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ere-falllogo-facebookWhen you see a conference session titled Straight from the Source: What’s Really on the Minds of the New Generations of Top Candidates, well, it’s something you just have to hear.

Add in that fact that it is being led by Gerry Crispin and Mark Mehler of CareerXroads, two very smart and savvy guys, and you can see why this not only played to a full house but was also a great way to kick off the second full day of the Fall 2013 ERE Recruiting Conference & Expo in Chicago.

The charm of this session — and it has been done at ERE conferences before — is that it gets bright, young in-demand job seekers (and some are newly hired) to talk about just what it is that they have experienced as interns and first-time job seekers, and how that plays with people of their generation. (more…)

cae-logoAs long as I have been in business, hiring managers have been trying to pin a magic number on job candidates in the hope it will indicate future job performance. Sometimes that number is a GPA, combined test score, or even past earnings. Now we have the Collegiate Learning Assessment (CLA+) … a test given to new college graduates and scored like the SAT. But guess what? Magic numbers are just that … magic!

Magic is the art of illusion. That is, a magician creates illusions using sleight of hand that deceives the audience. Hiring decisions based on a number are sleight of hand because they lead people to think everything about a person can be reduced to a few digits. But anyone with enough years on the job and the professional savvy to systematically compare job performance to pre-employment test scores (i.e., studies … not stories) knows this is only part of the performance story. (more…)

Letterman-BuildingIs a degree from Harvard worth more than one from Oklahoma State? By how much? A year at Harvard costs $52,650 versus about $9,000 at OSU. So is a graduate of Harvard almost six times better than one of OSU?

You may soon be able to tell, courtsey of a new test called the Collegiate Learning Assessment that supposedly provides an objective, benchmarked report card for critical-thinking skills. (more…)

3381_Wyatt Hall WindowStudents 2011College recruiting has been in the doldrums during most of the economic downturn, and as a result there have been few strategic changes in it, even though the rest of the recruiting function has undergone major shifts during the downturn. And just in case you haven’t seen it yourself, I am predicting that college recruiting demand is about to explode and the competition will soon reach previous “war for college talent” levels.

This resurgence of interest in college hires is due to a reviving economy but also because of the urgent need in a VUCA world for employees who are creative, innovative, fast-moving and who are comfortable with new technology.

If you are one of the corporate talent leaders who want to get and stay ahead of the competition, the time is ripe for re-examining your college program to see what needs to be done to update it. Start with the college recruiting staff. Make sure that it is staffed with data-driven, experienced recruiting professionals prepared for real change, rather than simply enthusiastic young people whose primary qualification is that they themselves are recent college grads. I’ve put together a list of the top 10 categories of strategic change that could literally propel your program into dominance. They are listed with the most impactful strategic changes appearing first.

Action Steps to Win “the War for College Talent” in 2014 (more…)

NYU -- the largest private university in the U.S.

NYU — one of the largest private universities in the U.S.

With the astronomical jobless rate and the skyrocketing cost of four-year college, many are questioning the value and validity of a bachelor’s degree. As a proud NYU alumnus, I treasure my education and wholeheartedly believe in the relevance of the college experience. However, over the years my black-and-white viewpoint on this subject has shifted to shades of gray.

That’s why the current educational phenomenon of “degree inflation” is so disconcerting to me. Economists and educators have coined this term to describe today’s hiring climate, where a college degree has become the basic requirement for jobs that don’t actually need an advanced education. According to Burning Glass, these positions include clerks, dental hygienist, administrative assistants, and paralegals. Corporate hiring professionals often adopt strict “degree required” criteria as a means of weeding out candidates and working with a manageable number of prospects. But very often this false criteria has no bearing on someone’s ability to engage, contribute, or excel in a role. (more…)

About 40% of University of Wyoming students are non-traditional

Recent statistics say as many as two thirds of current college students are considered nontraditional students. Yet, most career development and rotational programs are tailored for the traditional student, and even screen out nontraditionals.

Who They Are

The National Center for Education Statistics loosely defines “non-traditional” students as meeting one or more of the following criteria:

  • Delays enrollment; does not enter postsecondary education in the same calendar year that he or she finished high school.
  • Attends part time for at least part of the year.
  • Works 35 hours or more per week while enrolled.
  • Is considered financially independent for purposes of determining eligibility for financial aid.
  • Have dependents other than a spouse (usually children).
  • Is a single parent.
  • Completed secondary education with a GED or other high school completion certificate or did not finish high school.

Statistics from that same agency claim that 73% of all college students meet one or more of these criteria, which means most campus recruitment efforts only target the remaining 27%.

Nontraditionals offer employers many benefits:

  • Professional experience outside of the classroom. They may have worked, or are currently working, and understand expectations and responsibilities of employment.
  • Life experience. Veterans have traveled and had leadership experiences in high-pressure situations. Parents have “people management” experience.
  • Goal orientation demonstrated by pursuing a degree despite obstacles.

Where They Are

Demands on their time means nontraditionals spend less time on campus, and their classes are often after “normal” business hours. While more than 80% of students attending two-year colleges are defined as non-traditional, many attend online classes at traditional schools (like Harvard or Northeastern), or any of the various virtual-only institutions (like Regis University in Boulder, Colorado).

While membership may not be as active, a few organized student groups can be located:

  • Many colleges have a commuter student office, commuter council, or other liason to non-traditional students, and a good place to communicate to them is through their on site or electronic bulletin board. Most students use email and electronic means of communication, and may get emailed updates directly.
  • Student Veterans of America is a non-profit national organization with more than 500 chapters in the US, Paris and Rome.
  • Each university’s intra-fraternity council has information on sororities/fraternities that count commuter students as their target membership.
  • Reach out to student councils, clubs, or boards. Student government can be a resource to find the leadership of these organizations, and perhaps a few of your target audience themselves.
  • Students in Free Enterprise is a group that attracts students with entrepreneurial interests. School teams design, develop, and complete a community service project each year, and compete regionally and nationally to win scholarships and funding.

What They Want

Nontraditional students face a few challenges to completing a degree: financial hardship caused by student loans, working while attending classes, or familial support obligations, dependent care concerns, and competing work and academic commitments. Identify ways that you can meet these students’ unique needs and set yourself apart as an employer:

  • One third of college students are over 25 years old, and many have families and children. Benefits like flex time, child and dependent care resources, or a generous or flexible PTO policy pique this population’s interest.
  • Understand that this population may have limitations on relocation. While this eliminates many rotational career development programs from their short list, this location commitment can be used to your benefit. Consider partnering with local post-secondary schools, asking them to create a talent pipeline for your specific location.
  • Create connectedness: identify or organize an employee resource group for veterans, single parents, older students, or part-time employees.

Presenting Them to Managers

You might be surprised at the number of hiring officers who say they want college graduates, but stumble when pushed to define reasons.

If you have a college hire career program, view it with fresh eyes. Open the conversation with your hiring managers and sponsors and ask questions.

  • Where do our requirements come from?
  • Can we develop a program with criteria inclusive of nontraditional students?
  • How do we remove obstacles to attracting those students?

Be careful of simply re-wording your existing program to sound attractive to a nontraditional. This is a futile effort, and a sure way to lose credibility with both your client and your applicant. Other things to consider:

  • Consider offering part-time employment as opposed to internships. A nontraditional student may be willing to work a shorter paid week while in school. (Partner that with a part-time tuition reimbursement policy and benefits package.)
  • Speaking of tuition reimbursement, many nontraditionals are already employed in your organization, maximizing their tuition reimbursement plan. Develop a plan to identify, recognize, and reward these students, and offer them a career path. This is a low investment way to both win over leadership reluctant to consider different campus strategies and improve employee retention.

Create an immediate low cost/high return strategy by considering nontraditional students to complement your traditional recruitment methods. Considering the relatively high number of nontraditional students, developing a plan to reach the “73 percent” makes good business sense.

Recruiting is important at any firm, but it is super critical at startup firms. This is because when you have thousands of employees, you can still get by after hiring a few turkeys. At a startup, however, you are so lean that every hire must count and a single bad hire can cause incredible damage.

To further complicate the matter, large firms have a product and employer brand that can attract applicants. Startups have no name recognition, no recruiters, and only an informal recruiting process. The recruiting is made even more difficult because startups are often targeting engineers and IT staff, which are the second- and third-most difficult-to-fill jobs.

Don’t despair. It is possible to recruit great people to a startup if you are aggressive and you know the right tools to use. The following is a list of recruiting approaches and tools that are tailored to the limited resources and the special needs of startup firms. 

Branding and Market Research Approaches

  • Understand a startup’s recruiting advantages – it is a major mistake to assume that as a startup, you are at a disadvantage when it comes to recruiting. Although you may not have an employer or product brand, you still have many recruiting advantages, including the excitement that comes with starting something new. There is a certain panache associated with working for a startup because everyone knows that you are a risk taker, an entrepreneur, and a pioneer. Even though you may work insane hours, you know that you will be part of a cross-functional cohesive team and community that will share the pain with you. At a startup, you will likely have little structure and hierarchy, few rules, and because of the small size, you will have a chance to make some high-impact decisions, interact with executives, and simply to “make a difference.” And with all the risks come the possibility that you could become wealthy in a few years and you will always have the bragging rights that you got in on the ground floor. And if the startup grows, you will likely get promoted rapidly multiple times.
  • Fully know your recruiting targets — the first step in recruiting at a startup is focus your recruiting on top candidates who are not in the job market (i.e. passives) who may be 25 times more impactful than average hires. The next up is to fully understand your target recruits. Fully understanding them requires market research that helps you identify: 1) what specific factors will attract them and turn them off; 2) where they might find out about a job opening (i.e. social media, Twitter, referral from a friend etc.); and 3) what criteria they used to accept or reject a job. Start with a “recruiting behavioral profile” using your current employees to find out these three things. Other options include asking your network on social media, asking on online forums, or even holding focus groups at trade events.
  • Make a list of your selling features — your main competition for recruits may be other startups, so you need to compile a list of what makes your particular startup more compelling than others. Talk to your own employees and especially new hires to find out why they joined and why they stay, and what they find that your firm has to offer that is superior to what other startups have that are recruiting at the same time. Some key selling points might include a great product idea, more secure funding, great leaders, bleeding edge work, a new technology, being closer to an IPO or buyout, a great location, or a super team. Whatever you choose to sell to recruits, make sure that it coincides with the job acceptance criteria of your ideal recruiting targets.
  • Develop stories and become talked about – rather than relying primarily on job postings, a more powerful approach for attracting recruits is to become” written up” in local media and on blogs. In order to be written up, you need a story inventory that contains stories about your product, the way you manage, or other features that people would want to write about and pass on. Start by identifying the factors that journalists and bloggers like to write about. This involves looking at a number of write-ups in order to identify the common factors that writers and editors like to include in their stories. This might be a great project for a PR intern.
  • Make your position descriptions compelling – if you must post your positions on niche job boards, make sure that they are exciting and compelling. Don’t follow the traditional job description format, and be sure to include a few items that will get the reader’s attention.

Traditional Recruiting Approaches Adapted to Startups

  • Referrals are king – whether your firm is a startup or large firm, employee referrals are the fastest way to attract quality talent. Employee referrals work even better due to the growth of social media, but in order to ensure success, you need to integrate the two programs and then educate your employees on how to convert their social media contacts into quality referrals. Give your employees well-designed “referral cards” to hand to potential recruits who impress them. Be sure and encourage referrals “for the good of the team” by demanding that your employees refer only their very best friends and colleagues to ensure that they don’t have to work alongside average people. Ask employees to assess every referral on their technical skills, their cultural fit, and their willingness to join the firm. And always ask new hires to make referrals on their first day. You don’t need to offer major rewards: a $100 Starbucks card, concert tickets, a two for dinner coupon, or even a dozen movie tickets might be sufficient. Because you have fewer employees at a startup, you have fewer “talent scouts” to make referrals. As a result, startups should expand referrals to include “friends of the firm” including friends of employees, vendors, employee relatives and customers.
  • Social media is powerful – if you take advantage of the contacts and networks of your employees, you can spread your employer brand, recruiting, and job opening messages to thousands at a minimal cost. LinkedIn is the most powerful social media recruiting channel, followed by YouTube, Facebook/Google+, and Twitter.
  • Be innovative in your recruiting – many of the traditional approaches like large job boards, corporate websites, and newspaper ads used by corporations are expensive, and most of them simply don’t work. If you expect to recruit innovators to your firm, be aware that innovators will quickly discount your firm if they fail to see any innovation in the way that you recruit. Innovation in recruiting makes your firm stand out and get noticed in the media and the blogosphere.
  • Recruiting interns is critical – interns are an inexpensive (and sometimes free) form of labor who bring excitement and energy to the firm. Even though interns may require training before they add much value, their energy and their willingness to do almost anything makes them essential. Interns can also be asked to serve as “on-campus ambassadors” when they are attending classes. Use the social media networks and referrals from your current interns to identify the very best who they know for additional internship openings. Also use grad assistants at local universities to help find top intern talent. Offering virtual projects to interns may also provide an avenue to get top students who don’t live in the area.
  • Use a hiring team – in a small organization, many of your team leaders may be weak recruiters, and there may only be a handful of people within the startup who are really good at recruiting and selling candidates. As a result, it is usually best to put together a hiring team that does all of the hiring. This is because when you use a hiring team, the individuals on it are more likely to be knowledgeable and up to date on the best recruiting practices and what it takes to land candidates.
  • Use peer interviews — finding top recruits is only half the battle. You have to sell recruits on an opportunity that is probably full of uncertainty. The best way to sell them is to use peer interviews, where your own employees do most of the assessment and selling during the interview process. Having coworkers or peers involved in the interview process works particularly well at small organizations because these individuals are likely to be both knowledgeable and passionate about the entire organization because they “live the work and the firm” every day. The passion of these individuals is likely to come through during the hiring process and it might give you an advantage over other organizations with less-passionate interviewers.
  • Use local professional events — although a good deal of startup recruiting is done over the Internet, professional meetings and events are always an excellent place to recruit. Local breakfast, lunch, or dinner meetings held by professional associations are an excellent supplemental way to meet potential hires. Encourage each of your employees who attend these meetings to speak, to bring back the names of one or two potential hires, and to encourage speakers, officers, of the organization and other well-connected individuals to make referrals.
  • Your CEO as your chief recruiter – Mark Zuckerberg and Facebook is an excellent example of a startup firm using its CEO as their chief recruiter. Because the title of CEO impresses many people, getting them to speak and attend events will likely dramatically improve your recruiting contacts and press coverage. Obviously, you also have to train them on what to say in order to effectively attract and sell recruits. Direct calls from your CEO or CTO can also be a powerful recruiting and closing tool.
  • Use technical contests – many firms use external contests to attract individuals who are not in the job market, in part because individuals who enjoy challenges and that want to assess or demonstrate their skills are attracted by Internet contests. If you can develop a compelling technical contest that your target audience will see and be excited about, not only will you get some answers to your contest’s problem, but you may get several high-quality hires from among the finalists and the winners.
  • Target your customers — if your startup has progressed to the point where you have customers, you need to target them either as recruits or as referral sources. Because your customers are likely to share the same interest and passion for what you are doing, they may be your best source of hire. If you only have a beta product, ask key customers to become beta testers, not only for the knowledge but also to build a potential recruiting relationship with them.
  • Campus recruiting — although most startups don’t have enough resources to recruit at college career centers, speaking to student groups, entrepreneurship classes, and technical classes may yield some results. Getting grad assistants to help you identify candidates can also be powerful. You can also do remote college recruiting using Facebook pages, LinkedIn, mobile phones, and even Twitter. If you have some employees who are recent graduates, use them to spearhead your college recruiting effort. Incidentally, starting early in targeting sophomores and juniors may bring you some great interns or recruits who you wouldn’t have a chance to get once they become seniors.
  • Search the Internet for examples of outstanding work and answers – educate your employees who are searching the Internet for new ideas or solutions to identify and seek out potential hires, based on a review of their work. Often complementing individuals on their work is a great first step into convincing them to become a recruit. You can find examples of existing work on many sites, including Pinterest, YouTube, Dribbble, and their personal website. You can also post advanced questions on online technical forums and use those that provide great answers either as referral sources or as recruiting targets.
  • Write blogs and post videos – if you have good writers among your staff, writing technical blogs is a good way to expose your firm and your ideas. An alternative is to feed compelling stories to popular current bloggers. Posting interviews with your key technical people on YouTube or posting videos made by your employees showing the fun and excitement at your startup can be compelling and inexpensive.
  • Interview live from anywhere — most interviews take forever to schedule because they require finding times where both the applicant and the manager are available. And for the applicant, finding an opportune time where they can take off of work and travel to your site may also be difficult. So, if you want to dramatically increase the number of individuals willing to sit for an interview and you want to excite them by using some new technology, consider using live Internet video interviews. For example, a new iphone app from HireVue allows candidates to interview from anywhere and at any time, using their mobile phone or iPad. Using this type of technology, almost every candidate and manager can find time for an interview.
  • Bring a colleague to work – sometimes nothing sells candidates better than an open house meeting on your site, where they get to meet your team face-to-face and experience their excitement. The best option is to hold an invited open house on your site and encourage your employees and interns to bring a top colleague with them. Then have your managers show them your best practices, technology, and your team.
  • Ask during the interview — ask the best interviewees during interview for the names of other good individuals who they know. If you ask enough interviewees, you will get a pretty good list of top names for your talent pool.

Advanced Recruiting Approaches for Startups

  • Involve top prospects in your work – ask top recruiting prospects to help you “assess” a new idea or program. Then build the relationship to the point where they know you well enough to consider a job or accept an offer.
  • Hire them both – although it might seem expensive, offer a program where you will hire a superstar and their best friend at the same time (i.e. colleague, spouse/ partner). The premise under this approach is that the unusual opportunity to work with a close colleague may be a powerful enough incentive to attract and keep top talent. And don’t worry: no top professional would ever bring in an average or mediocre colleague to work alongside them.
  • Target other startups – some of the best hires are individuals who currently work at startups. They are superior because they already understand the concept and the risk/reward ratio of a startup. Obviously, you should target startups that are going downhill (especially on a day when bad news is released) but you might also be able to get some recruits from former startups that are now getting large and bureaucratic. Consider informal recruiting at incubator sites and coffee shops in neighborhoods dominated by startups.
  • Get help from your VC – if you’re ready have funding, work closely with your venture capitalists to determine if they can provide you with help in the recruiting area. Because they have already worked with other startups, they are likely to have resources and contacts in the area of recruiting.
  • Adopt a “next time” hiring approach — face facts, there will be many times where you cannot successfully recruit a particularly desirable target. They may not be available precisely when you have an opening, or another firm may simply be capable of offering something that is more compelling. A solution to this problem is to adopt a “next time” hiring perspective, where you accept the fact that your initial recruiting efforts might be unsuccessful. But rather than giving up once you get a “no,” you continue a relationship with the individual in the hopes that you will get them the “next time” they enter the job market. This requires keeping in touch with them on a periodic basis and letting them know that you’re willing to wait until the next time that they are available. This delay will not only give you time to strengthen the relationship but it will give you more time to understand their job switch criteria and to sell them on the opportunities at your startup.
  • Ask past references for referrals – individuals who served as references for previous top hires, if they were asked, will often help out again in your search for new candidates. Start identifying recent hires who have turned out to be exceptional. Call their references back, thank them, and then ask them “who else they may know that is exceptional and could possibly be interested in a startup opportunity?” Because these individuals have given a good reference once, it is highly likely that the additional names that they provide will also be of high quality. Most references are more than willing to help without an expectation of reward.
  • Create a hiring consortium to share costs – if your startup is in its infancy stage and your budget is limited, consider collaborating with a group of similar startup firms to share recruiting approaches, ads, recruiting vendor and/or career fair costs. For example, one firm automatically shares its employee referrals between three different firms.

Final Thoughts

If you consider a startup to be like a sports team, you will quickly realize that recruiting top talent is the key to winning. A startup cannot grow organically without recruiting. And if it grows with mediocre recruits, it has already damaged its future.

If you hire great people, they don’t need a lot of training, coaching, or development, and if you hire innovators, the value of that innovation is priceless compared to the cost and time involved in recruiting. If you expect to win the recruiting war, every employee of the startup from the CEO on down needs to adopt the role of a 24/7 continuous talent scout. And finally, if you follow up and provide them with the most effective recruiting tools, you may be well on your way to becoming the next Facebook or Google.

A day doesn’t go by that I don’t read a blog, LinkedIn discussion, or business article challenging the existence of a skilled worker shortage.

Just last week I presented a keynote address to the Executive Women’s Roundtable in Dallas, Texas. Most of the attendees were shocked by the statistics and trends I presented about skilled worker shortages. As suspected, I encountered a few objections. Most of the arguments targeted employers. The antagonists say that management in many companies simply refuses to pay qualified workers what they are worth. I can’t argue with them on that accusation. That is absolutely true.

Some employers still don’t get it — that high unemployment does not equal more qualified workers in this new global and technology-driven economy. The bar for minimum requirements has been raised substantially. Many previously employed and experienced workers now fall under the bar. To recruit and retain skilled workers, employers will need to re-examine how they compensate their workforce.

Supply and demand also plays a part. The supply of workers — domestic and international — available to do many task-oriented jobs far exceeds demand. Jobs that were once a sure bet to middle-class wages can now be performed at a fraction of a cost in developing countries or by automation.  For those workers holding a high school diploma or less with no secondary education or trade school experience, I see low-wage, low-skill positions in your future.

But none of these arguments negates the fact that the U.S. has a significant and growing skills shortage. You need look no further than educational attainment, high school dropout rates, and basic literacy to see that U.S. employers are facing an acute shortage of skilled workers.

I can summarize my “case” for skilled worker shortages with two points.

Point #1

While many argue that a four-year degree isn’t the best preparation for many of the new good-wage earning jobs, you just can’t refute that few, if any, skilled jobs can be performed well without the minimum of a high school diploma.

And yet, nearly one out of eight working age adults (12.4%) in the U.S. do not have a high school diploma. For Hispanics, that number skyrockets to more than one in three (35.6%). Since the Hispanic population makes up a growing segment of the total population and is nearing a majority in many states, that situation alone poses a monumental problem when you discuss skilled workers.

The largest segment of working-age adults holds a high school diploma and no secondary education. According to the U.S. Census Bureau, 2011 Annual Social and Economic Supplement, 24 percent of the population fits this category. The number jumps to more than 31 percent for adults 55 and over, nearly 32 percent for blacks, and 27 percent for Hispanic. That means that somewhere between one-fourth and one-third of our working population doesn’t meet the minimum educational requirements for jobs being created or re-created.

The high number of workers with lower educational credentials in and of itself isn’t creating s skilled worker shortage. For those positions, the supply far exceeds demand. Ed Gordon in fact estimates that nearly 123 million workers are competing for 50 million lower-skill, lower-pay jobs.

But when it comes to unemployment for college graduates, the competition gets stiff.

While the media and politicians seem to focus on the 8-plus unemployment rate, that statistic really obscures the real story. As former U.S. Department of Labor head Robert Reich said, “the average height of Shaquille O’Neal and me is 6 feet tall.” That stat is meaningless of course because Reich is a diminutive 4’10” and Shaq is reportedly 7’4”. And that’s my point. Eight percent unemployment hardly tells the real story of unemployment and worker shortages.

Just look at the table below. The overall unemployment rate is skewed higher when you include the 1.4 million out-of-work workers with less than a high school education. Compare that to the 3.7 percent rate for unemployed workers holding a four-year degree or higher. That is well below the full-employment rate of 5 percent. Unfortunately that is nearly double the rate as recently as 2007 but it is nevertheless indicative of full employment.

Less than HS

HS, no college

Some college or associate degree

Bachelor’s degree or higher

% unemployment

12.4

7.7

7.3

3.7

# of unemployed

1,421 M

2,852 M

2,696 M

1,765 M

Source: BLS.gov (April 2012)

The overall unemployment rate is also inflated by age demographics. The hardest hit demographic by age in this economy is the 16-24 year olds, nearly 2.5 times compared to the 35-44 age group and those workers 55 and over.

Age

All races

16-24

15.4

35-44

6.0

55 and older

6.3

Source: BLS.gov (April 2012)

Breaking this down even further, the rate of unemployment for the youngest workers is more than three times higher between those who didn’t graduate high school and two times higher for those with a high school diploma compared with college grads. The same trend holds true for black workers.

Less than HS

HS, no college

Some college or associate degree

Bachelor’s degree or higher

18-34

9.2

6.0

4.9

2.9

White

8.4

4.1

3.9

2.7

Black

13.2

11.4

9.1

4.7

Point #2

Admittedly education and skills doesn’t always have a direct correlation. The concern over whether colleges are really preparing students for jobs of the future is a good question, and one too vast to cover in this article. But few people can challenge that basic literacy is a must-have requirement for any job today.

More than one-third (37 percent) of the 25-to-54 year old U.S. population does not have the basic ability to write a letter explaining an error on a credit card bill, use a bus schedule, or use a calculator to determine a 10 percent discount (Level 3 literacy).

Tragically, it has been reported that less than half (44%) of 25-to-34 year old high school graduates operate at literacy levels of 3 or higher. That means that more than 4 out of 10 working age adults don’t have the functional literacy skills to perform even the most basic jobs. Worse, nearly 55 percent of workers 55 to 64 year old have literacy skills at level 1 or 2. For your reference, Level 1 literacy is the ability to locate the expiration date on a driver’s license, total a bank deposit slip, or sign their names; Level 2 is the ability to locate an intersection on a street map, understand an appliance warranty, or total costs from an order.

Even if you discount the importance of post-secondary and advanced degrees in job skill requirements, you must be hard-pressed to ignore the basic literacy gap between available workers and open jobs. A study in 2009 revealed that in just the city of Philadelphia alone, more than 50 percent of working age adults lacked necessary workforce literacy skills. More than 200,000 failed to obtain a high school diploma. Statewide nearly 38 percent lacked the skills. This scenario is repeated in nearly every major city and the majority of states.

These startling statistics come at a time when nearly half of all new jobs being created require postsecondary credentials and jobs requiring postsecondary education will nearly double that for jobs that do not require such a credential.

Not only does the U.S. have a skills gap but the gap is growing wider as minimum education credentials increase simultaneously with basic literacy deficiencies and 30 percent high school dropout rates.

I strive to be the world’s most prominent advocate of employee referrals simply because there is no more powerful tool in recruiting. Well-designed referral programs not only identify top prospects that are not in a job-search mode but they also require employees to assess candidates for skills and fit and to sell them on the company and the job. Taken together, this identification, assessment and selling feature make referrals superior to any other source.

If your corporation is not getting close to 50% of your hires from employee referrals, I have gathered 10 compelling numbers that should change your perspective.

Hard data on the value and impact of employee referrals (*see references at the end of this section)

  1. Hire volume — Referrals are the #1 source in hiring volume. *&***
  2. Hire quality — Referrals are also the #1 source for new hire quality.*
  3. Speed (application-to-hire time in days) – Referrals are the #1 fastest time to fill (29 days for referrals, 39 days for job boards, and 45 days for career sites) **
  4. Average length of employment of all initial hires after one year (retention) – Referrals are #1 at 46% retention after 1one year (compared to 33% from career sites and 22% from job boards). **
  5. Average length of employment of all initial hires after two years (retention) – employee referrals are #1 at 45% retention after two years (compared to 20% from job boards after two years and 14% after three years). **
  6. Percentage of all applicants -- Referrals are only 6.9% of applicants **
  7. Percentage of all hires – 46% of all hires at top performing firms are referrals ****, while for all firms, they range between 28% *** and 39.9% of all hires. **
  8. Applicant-to-hire ratio — Referrals are #1 and are hired at a rate of 1 out of 3 applications for top-performing firms and 1 out of 10 at average firms. Compare that to an average applicant to hire ratio of 1 out of 18 from all sources. ****
  9. Cost per hire – Job boards hires cost on average $1,671 versus referral hiring costs of $2,306 (only $635 more). ****
  10. Diversity impact – Despite the old myth that referrals have a negative diversity impact, referrals were #1 as the “most productive” source for diversity hires, well ahead of major job boards, company affinity groups, and diversity career fairs.***

* Source — Staffing.org 2011

** Source — Jobvite index 2012

*** Source — CareerXroads 2011 – 2012

**** Source — Dr. John Sullivan and Associates research 2008-2011

Top 30 Employee Referral Program Benefits

If you are trying to get additional leadership or financial support for an employee referral program and the above metrics are not enough, here is a long list of the benefits that referral programs can provide. The benefits are grouped into two categories, business benefits, and benefits that accrue to the recruiting function.

Business benefits

The benefits that will accrue to the business and to hiring managers include:

  1. Higher candidate quality – data shows that referral candidates can be five times more likely to get hired than other candidates. This is because educated employees know that their role is to seek out individuals with superior skills and experience. And because referral candidates are proactively sought out and prescreened by your employees who know the job and the company, the candidate pool is a higher quality than most sourcing pools that are made up of “active candidates” who found the firm on their own (most referrals are currently employed). Having the candidates prescreened by employees saves on recruiter time and this additional level of screening means having a low percentage of “turkeys” in the candidate slates, which pleases hiring managers.
  2. Quality of hire — new hires from well-designed referral programs routinely produce the highest on-the-job performance of any recruiting source. In addition, referral new-hires have significantly higher retention rates than hires from other sources.
  3. High impact hires – because the best ERP programs prioritize and focus on high-impact and revenue-generating jobs, they produce fast quality hires in the specific business areas where they are needed the most.
  4. Less wasted management time – because these programs generate fewer weak applicants, managers have to spend less time interviewing weak candidates and sorting through less-than-optimal resumes. And because of the quality of the candidates, managers are generally highly satisfied with reqs filled through the ERP.
  5. Candidates are a better fit – well-designed referral programs produce a high percentage of candidates that fit the culture. This is because your employees know your corporate culture and they are able to screen out those who are a weak fit. This means that hiring managers waste less time on candidates with the right skills but the wrong “fit.” New hires who are a better fit may require less onboarding time, less training, and they may reach minimum productivity levels faster because they are instantly a better fit with the team.
  6. Low termination rates – because employees add a layer of skill prescreening and fit assessment, some referral programs have data that prove that referral hires have as much as a 350% reduced chance of having to be fired.
  7. Improved employee retention rates – a referral program that involves a large percentage of your employees will likely increase the retention rates of your current employees. This is because your employees will need to learn more about the practices that make your firm great in order to sell potential referral prospects. This increased understanding and knowledge will help build their pride and their loyalty as current employees because they are reminded why their firm is superior and why they should stay. Widespread learning about the company’s strong points may also serve to strengthen the corporate culture.
  8. Rapid hire capability — Referral processes that are proactive (i.e. they seek out individual employees for referrals) and that contain “alert processes” can notify a select group of employees about an immediate job need. These targeted “special need” alerts generally result in rapid referrals and fast hires.
  9. Faster time to initial productivity – higher quality hires mean that new hires get up to speed faster. In addition, because many employees will mentor, guide, and assist the individuals who they have referred, often the time to productivity will be even faster.
  10. Added diversity — well-designed referral programs have no negative diversity impacts, and targeted ones with an emphasis on diversity can actually increase diversity.
  11. Expanded global hiring capability — with global economic growth and widespread access to the Internet, employee referral programs now work effectively to attract top prospects in most countries around the world. And because the social and professional networks of your employees are now likely to be global, referrals can provide the firm with an important supplement to its current global recruiting capability.
  12. A morale indicator — if employees don’t like a firm or their boss, they will not refer others for a job. As a result, employee referral rates closely mirror employee morale, so managers and HR can use referral rates as an indication of good or bad morale in a function or unit.
  13. Additional employee learning – referral programs cause employees to proactively seek out numerous other professionals as potential recruits. A side benefit of this process of interacting and asking questions of other professionals is expanded benchmarking, added competitive intelligence, and employee learning.

Benefits to the recruiting function

Benefits that accrue primarily to the recruiting function are numerous. They include:

  1. Immediate results — referral programs do not have long development times and fortunately, once implemented, they produce results almost immediately. In fact it is not unusual to double the percentage of referral hires within the first year.
  2. Low risk of failure – as referral programs become more data intensive, the critical success factors that are required for operating an effective one have become clear. Programs designed with these critical components almost always produce a positive ROI and have an extremely low probability of complete failure. Having a low probability of failure is extremely important when your resources are limited and you cannot afford to invest in a failure.
  3. Social network growth makes referral programs even more effective — the tremendous growth of social networks now makes it even easier for your employees to make contacts and to build networks and recruiting relationships.
  4. A stronger employer brand and superior messaging – because your employees “live the job” every day, what they say to candidates is likely to be viewed as more authentic and believable than messages on your corporate website or even sales pitches by individual recruiters. In addition, because they know the job and the managers better, your employees can often provide more detailed and current information about the job and the team than standard recruiters can. All combined, this will greatly strengthen your employer brand while simultaneously increasing the percentage of prospects who are willing to apply for and eventually accept jobs. And if you put together a referral and social media toolkit for educating your employees, your results will be even more powerful. And finally, having employees active on social media will also increase the likelihood that they will identify and counter negative comments that they find about your firm.
  5. Fewer legal issues – referral programs themselves generate few complaints or legal issues. And the resulting better quality hires, fewer turkeys, and lower turnover rates together help to minimize any potential legal issues after hiring.
  6. Less recruiter time required — whenever recruiters are overburdened, any new recruiting program should minimize the use of their time. Employee referral programs leverage the time and the networks of your employees, so for referral candidates a significant portion of the finding, screening, and candidate selling is done by someone other than recruiters. And since nearly 50% of all hires at top-performing firms come as a result of employees’ time spent on networking and social media, recruiters’ time can then be focused on the remaining 50% of the positions. Fewer weak applicants also means that recruiters waste less time on those who have little chance of getting hired.
  7. A broader sourcing network – because your employees interact with similar professionals throughout the industry every day, the combined professional and social networks of your employees is guaranteed to include many times more qualified individuals than the sourcing network of any individual recruiter. And in addition, the existing relationship and trust that your employees have built with individuals in their network make it easier for these employee contacts to be converted into recruiting prospects.
  8. Targeted referrals – if your referral program educates employees so that they know which specific firms you would like to target, the number of referrals from benchmark firms will increase dramatically.
  9. Employee willingness to participate – nearly 60% of all employees express their willingness to participate in employee referral programs. And if your program is highly responsive, you will continue to get referrals from a broad range of employees.
  10. A long-term impact – once you have successfully rebuilt your program, you can expect the positive impacts on recruiting to continue for at least two years without major changes to anything other than marketing materials and rotating prizes (if you are in a company that does not provide incentives, you still need a program/process).
  11. High-volume capability – across corporations, referral programs routinely produce the highest volume of hires, a larger percentage than from any other source.
  12. Lower costs – expanding the use of referral programs for executive and technical positions can dramatically reduce executive search and agency fees. Well-designed referral programs deemphasize large individual referral bonuses (or sometimes no bonus) and as a result, your cost per hire can actually be lower than traditional sources. When significant individual referral bonuses are used, they have the added impact and benefit of putting more dollars into your employees’ pockets, aiding retention. And finally, because employees frequently go to conferences and professional events and because the cost of their travel is already covered, the company gets the benefit of on-site face-to-face recruiting and the recruiting department doesn’t have to send a recruiter and pay for his or her travel.
  13. PR and product branding value – having thousands of employees talking to their friends and colleagues every day about the firm, the quality of its products, and how well it is managed has a tremendous product branding value.
  14. Executive search capability – employee referral programs also work well for vacant executive positions. A well-designed executive referral component can supplement the use of agencies and reduce the total fees paid to them.
  15. Improved college recruiting — because referral programs can be successfully applied to college students who are extremely well-connected, your college recruiting results could improve significantly, especially at schools that you can afford to physically visit.
  16. An increased appreciation of the role of recruiting – effective referral programs make recruiting highly visible, and as a result, the program can make recruiting a continuous topic of conversation and focus throughout the organization. Well-designed programs cause employees to develop a feeling of ownership for the hiring process. Once involved, employees see both the difficulties and the benefits of recruiting, and as a result, their understanding of and their respect for the function almost always increases.
  17. Vendor support — the development of a strong vendor community in the area of referrals makes it easier to get supplemental help and technology support for your corporate program.

Final Thoughts

If you are currently considering a redesign of your recruiting function, focus your limited time and resources on programs with the highest immediate impact, the lowest cost and the smallest chance of failure. You simply have to get it right the first time. Fortunately, all of the data indicates that one single option stands out far above all others. And that is implementing or upgrading your employee referral program/process to take advantage of the growth of social networks.

If you want to look good fast and you can’t afford a long learning curve or to suffer from a major failure, there is really no other first option.

We end this week with a collection of odds and ends and surveys from our overflowing inbox.

Our first item is especially worth reading for those of you with teenagers. (If your offspring is graduating from college this spring, skim this, but don’t miss the next item.)

Since you’re a recruiter, you already know that jobs for millennials, let alone seasonal work for 16-19 year-olds, is tough to come by. That’s not likely to change, says Challenger, Gray & Christmas.

“While teen employment is likely to see further improvement this summer, job gains will probably once again fall short of pre-recession figures,” said John A. Challenger, CEO of the global outplacement firm. Last year about 1.1 million teens got jobs. More will find jobs this summer, but not a lot more.

Among the reasons: the millions of older millennials who can’t find jobs and will be competing with the teens for the seasonal work, says Challenger.

College Hiring Plans Up

Here’s a little silver lining to that news, courtesy CareerBuilder. Says the company, 54 percent of the surveyed employers said they planned on hiring recent college grads this year. That’s a big — no — a huge improvement over past years. In 2011 only 46 percent said they had such plans; 44 percent in 2010 and 43 percent in 2009.

Employers were most likely to report they will pay between $30,000 and $40,000, the survey found, though 20 percent will offer less than $30,000, and 28 percent will be over $50k.

Freelance Opportunities Booming

This may not help your teen, though everyone knows at least one kid with the tech chops to reprogram your phone, but freelance jobs, including business process types, are booming.

Freelancer.com says its job postings in the first quarter skyrocketed up 31 percent. The site is where companies around the world post their project, contract, and freelance jobs. Dominating the top 50 job activities tagged by hiring managers and recruiters in their 170,000 postings: IT and virtual assistant tasks.

Why so, “sign of the times?” Says Freelancer CEO Matt Barrie, “We have seen a huge increase in outsourcing on the whole, with businesses rethinking their strategies.”

LinkedIn Wins (Again) in Poll

With only 92 responses to this survey, we would counsel against anyone building a strategy around the results, but still, we found it interesting that yet another set of recruiters says LinkedIn is even better than sliced bread. (OK, they didn’t actually say that.) They just ranked LinkedIn ahead of all other sources (not including, it seems, employee referrals) for the quality of candidates.

The poll by Job Board Doctor Jeff Dickey-Chasins rated social media as a recruiting channel more frequently used than any other, including employee referrals, which is the first time we’ve seen that result.

Manufacturers May Be Headed Back To U.S.

Finally, if you recruit for manufacturing, here’s a survey finding you are going to really like: “More than a third of U.S.-based manufacturing executives at companies with sales greater than $1 billion are planning to bring back production to the United States from China or are considering it.”

So says the Boston Consulting Group, which conducted the survey in late February. Of the decision-makers at the 106 companies participating, “37 percent said they plan to reshore manufacturing operations or are “actively considering” it. That response rate rose to 48 percent among executives at companies with $10 billion or more in revenues — a third of the sample.”