Tomicide Solutions, March 2012
Are Your IT Talent Selection and Recruitment Practices Leading Your Company Down The Doom Loop?
By Tom "Bald Dog" Varjan
Synopsis
We can say that the biggest differentiating factor in an IT company is its collective brain power, but when we look at human resources management in IT companies, what we can see is pretty disappointing.
Most HR professionals in the IT sector are not ready for the post Internet era. Instead of talented value-creators, HR folks are still looking for docile, obedient weaklings with superficially impressive resumes and credentials.
Docility and obedience are needed to support the petty tyrants (the most common management practice) on the top, and impressive paperwork is needed to prop up the company's intellectual shallowness.
But the problem is that people who are worth hiring, because they are so good, are not willing to play this retarded game.
So, IT companies either end up with losers or start playing a different game.
Podcast: MP3 Version.
Do you know that when Jell-O is hooked up to an EEG machine, it registers movements virtually identical to the brain waves of a healthy adult.
I mention this because if you hook up many IT companies' HR departments to EEGs, based on their hiring practices, their brain waves would be inferior to the brain waves of plain Jell-O.
It seems to me that HR departments in general do more harm than good to their companies. They certainly have a knack for keeping the most talented people out of their companies and hire the ones who are either very skilled at writing resumes or have the money to hire blazingly good resume writing experts.
And then those HR pros get excited by the quality of resumes that have come in for various job ads. And then the race is on to hire the owners of the most impressive resumes.
While this looks like a conspiracy in which one department works against the company as a whole, basically, slowly cutting off the feeding hand, it's not one department's fault. It's more like a company culture of maniacal cost-cutting at any price.
The sad reality is that, and during the recession it applies about a million times more, most IT companies put more value on reducing costs than on increasing profits.
The Disconnect Between HR And The Rest Of The Company
As the old saying goes, no one has been fired for buying IBM.
HR's mantra is that no one gets fired for hiring impressive resumes even if they represent incompetent nincompoops.
Let's think about it...
HR people are not accountable for the quality of the people they hire and the value those new employees bring to the table.
Here is what they are accountable for: Hiring people with impressive resumes at the lowest cost. And in doing so preserving budget, so they look great in the eyes of their bosses.
Yes, business owners may want to have quality people, but offer special incentives to their HR people for preserving budget. Basically, hinting to them to do everything on the cheap, including hiring cheap people.
So, HR creates a "level playing field" which makes certain that only mediocre people with impressive resumes qualify and people with unique skills get rejected right in the first round.
This perverted mentality reminds me of a chat I had a few years ago with a facilitator at one of the government-sponsored self-employment programmes. After taking these courses, some 75% of participants, instead of starting their businesses, get some low-paying jobs and live the rest of their lives as employees, just as they did before.
To my surprise the coordinator said...
"Tom, as long as we dispense 140 hours of classroom tutelage and make sure that every participant fills in the blanks on our business plan template, we are blazingly successful regardless of the actual failure rate."
HR departments are usually the same. As long as they can prove that they process a certain number of resumes and perform a certain number of reference checks, they can justify their existence regardless of the quality of the people they hire. And here is the problem.
The HR folks in most IT companies are not involved in strategy issues, so they just do their "things" regardless of how "their "things" impact the company's future. They put in the time and "effort" but in most cases, the results are pretty poor. Obsolete HR policies and procedures are the main reasons why really talented people can't get into IT companies.
The sad fact is that HR departments in general don't understand "talent." They only understand "worker." The way most HR departments operate reminds me of the runner complaining to his friends...
"Hell, I'm the fastest runner, but I've never won one single race. I don't understand."
And then his friends ask him...
"Are you actually running in the right direction?"
Then the runner says...
"I don't know, but I take about the same amount of time to finish the race as the others. I dispense the same amount of time and produce the same amount of deliverables (e.g. sweat equity), so I should get the same results (a.k.a. win the race)."
HR folks go through all those fancy resumes, and mistakenly believe that just because they dispense the same amount of time and effort, they automatically produce results that can advance the company they work for.
And the same happens in business every day. HR's mandate is to hire cost-effective workforce. Not talents who can produce great results, but workers who are relatively cheap to hire.
There is no incentive or interest to care about whether or not newly hired people are actually assets for the company. And there is even a clash here: HR wants to remain busy, which requires a healthy employee attrition rate. Top management can't shrink the size of the bloated HR department when it is perpetually busy hiring, orienting, training and firing employees.
But employee attrition creates client attrition. And any HR person who can't see this correlation between the two should be replaced with a pet monkey. At least, the monkeys would provide entertainment to employees.
But employee attrition also causes client attrition and margin erosion. It also undermines brand and overall company reputation.
So, the race is on in search of workers who are willing to sign on the bottom line for competitive(ly low) wages to earn their fair(ly discounted) shares. HR people inherently don't care about what people can bring to the table. They are trained to check if the paper representation of people is impressive enough and if people accept offers with low enough wages.
The sad fact is that we may be living in the information age, the age of unique talent and brainpower, but most HR departments are still searching for workers with brawn power that would make them perfect in an era that is long gone.
So, since more and more IT companies realise that the secret is not to own workers but to have access to the best talent on an as-needed basis, they switch from hiring more full-time employees to engaging independent professionals on a project-to-project basis.
Here is one typical scenario:.
Fred Cringingnuts, the principal of the Behind Nowhere Secondary School decides to offer dental care for students. Being a government-controlled state school, Fred's HR manager, Liz has to adhere to government-like bidding tactics to find the right dental clinic for the contract. That is a competitive(ly cheap) one. Liz creates clear-cut bidding guidelines, including budget, and sends it out to all the dentists in town.
Jackie is a premium dentist who offers porcelain fillings, laser drillings and other cutting-edge dental services. Her services are highly unique and valuable, thus don't fit into the stringent and stingy budgetary requirements. Yet, she decides to send in a bid. She virtually gets laughed out of the bidding war. Liz's message is, "Your prices are ridiculous."
HR selects a dentist who offers competitive prices with belt-driven drills and mercury fillings. Liz knows that mercury can cause horrendous illnesses for kids down the road, but she is not paid to care about the kids. She is paid to acquire competitive bids and select one of the lowest bidders.
The fact that the mercury fillings will soon cause the kids pretty nasty illnesses which in turn will require millions of dollars worth of remedial medical treatment is irrelevant. Bidding wars don't have a long-term view. Liz's mantra is: "I want it all, here, now and cheap."
Now fast-forward five years. The kids are experiencing all sorts of strange illnesses. And the root of those illnesses is mercury poisoning. Mercury leaking from their fillings that they had received many years before.
And now as a significant "legal force", a large group parents are suing the school for medical negligence. Now the school must pay all the legal fees and the ensuing mercury-related medical expenses for all the kids for the rest of their lives.
The point behind this story is that the HR person made a decision that had an impact in an area which she wasn't interested in: The school's long-term success. She wanted to be a good HR person by hiring cost-effective workers at competitive(ly low) prices and in doing so preserving her budget, a part of which becomes her annual bonus.
That is, at the end of the year, while the school is going through multiple lawsuits and pays all sorts of damages for the effected kids, Liz picks up a hefty bonus for prudently using her annual budget.
The sad fact is that most HR departments hire people as though buying a pack of chewing gums. They want to reduce costs and to do that they don't mind sacrificing value.
Also, even if there is a good candidate for a position, HR starts a bidding war by advertising the position and the resumes start coming in. And when there are enough mediocre resumes, HR will get rid of this unique person, who someone initially thought of as a great candidate. HR decided to replace a talent with a worker because the worker is cheaper.
So, what can you do to improve the situation in your company? If you are planning to hire a person whom you may pay a combined amount of $500,000 or more over the years, participate actively in the hiring process. Relying on HR or hiring agencies to acquire value is as futile as relying on your goat to guard the cabbage patch in your back yard.
HR should never make hiring decisions. HR could facilitate the hiring process, making sure that candidates' unique value is reviewed and assessed. When HR makes hiring decisions, it will favour the seemingly lowest bidder.
I say "seemingly" because the lowest bidder usually costs the most. But sadly, HR departments are accountable for the cost at which they hire people, not for the value those people produce over the years.
You've probably heard the joke, about the two competing hairdressers:.
Hairdresser #1: Haircut - $10.
Hairdresser #2: Fixing $10 Haircuts - $50.
And the good news is that as long as there are idiots who go to hairdresser #1, hairdresser #2 will be fully booked... partly by the same tightfisted losers who went to #1 in the first place.
As the saying goes, a fool and his money are soon parted.
In his working years my dad was a painter and decorator. I can't even remember how many prospects turned him down because they thought his prices were too high. Well, he was a Master Certified Decorator, not just some guy with a brush, so he charged premium.
So, when he quoted his fee, many prospects gulped, and decided to do it for themselves.
But after making a mess of their homes, most prospects called him back and accepted his prices, which were much higher than before because he had to undo the mess the owners created and then start from square one.
Many IT companies want to be excellent, but when it comes to acquiring new talents, they automatically go to the bottom of the unemployment scum barrel, hoping they can pick up some cheap labour that way and then miracle happens.
The fact is that we can never make chicken salad out of chicken shit. Although the interesting phenomenon is that there's an endless supply of idiots who keep trying. Just look at the businesses in search of "talents" on Craigslist. The gathering or morons.
Come and let's discuss this newsletter issue on my blog....
Attribution: "This article was written by Tom "Bald Dog" Varjan who helps privately held information technology companies to develop high leverage client acquisition systems and business development teams in order to sell their products and services to premium clients at premium fees and prices. Visit Tom's website at http://www.varjan.com.
