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Only the Employed Need Apply (Especially in Sales)
I’ve been sitting on this blog post for a while thinking that its efficacy would get better and better as the economy and job market failed to recover at the pace that the economists thought (hoped) it would. It looks like my hunch was right.
Nine months ago, the Wall Street Journal published an article called “Only the Employed Need Apply“. The premise of the article was that many employers were only interested in talking to people who were already employed – even if the candidate who had applied had lost their job even after performing at a high level.
Bobby Fitzgerald, a partner in five restaurants in three states, says these days he gets two dozen or more unsolicited résumés each day at one of his Phoenix restaurants, the White Chocolate Grill. But Mr. Fitzgerald says his top candidates, for jobs ranging from servers to management, usually are people who are employed elsewhere. He currently has 50 openings across his five restaurants and has told recruiters to bring in only people who are working.
When you consider that in March 2010 our unemployment rate is still on the precipice of 10% and the average time that someone is unemployed is still over 1/2 of a year, it would appear that Business Leaders like Bobby Fitzgerald aren’t alone.
At Hire Better, we’ve seen a significant up-tick in the number of clients who want us to assist them in hiring salespeople. For those salespeople who we see as applicants, the statistics are NOT in their favor if they’re applying for a role in which Hire Better is involved. Here’s what we’ve found:
In a typical hiring cycle, assuming that we have 100 people to consider for a role:
- 82-85 will be Direct Applicants
- 12-15 will be People who are “headhunted” or from our Network
- 1-3 will be Referrals from internal employees at the client company
When we get down to the Top Three Finalists, they’ll look like this:
- 1 Direct Applicant
- 1 “headhunted” Candidate
- 1 Referral
And when the finalist is hired: The chance of the Direct Applicant goes DOWN exponentially as the salary and responsibility goes UP.
For a Sales role, the prospects of a Direct Applicant are even WORSE. The same statistics will apply to the Candidate pool as before but I have to expand the pool to 5 people when you look for Finalists:
- 1 is a Direct Applicant
- 3 are “headhunted”
- 1 is a Referral
And when this is the case, the Referral has more than a 50% chance of getting hired and the Direct Applicant has less than a 10% chance. In the case of sales candidates – I believe these stats are just about right. And they’re justifiable! If you’re considering hiring an unemployed salesperson or sales manager, you should be asking yourself “Why would a good salesperson be unemployed?”
Dave Kurlan, who I haven’t mentioned in quite awhile, recently shared his findings on how long it takes to get an ROI on a salesperson. His bold mathematical formula looks like this:
If you have a 12 month sales cycle and an 8 month learning curve, it will take nearly 2 years to get your new salesperson producing consistently. In that 2 years, maybe you’ll pay out close to $150,000 in subsidies.
Using your average margin, how much revenue must be gemerated to offset that subsidy?
How much revenue must be generated to produce a satisfactory ROI?
How long must the salesperson stick around in order to produce that ROI?
To bring it all back together, if a prospective sales candidate (who, for the sake of this blog post is unemployed) has found him/herself in a new sales role every 2-3 years, what are the odds that anyone who is hiring them is going to experience a positive ROI?
When we look at candidates through this lens we find it’s a lot easier to not find ourselves getting “sold” during an interview by someone who has all kinds of great excuses for why “things just didn’t work out” at that last job they were in…
Tags: A-Player, A-Players, bad hires, Baseline Selling, challenges of hiring salespeople, Dave Kurlan, hire better, hiring, hiring manager, Interview, Kurlan, mediocre salespeople, Objective Management Group, recruit don't absorb, Recruiting, recruiting salespeople, Salespeople, talent acquisition, unemployment, unemployment rate, virtual bench
What To Do When Generations Clash
I’ve just returned from the EO President’s Meeting in Dallas, TX and one of the biggest topics that they were discussing was the significance of delivering value to members. The major reason why value is so important: retention of members. Like most organizations and companies, acquiring a new member (or customer) is very expensive and time-consuming. It seems obvious that, once you’ve acquired them, retaining members should be a heavy area of focus for any leadership team. As the discussion continued it began to shift to the age of our members and the risks/rewards of eliminating the ceiling that is currently placed on new members.
I found myself sitting in this large conference room with 100+ other business leaders reflecting on the amount of preparation and time that had gone into evaluating this topic. The most amazing thought I had was that the collective revenues of these 100+ businesses represents the GDP of a fairly significant nation and this was the most important thing on their minds.
When EO was started just over 20 years ago, it was created for Entrepreneurs who were under the age of 40. When I joined EO 5 years ago it was called the Young Entrepreneurs’ Organization (YEO). At the time, the average age of a member was about 37. Today, the age limit of 40 has been eliminated and the average age of a member is now 41. To put it in a more simple perspective: every year that I’ve been part of this organization, the average age has gone up by 1 year. This is quite indicative of our entire population as well as a major challenge for businesses around the US.
Something we’ve been looking at a lot here at Hire Better is directly related to this particular topic. The area of focus for us: as businesses continue to grow and mature, they’re worried about the retention of their employees as well as the age of their teams. Jason Dorsey, widely known by the business word as the GenY Guy, has some incredible data points that he’s been publicizing to business leaders around the world. Here are a few:
- For the first time ever we have FOUR generations working together in the same workplace (GenY, GenX, Baby Boomers and “the Mature” Generation)
- The average life expectancy of a Baby Boomer is about 78 while the “retirement age” is still 65
- GenY’ers are the first generation in history that will likely need to WORK for 65 years (that’s retirement at 87-90 years old)
On top of these points, here are a couple of other really scary ones (if you’re a business leader)
- While Baby Boomers are finally comfortable with email and are actively learning about Facebook, GenY’ers aren’t using those mediums much any more because they’re cumbersome and/or they’re no longer “cool” now that their parents are part of the community
- GenY’ers believe that long term tenure in a role is 13 months. Baby Boomers want to give them employee reviews once a year.
- GenY’ers aren’t really motivated by money as a “carrot” the way most previous generations have been. Why? Because their parents (those same Boomers) have given them a credit card to pay for things like gas, groceries, vacations, etc.
Driving retention, loyalty and performance from the GenY population is becoming a real challenge for businesses around the US. This is a generation that is affordable and hard-working as well as passionate about their work but they can’t be relied on to work diligently from 8 AM to 6 PM every day. They aren’t interested in sitting in meetings to talk about the next meeting. And they’re no longer even “tech savvy” (Jason calls them “tech dependent” because they don’t have any idea how their smart phone works – they just know they can’t live without it).
What in the world are you supposed to do as a business when you wake up and realize that the future of your organization depends on leveraging this new population of workers that you can’t relate to? Here are a couple of quick suggestions:
- Accept that while Work/Life Balance is something that Baby Boomers dream about and GenX’ers talk about, GenY lives it. You won’t be able to keep them around if you expect them to sacrifice their friendships and social time. Create a workplace that inspires them and encourages hard work in short spurts and then downtime to go “be a kid”.
- Let them work in teams as often as possible. This is a generation that was raised playing soccer, baseball and other team sports starting at age 3. They were on tournament teams starting at age 8. When then went to these tournaments, even if they finished in 8th place they all got trophies. If you’re asking them to work solo and independently without praise, they’re not going to stay engaged.
- Start with the outcome and then work backwards to to talk about the steps. This is counter-intuitive to the way most people are used to teaching and also to how our educational system has educated every generation for the last 5 generations. By starting with the big picture and driving universal awareness of the challenges, GenY will embrace the challenge and buy-in to the goals instead of zoning out at step 4 of a 200 step process.
- Give employee reviews all the time – 10 minute check-ins every week or two are significantly more powerful than an annual review. Let this new generation know what they are doing right, give them praise, offer corrective actions and make minor adjustments all the time instead of hoping they’ll be around for their 1st annual review.
Jason Dorsey just released a new book and you owe it to yourself to buy it and read it. You can also read a lot more about him on his website.
Tags: Entrepreneurs, EO, gen Y, generation Y, geny, hire better, jason dorsey, Retention, Scorecard, talent acquisition
More Thoughts on Incentive Pay
Continuing with the theme of evaluating the behaviors of Major League Baseball Teams and trying to tie their contracts, incentives, etc into those of a business, I thought it would be beneficial to look at an interesting article that was just published called, “How One Cy Young Vote Could Be Worth $21 Million“.
Written by Derrick Goold of the St. Louis Post Dispatch, Mr. Goold pulled back the curtain on the Baseball Writers Association of America (BBWAA) by suggesting that they were politically motivated (or de-motivated) when casting their votes for this (and previous) Cy Young award winners.
If you’ve read this blog for any length of time you’ll know that I’m a huge fan of Steven Levitt (Author of Freakonomics). In his blog that he writes for the New York Times entitled “The Hidden Side of Everything” he said:
Most people, given the opportunity, would like to have a say in what other people earn. If someone is nice to me, throw a little extra Christmas bonus their way. If they are rude and surly, how about a 3 percent pay cut?
So I find it interesting that the Baseball Writers of America (BBWAA) recently approved a rule which says that any player who has an incentive clause based on an award voted by the BBWAA (e.g., the Cy Young award) will not be eligible to win that award. The proximate cause of this decision is Curt Schilling’s contract, which pays him $1 million if he gets even a single third place vote for the Cy Young. When he joked about paying off a writer to throw him a vote, that was the last straw.
I understand that the politics of voting for the Cy Young award may not make all that much sense to you if you’re wondering why I’m bringing this up so I’ll get to my point. Topgrading has long suggested a Scorecard by which you can measure the performance of an employee using statistics, accountabilities and accomplishments. This is something that baseball has been doing for over a decade. Granted, it’s a lot easier to measure OPS (On Base Average Plus Slugging Percentage), ERA (Earned Run Average), WHIP (Walks & Hits per Inning Pitched) or VORP (Value over a Replacement Player) than whether an HR Manager was able to improve the coaching skills of middle management, but the idea is the same.
For a baseball player, when millions of dollars are at stake, would you rather have someone demand $10 million per year in guaranteed pay with no performance incentives (hint: the sales guy who wants a base of $150k) or would you be more inclined to sign the player who said, “Pay me less than the market but if I perform, you’re going to need to back a bank truck up to my house”? As a business owner, I’m MUCH more inclined to risk the chance of paying a lot more in the long run to get stellar performance because, if the employee performs at a level a lot higher than what I anticipated, our company will be better for it.
Here are some additional thoughts from Derrick Goold on Adam Wainwright, the Runner-Up for the 2009 Cy Young Award in the National League:
Wainwright’s deal is packed with a two-year option for 2012 and 2013. Both years are triggered at the same time and the base value set for them is $21 million. Wainwright’s two-year option vests like [Matt] Cain’s [a pitcher with the San Francisco Giants]. If Wainwright finishes the 2011 season healthy — i.e., not on the disabled list with an arm injury — then the option vests if he has pitched a total of 400 innings in the previous two years or finished in the top five of Cy Young voting in the previous two seasons.
Consider that for a moment in light of what happened Thursday [the voting for the NL Cy Young].
If Wainwright finishes in the top five of the award in either the 2010 or 2011 season and he finishes the 2011 season healthy, a $21-million option vests for him and the Cardinals. We saw yesterday two voters make two votes that put two pitchers in the top five. That was it. One vote and a healthy arm could equal $21 million.
While I can see the point of Mr. Goold, I’d also argue that paying someone like Adam Wainwright, if he can pitch 400+ innings in the two years leading up to a contract extension and he’s getting votes for the Cy Young, is a VALUE at $21mm. He’ll be about 30 years old (the middle of a Pitcher’s Prime), he’ll have shown stability, he’ll be leading the pitching staff and he’ll have thrown well enough to have earned some recognition.
CEO’s who find themselves worried about Performance-based and Incentive Pay are only worried because they’re incentivizing the wrong things. If you can get your incentives truly aligned with moving your organization in the right direction – they make all the sense in the world.
Tags: A-Players, baseball, chris mursau, cy young, hire better, Incentive-based pay, incentives, incentivizing salespeople, recruit don't absorb, st. louis cardinals, talent acquisition
Team Motivation When You Need It Most
It’s that time again: I dug up an old gem from Dave Kurlan as I was working on building the incentives for our Executive Team at Hire Better.
Earlier this year, Dave shared his opinions on the 5 Steps To Motivation. We Tweeted just this past week about ensuring that you’re worrying less about Motivation as a Leader and more about De-Motivating your employees.
Below are some of Dave’s thoughts. Of note: he suggests that various people react to these in different ways. I found that doing a Communication Builder with my Sr. Team and Executive Assistant was really valuable (thanks to the suggestion of my Mentor Lois Melbourne). Knowing how each of them wants to receive information and how they want to be Praised/Critiqued was really valuable but I still have found that the #1 item on his list is the most valuable. I’ll only (personally) use #2-5 as the situation gets more dire.
“I believe that motivation is very misunderstood. You can’t motivate by being a cheerleader, nor can you motivate by reciting somebody else’s inspirational quotes. Motivation comes from within and you must find out what your people’s internal motivators are. Why are they doing this thing called selling?
The other thing that’s important to know is that everyone reacts differently to motivation and motivation takes many forms. For instance, perhaps you have some people who respond to one of these methods when trying to get them to perform:”
- Challenge them (I have a challenge for you…do you think you’re up to it?)
- Feign that you’ve lost faith in them (Tell them that you don’t think they can do it)
- Encourage them (I just know you can do this!)
- Demand that they perform (You are required to do this)
- Ultimatums (If you don’t do this you’ll be out of a job)
Tags: A-Player, A-Players, Baseline Selling, challenge, Dave Kurlan, demand, encourage, Fortune, hire better, job description, lois melbourne, lose faith, motivate, motivation, Scorecard, Twitter, ultimatum
Thoughts on the new book by Jim Collins: How the Mighty Fall
Jim Collins has been taking quite a beating in the news recently for a lot of what he wrote about in Good to Great and Built to Last. As it turns out, much of what he praised companies like Fannie Mae and Circuit City for has been emulated by thousands of companies around the globe. The problem: well, if you’ve had a pulse and watched the news for more than 10 minutes in the past year you’ll know that both of those companies aren’t in the best shape any more.
In response, Jim Collins has written a follow-up book called “How the Mighty Fall“. Fortunately for you, you can skip buying it at the book store and, instead, read this summary to capture what he’s trying to get across. Unfortunately, the book reminded me a lot of the scene a couple of years ago where Mark McGwire (one of my favorite baseball players of all time) sat in front of Congress and kept repeating over and over again, “I don’t want to talk about the past”. If you missed it, I found the video on YouTube.
Mark McGwire in front of Congress
The book was hastily put together, is a shorter read than Parade Magazine on Sunday (it’s only 123 pages), and feels more like Jim trying to save his reputation than actually get any point across.
That being said, here are the TWO nuggets that I was able to capture (and hopefully they’ll save you the pain of reading his short story):
PEOPLE NEED RESPONSIBILITIES (Page 57) “One notable distinction between wrong people and right people (in key seats) is that the former see themselves as having ‘jobs,’ while the latter see themselves as having ‘responsibilities.”
Verne Harnish suggests, “Every person in a key seat should be able to respond to the question “What do you do?” not with a job title, but with a statement of personal responsibility. “I’m the one person ultimately responsible for x and y.” Think columns two and three on our Accountability Worksheet. In fact, Collins, when he’s hosting executive teams at his research lab often challenges executives to introduce themselves not with titles, but by articulating their responsibilities.”
MANAGE WITH DISCIPLINE (Page 119) ”If you’ve fallen into decline, get back to solid management disciplines — now!” ”In fact, our research shows that if you’ve been practicing the principles of greatness all the way along, you should get down on your knees and pray for severe turbulence, for that’s when you can pull even further ahead of those who lack your relentless intensity.”
Tags: A-Players, built to last, circuit city, congress, fannie mae, flywheel, good to great, hedgehog, hire better, how the mighty fall, jim collins, management discipline, mark mcgwire, testimony, verne harnish
Questions to ask when Assessing your Company Culture
The Austin Technology Council held a CEO Roundtable on May 18th about “How Healthy is your Organization’s Culture”? The featured speaker was Dr. Carol Kallendorf, the Founding Partner of The Delta Associates. I made a commitment to Tweet more often and so I maintained a Twitter Stream throughout the whole event. If you’re not following me on Twitter, why not?
The event wasn’t an exceptional one as the featured guest has been in business of telling companies what they do wrong for over 27 years. Further, no matter how pointedly people asked her questions she had a political answer that wasn’t based on experience and instead, sounded like rhetoric. At the end of the event we all got handed a piece of paper (how very Baby Boomer) of the 10 questions you can ask to assess your organizational culture. While the document wouldn’t surprise you even if you were from Mars and didn’t even know what culture was, there were a couple on there that at least bore repeating:
- What are the issues that tend to align your Executive Team? What about fractionalize it?
- To what extent do the people in your organization have shared goals, vision or fate?
- Could your employees explain to their family members what it is that they do within the company that contribute to its success?
- Do people at all levels in your organization know what business you are in, how you make money and who your customers are?
- What’s your culture for handling mistakes and failure? What would your employees say is the culture for handling failure or mistakes?
- Do people like to come to work?
- How big a priority is culture?
Again, nothing earth shaking or really insightful but they ARE thought provoking. Can you make any changes today inside of your company that could represent a baby step in the right direction?
Tags: alisha ring, amwf, Austin, austin technology council, brian wong, carol kallendorf, change management, culture, delta associates, drive culture, Fame, Family, Fortune, Fun, hire better, talent acquisition, tweets, Twitter
Build It Right – Right from the Start
Hanging out with Early Stage Entrepreneurs is about my favorite thing in the world to do. For the past 18 months I’ve been actively involved in EO’s Accelerator Program which is dedicated to helping companies between $250k-$1mm grow faster and more efficiently through peer to peer learning, introductions to advisors and facilitated learning opportunities.
This morning I got the chance to share some of our best practices with the Portfolio Companies of Austin’s newest Incubator: Capital Factory. (If you’re interested, you can follow them on Twitter: @capitalfactory). I find it exhilarating to spend time with new companies and brilliant minds and I’m proud to have American Workforce be a supporter of this organization. This morning we focused on how each and every one of their companies has a chance to do things right – right from the start. None of them have started to hire employees yet but each of them has the plan to in the very near future. We talked about a number of strategies and the ways that they can make their companies attractive to top talent without having to spend a lot of money. But what I really challenged each of them to do was to analyze their Virtual Bench, build a repeatable screening process that gets to the point of what they need to find out about someone before hiring them, and thinking about the candidates’ perspectives when they are considering joining these new companies.
There were FOUR main questions that I asked them to really think about as we were wrapping up. If you’re a Business Owner, aspiring Entrepreneur or Manager, you should be thinking about these questions too:
- What is the first impression we provide to prospective A-Players when they come on-site to meet us?
- If we’re interviewing an A-Player and everyone knows it, are we willing to make our decision on the spot? If not, what else needed to happen during screening to make us comfortable and confident?
- Have we acknowledged the spouse or significant other and included them during the recruiting process? How could we?
- Are we ready to have new A-Players on our team? Can our management style challenge them so that they’ll stay and thrive in our company?
And the BONUS Question: Are we comfortable hiring people that have the potential to take our position?
Sure, Topgrading is tough to implement. But in the 2 years that I’ve been involved with it, I’ve found that it’s the questions above that impair companies and limit the effectiveness of the process more than conducting 4 hour interviews or executing on TORC. What are you doing in your company to Hire Better?
Tags: @capitalfactory, @joshuabaer, A-Player, A-Players, american workforce, amwf, aspiring entrepreneur, Austin, capital factory, chris mursau, emerging entrepreneur, EO, EO Accelerator, Fame, Family, Fortune, Fun, hire better, hiring, Interview, job description, josh baer, recruit don't absorb, Recruiting, Scorecard, talent acquisition, Topgrading, topgrading methodology, TORC, Twitter, virtual bench, who the book
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