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The Whiteboard is on Holiday

Back blogging next week – enjoy the weekend!

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How NOT to Remunerate Recruiters

I’ve been contacted by a number of different recruitment firms over the past few weeks who are looking for advice from me on pay structures for their recruitment consultants.  This is a good thing.  It shows that firms out there are thinking properly about talent management, risk and reward, and employee retention.

Sometimes they are paying fair commissions and sensible base salaries, sometimes they are a bit off the mark and just need a bit of tweaking to remain competitive.  There have also been encouraging signs of more expansive-thinking in remuneration packages, with non-monetary additions like Rostered Days Off (copied from our Aussie cousins), days off for birthdays and the fabulous ½-day per month to conduct charity work.

However, from time to time I come across a real dinosaur in recruitment remuneration, which is known as the Deficit Model or “Clawback”.  This can work in different ways but essentially it means that if the recruiter fails to reach their target billings for the month or quarter, then the shortfall, or deficit, amount between their target and their actual billings is added to their target for the following period.

 Now at first glance this may seem fair enough.  If your target is three times base salary to ensure you cover the costs of your desk, and you have failed to reach that target, then you have been a cost to the business during that period, rather than providing a profit.  Many professions are a cost to the business but here in recruitment it isn’t supposed to work that way.  Your billings are the lifeblood of the firm and if you are a cost, as well as all the non-revenue-generating staff like reception, payroll, IT support, tea lady, then that is not a viable recruitment business.

However, the truth is that this is a model very easy for recruitment owners to implement because it means there is absolutely no risk in them employing that recruiter.  If they hit a rough patch and cost you money, they will have to pay back that money from future commission cheques anyway.  But the trouble with no risk is that there is often no reward.  What many of these firms end up with is recruiters entering a downward spiral.  They may hit a few good months at first and all seems rosy.  But as soon as they have a bad month, or even a dreaded scratch month (come on, most of us have had one at some time or other), they are immediately behind the curve.  Unless they have a stellar month to follow up with, they will see their hard work go unrewarded.  This affects morale, confidence, and self-belief.  In no time you find yourself with a recruiter initially showing great promise but now, for some reason, lacking in drive to exceed targets, seemingly happy to collect their base salary, with no real prospects of making commission for months to come no matter how good their performances.

This recruiter will leave you and take their recruitment skills, that you have provided training for, to a competitor.

It is easy to say that in theory if the recruiter isn’t good enough to reach their target then they don’t deserve to earn commission in following months.  The good billing recruiters won’t fall foul of this model because they are able to bill consistently and not get into deficit.  But this is over-simplifying things, especially as we work our way through a patchy economic recovery where billing performances are very much up and down out there.

In practice you will lose the knowledge and skills of a recruiter who may well bill $400k in 2011 and $500k+ in 2012, the only trouble being that money is going into the coffers of your competitor.  This is not speculation, this is fact.  A senior recruiter recently left a large, global recruitment firm where he was facing 6-months of solid billing performances to get any chance of reaching commission again and paying off his deficit.  He has joined a boutique, where his slate is wiped clean and where he will make good commission from day one, assuming his desk is now back on track.

I know of another large global who have recently scrapped the deficit model, at least in their New Zealand operations.  This takes bravery from recruitment leaders but you will be rewarded in the long-run.  It is out-dated and cannot be competitive any longer.

The way forward is to keep commission plans simple.  The simpler the better.  If you are a recruiter reading this and you cannot tell me how much commission you will earn if you bill $35k this month, without the use of calculators, excel spreadheets and astronomy charts, then you are not on a good commission plan.  And recruitment leaders ask your staff.  Ask them how much commission they will make if they can get that last perm placement over the line for November.   If they can’t tell you, then you will have problems retaining and building your teams during the busy years ahead.

I would be interested to hear from anyone out there who has experienced this deficit model first hand and your experience of it, good or bad.  How does your commission plan stack up?

Momentum Hits Back After Wilce Inquiry Goes Public

At last.  Yesterday saw the public release of the very catchy sounding report “The Circumstances into which Mr Stephen Wilce was employed as Director of the Defence Technology Agency”.

For any of you who have been living under rocks lately, this report is of significant interest to our New Zealand recruitment community because of the role played by Momentum in the sourcing and presenting of Stephen Wilce as a candidate for the role.  Placed by Momentum back in 2005, Stephen Wilce muddled through 5 years in the job before an expose on 60 Minutes last month revealed him to be a fantasist making wild claims of Olympic bobsleigh exploits, representing Wales against the All Blacks and, my favourite, playing guitar on the British folk circuit (is that something you’d actually make up to try and impress someone?!)

How much Momentum charged for their work depends on what website you read, ranging from $25,000 in the Herald to $70,000 in Stuff.

The New Zealand Defence Force realised what an almighty and embarrassing mistake this was and immediately went about the honourable process of seeking to lay blame elsewhere.  So, despite assembling an expert interview panel themselves and deciding to make the appointment, they have been trying to suggest it was all Momentum’s fault for not conducting adequate reference and background checks.  Momentum denied this, saying that it was not their responsibility to conduct reference checks as the NZDF had agreed to do this as the hiring process unfolded.

You might have read my comments on this in earlier blog posts but I have always sided with Momentum on this.  This isn’t due to some form of nepotism or bias towards them but really because I see this as an issue affecting all of us in recruitment, and this is something that could have happened to any other firm out there.  The fact Momentum’s reputation has been severely tested does not just affect Momentum, it affects all of us in recruitment.  People outside our industry are quite happy to tar us all with the same brush, and you will have all experienced this first hand.  They don’t care if your firm isn’t Momentum, they would happily believe that because of these stories, it probably means that all recruitment companies fail to conduct proper background checks.

Let me ask you your impressions of finance companies when you hear about Blue Chip.  Or your impression of used car salesmen when you hear about one dodgy one on Target.  Even your impression of professional footballers when you hear about John Terry…err actually that might be a bad example as they probably are all like that (apart from the saintly Fabregas).

But joking aside, it has been disappointing for me to hear about other recruiters smirking into their flat whites at this controversy, and barracking Momentum from the crowd at the Seek Awards.  Get off your high horse, this attack on Momentum’s reputation isn’t just a pain in the backside for them, it affects all of our reputations out there in the wider business community.

I am particularly glad this report has finally come out because I believe it goes quite a long way (but not the whole way) to exonerating Momentum from blame.  You can download the whole report here but on the whole it is incredibly tedious and I can summarise the main points of interest as follows:

h.            Momentum Consulting Group Ltd (“Momentum”) carried out qualification checks on Mr Wilce in accordance with the then provisions of DFO 16.  Mr Wilce holds the qualifications that he claimed to hold in his curriculum vitae.

i.              Momentum carried out a criminal history check through a subcontractor.

j.             Momentum was obliged, under the contract it entered into with the Crown, to “undertake detailed reference checking” to the standard indicated in its Proposal.

k.            Momentum did undertake referee checks.

l.              The checking undertaken by Momentum met the basic standard then required by DFO 16; enquiries were made of Mr Wilce’s referees and no concerns about his background, integrity or character became apparent.

m.           The checking undertaken by Momentum did not satisfy the higher standard of thoroughness required by its contract with the Crown; adherence to this standard was necessary given the nature of the position.

n.            The NZDF recruitment project team placed an undesirably high level of reliance on Momentum carrying out the proper checks.  The NZDF could not contract out of its responsibility to ensure that adequate checks were conducted prior to appointing Mr Wilce.  Accordingly, the relevant manager, [the then Assistant Chief Development], bears command responsibility for any failings in this regard.

o.            The standard of checking required by DFO 16 at the time was inadequate in the circumstances.

It is with point “m” from this Executive Summary that Bede Ashby, the MD of Momentum, has taken umbrage.  In a press release issued last night he says:

“[Our] proposal recognized that the post of Director of the DTA required high-level reference checks. At no stage in the recruitment process did the NZDF ask us to complete these checks on Mr Wilce.

“If Momentum had been asked to carry out the full reference checks, as the Inquiry agrees was set out in our initial proposal to the NZDF, his claims about his performance in previous jobs would have been tested more rigorously. Although the checks were included in our proposal the client decided to take responsibility for these themselves.

“Variations on the original proposal are common in recruitment processes and this was no different. For example, Momentum completed assessment reports on all 14 members of the long list. This is very unusual but was carried out at the request of the client. The NZDF varied our original proposal by taking responsibility for the reference checks rather than having us complete them as originally proposed. These were among a number of variations agreed with the client during this process and our documents support this.”

So where are we left after all this?  I’m sure it will act as a catalyst to make many of us sharpen up the standard of our reference and background checking even if Bede’s assertion is a fair one in that they did do what was required.  And this is a good thing.  But we also don’t want to get carried away for fear of this happening to us some time in the future.  We are recruitment consultants.  We do not make the final hiring decision for our clients.  Yes we have a duty to assist our clients in making the right decision by providing them with as much accurate information as possible, but ultimately the buck stops with the person making that hiring decision.  As recruiters our skills are best applied in networking, sourcing and attracting the best available talent to a role.  We cannot suddenly become so uptight about background and probity checks that we lose sight of what we really are best at.

My advice would be that if you feel the nature of the role you are recruiting demands a higher level of background checking than the usual 2 or 3 employment reference checks, then put this in a written proposal to the client and offer to undertake whatever they deem necessary.  But then outsource this process to someone that can do it better than you – and charge your client for this service on top of the standard recruitment fee.

Fair enough?

A Glimpse at the Hays “social media policy”

I’m going to kick things off this week with an apology to Seek and their ex-GM of NZ Annemarie Duff.  Last week the question was asked whether she had had a dig at Momentum in her speech at the recent Seek Awards, as was the rumour I had heard.  Feedback from other sources has since suggested that it was a case of mistaken identity and comments were in fact made by an entirely different dark haired lady representing another four-letter organisation.

I enjoyed the company of Seek at an ad-writing seminar they put on at the Hilton this week.  It was pretty basic stuff but a very worthwhile refresher and there were plenty of new-to-industry and internal corporate recruiters there picking up some great tips.  Cheers also to Ross from Seek who showed great generosity of spirit in inviting me to their offices for a beer sometime in the future.

Onto other things and I recently heard from an old colleague who left the employment of Hays that they had to delete their Linkedin account entirely when they resigned from the company.  If you read The Whiteboard a couple of weeks ago you’ll have heard about another recruiter, from a different organisation, who was forced to delete Linkedin connections that mirrored names in the company database.  Well it sounds like Hays have taken things even further lately.

Hays have historically been swift and decisive in their handling of social media and the way their employees and ex-employees can utilise it, which is consistent with their strict enforcement of contractual obligations under restraints of trade for exiting staff.  They were one of the first to successfully challenge an ex-employee’s Linkedin network in a (UK) court of law.

As far as I’m aware Hays only recently allowed its employees in this region to have access to Linkedin.  Having computer systems that can allow certain staff access to certain websites, and others not, enabled them to say, “OK, you can have access to Linkedin at work if you like, but if we allow it then you have to sign this policy agreeing to delete your account if you leave our employment.”

This may seem Draconian but it is quite clever from Hays.  If an employee is using a work computer to access Linkedin then the inference would have to be that they are using the site for work purposes, and thereby the content of that account including its connections, messages and groups are owned by Hays rather than the recruiter.  So can Hays employees have any complaints?  They are not forced to sign such a policy, merely told that they can’t have access to the site at work unless they do sign it.  The more technologically savvy could still build their networks through a home PC or Linkedin i-Phone app.

So there is no doubt that such a policy will protect Hays’ IP generated during working hours, which is rightfully theirs to protect.  But I do wonder how such a policy would make current employees feel about the tools at their disposal as a recruiter.  Social media is an increasingly important phenomenon in a recruiter’s toolbox, and in my mind social media policies should be a collaborative and liquid affair, constantly moving with the times.  It should encourage recruiters to communicate, externally and internally, in a more personable and authentic way.  We are fast approaching an age where clients want to do business with real people rather than faceless brands and it is essential that personality and authenticity shines through.

Some of the top recruiters in our region are heavily involved with social media across all the different applications, but most notably Linkedin.  I would imagine that recruitment firms would be quite interested in securing the services of such recruiters and having them in their team.  So how, then, would it work if a recruiter joined a new company with an existing network of 500+ relevant connections and Group memberships, and utilised this network to generate fees for the new employer?  How would a policy such as Hays’ work in this instance?  My concern would be that it would be a big deterrent to that recruiter joining such an organisation in the first place.

It is completely understandable for Hays to impose such a policy but I think it is equally important that companies realise what they might actually be losing by doing so.  Something that black and white can give you security over IP and retention of existing business.  But it could also lose you creativity, openness and collaboration amongst employees, the hallmarks of the new social networking age, and mean you could be missing out on business that you didn’t even know existed.  

Discouraging or limiting social media activity must surely be a short-term fix rather than a long-term strategy.  One would hope so anyway.

Winners (and losers?) from the 2010 Seek New Zealand Recruitment Awards

Seek’s annual 2010 Recruitment Awards were held at the Hilton in Auckland last Friday night but you’d be hard pressed to know anything about it unless you were actually there.  I’ve been keeping an eye out for a press release all week but there has been nothing on Seek’s actual website or any newsworthy site such as the Herald or Stuff.

One site did decide to pick up the release and publish it out there, so The Whiteboard would like to follow suit and publically list and congratulate this year’s winners:

The winning agencies in each category are:

Adecco Recruitment

Large Generalist Recruiter

1st Call Recruitment

Medium Generalist Recruiter

Select Recruitment & HR

Small Generalist Recruiter

Geneva Health

Large Specialist Recruiter

Parker Bridge

Medium Specialist Recruiter

Synergy Consulting

Small Specialist Recruiter

Potentia

IT Recruiter

 

Now I do wish to offer my sincerest congratulations to these winners – and also to Madison and Focus who became Seek Legends for having won the award three times – but is this really the cream of the New Zealand recruitment industry?  I can identify some firms on there that I certainly feel are well up there, but there are others I have never even heard of.

Regular readers of The Whiteboard will have seen some views and opinion on the Seek Awards in my post on August  5th “SARAS – a credible award or just a popularity contest?”  I’m wondering if Seek are starting to come around to the same way of thinking because they certainly haven’t been singing from the rooftops about these latest winners.  Either that or they are purposefully playing it “low-key” after last year when the 2009 Winners and Finalists were announced to the Press roughly 2 hours before the awards actually took place (bit of a faux pas that took a distinct amount of excitement and anticipation out of the evening’s events).

As I wasn’t a finalist this year I wasn’t invited to the awards but luckily I had a mole in there who was sending out Tweets as the winners were announced.  This was actually quite exciting and I got to know the winners straight away without having to suffer all the whooping and hollering.

But it was another Tweet that I saw that I was quite surprised at.  It suggested that Anne-Marie Duff (GM of Seek NZ – well she was then – but it was her last day as she’s going to TVNZ as a Marketing Manager) took a bit of a playful swipe at Momentum during her intro speech and had a cheeky dig about the Stephen Wilce dodgy CV saga.  Apparently the comment was greeted with a second’s pause before the room exploded in great mirth and all-round points scoring against Momentum, all in front of a red-faced Anne-Marie.  I thought that was potentially a bit of an uncool comment as they are no doubt a large client of Seek, so I put out a Tweet of my own (from @JonathanRiceNZ):

“Is it true Anne-Marie from #Seek had a dig at Momentum in her speech at the Seek Awards?  Error of judgement?”

Well talk about opening a can of worms.  I mean I was only asking the question – not making a statement – but I was firmly rapped on the knuckles by Seek so I agreed to send out another Tweet advising my followers that it was untrue and Anne-Marie did not, in fact, say anything or make any reference at all to Momentum.

I was also informed that it was unfair on Anne-Marie as she had left Seek and couldn’t defend herself.  Well I’ve been thinking about this all week and decided that of course she has a chance to defend herself from my question-that-wasn’t-an-allegation-it-was-just-a-question-as-I-wasn’t-actually-there.  She can defend herself here, on The Whiteboard, by making a comment on this very post.

Of course anyone else who was there and also didn’t hear these comments can say so on here as well – and then I will be more than forthcoming with my apologies for having cast any aspersions in Seek’s direction whatsoever!

I have also found out that, all going well, a formal press release will be coming out in the early part of next week about the whole Momentum / Defence Force / Stephen Wilce saga – and I for one will be glad to hear an official statement at last.

SARAs – A Credible Award or just a Popularity Contest?

I have noted from a number of recruiter e-mail signatures received over the past couple of weeks that the Seek Annual Recruitment Awards are nearly upon us again, and marketing efforts have begun to elicit votes from job seekers.  This is a welcome thing for it presents an opportunity for us in the New Zealand recruitment industry to let our hair down a bit (especially as there is no Seek Blue Ball again this year) and celebrate the recruitment firms out there giving great service to their candidates.

Or is it?  You see, I have often wondered about the status and substance of these awards.  Are they really a useful indicator for potential clients of who is providing the best candidate care?  And would this actually succeed in swaying the opinion of a potential client towards a certain agency?

Or are they simply a popularity contest amongst the recruitment firms actually bothered to invest time and effort into a marketing campaign to get job seekers to vote for them?

For those of you who aren’t aware, the SARA’s are awarded to recruitment firms in different categories ranging from small, medium and large in size, to generalist, specialist or IT in nature.  The winners are determined by who gets the most votes from “job seekers” that determine that firm to be their favourite recruiter.  I put the inverted commas around job seekers because you don’t actually have to be a job seeker, you can be anyone with a computer that doesn’t contain a cookie identifying you as someone who has already voted.  The contest is also only open to the firms that choose to enter so it is does not provide complete industry coverage.

I look back at previous winners and finalists of the SARA’s in New Zealand and wonder whether they really are an award worth striving for, or if they might be a bit of a poisoned chalice?  I can see 5 or 6 of the previous finalists from the past couple of years who have now totally gone out of business.  OK we had a vicious recession to get through but clearly it was astute business practices and hard work that kept companies afloat, not the ownership of a SARA.

I also wonder where are some of New Zealand’s bigger brands and operators?  If you look at some of the larger advertisers from the Herald’s annual Career supplement – the likes of Momentum, Gaulter Russell, Numero, OCG, Robert Walters, H2R and Sheffield – they are nowhere to be seen at the SARA’s.  It might be presumption on my part but I am imagining these firms don’t even enter into the contest (and a look at their websites indicates a lack of marketing towards the awards).

I think the idea of having these awards is fantastic and I for one am really looking forward to the event (if I’m still invited after this).  But I just think that a SARA could be something to really covet, to really aspire to, and to proudly market to future potential clients, if they were a bit more than a simple popularity contest, powered by the most active marketers, from the firms that actually bother to enter.

ITCRA sponsor an award for CIO Magazine for “Excellence in IT Recruiting” (won by Absolute IT this year).  With these awards IT recruitment companies are assessed on a number factors ranging from client feedback to staff development and are assessed by an independent panel of industry experts – in this case Julie Mills of ITCRA (ex-RCSA President), Brett O’Riley, CEO of NZICT Group and Judy Speight, Executive Director of Accelerating Auckland.  Now here is an award that can be held up with pride in front of clients and candidates alike.

Don’t get me wrong, I think the SARA’s are a great idea and, despite the number of previous finalists who have struggled in recent years, there are also a number of winners and finalists who I have worked with extensively and recognize them to be outstanding operators and recruiters.  I just think the award itself lacks a little substance and credibility, especially without the entries of some of the other firms mentioned above.

“Job Descriptions” Are a Waste of Paper

I was kindly forwarded an interesting article by a client this week and there is a part of it I feel compelled to comment upon.  The article was published in the Computerworld New Zealand magazine on 19th July and was titled “ITCRA clarifies questions raised by online comments”.

For those of you who don’t know, ITCRA stands for “Information Technology Contract and Recruitment Association”, who are a body to which most kiwi IT recruitment firms appear to belong.  It also appears to be where the recently departed RCSA Commandant Julie Mills skipped across to.  Anyway, the article came about in response to a previous piece where John Wyatt was interviewed for the magazine, and it begins like this:

“Last month, Computerworld published an interview with Recruit IT Director John Wyatt, which discussed whether IT firms were specific enough when writing job descriptions for roles they seek to fill.

Many of the positions Recruit IT is asked to fill don’t have formal job descriptions attached, Wyatt said.  He added that the IT industry could benefit if job vacancies assigned to recruitment firms contained more precise details of what the candidate is expected to do.”

 

Julie Mills then goes on to respond to the 47 comments that were left on this previous article, many of which followed the usual boring patterns around low barriers to entry in recruitment, whether recruiters actually use their databases, why salaries are left off job advertising etc, etc, ad nauseum

But I want to make a comment on John Wyatt’s original assertion that the IT industry would benefit from giving recruiters clearer job descriptions:

Really?  I mean really?

You see I’m not so sure about that, and the reason for that is that job descriptions are a complete load of arse – a waste of paper – a pointless invention by under-worked HR departments seeking to attach a process and a label to everything.

Job descriptions may well describe a job, but they certainly won’t describe the ideal person for the role, nor will they describe the lucky person who eventually wins the job.  The reason for this is that any hiring manager, or recruiter for that matter, worth their salt, will hire on attitude first, and teach skills later.  Now I will concede that there are certain jobs where a certain level of technically definable skillsets are justified, IT being one of them, but why don’t you just put together a brief list of those technical skills and not waste time fluffing it up with all the pointless warm and fuzzy stuff?

The same logic applies here to the recruitment doomsday merchants who keep asserting that technology is going to render the recruitment industry impotent.  First it was e-mails (recruiters used the technology to their advantage).  Next it was the internet (recruiters learnt to harness it to market services and seek out candidates).  Then it was job boards (agencies now provide at least 80% of job board revenues).  The next wave is smart job boards that will be able to seek out candidates from online posted CVs who match certain criteria for a job, removing the job of the recruiter.  Of course, this will also fail to remove the recruitment industry.  The reason for this is that recruitment is not a science, it is an art, and the only machine capable of determining a match, a fit, is the human brain.

Job descriptions fall into the same category as this – you simply cannot accurately describe the perfect person for the role by listing a range of character traits, experiences and achievements.  Yes you can require a Degree in Chemical Engineering for a Process Engineer in an Oil Refinery but leave it at that.  That’s about as far as it goes.

As for John Wyatt’s belief that the IT industry would benefit, I assume he means that more placements would be made, of more candidates who more accurately fit the mould.  Come off it.  A good recruiter will find the right fit for a company by meeting the client, spending time in their business, really getting to know the workings and the culture of the firm, the social aspects, the balance of personalities.

A job description is a crutch for recruiters – to help them craft a half-decent sounding job advert – and to send to their candidate to make it appear like they understand the role they want to put them forward to.  Rip it up.

Now if there is one industry where it is totally impossible to contrive a straight-faced and useful job description, it has to be the agency recruitment industry itself.  But of course there are firms who have tried to put down the job of a recruitment consultant into a formal HR document, and I would like to share with you some of the best JD bits I have come across in my time recruiting for recruiters:

“Being ‘straight up’ with clients and candidates alike”

Should this really need to be in the job description?  Shouldn’t this kind of go without saying?  I suppose it says a lot about our industry.

“Having fun and not taking ourselves too seriously”

This is great.  I’ve worked with people in recruitment before who definitely don’t adhere to this one.  I’d have loved to have been able to wheel out the JD every time the sour face came on.

“Instigate appropriate number of sales cycles to generate and maintain a constant business pipeline.”

Pound the phone.  Just write it.  Pound.  The.  Phone.  Stop with all the flowery nonsense.

“Be literate and numerate”

Is this line really worth the effort of typing it into the JD?  This is like saying “breathe regularly”.  The funniest thing is that the next one was in the same JD…

“Present candidates all candidates honestly to clients”

Is it a grammatical error?  Or did the author write “candidates” before pausing to have a think, and then deciding to make it clear that they meant “all candidates” and not just the ones that might actually be worth putting forward.

“Ensuring our offices present a tidy and professional image always, and to encourage clients to visit them”

I can just imagine the new rookie recruiter, in his/her second month, starting to get some confidence going and referring back to the JD in their training manual or employment contract, and having a client turning up in the back office one Monday morning.  The desks of recruiters are generally not worthy of the inspection of your clients!  Of course, inviting them to your polished marble reception areas before interviewing your shortlist in the chromed, coffee’d and fresh-flowered boardroom is a different matter.

Just a bit of fun.  But seriously, get out there and get to know your clients better.  Don’t rely on a JD from HR and, even better, rip it up and make the placement anyway.

Have a great weekend.