Taleo Business Edition Summary Report · Taleo (NASDAQ: TLEO) is the leader in on demand, web-based...

The Human Energy Crisis: Technology’s Role in Supporting Field Workforce, Hourly, and High-Volume Hiring Needs

Taleo Business Edition Summary Report

Table of Contents

I. Early Warning Signs .............................................. 1

The demographics are stacked against the employer ....................................... 1

Employee retention remains a major concern ................................................. 1

II. Problems and Prescriptions ................................. 2

High turnover is persistent .............................. 2

Multiple hiring channels increase costs and complexity ................................................ 2

Insufficient insight leads to bad hires .............. 3

Interviews are treated as conversations rather than fact-finding missions .................... 3

The hiring decision is too slow… or too fast ........................................................ 4

Reporting is nonexistent ................................. 4

III. Harnessing the Available Technology ................. 4

Planning for an uncertain tomorrow ................ 6

About Taleo Business Edition .................................. 6

CONTACTwww.taleo.com – [email protected] – U.S.1.888.922.5665 – International

ABOUT TALEOTaleo (NASDAQ: TLEO) is the leader in on demand, web-based talent management solutions that empower organizations of all sizes, around the world to assess, acquire, develop and align their workforce for improved business performance. More than 1,380 organiza-tions use Taleo, including 35 of the Fortune 100, for talent acquisition and performance management, with over 1 million users process-ing 71 million candidates from over 100 countries. Requiring no capital investment, Taleo’s software as a service and on demand delivery offers 99.9% availability.

Copyright © 2008 Taleo Corporation. All rights reserved. No portion of this document may be reproduced in any form without the prior written permission of Taleo Corporation.

Taleo and all Taleo product and service names mentioned herein are trademarks or registered trademarks of Taleo in the United States, France, The Netherlands, U.K., Canada, Australia, and several other countries. All other product and company names mentioned herein may be the trademarks of their respective owners.

Facebook® is a registered trademark of Facebook, Inc. LinkedIn® is a registered trademark of LinkedIn, Inc. All other product and company names mentioned herein may be trade-marks of their respective owners.

© Copyright 2008 Taleo CorporationThe Human Energy Crisis: Technology’s Role in Supporting

Field Workforce, Hourly, and High-Volume Hiring Needs PAGE 1

I. Early Warning Signs

For all the advances in technology over the last 20 years, the process of hiring hourly workers has remained fairly static. A job applicant responds to an ad in a newspaper, is invited to fill out an application, and waits to be summoned for an interview. By the time the interview summons comes, the applicant may have already accepted another job offer elsewhere.

Human resource managers can point to any number of problems with this hiring process. They acknowledge that it isn’t fast enough. That it’s prone to human error. And that it doesn’t scale well for high-volume hiring. Finally, considering the number of bad hires that are made and the impact these hires can have on your customers, it’s prohibitively expensive.

The demographics are stacked against the employer

As inefficient as the hiring process is now, it promises to become even more inefficient in the future. Changes in the demographics of developed economies portend long-term labor shortages that are leading to what could be called a human energy crisis. The annual growth rate in the U.S. working population aged 20–64 is projected to average only 0.3 percent per year for the next 70 years.1 Between 2000 and 2030, the U.S. population is estimated to grow 26 percent, whereas the number of people age 65 and over will grow by 80 percent.2 Many of these seniors will soon head into retirement, where they will live longer than ever before and continue to require goods and services.

Employee retention remains a major concernFinding a sufficient number of qualified hourly workers is only one challenge. Retaining them is another, as turnover for hourly wage earners now averages 60-70 percent annually.3 Some of this turnover is endemic, as young people in their late teens and early twenties – a group long relied upon in industries such as retail, services, catering, and hospitality – make educational and career

1 Worldwide and U.S. Talent Acquisition and Staffing Services 2008–2012 Forecast, IDC, February 2008

2 Ibid3 Hourly Hiring Management Systems, Aberdeen Group, June 2002

transitions. These transitions are just a subset of a larger problem, however, as replacing departed workers consumes ever-larger blocks of manage-ment’s time and cuts into revenues when employ-ers go shorthanded.

Not surprisingly, when asked to rate the top work-force challenges in an IDC survey earlier this year, 77 percent of executives involved in the recruiting and staffing function cited talent retention as their first priority, and 47 percent chose the impending labor shortage. Of the four remaining options, only succession planning received more than a quarter of the votes.4

Top Workforce Challenges in the FutureWhat are the top three talent challenges

for your organization? (% of respondents)

Source: IDC, Worldwide and U.S. Talent Acquisitionand Services 2008–2012 Forecast

Managing aglobal workforce

Management ofcontingent labor

Offshoring/outsourcing

Lack of leadershipsuccession plan

Impendinglabor shortage

Retainingtop talent

0 10% 20% 30% 40% 50% 60% 70% 80%

77.1%

46.7%

31.4%

21%

18%

9.5%

Not even a recession will stave off the need to add new workers. In Q2 2001, just as the dotcom bubble was bursting, 1.2 million net jobs were lost in the United States. Yet in the same period 7.6 million gross jobs were created.5 In both good economies and in bad, people leave companies to retire, relocate, or start a new career. The majority of these people need replacements.

4 Worldwide and U.S. Talent Acquisition and Staffing Services 2008–2012 Forecast, IDC, February 2008

5 Talent Management in a Down Economy, Taleo Research, February 2008

© Copyright 2008 Taleo Corporation

Gross and Net Job Gains by Quarter 1992 – 2007 (in millions)

(2)

0

2

4

6

8

10

Gross Job Gains Net Job Gains

1.2 Million Net Jobs lost in 2Q01, but 7.6M Jobs Created

Source: Bureau of Labor Statistics

92 93 94 95 96 97 98 99 00 01 02 03 04 05 06

In the face of a shrinking labor force, what mea-sures can you implement now to better position yourself for the future? An appraisal of some current recruiting practices will help us identify several of the key challenges. We’ll then offer a few prescriptions on how to minimize if not eliminate the pain.

II. Problems and Prescriptions

High turnover is persistentMuch like the weather, everyone talks about high turnover rates but few people do anything about them. Over time managers become inured to the prospect of their employees departing for higher pay or better working conditions. For restaurants the average annual turnover rates exceed 100 percent.6 For employees in the hospitality industry it rises to over 150 percent.7 The least fortunate hiring managers may find themselves attempting to fill the same position two and even three times a year. Not only is this costly and time-consuming – your investment in new hires includes orientation and training – but quitting saddles the remain-ing employees with more work. And because

6 People Report: Worker Turnover Rate Continues to Climb, Nation’s Restaurant News, Dina Berta, November 2006

7 Keeping Hotel Workers: It Takes More than Money to Retain Lower-Paid Employees, HR Magazine, Andrea C. Poe, February 2003

employees often quit without giving notice, managers may become desperate enough to rush into hiring a replacement.

Prescription: Build bench strength by develop-ing and maintaining a candidate database. Accept that hourly wage earners are rarely mar-ried to their jobs and can be influenced by the lure of better hours, an increase in pay, and the prospect of working alongside more consider-ate co-workers. Turn this to your advantage by periodically sending friendly reminders to former applicants asking them to update their contact information. If you use an applicant tracking system (ATS) to conduct online recruiting (eRecruiting), invite your former applicants to log on and update their candidate profile. Doing this helps you remain top of mind and shows that you remain interested in their careers. The ATS system you select and use should empower you to conduct efficient, multilingual hiring of both field workforce and professional staff.

Never overlook your best former employees either. They may have friends, siblings, or chil-dren of their own to send your way. Remember that every hire from your candidate database reduces your advertising costs.

Above all, work to ensure that your hires are as pleasant to work with as they are capable. This means screening your candidates thoroughly. People often join a company for the money and culture, and quit because of their fellow employees.

Multiple hiring channels increase costs and complexity

Between in-person applications, in-store kiosks, and the telephone, the application process for hourly workers is unwieldy. You get all of the costs and clutter without a central repository, resulting in a lose-lose situation. Hourly wage earners typically aren’t steered to the web because many of them

The Human Energy Crisis: Technology’s Role in Supporting Field Workforce, Hourly, and High-Volume Hiring NeedsPAGE 2


don’t have broadband Internet access. Growing numbers of them do, however, and would welcome the chance to apply from home at a time of their own choosing.

Prescription: Convenience is king. When you make it easier to apply for a job, more people do so, especially those who already have a job and can’t easily slip away to apply in person. Unlike in-store kiosks, telephones and websites enable a 24-hour application process. Employers can route both technologies through an ATS system and have searchable results in one location. This is a major leap forward. Channel management becomes easier, even as another channel is added, while the additional costs are offset by the higher volume.

Insufficient insight leads to bad hiresTypically you have an application, one or two references provided by the candidate, and a brief interview. Many applicants are just entering the workforce or come from other countries, which gives you even less to base a decision upon. Pinched for warm bodies, some managers will try to justify a borderline hire by saying that if it doesn’t work out, the worker can always be let go later. Thinking like this leads to trouble. Far better to make the right hire to begin with.

Prescription: Give yourself the tools to acquire more information, and store that informa-tion online to make it accessible to everyone involved in the hiring decision. Many compa-nies now use role-based hiring as a means to learn more about a candidate’s suitability for a position based on their past experiences and personal history. A series of targeted questions enables you to evaluate the candidate’s person-ality, industry knowledge, and understanding of the role before you make a job offer.

An ATS system gives you another way to screen for desired traits and experiences. You input an

unlimited number of screening questions and the system automatically ranks the candidates by their responses. Candidates who score the highest can be automatically scheduled for an interview.

Interviews are treated as conversations rather than fact-finding missions

The candidate interview is the hiring manager’s last best opportunity to find out what motivates a potential hire, yet few hiring managers excel at it. Ironically, part of the problem is the frequency with which they’re asked to conduct these interviews. It’s difficult to prepare yourself for something you’ve done dozens or even hundreds of times. Too many managers enter the interview unfamiliar with the candidate’s specific qualifications, whereas others are determined to go on “gut feelings.” They approach the interview like an ordinary conversation and quickly run out of time to ask – or answer – important questions. Often the interview is shoe-horned into a few spare minutes.

From the candidate’s perspective, it’s demeaning to interview with someone who couldn’t be bothered to prepare for it and shows so little regard for the candidate’s time. A meandering or abbreviated interview creates the worst possible impression. Candidates can tell when they’re not valued.

Contrast this with the interviewing process for salaried hires. These candidates may interview with six people in one day, for as long as 45 minutes each. From the company’s perspective, this is justified by the fact that salaried employees cost more to employ. However, the majority of these professional hires will never have as much customer contact in a year as hourly hires will have in a week.

Prescription: Take a page from the profes-sional hiring playbook and ask two of your most trusted employees to interview your job candidates. Adding two more people to the

The Human Energy Crisis: Technology’s Role in Supporting Field Workforce, Hourly, and High-Volume Hiring Needs PAGE 3


interviewing process will provide insights that escaped you. Decide beforehand on the ques-tions you want to ask your candidates. Look for a mix of questions that help you gauge the candidate’s ability to perform the job tasks and whether their personality will mesh well with their co-workers. Stick to the script, and show respect for your candidate’s time by limiting the number and nature of your questions. Because scheduling interviews can be such a headache, look into technology that can do this for you – especially for volume hiring. Automatic interview scheduling can be a godsend.

The hiring decision is too slow… or too fastSays one recruiting industry executive, “With salaried workers, you can take time to weigh the pros and cons of hiring a candidate. With hourly workers, the minute they walk out the door, they’re looking for another job. If you drag your feet with the selection process – which should be measured in days, not weeks – that candidate is gone.”

Most hourly workers don’t have a lot of savings to tap or investments they can dig into. The majority are looking for work because they need a job now. The fundamental question is, then, how can employers of hourly workers respond quickly enough to satisfy job seekers, while providing themselves enough leeway to identify the most qualified candidates?

Prescription: Be a player for the best talent. Hasten the decision-making process by laying the groundwork with excellent screening, assessment, and pre-qualification requirements. Adjust the difficulty of the questions according to need: more advanced questions give you fewer, more qualified candidates, while easier questions provide you with a larger candidate pool. Ranking your candidates will help you decide when to be prudent and make an offer quickly. During the interview process, tell the candidate when you expect to have a decision and never ask them to wait more than a week for an answer.

Reporting is nonexistentAs companies struggle to hire new workers, too often they rely on past experience to guide them on who to hire (and fire) and where to advertise. Trial-and-error may have worked in the past, but it’s too wasteful – especially as the margins in retail, hospitality, trucking, restaurants, and manufactur-ing have become smaller and less forgiving. There’s no future in flying blind. What’s missing is an objective way to gauge effectiveness.

Prescription: Consider investing in a good reporting tool. Licensing one of the better ATS systems for eRecruiting will allow you to fine-tune your hiring and retention policies and facilitate candidate correspondence. These pay-as-you-go systems8 can measure the effective-ness of your sourcing investments as well as the performance of your current employees. They provide insight into the number of jobs filled, the time to fill them, and the cost per hire. They’ll tell you which job fairs are providing the best return on your investment and what caused you to be successful. A good ATS system will also identify your star performers and show you where to concentrate your retention efforts. This alone will pay for your system and earn you the appreciation of your remaining employees, who won’t be asked to cover for departing co-workers.

III. Harnessing the Available Technology

The recruiting tools and technology available today are unlike what existed even five years ago. The most advanced applicant tracking systems, for example, can automate your interview scheduling and make quick work of job fairs and other volume hires. The technology is sufficiently advanced to help you source, screen, hire, and retain your most prized employees.

8 Typically a subscription model based on the number of users, many ATS systems are made available to users 24x7 over the Internet as software as a service (SaaS), that is, software hosted, maintained, and upgraded by the vendor at a remote location.



To see what you might gain from employing an ATS system, let’s look at three applicants in three different industries plagued with high turnover. In the final scenario, we’ll switch roles and evaluate a candidate from the employer’s perspective.

Restaurant Cook – Gabe is an accomplished cook at a local diner with a new baby on the way. A desire for benefits and a bigger apartment have compelled him to find a new job with higher pay. Gabe picks up a paper on his way home from work and checks the classifieds. He spots an ad for a sous chef at an upscale restaurant nearby and is directed to a website. He provides his personal and work histories and is presented with three sets of ten questions each. Gabe correctly identifies the ingre-dients in hollandaise sauce and explains that it’s one of five mother sauces in French cuisine. Gabe is asked to translate a dozen French culinary terms into English and is scheduled for an interview two days later. The entire process takes thirty minutes.

Hotel Housekeeper – Lourdes is an experienced housekeeper. She speaks some English but Spanish is her native language. Lourdes doesn’t go online and doesn’t even have a computer. She does have a phone, however, which she uses to respond to an ad in a Spanish-language newspaper. In Spanish, the interactive voice response (IVR) system asks for personal data before running through a series of qualifying questions. Lourdes is asked whether she has any allergies to chemicals, any physical limitations that might prevent her from turning a mattress, and whether she’s able to comprehend basic requests from English-speaking customers. She volunteers answers to the EEO self-identifica-tion questions. As she speaks, Lourdes’ answers are converted on the fly into a computer text file that will be forwarded to the hiring manager as soon as the call is over. Before she hangs up the phone, Lourdes is scheduled for an interview.

Retail Salesperson – Kelly is a student at a local community college. She needs employment over the holidays to help pay for her college tuition. She

worked last summer in a call center but doesn’t want to be stuck in a cubicle during the holidays. Kelly goes online often and has a Facebook profile. An ad on Facebook says Boutique Z in the next town over is hiring.

Retail Manager – Chris is a store manager at one of Boutique Z’s apparel outlets and needs to bring on extra workers to help over the holidays. Chris has some experience with computers but is a long way from being an expert. Yesterday she used Boutique Z’s applicant tracking system to place a help wanted ad on the company’s Facebook profile as well as on several job boards selected for her by the system. She’s just received an email alert that a candidate named Kelly has been scheduled to interview with her tomorrow morning. Chris finds Kelly’s past experience as a customer service rep promising. She notes that Kelly took a course in fashion last semester and scored highly on the screening questions. Kelly’s Facebook profile reveals that she also has a great sense of humor. If tomorrow’s interview goes well, Chris wants to offer Kelly a position, contingent on her passing a background check. If Kelly accepts, her online application can be accessed by Boutique Z’s payroll department and integrated into the company’s HR system. Next year at this time, Chris will have one more candidate she can call on when she needs seasonal employees. Boutique Z will have shifted more of its sourcing resources to social utilities and online job boards and reduced its advertising spend by one-third.

Retail, restaurants, and hospitality are used as examples here, but we could easily substitute eight or ten other industries. These include transporta-tion companies searching for dispatchers and drivers, banks seeking tellers, loan officers, and accountants, manufacturers hiring line workers and sales staff, even casinos in need of dealers, waiters, and marketing managers. The best ATS systems can accommodate both hourly and profes-sional hires on the same platform.

The Human Energy Crisis: Technology’s Role in Supporting Field Workforce, Hourly, and High-Volume Hiring Needs PAGE 5


Planning for an uncertain tomorrowNo one can predict where the economy is headed in the near term. Some forecasts say we already may be at or near the bottom – that any downturn will be shallow. Other forecasts are more dire.

Economists are in agreement on the scarcity of skilled labor, however, and the fact that we’re confronting a human energy crisis. As the war for talent heats up, inevitably there will be winners – those who able to staff their shops, restaurants, plants, hotels, and banks with capable people – and losers. Because planning ahead can make all the difference, we’ll leave you with these reminders:

The labor force is shrinking, and not even a • recession will negate the need for more workers

Automation is available to help you find and • screen the best candidates

Consider role-based hiring as a means to learn • more about a candidate’s suitability

Provide candidates the ability to apply at their • convenience and in their own language

ATS systems let you store telephone and web • applications as text files in a single candidate database

You can use that database to stay current with • former applicants and employees

Stay focused during interviews, and respect the • candidate’s time by asking targeted questions

Make a job offer to the best candidates within • days, if not hours

Use metrics to guide you on which employees to • concentrate your retention efforts

About Taleo Business Edition More than 1,300 small and midsize organizations worldwide

use Taleo Business Edition™— the leading solution for

eRecruiting. HR professionals, recruiters, staffing agen-

cies, and business owners choose Taleo Business Edition

because they can fill jobs faster with better candidates, less

paperwork, and reduced cost while meeting their compli-

ance and reporting obligations.


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