Companies & Industries

Kurt Ronn: Rethinking Talent Acquisition


A new level of scrutiny is coming to the hiring process, which is just one reason companies need to have a smart, consistent program in place

We all know that if you want to order paper clips for the office, there is a purchasing process set up by the finance department that must be followed. However, the process for talent acquisition—how you find and select talent for your organization—remains largely undefined in the workplace and is often left to the discretion of individual hiring managers. Wide variance within companies is typical. Some hiring managers post their own Internet job postings with their preferred job requirements and search for resumes on major Internet job boards; others call an internal recruiter, a search firm, attend a job fair, or hire a friend.

This is a mistake. Talent acquisition is not an art form; it, too, works best as a defined process. Poor recruiting impairs the ability to attract top talent and has been proven to destroy some companies while costing others millions in fines and lost revenue.

Federal Discrimation Guidelines

But there is another reason human resources would be wise to take a lesson from finance when determining strategies for effective recruitment and execution: Governance has come to recruitment. The new systemic employment discrimination approach of the Office of the Federal Contract Compliance Programs (OFCCP), soon to be adopted by the Equal Employment Opportunity Commission, as documented in the EEOC's Systemic Task Force Report of March, 2006, completely changes recruiting.

It is important to recognize that hiring is not simply a single decision made by the hiring manager. There is a system (albeit often a poorly defined or thought-out one) in place; one tjat comprises definite stages. Decisions are made at each stage, starting with the creation of the position requirements through the presentation of the final slate of candidates and the ultimate hire.

If the results at any of the stages in the talent acquisition process have an "adverse impact"—for example, not moving enough women or minorities to the next stage—then systemic employment discrimination can exist. The idea of systemic employment discrimination as defined by the law doesn't merely refer to the few candidates considered at the final stage of the hiring process; it refers to the entire queue of candidates and points to a much larger problem with a much larger impact on the business.

Penalties Are Steep

Hiring managers or even divisions operating in an inconsistent or uncoordinated manner can have enormous business, legal, and talent implications. In 2006, the OFCCP recovered more than $51 million dollars from federal contractors (companies that supply goods or services to the government) because they discriminated against employees during the recruitment process.

And cases involving systemic discrimination comprised 88% of the recovery. The OFCCP is actively searching out adverse impact and looking further up the talent pipeline than just the hire. The OFCCP reviews the recruitment/hiring process, looking for intentional or unintentional discrimination based primarily on race, gender, and ethnicity.

In the eyes of the law, unintentional systemic employment discrimination is just as bad as intentional systemic discrimination. The OFCCP is effectively saying to employers: Your company comprises good people with good intentions, but statistical analysis of the hiring process shows adverse impact. Unbeknownst to you, something in your talent-acquisition process is having an adverse impact on your hiring decisions.

Analyze Your Process

Maybe you are screening out a disproportionate percentage of female applicants due to the key words you used when searching the Internet job boards? Maybe your hiring manager will only hire people from your main competitor and their race and gender is not representative of the people that could actually perform the job? Maybe the search firm that you used is discriminating unfairly? But regardless of where the discrimination originates, the accountability resides with and fines are levied against the company, not the hiring manager or search firm.

It is the responsibility of the company to keep the records necessary for the OFCCP to review the hiring process. Failure to produce proper records will force the OFCCP to reconstruct your hiring process and the related data. The record-keeping requirements extend to all of the activities by all of the parties involved, including hiring managers and recruiters, both internal and external.

The impact of not adhering to proper practices is not limited to paying out concessions and back wages. It influences the business as a whole. Who wants to buy from a company that discriminates against women and minorities? What is the cost of repolishing the brand?

Hiring As Brand Management

The cost is certainly as much as the judgment levied. And what about your current employees—do they want to continue to work for a company that discriminates? Most likely not. The fines levied by the OFCCP will only increase as the OFCCP casts a wider net. Plus, the success of the OFCCP in collecting for systemic discrimination has caught the attention of the EEOC. The EEOC has formed task forces to explore how a systemic approach can be adapted to employee discrimination.

People want to work for great brands. Skipping appropriate recruitment-planning steps will result in inconsistent execution, increased liability, lost business, and a tarnished brand. With increasing scrutiny on all aspects of hiring, the stakes have never been greater. The recent OFCCP regulations and focus on systemic employment discrimination have brought governance to recruitment. The entire process must be compliant. Only a talent procurement process that is well-defined and well-executed from start to finish will yield consistent, compliant results—and will be a competitive advantage in the war for talent. In my next column, we'll explore ways to make this happen.

Kurt Ronn is the president and founder of HRworks, a national recruitment firm that helps major companies acquire talent to build their organizations. He is a contributing columnist for BusinessWeek.com.

Steve Ballmer, Power Forward
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