Deliberate hiring practice helps Americans prosper

Forming a team of people with a true passion is the hardest thing for Apple and Microsoft

“You’ve got to be a really good talent scout because no matter how smart you are, you need a team of great people,” said Steve Jobs, founder and former CEO of Apple Inc, one of the largest corporations in the world. “You’ve got to figure out how to size people up fairly quickly, make decisions without knowing people too well and hire them and see how you do and refine your intuition … because you need great people around you.” Albeit vaguely, Jobs captured the essence of recruitment and selection of employees. The acquisition of employees not only requires the expenditure of a significant amount of time and resources; it is also complicated. Small business owners spend around 40% of their working hours doing hiring-related tasks (Gutner, 2011), which do not generate income. According to the Society of Human Resource Management, the average cost to hire an employee is $4,129; it takes around 42 days to fill a position (Shrm, 2017), not including the potential risk of counterproductivity and turnover. Luckily, human resource experts such as I/O psychologists strive to refine the hiring practice and attract suitable candidates who have the knowledge, skill, ability, and other personal characteristics (KSAOs). How do we start?

Employers look to hiring to fill a newly created position and to replace an incumbent worker. It involves four steps: Planning the need for new employees, getting appropriate people to apply for the position, deciding whom to hire, and getting the selected people to take the job. Two essential elements must be considered in KSAOs: criterion and predictor (Spector, 2019). Criteria define the attributes of a good employee with promising performance. Job analysis is the first step toward identifying the needs of new employees and defining the KSAOs of a good employee. Predictors assess job applicants in terms of their potential for promising performance. Jobs’ statement that a company must “Make decisions without knowing people too well and hire them and see how you do and refine your intuition,” says that the hiring process does not stop at selecting employees. A validation study helps employers to validate the correlation between a criterion and predictors (Spector, 2019). After all, successful additions of new employees must help the organization thrive over a given time period.

However, to save resources and time, employers rely heavily on resume filtering and online job posting to attract a large pool of applicants. As many as 90% of large companies use some form of automated applicant tracking system to screen resumes, at which point about half of all applications are removed from consideration (Weber, 2012). This apparently cost-efficient strategy invisibly burdens employers and prevents people who do not have a share of national prosperity from entering “middle-skills” positions that are critical for a business’ success. Such positions pay well and offer decent prospects for career advancement (Fuller & Raman, 2017). A four-year college degree is an example of a problematic filter.

Degree inflation is the increasing demand for a four-year college degree for jobs that previously did not require one, and it is making the U.S. labor market more inefficient. As automation began to replace routine work, the percentage of jobs requiring social interaction increased (Autor, 2014). Employers increasingly require middle-skills workers to possess a range of soft skills, such as the ability to handle interpersonal interactions (Autor, 2014). Therefore, they started using college degrees as a proxy for social skills in jobs that previously did not require a college degree (Vedder, 2011). According to J. J. McCormick, Sales Manager at Veredus, a Hays Company, “For many companies, a bachelor’s degree signals that the person has put themselves through four years of college, so they have certain life experiences, commitment levels, and organization levels.” (Fuller & Raman, 2017). In contrast, between 2007 and 2010, the percentage of job postings requiring a bachelor’s degree increased by ten percentage points, but as soon as the market tightened, the number of job openings requiring a degree fell. This phenomenon suggests that a degree was not actually required for the performance of the employees (Modestino et al., 2015). According to Pam Belcher, senior vice president of Human Resources and Talent Management at LifePoint Health, “All industries have gotten lazy around the issue of a college degree. It’s just easy to slap on a B.A. requirement on a job posting.” (Fuller & Raman, 2017). Such degree requirements without validation undermine the prospects of many workers, particularly young adults who are not in school and out of work. It denies these young adults access to critical work experience and stays in the workforce.

Employers believe that college degrees signal readiness for the workforce in terms of both hard and soft skills. Employers are often looking for particular digital skills, such as Microsoft Excel, SQL, or Java, and interpersonal skills, such as negotiation or empathy. However, acquisition of those skills does not require a college degree (Fuller & Raman, 2017) and using a college degree as a proxy for such skills only serves to shrink the applicant pool and make the hiring process more difficult. Middle-skills jobs account for a sizable proportion of U.S. employment, and most employers admit that they are hard to fill (Fuller & Raman, 2017). If companies do hire their ideal college-degree employees, they pay 11%–30% more than for non-degree workers with work experience. College-degree employees also are more likely to feel unengaged or under-utilized and leave for competitors (2016–2017 Accenture). In terms of performance and level of onboarding support, college graduates were thought to require more training and oversight. According to another survey, 37% of employers ranked relevant work experience, and only 11% of employers ranked four-year degrees as the most important qualification. Forty percent of employers actually ranked four-year degrees as the least important qualification concerning potential candidates (2016–2017 Accenture).

Employers are now facing a paradox: employers agree that candidates need to be filtered through a broader set of selection criteria than just education, yet a high percentage of hiring practices filter candidates based solely on educational qualifications.

First, organizations must recognize that middle-skills jobs are critical to their competitiveness and that degree inflation inflicts higher wages, low-level engagement, and high turnover rate on the company. In particular, it is in manufacturing, retail, accommodation and food services, and health care that degree inflation is prevalent (Burning Glass Technology, 2015).

Second, better alignment between educators and employers could ensure worthwhile workforce-training and education and produce workers with market-ready hard and soft skills. An employee’s possession of a degree may indeed imply the commitment and capacity to go through rigorous college curricula that provide specialized knowledge and interpersonal and problem-solving experience. However, failure to earn a college degree should not become a barrier to enter the workforce or bar access to career paths that lead to economic independence. For example, organizations can refine hiring practices to increase collaboration with local community college, vocational college, and workforce-training institutions and provide more-up-to-date skill requirements than a simple bachelor’s degree. Employers play a significant role in being part of the solution.

Third, “hire for attitude, train for skill.” Instead of merely requiring a college degree, CVS uses a combination of pre-employment and in-house training to level-up employees’ skills to the extent necessary to perform. Ernie Dupont, CVS’ Senior Director of Workforce Initiatives, said the following: “At CVS Health, we work with occupations from entry-level to management level. We considered the idea of requiring a college degree for management positions on and off over the years but decided it’s not in our best interest. Frankly, we think it closes down a stream of potential candidates that are well qualified or, in some cases, exhibit potential.” Thanks to online learning technology, organizations can train onboarding employees using cost-efficient options. It makes sense that instead of hiring externally and competing with other employers, a practice that ignores the risk of misfit and turnovers, organizations should invest in partnerships with the local community to hire potential talents and provide the onboarding employees with in-house training.

In conclusion, organizations need to invest in the talent pipeline and practice deliberate selection practices. In this vision, candidates understand the needs of jobs and willingly develop the skills necessary to perform. Organizations assess candidates accurately and pay fair wages for the KSAOs that predict a good employee. However, such a vision is difficult to put into practice, because degree inflation is just the tip of the iceberg of all the hiring fix-it-all solutions. Due to the complexity of human and organizational behaviors, only large organizations have the resources to participate in reducing this inefficiency. Organizational professionals need to continue their research on the validity of job analysis and assessment methods to assist organizations in finding a cost-efficient practice, which, in turn, will ensure that all Americans have the opportunity to share in prosperity through different talent pipelines that start as early as high school.

Reference

2016–2017 Accenture, Grads of Life and HBS Project on Managing the Future of Work, Hiring and Talent Management Survey.

Autor, David “Polanyi’s Paradox and the Shape of Employment Growth,” National Bureau of Economic Research Working Paper 20485, September 2014

Burning Glass Technologies, “Labor Insight Real-Time Labor Market Information Tool,” February 2, 2017.

Fuller, J. B., & Raman, M. (2017). Dismissed by Degrees. Harvard, 37. Retrieved from http://www.hbs.edu/faculty/Pages/item.aspx?num=53502

Gutner, T. (2011, January 14). Is It Time to Outsource Human Resources? Retrieved from https://www.entrepreneur.com/article/217866

Modestino, Alicia Sasser et al.“Upskilling: Do Employers Demand Greater Skill When Workers Are Plentiful?” Federal Reserve Bank of Boston, Working Paper №14–17, January 2015

Shrm. (2017, May 19).

Average Cost-per-Hire for Companies Is $4,129, SHRM Survey Finds. Retrieved from https://www.shrm.org/about-shrm/press-room/press-releases/pages/human-capital-benchmarking-report.aspx

Spector, P. E. (2019). Industrial and organizational psychology: research and practice. Hoboken, NJ: John Wiley & Sons, Inc.

Weber, Lauren “Your Résumé vs. Oblivion,” Wall Street Journal, January 24, 2012.

Vedder, Richard “For Many, College Isn’t Worth It,” Inside Higher Ed, January 20, 2011.