Pinch a Penny Now, Lose a Dollar Later

What was your last shopping experience like when you ventured into a discount retailer (and, yes you have been in one admit it)? If your experience was like many other individuals' you were greeted by a retail store with merchandise strewn about, items in the wrong locations, advertised items missing from store shelves, not many employees around to ask questions of, and (if you found an employee) were met with a gaze from a tired, distracted, and overextended (or worse - a disinterested) employee. Conversely, what was your last experience when shopping at a "full price" retailer? For the most part, polls have shown that shoppers are willing to pay a small premium for better service and a better selection. People like to feel their shopping list is as important to the retailer as it is to them (after all, you earned your money, they should earn the right to take it as well). Don't worry there is a human resource connection coming.....

Let's go back to the discount store with the unhappy employees. What we know, as human resource professionals, is that unhappy employees = lower productivity, increased use of sick time, and lower ratings on customer service. So why are discount retailers (and many other areas of industry) lowering wages and shedding experienced employees? Yeah, yeah - we know - it's to be able to make those shrinking budgets. What if, though, we were actually accomplishing the reverse with our actions? Instead of steering our organization through an economic downturn we were further jeopardizing its health by driving customers away?

Professor Zeynep Ton, of MIT's Sloan School of Management, has ten years of research to back up why it might not be such a good idea to put the squeeze on your employees. In the Future of Retail: Companies That Profit By Investing in Employees at Time.com, Ton's research finds "companies that buck the status quo and invest heavily in their workforce actually are able to not only compete with their competitors on service but on price too". This upends the notion that to compete in the market as a low-cost leader, a company must have a low-cost workforce. In fact, Ton states that retail chains that experience high levels of success "invest heavily in store employees, but also have the lowest prices in their industries, solid financial performance, and better customer service than their competitors".  

What, exactly, makes successful companies successful anyway? It's in their "business card".  Remember the old standby in business - it holds true today: your employees are the face, the "business card" of your company. The experience customers have with your company is heavily influenced by their interactions with your employees. Ton's research found "all sorts of efficiencies that become unlocked once you have a highly trained, highly motivated workforce". 

So take a cue from those that are successful now, and are set to continue their success and growth once the economy turns in their favor: invest in your employees. Yes, pay them a decent wage, provide a content rich and inclusive training program, offer great benefits, and promote a culture of innovation - then, maintain as you enjoy success...   

"Looking for a Unicorn"

Staying with the theme of "unicorns", the title of this post is taken from a Wall Street Journal article by David Wessel entitled Software Raises Bar for Hiring. In the article the president of Mindbank Counseling Group, Neal Grunstra, relates the stringent and highly specific requirements that many companies have for job vacancies as akin to "looking for a unicorn". Peter Cappelli, a human resources and management professor at Wharton School, cites an email he received from "a company that drew 25,000 applicants for a standard engineering position only to have the HR department say not one was qualified". 

Okay, so it makes sense that the current plethora of candidates for the dearth of job vacancies means that hiring managers can afford to be picky; after all the current state of the economy is a result of not enough jobs to go around.  Is that what is really happening, though? Or is this issue more about a lack of candidates with the right skills? "For every story about an employer who can't find qualified applicants, there's a counterbalancing tale about an employer with ridiculous hiring requirements", Capelli states. 

What about the issue of selection software? Software used in the process of recruitment and hiring was initially intended as an aid rather than a substitution. Now, many applicants submit their resumes in the hopes that they have included enough key words to get their resume through. Most applicants never get the opportunity to speak to someone.  Does this mean that an applicant who cleverly included a sufficient number of key words in their resume is better qualified for a position? Inherently no. 

This problem has spurred new developments in selection software. In Seeking Software Fix for Job-Search Game, Lauren Webb writes that the ideal software would "read resumes intelligently, flagging a handful of truly promising candidates to recruiters and alerting job seekers to openings that are laser-targeted to their skills and background". So, if companies are really intent on finding that unicorn they need to consider more than whether the candidate is great at manipulating their software selection criteria and focus on widening the scope. "Cultural and behavioral fit is a stronger indicator of success and business performance" states Elaine Orler of Talent Function Group. Capelli puts it this way: "[employers could] back off the strict requirement that applicants need to have previously done precisely the tasks needed for the vacant job" and "see if they could do the same with some training...".