control its temp workforce. We cannot take this process for granted. S Agencies have to construct good, qualified temps to cultivate and maintain marketable workforces. What sells in the , world of temporary employment is not simply warm bodies; it is good workers who are willing to work on a temporary basis. D According to Select Labor’s marketing brochures, the agency E promised temps who were “productive,” “committed to quality performance,” and “reliable,” and who “would A significant contributions to [hiring company] make products.” Agency staff had many reasons to guard against N hiring people they suspected wouldn’t succeed as temps, D because they would not be productive, wouldn’t whether cooperate with supervisors and managers, or in other ways R didn’t show potential for positive work performance. Having aA reliable stream of quality temporary workers supported the agency’s reputation, attracted additional client firms, and added to the bottom line. Sending temporary workers who wouldn’t last on a job was directly counterproductive to 1 these goals. We found that these interwoven imperatives led 1 Labor to adopt a variety of strategies to improve the Select quality of its temporary labor and the quality of its services 2 (for a fuller analysis see Smith & Neuwirth, 2008). 3 Selective Recruitment T virtually every business in America, Select Labor (SL) Like advertised its services in customary places and ways. AnyS body wishing to find employment—whether as a temporary worker or as a temporary who could convert to a permanent worker—could find out about SL on its Web site, in the yellow pages of the local telephone directory, in a regional Employment Guide and Career Source magazine, and at community colleges and training centers. In addition to these impersonal methods of advertising, SL staff widely and selectively recruited people who could help secure the firm’s claim to sell a high-quality temporary workforce. 9781305234758, Strategic Human Resource Management, Fourth Edition, Mello - © Cengage Learning All rights reserved No distribution allowed without express authorization Chapter 8 For one thing, SL staff attended local job fairs when possible. Job fairs are fascinating terrain for anyone studying contemporary employment practices. Visitors can find dozens if not hundreds of employers hawking their products, services, and reputations to potential employees. Fairs, particularly large urban fairs, attract thousands of the job-seeking unemployed as well as employed people just curious about what the labor market has to offer. Job fairs encompass a surprising number of employers and industries (including government agencies, goods and service providers, Internet companies and high-tech firms, and temp/staffing agencies). When Select Labor staff sponsored tables at a fair, they could G keep their eyes open for job seekers who were looking for permanent work but were receptive to learning about the A advantages and disadvantages of temporary jobs. At the T same time, the staff used this opportunity to discourage those job seekers for whom temporary employment would E be an unacceptable alternative to permanent jobs: In other words, agency staff engaged in nurturing some potential S applicants and weeding out others before they even came to , the agency office. Reeling in job fair attendees by offering promotional items such as chocolates, pens, calendars, and notepads, D agency reps collected résumés from attendees (as do virtually all those who staff the tables at job fairs). They conducted E impromptu interviews, speaking with and taking notes on potential job candidates about their preferred hours of work A and wages. Conversations at these fairs gave SL reps an openN ing to educate job seekers about temporary work and collect information for their database of potential recruits to the D industry. R Staffing specialists tried to recruit competitive, good temporary workers through networks with job development A specialists in the region. These job development specialists worked for state agencies (both training and placement); they worked with community colleges, and they worked for 1 for-profit training schools and colleges. One staff member in the SL office, for example, sent off job announcements 1 each week to a group of job specialists in the region with 2 whom he had developed close relations throughout his career in the staffing industry, trusting that they would 3 direct these announcements to appropriate individuals. T Alex, an energetic recruiter at Select Labor, said of his systematic approach: S Many of these people don’t make money by placing people—they either work for the county, the city, or the state, and it’s their job to help people find work. So if I have a job opening, I’ll go down my list and start calling these folks and say, “Hey, I need this type of candidate with these skills” and so on. I’ll ask if they have anyone they can send my way. And every Monday morning I try and type out a spreadsheet with all my job openings. Then I fax this list to over 33 agencies, schools, and places like Staffing | 363 that. I’ll follow that up with a phone call or even a visit if I have time. Sometimes I’ll go ahead and visit the place and post a flyer with my open job orders, and I’ll attach an envelope to the flyer with my business cards. Other staff routinely telephoned their contacts at agencies and schools to find out about new graduates who might be good “material” for temporary positions. Trust is an important ingredient in hiring new workers, and as sociologists and labor economists well know, relying on established networks is a common way for employers to recruit good workers they can trust (Granovetter, 1995; Smith, 2005). Select Labor recruited reliable temps by tapping the networks of the temps already on its payroll. SL had a formal program that offered modest bonuses to temporary workers who recommended friends or family members for jobs with SL. (The parent company estimated that approximately 50% of SL’s recruits were friends and family members of current employees.) To maximize the quality of those who were referred, SL gave temps the bonus only if the recommended person was able to work in good standing for several weeks of full-time temporary employment. On occasion, SL staff declined to hire someone recommended by one of their regular temps, a person who was good enough to be sent out to some jobs but just questionable enough to make Select Labor staff wary of his recommendations. In other words, agency staff did not leave the quality of their temporary labor pool to chance, or passively wait for the right kind of temps: They sought job applicants who might be reasonably compatible with temporary positions. Screening for Good and Weeding Out Undesirable Applicants Selective recruitment doesn’t guarantee that a temp will succeed on the job. Once the agency succeeded in persuading people to visit the office, follow-up measures were critical. SL staff used a rigorous intake process as a filter to separate questionable from promising temps. What is surprising is the high level of quality control agency representatives used to select the members of their temporary employment pool. While we would expect that a company hiring a permanent worker for a complex or demanding job might use rigorous selection measures (Wilk & Cappelli, 2003), we would not have the same expectation for those who hire workers who are commonly thought of as “disposable.” The primary objective of the intake process was the inextricably entwined work of weeding out unacceptable candidates and identifying acceptable ones. First, minimal skills tests were administered in the office: SL had one room in the facility dedicated to testing the computer skills (word processing, graphics, and database management) of candidates for office positions, and the soldering skills of applicants for positions with integrated circuit producers who needed expert solderers. Beyond their technical skills, job applicants 9781305234758, Strategic Human Resource Management, Fourth Edition, Mello - © Cengage Learning All rights reserved No distribution allowed without express authorization 364 | Part 2 Implementation of Strategic Human Resource Management were assessed on their understanding of the parameters of temporary employment. SL placement specialists were trained to carefully follow a scripted interview protocol when new temps came in seeking work. SL staff gave job seekers a pamphlet outlining the features of temporary employment, including minimum standards of job participation (arriving on time for an assignment, observing all client rules, volunteering for more tasks once on the job), the importance of maintaining confidentiality about the client’s business, and covering how payroll was handled. Staff were instructed to use the interview to find out how much the candidate knew about temping. Training literature exhorted them to consider: “What does the candidate hope we can do for him/her? How flexible is he/she regarding assignments and pay? How realistic is the candidate? Do they understand the meaning of ‘at will’ employment?” The brochure went on to implore recruitment specialists to “set forth Select Labor’s expectations, policies regarding communication and commitment, business dress and attendance. Gauge what you emphasize by the strengths/weaknesses/ problems you suspect.”6 If a recruitment specialist suspected that an applicant’s expectations were way out of line, or that an applicant misrepresented his skills or wasn’t really serious about taking a temporary position, the specialist would attempt to discourage him and, more notably, “encourage poor candidates to register at other services.” Agency staff were primed to detect behaviors believed to predict an applicant’s potential for good and bad work performance. Promising applicants were said to have some combination of these good traits: positive attitude, responsibility, reliability, loyalty, energy, intelligence, honesty, and trustworthiness; these traits, in turn, were associated with close to 100 examples of “good” behavior. Questionable applicants were said to have a set of traits that were the polar opposites of those typical of the promising applicants and were similarly associated with close to 100 behavioral propensities, all “bad.” Placement specialists were asked to check off other traits during the interview, using categories for grooming, verbal facility, awareness, and behavior. Each category contained a list of characteristics ranging from very desirable to unacceptable. Under “grooming,” for example, job seekers were ranked as to whether they appeared to be management and professional or “casual” material, fit for light industrial or clerical work, unkempt or unhygienic, “counselable,” or unacceptable. Under “awareness,” a job seeker could be interpreted as excellent, with strong understanding of expectations, all the way down to unsatisfactory, “shows total lack of understanding of expectations.” And under “behavior” someone seeking temporary employment could be interpreted as extremely good with a positive attitude, all the way down to “unacceptable, exhibits poor attitude.” SL staff engaged in quality control of temps after they were placed in jobs by collecting and studying data on worker performance, monitoring temps at job sites, and rewarding good temps while sanctioning problematic temps. For example, agency staff sent a survey to the managers at client companies asking managers to evaluate individual temps. The short survey created a track record about general aptitudes and behaviors rather than specific skill sets: “production” and “skill level” (both undefined), attendance, judgment, cooperation, dress/grooming, and accuracy—with a telling question, “Would you accept his/her return?” concluding the survey. Quality control was exercised in other ways as well. Agency staff were required to conduct a “quality check” by G hiring managers within 30 minutes of the arrival of a calling new A temp or batch of temps to make sure their transition into the workplace had been successful. Had the temp or T arrived on time? Had they been able to understand temps and follow directions? SL staff always hoped that the new E temps would blend into the client company in a relatively seamless S way. As further follow-up, agency staff would conduct unannounced “spot checks,” visiting different work sites to, check in with managers, touch base with the temps they had hired, and observe the work site to make sure that everything was in place. At companies where they had on-site D offices—vendor-on-premise arrangements—staff were easily able to monitor temps on the job for evidence of satisfactory E behavior and attitude. All these methods allowed agency staff toA identify the good performers and gather ammunition for weeding out the bad. N SL staff used incentives to reward and reinforce good temp D behaviors. By using an employee reward system that set a bar for quality work performance, they communicated R they expected of all their temporary workers, simultawhat neously acting to retain good temps. The employee recogniA tion program awarded bonuses to temps who were deemed of the highest quality, with good temps receiving cash, paid days off, and gift cards. SL staff encouraged client firms to have 1 employee-of-the-month award programs for temporary workers as well. 1 On the other hand, agency staff could refuse to rehire or 2 temps who, for various reasons, didn’t succeed on the replace job. 3 Agencies are not legally bound to place or replace applicants once they have hired them. And on the other side of Temployment relationship, hiring firms can easily request the that a temp not be sent back to them. Select Labor staff could S cast off substandard or “suboptimal” (Peck & Theodore, 1998, p. 670) temps, noting who was unsatisfactory, who was making managers at client firms unhappy, and who was unlikely to make it as a temp in the long run. Agency staff occasionally sent a temporary worker off to interview for a position at a company, only to hear later that the individual never arrived. When and if the job candidate called the agency begging for a second chance, Select Labor’s staff had the option of deactivating his job application. SL staff 9781305234758, Strategic Human Resource Management, Fourth Edition, Mello - © Cengage Learning All rights reserved No distribution allowed without express authorization Chapter 8 generally gave temps with problems a second chance but usually stopped before giving them a third. Occasionally, the placement staff at SL would tell job seekers after an infraction (such as not showing up for an interview or a job, or failing to meet the minimum standards for job performance) that they weren’t able to find another position for them, a passive antiretention strategy. The agency’s guarantee that Select Labor would not charge a client firm for the final eight hours of a “failed” temp’s work subtly reminded staff about the financial cost of keeping a bad temp. Maximizing Fit, Modifying Workers’ Aspirations G Successful sales in the staffing industry come from knowing A how to place the right worker in the right job. Select Labor management cont...
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