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People investing.

Smart managers take their hiring very seriously. It may be an art and not a science, but there are ways to make it less of a gamble for your company.

ABOUT EIGHT MONTHS ago, you had a company Christmas party, and in about four months you'll have another. At each of these your president gives a short speech. And in both speeches, at some point, he says, "Our people are our most valuable resource."

How do I know that? Because when someone becomes president they go through an initiation rite and one of the things they learn is that you may never, never give a speech to the employees without throwing that cliche in somewhere.

What your president probably really means is: "People are our biggest cost of doing business."

If you were to ask that top executive what he or she meant, here is most likely what you would hear:

"People and the things they do are always a wild card. Every other part of my business (except interest rates and the photocopier) behaves in a predictable and manageable fashion. But people problems come at me in ways I can't control.

"In terms of simple output, low-producing employees are an eternal drain on profit. Worse, they reduce the productivity of the people around them. Oh yes, we work with our marginal performers. In fact a disproportionate amount of our time is spent with them. But you know what we find? People don't change much. If you hire a low performer thinking to train/manage/motivate/empower/persuade him or her to become a high performer, you are an optimist. Sometimes it works, but more often it fails.

"And finally, problem employees, like a pesky flu virus, are easier to acquire than to get rid of. The pre-termination process of documentation and progressive corrective action is very management-time intensive and fraught with legal peril.

"When I'm dealing with our problem employees, the question I find myself asking again and again is, 'Why did we ever hire this person?' I've come to believe that the most efficient way to manage employees is to manage who gets hired."

This president's convictions embody a lot of truth, and given these truths, the astute manager is willing to take infinite pains in selecting personnel carefully and intelligently.

And yet, surprisingly, few managers in our industry have received formal selection training. Thus, their selection technique is haphazard, or based on the infamous "gut feel" theory. The following is a more structured and, hopefully, useful approach.

First, you need to know, preferably well in advance, when you need to add staff.

Admittedly, the number of variables affecting mortgage lending volume, and the volatility of those factors makes anticipating staffing needs a somewhat difficult endeavor. But it is not impossible, and one would think that experience in managing cyclical volume would confer skill.

The refi craze of last winter and early this year presented a perfect laboratory to test this hypothesis.

I called the head of production for a major East coast lender and asked, "How did you find qualified people to handle this spike in volume?"

His answer was, and I quote, "We did the same as in 1986: we blew in one ear and if nothing came out the other side we hired 'em."

A brief survey of production, underwriting and closing managers echoed this sentiment.

Looking for something a little more heartening to put in this article, I went back to the telephone with three more questions. The data I gathered, while certainly not statistically valid, is suggestive of the way we manage the staffing function in this industry.

First, I asked, "How was this craze different from 1986? Did we learn anything? Did you do anything better?"

The most common answer came first from a Virginia production manager: "This time around we recognized the situation earlier. In 1986, the horse was out of the stable before we knew the door was open." Two other trenchant observations that surfaced repeatedly were that, "more of our work is done by computers now, so the 'people squeeze' was not as acute." But the other common observation was that "we were recruiting from a smaller pool because so many good people became terminally disgusted at being laid off every two or three years and left the industry."

My second question was, "Assuming that you could not have foreseen how low rates would dip, what should you have done to better manage this flood of business?" The emphatic and pervasive first response to this was, "I should have cross-trained my staff."

Other insightful responses to this question included:

* "I should have brought in more temps sooner, so they would have been fairly well trained when the flood hit."

* "I should have had better skills training efforts in place."

* "I should have had more automation in place."

* And finally this frequent response, "I should have squeezed off the flow of refinances earlier with tiered pricing and up-front fees."

My third question was, "For better or worse, you hired a bunch of people to handle this aberrant business demand. What are you going to do with them when the heavy demand drops off?"

No one had an answer more imaginative, humane or far-sighted than predicting another round of lay-offs. And probably, the brighter and more aggressive of the people we lay-off in the doldrums of 1992 will move on to a saner industry, the remainder will be around when we begin panic hiring in the boom of 1994.

The inferences from this information are fairly plain. As an industry, it seems we too frequently do the following:

* plan staffing against a too-short time horizon;

* train to a too-narrow band of skills;

* cross-train inadequately or not at all;

* scale back brutally when volume drops;

* use the "temp solution" with mixed results because sufficient time is not allocated for training;

* hire in a frenzy with loose selection criteria.

The staffing answer

Granting the existence of these common industry ills, the required prescription flows easily and logically to mind. Plan staffing needs (head count and skill sets) against a rolling, three-year business plan. This plan should incorporate any technological advances you plan to implement and how they will affect your staffing needs.

When demand drops, use your excess capacity to keep the work flowing while you train, retrain and cross-train your staff. THe argument has been raised, "What if I train them and they leave?" The rejoinder is, "What if you don't train them and they stay?"

The "temp solution" works if you manage it right. The keys to managing it are:

* Be ruthless about cancelling any temporary employee with whom you are not happy.

* When you get a good one, invest some time in training.

* Then, keep the person long enough to get a payback from the training.

If you spend a lot of effort upfront getting the right people into your organization, you won't have to spend a lot of effort later getting them to be productive. This process of "getting the right people in" is composed of two activities, screening and selecting. Because they have such impact on your long-term success, let's examine them in some detail.

The screening process

Let's assume that you have gotten approval for a position, established a salary range, broadly defined the position specifications, recruited against those specifications and obtained a pool of applicants. Your next step is to screen the applicants. Your objective is to eliminate the people that you don't wish to interview, and that is a two-step process.

First, review your applications and resumes and eliminate those candidates who can be disqualified on the basis of their "paper credentials." The most common disqualifier is lack of relevant experience, which most managers consider an automatic knock-out for mortgage banking's multitude of knowledge-based jobs (underwriting, processing, foreclosure, closing, quality control, bankruptcy, etc.). Other disqualifying factors could be:

* lack of required education and/or training;

* inability to complete an accurate, legible application;

* a resume that is missing, unprofessional or outdated;

* unrealistic salary requirements;

* a resume that shows overqualification, large gaps in employment history, progressive reduction in responsibility or an excessive number of job changes.

This process should eliminate about two thirds of your applicants, and it is largely mechanical. However, there should be, and is, room for some subjectivity. A paper-based screening system flatters applicants with high verbal ability and obscures the value of those who lack it.

For example, if I were looking for someone to handle difficult customer complaints, an entry such as the following on an application would tell me something about the person's empathy, kindness and patience:

"Reason for leaving last job: Care for terminally ill father for a period of one year."

While this entry on a resume or application, although superficially more pertinent to the job, tells me less about the candidate's suitability:

"Primary duties: Supervise the correspondence with dissatisfied customers."

The second step of the screening process is to telephone your remaining candidates. Some will be unreachable, or no longer be in the job market. A short chat with the others will tell you:

* when they would be available;

* whether or not travel requirements would be acceptable;

* whether or not the salary range is acceptable (many candidates will not tell you their salary requirements on an application or resume);

* whether or not the hours/benefits/vacation are acceptable;

* whether or not they can carry on a professional-sounding conversation;

* whether or not they seem to be excited about your opening.

If you handle this process yourself, you should have no trouble paring the list of candidates down to a very manageable size. If someone does it for you, he or she will be very hesitant to eliminate people for the "soft" reasons of poor speech habits, questionable motivation or weak grasp of reality. If this task is done by someone else, ask your assistant how he or she reacted to the candidates personally, and if you are told that a particular one "sounded bad," you can safely eliminate him or her.

Send a gentle, signed, "no thank you" letter on company stationery to the people you've eliminated. No fuzzy, tenth-generation photocopies. Rejection is painful; because you must do it, do it with tact and professionalism.

The short list

Now you've got your "short list" of candidates. If you have screened properly, each of your remaining candidates deserves a thorough interview.

Schedule the interviews. Allow plenty of time for each one. I schedule two hours for an interview. My peers think this is bizarrely excessive. But my running rate for the last 20 months is 0 percent turnover. It is also wise to leave half an hour between interviews. This way if you run over your scheduled time, you will still be free when your next applicant arrives. A job candidate is going through a lot of anxiety to begin with--keeping one waiting past their appointed time makes you look rude, insensitive and inefficient.

The interview

Prepare for job interviews. Arrange a quiet, professional location. If it will be in your office, forward your phone (and get those stacks of computer reports off the floor).

If it will not be in your office, it should be a borrowed office or a conference room, in your company's building. Your candidates want to see where they might be working. Also, an interview conducted, for example, in a restaurant dumps a whole new cluster of stressful and irrelevant decisions onto the candidate.

Review the candidate's application and resume shortly before he or she is scheduled to arrive. As to the format of the interview itself, there are two schools of thought.

One is the structured interview, in which each candidate is asked identical questions. The advantages are uniformity, thoroughness and consistency. It's also a lot easier for the novice interviewer to conduct a structured interview.

The other is the unstructured interview, in which the interview questions build organically as the discussion progresses. The advantages are spontaneity, flexibility and depth. It requires more finesse to conduct an unstructured interview, and there is an undeniable tendency for the conversation to drift into the areas with which the participants are most comfortable. I recommend a hybrid, with some prepared questions and plenty of time for a discussion.

Creating your prepared questions is the toughest task in the whole selection process. Your questions must elicit detailed and potentially damaging information from a candidate who is intensely focused on presenting a positive image.

Suppose you want to know whether an applicant can stand up to the emotional laceration of being harassed all day by irate customers.

If your question is the old stand-by ("Do you like working with people?") the answer is 100 percent predictable, and gives you no useful information.

Instead, your question must be open-ended and require some creative thought on the part of the applicant. Here are some better alternatives:

* "What do you do with totally unreasonable customers?"

* "What kinds of complaints are toughest for you to handle?"

* "When should you 'give up' on a customer complaint and pass it along to your supervisor?"

When your prepared questions have been crafted to your satisfaction, you're ready to conduct your interviews. Greet the applicants personally and do what you can to make them comfortable.

Opening small talk is optional (if you think it relaxes the candidate, you've forgotten what it's like to be one). Ask detailed questions about relevant material from the candidate's resume and application. I take notes on the documents themselves. If you choose to do this too, here's a tip: write only factual material. Write evaluative or judgmental comments on separate paper after the candidate has left. Here's why--if you take notes during the interview the candidate has a legal right to ask for a copy of them.

After you have thoroughly reviewed the information on the resume and application with the candidate, move on to your prepared questions. Generally, each of them will lead into an unstructured discussion. Let it flow for a few minutes, then pull back to your agenda.

Show genuine empathy for the applicant's statements. There is no other way to get them to open up. Listen with total concentration and focus your analytical ability on what's being said.

The depth and structure of the applicant's statements are true indicators of their intelligence and organizational ability.

The way applicants describe past jobs will tell you whether they have a people orientation or a task orientation and whether they focused on goals or activities.

The way candidates describe past colleagues and bosses also suggests how they will probably relate to future bosses and colleagues.

Every career more than a few years old contains some failures. How an applicant discusses and relates to a failed project, relationship or career move is particularly revealing. To evaluate a candidate in light of this, I suggest that:

* A candidate with moral courage and healthy self-esteem will acknowledge a failure as a failure. A lesser candidate will prevaricate or redefine the event.

* A candidate blessed with objectivity and realism will assume at least partial responsibility for the failure. One not so blessed will always blame upper management, the economy or some other uncontrollable.

Successes, in general, are more clear-cut than failures, but it is frequently instructive to ask a candidate two questions.

The first question to ask is: "What enabled this project (relationship, job) to succeed?"

The candidate may talk about planning, or teamwork, or management or financial commitment or whatever. The focus of the answer indicates the focus of the candidate. And the complexity of the answer suggests the depth of the candidate's understanding.

The second question should be: "What results led you to label the project a success?" A candidate with an administrative mentality will talk about time and budgetary constraints being met, while a more big picture candidate will relate to service delivery. A truly dedicated people-person (they are more rare than you would be led to believe) will certainly mention growth and development opportunities for the people involved.

If, after your questioning, the candidate still seems viable, then it is your turn to do some talking.

Classic interviewing theory says that the interviewer should do as little talking as possible, and classic interviewing theory is wrong.

The candidate deserves to know exactly what he or she may be getting into. This includes answers to these questions:

* "What is this company like to work for?"

* "How is the company doing? What is the outlook for the company and the industry as a whole?"

* "What seem to be the company's priorities?"

* "What do you do here? What is your unit's scope and function in the overall scheme of the company?"

* "What are you like to work for?"

* "What are your priorities for the next year or two?"

* "How do you supervise? What is your communication style?"

* "In general, what is the benefit program like?"

* "What, how and when will I be paid?"

* "What is the policy on sick time and vacation?"

* "What is the policy and scheduling for raises and performance appraisals?"

* "What is the policy on internal promotions and transfers?"

* "If I do well, what opportunities are there for growth and advancement?"

* "Most importantly, what performance do you expect from me? What will my job responsibilities be? What are the performance standards or key objectives?" (Depending on the job, some of these items may be more appropriate for a second interview.)

When you have covered these items, or those you deem appropriate, give the ball back to the applicant. Ask them if you have provided a clear picture of the job and whether they have any additional questions.

If you have covered the foregoing items correctly, the applicant will be fairly thoroughly overwhelmed and will probably have no questions. That's not a negative.

If he or she does have questions, they are frequently key to the applicant's concerns and may bring a hidden agenda to light. For example, if you are asked four questions about sick leave policy and none about the job content, your internal eyebrows should rise to the top of your head.

After you have answered the applicant's questions, close the interview by summarizing where you are in the selection cycle and when he or she can expect to hear from you. Finally, thank the person for coming in.

Final selection

Some candidates will be eliminated on the basis of their interview. Notify them promptly and courteously. Do reference checks and credit checks (if needed) on the others. This may eliminate more candidates. If more than one person remains, you have the "good problem" of choosing among several fully suitable candidates.

Take your time. Keep their files on your desk and skim them once or twice a day. Let your subconscious brood on it. Frequently, one candidate will begin to stand out. If not, do second interviews with your finalists, and have the candidates interview with your boss.

Don't provide your assessment of the candidate beforehand. Let your boss form his/her own impression. Your manager has a broader perspective than you do and you should weigh that input very seriously. Finally, don't ever let your boss see a candidate whom you are not sold on.

When you have made your selection, make the job offer with all the pride, assurance and enthusiasm you have. If the offer is made by phone, always follow-up with an offer letter.

The time you will have invested in selection will be paid back in morale, productivity and retention. It is a shrewd investment.

Andrew S. Hubbard is vice president of BarclaysAmerican Mortgage Corporation, Charlotte, North Carolina.
COPYRIGHT 1992 Mortgage Bankers Association of America
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
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Title Annotation:techniques in hiring of employees
Author:Hubbard, Andrew S.
Publication:Mortgage Banking
Article Type:Cover Story
Date:Aug 1, 1992
Previous Article:Banking on a niche.
Next Article:The allure of super jumbos.

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