Job Market Jingo

There is a lot more wrong with the job market than a weak economy. 


I’ve hired about a thousand people, mostly engineers, accountants, lawyers, and scientists over four decades.  Not recruited, but hired, out of my budget, my pocket, on my head be it.  

There is a big difference between hiring and recruiting.  A recruiter does pretty good if he or she gets one out of ten applicants accepted for interviews.  When you are hiring your own people, you are in seriously bad shape if one out of ten hires is a bad egg.  When people have to work together and trust each other to get it right, the team has a very low tolerance for screw ups.  As the guy who was responsible for a new product or the performance of the bottom line, my tolerance was even lower.  When something went right, it was just according to plan.  When it went wrong, as I said, on my head be it.  

Suppose you have a new department with goals and responsibilities, and you have no staff.  You have a budget.  You write a stack of job description, pray that they are somewhere in the region of what you need, and hand them to recruiters.  Recruiters rarely know anything about electronics, computer science, or putting together an SEC registration.  They work mostly on key words, academic credentials and a linear definition of job advancement.  The creative and out-of-the-box applicants will not pass through those pearly gates.  They even pride themselves on exactly matching the dumb requirements you gave them, much to the inevitable dismay of the hiring manager, who hasn’t even got a clear idea of the product yet.  There is some cultural expectation that the hiring manager actually has a crystal ball and that all these nice, geometric recruits will fit together like so many Lincoln Logs to achieve this vague goal.

Been there, did that, nope, it didn’t work.  Tried the Hay system, consultants, more expensive headhunters, and found a declining curve of expense vs. performance.  The next step, according to the MBA courses at the time, was to take a tinkertoy approach to building anything, a department or a new product.  It had to be made out of standard pieces, nothing really innovative, so you could go out and hire geometric candidates, squares, triangles and circles, to fit the geometric functions.  Then you used massive promotion and sales push to get your pretty ordinary geometric product or service out to market ahead of all the other geometric competition.  That method also has the benefit of predictability for the shareholders and banks, and puts the hiring manager on top of a far larger pyramid, to his or her glorification.  It is a way to make a potentially interesting project as dull, boring and essentially meaningless as everything else.  

So, having come to that conclusion after the first decade of bossness, I decided to try for improvement.  One thing I tried was giving the recruiters shorter, vaguer job descriptions with such phrases as “gestalt visualization” and “breakthrough technology” or throwing in requirements to be a musician, novelist, poet or other offbeat thing to attract the less geometric candidates.  But then I had to use my own eye to find a few bright sparks hiding in the paper pile.  I tried random hires of bright people, and got a few good ones that way.  It still wasn’t productive.  I was spending nearly all my time hiring and damned little time moving the goals forward.  

It occurred to me that a system tends to produce images of itself.  If I wanted a better group of innovative people, I had to find an innovative hiring model.  I already had a small nucleus of people who understood what we needed to accomplish, and we were not yet set on the means or the details.  So I gathered a number of top hands in the various broad categories containing our likely areas of expertise.  We sent out letters asking them to talk to us about our new jobs and their pet projects, paid their airfares and transport, and brought them in en masse.  We provided coffee and sandwiches throughout a long day.  

In the morning we all met together in one big conference room, against all the advice of the HR department who wanted me to interview one on one.  First I stood up and told them what we thought we needed to do, how much time we had to do it, and made everyone understand that we were looking at a landscape, not a railroad track.  Our pot of gold was out there somewhere, and our adventure was to find it.  Do you think you could contribute to this adventure, and if so, how?

Then each of my nucleus people stood, gave their brief backgrounds and interests, and their ideas of the lay of the land ahead.  I took notes.

Finally, I asked each invitee to give a similar, short presentation of their strengths and interests, and any ideas they had off the top of their heads about what they might do with us.  Of course, not everyone we wanted was a gifted extemporaneous speaker, so there was some encouragement and back and forth discourse.  I provided some light humor, set a tone of openness and tolerance, and, of course, took notes.  Then we broke for lunch.  I watched who talked to whom and took more notes.  

That afternoon I assigned each existing employee, as discussion leaders, and a few invitees to go off in a group for some free-form discussion.  I went from group to group with my notes.  When the discussion leaders sent back to me notes such as, “Hire Jill, she’s a great compiler designer,” or “Please convince Jack to work here, we need him to do compliance testing,”  I went after those individuals, did the cleanup part of the usual one on one interview and made an offer on the spot.  We got ten, twenty, even thirty excellent hires every time we tried this technique.  Those hires were already qualified as  good fits for the culture, already plugged into the project, fired up, mentored up and ready to go.  

Over the next few years, we had practically no attrition, only a few mis-hires who had to be let go, and that group produced a steady stream of hugely profitable, industry leading products. It also produced a new kind of leadership.  I was called on by universities and corporation to teach and lecture on the whole set of new techniques we developed,  which I called “Type 3 Management”.

To create a highly effective, truly innovative organization, don’t listen to the cult of personality gurus, the brick on a brick consultants, the personnel management types.  Watch the essentially self-organizing open source efforts, the low-budget social media engineers, the dropouts who become billionaires without benefit of an MBA.

Who does the world look to for innovation?  It all has to do with the quality of ideas and insight coupled to diligence, the desire to do something worthwhile and the openness to work with others to make it happen.  Richard Florida, an economist at the University of Toronto, calls this the "creative class".  After everything else is either automated or outsourced to China, these are the only people who will make a decent living, and their work habits are not exactly in the industrial mode. 

Why is this relevant today?  I see an awful lot of niche hiring, short term payoff positions, and even worse key word recruiting using acronyms with a half life of ten days.  I just know a lot of geometric hires are going to produce a wave of “me too” companies.  This is no way to grow an economy or to compete with Chinese workers living in dehumanized dormitories and getting less than $10 a day.  If that’s the best management model we have, that’s what we’ll become.  It doesn’t have to be that way.

Crevice Jobs and Unemployment

I don’t have a true count, but I must have hired over a thousand people in my lifetime as a CEO and in various executive positions. That hiring streak spans four decades, and during that time I’ve seen some powerful trends and instructive lessons for dealing with economic unemployment.

There have always been jobs that required physical skills and jobs that required skills that were technical, or required the accumulation of business acumen, or sales/marketing/administration etc. In the first category, a candidate had to be physically adequate and reliable. In the second set of categories they required a technical skill set, specific educational level, or personal experience. For example, one would not hire a used car salesman to design a new hybrid car, at least not as a first choice. However, within broad categories, we always assumed there was a training period, perhaps a six month trial period, during which the newby would get on-the-job training and prove himself or herself. We used to hire for generic talent, capability, brains, but not for niche skills.

The first category of jobs are largely being exported or automated. Our economy is increasingly in the second set of categories. These are the people that are now out of work.

Three things have happened to make the market for this second set of jobs vastly different today.

First, specialization has progressed to the point where there are literally thousands of niche skills, most of which are transient. I don’t hear much about dictation skills today, and who cared much about Excel or Twitter in 1990?

Second, the technical explosion has left most recruiters in the dust and most technical managers overwhelmed and dependent on these non-technical recruiters. The recruiters do not comprehend the nature of the job in relation to either underlying capability or previous experience. So the recruiters are converting formal job descriptions into recruiting ads and doing a checklist matchup with candidates’ resumes. The fundamental values of intelligence, capability and character are below the line. The best real candidates get lost in the process and the checklist becomes the meat of the candidates’ evaluation.

Third, it has become so expensive to seek, hire and pay a new employee, especially with the higher payroll taxes mandated by the health care bills, that the only way the process can be justified is against immediate profits. The idea of bringing up new talent by training and mentoring, of balancing new talent vs the routine promotion of existing employees in order to broaden the talent pool for future growth is no longer very attractive. The new person has to come on board and instantly contribute to the bottom line. This means they are recruiting for skills that are often ephemeral in the marketplace. In some areas, the skills sets listed for a job are so absurd as to be laughable.

I used to be an expert on operating systems design and development. As computer languages changed, I learned 22 different languages, from COBOL, FORTRAN and BASIC, to a half dozen assemblers, TRAC, LISP. PROLOG, C, C++ and I almost learned C Sharp before I went on to another profession. The whole idea of only hiring a person who has years of experience in a particular language and even a single compiler product means you deny the existence of any underlying talent for writing computer code, and that is just plain stupid. Really good programmers are 25 times more productive than the ordinary college-trained professional, and learning a new language for such a person is a matter of weeks and a little practice.

One of the curious technical niches is for “drivers”, which are those components of operating systems that know how to operate printers, disk drives, ethernet connectors and the like. The real skill is interpreting the device manufacturer’s specs in code. There is a standard “tool set” for the part that connects to the operating system, and if you ever wrote a driver, you know it. Last year I saw a job opening for people who had at least 2 years experience writing drivers for a particular manufacturer’s device - an unremarkable device with a market life of about a year.

Narrowing the job below the niche to a crevice does not get talent - it does not produce anything but quick revenues for the lucky headhunter, who probably stole the only person with that crevice skill from the device manufacturer. That person will not stick around long. Being confined to that crevice will be like being put in a closet and maybe the employer will change the light bulb once a year.

Crevice jobs are becoming the trend in every technical area. In the health administration area I see ads for a specific medical record keeping system. Accounting job boards post positions for people who are expert in one brand of accounting system. Even C-level jobs are skewed to a particular niche industry, where history has proven that the best CEOs, CIOs and CFOs often cross over from other sectors.

All the time, the generic, unskilled jobs are being exported to countries where such labor is cheap, leaving the USA and other advanced nations with vast mismatch of crevice jobs and “unqualified” job seekers. No wonder recruiters complain about receiving 100 applications for every opening - nobody fits, so everyone applies everywhere.

In a vibrant economy commercial industry mines the job market for talent, not crevice skills, and invests heavily in new employee training and development. If government wanted to take a useful role in this situation, it would promote policies that encourage industry to recruit and train a smart and flexible work force. Current tax policy discriminates against any training costs that prepares a person for a new position. The current administration believes a dole, such as extended unemployment benefits alone, is preferably to creating work opportunities through training. What better time to get new job skills than when you are sitting around applying for jobs? The problem is no one in this position has any money to spend on classes.

I propose that Federal and State governments institute coordinated programs for job training.

First, all job skills training tuition ought to be tax advantaged - deductible or credited against taxes owed - whether the employee pays them or the employer pays them. Since every person will change occupations several times, tax law must not discriminate against education or training that allows entry to a new occupation. At state and local levels, training tuition assistance ought to be coupled to forecast needs, so that not everybody who thinks being a TV news commentator is a great job goes to a training program for broadcasting and empties the ranks of insurance sales people. Perhaps the private companies that provide education and training get rated by the percentage of placed graduates, which would affect their prices. They would then respond to the real market, not just the popularity of their courses.

Second, I propose that job skills training at the basic level be incorporated into jobless benefits, so that a person unemployed for more than, say, 13 weeks automatically gets enrolled in a job training class of their choice paid for by state and federal unemployment taxes, in lieu of the extended unemployment benefits now provided. To minimize abuse, the cost of the program becomes taxable income if the unemployed person fails the course. That should keep aspiring public relations people from taking courses in quantum physics, or people signing up and not attending classes at all.

Third, I propose that the Federal component of the unemployment tax be adjusted for company training history as well as employee retention history. A company that does not lay off people pays a much lower rate, say 0.5% of payroll, than a company with many layoffs, whose rate could become 5% of payroll. Under this proposal, a minimum training cost goal would be set, according to the estimated “change level” of that sector, and companies that spend over that limit get credit against their unemployment tax rate. Conversely, companies that spend less than their change level target would pay a higher rate. The rate adjustments and average tuition payments would be set by actuarial calculations to be revenue neutral and self funding over time.

Once the incentives for crevice jobs have been nudged back to reasonable limits, I believe that unemployment will decrease, productivity will increase, the tax base will rise, and the estimated ten year correction to the unemployment problem will be down to five years.

Incentives to create a more flexible, better trained, more productive work force in the skilled areas will go a long way toward restoring wholesome recruiting practices. Crevice recruiting will become less credible. Once it becomes clear that US talent can be retrained to meet the challenge of change, the labor force will be a more robust sector of the economy. Forging our excess realtors into accountants, and our out-of-work residential housing electricians into solar energy contractors cannot be a bad thing.

Anyone want to comment?