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announcer: lou adler is the president of adlergroup, a training and consulting firm helping companies find and hire top talent using performancebased hiring. he is the amazon best seller author of "hire with your head: using performancebased hiring to help top talent." adler is a noted recruiting industry expert, nationalspeaker, and columnist for a number of major recruiting internet sites including shrm,ere.net, kennedyinfo.com and zoominfo.com. adler's early career included executive andfinancial management positions with the island group and rockwell international. he holdsan mba from ucla and a bs in engineering from clarkson university in new york. and now,please welcome to elevate 2015, lou adler. lou: hey, hi everybody, this is lou adler.i want to talk to you today about performance
based hiring. performance based hiring isan integrated business process for hiring top people. it's not a series of independentsilos or point solutions like interviewing or sourcing or closing. it actually integratesall of those pieces together. what i want to focus on in using performance based hiringis how to attract the best people rather than weed out the weak ones. in my opinion there is too much emphasis ongetting as many people in your candidate pool and weeding out the weak ones. i'd ratherjust focus on hiring the best ones and get them in there. we don't need to necessarilydeal with everyone whom we're not going to hire.
as many of you know, i've been in the hiringbusiness for many, many, many, many, many years. it actually started i was in engineeringand manufacturing and finance, but when i became a recruiter i realized there was abusiness process. and almost 20 years ago i wrote the first book, "hire with your head"based on 15 years of recruiting, put some audio tapes and video tapes together withnightingale-conant. my most recent book is "the essential guidefor hiring and getting hired," which really focuses on both markets, candidates lookingfor jobs and managers and recruiters trying to find these people. but all of these reallyinvolve what i call performance based hiring which is an integrated business process.
what i've discovered over the years is thatfour conditions always have to exist to hire a great person. number one, you have to havea great job. number two, you have to find great people. number three, you have to conducta thorough interview and choose a candidate both motivated and capable to do that work.then you have to close the deal or what i call career opportunity. you can hire a greatperson, but if you're paying the person too much money they're going to under perform.it's got to be a win-win situation. great opportunity, great job. it's got to map intothat candidate's career motivators and intrinsic value system. that's how you come up witha great hiring decision. but as i looked at that, when you really thinkit's simplistically, there are really two
job markets. one is a holiday surplus model.people are actively looking for jobs. they're willing to take lateral transfers, but froma scarcity situation, whether you're going after passive candidates or the best activecandidates, those people are only interested in career moves. so there's two job markets.the job market where we're offering lateral transfers that aren't too well defined andcareer opportunities based on growth opportunity and maximizing the person's internal motivators. to get at that, there are really four metricsthat i focus on. one is if you need to see more than four candidates to make the hiringdecision, there is something fundamentally wrong. as part of that i start peeling whois in the candidate pool. it's usually the
sourcing mix is off. typically to hire a greatperson on a consistent basis, at least two out of three candidates presented need tobe referred candidates. that's what i call the two to one sourcing mix. but to even pullthat off, every good candidate you talk to at the top of the funnel, especially if they'repassive candidates, you have to be able to convert those into prospects. [inaudible 00:03:48] talk about something.you call 100 great people and nobody talks to you, you're gonna wind up with the bestof the active candidates. i want to get the best of the best candidates and most of thoseare going to be passive candidates. well that's what performance based hiringis, and the reason for that is important.
it's that some of the best people aren't lookingfor work. in fact even active candidates, most of them get their jobs through networking. we did a survey in combination with linkedinand our own surveys, but when you think about it, the high level 5 to 15% of the total talentmarket is active. five percent for a real scarcity situation, high demand position.fifteen percent for more traditional positions where there is some supply, but even in that5 to 15% of the total market, i'm going to say it's almost 2 to 1 or 60% of those peoplefind their jobs through networking with a referral. not many of them actually find their jobsthrough a job posting so let's just start
setting the stage that hey, referrals, gettingreferrals and networking is the key to this. so now you look at 15 to 20% of the marketare tiptoers. these are people who just started looking for work and we all know that peoplewho just started looking for work talk to their friends or former bosses or former co-workers.that's the referral network. that's a real talent sweet spot, getting these tiptoers,they just entered the market and now we've got 65 to 75% of the total market which arepassive candidates. these are pretty cool people, but they're all passive and they'renot the least bit interested in taking [inaudible 00:05:22] to find a lateral transfer. you have to reach out, proactively reach outand find the names of these people. call and
engage with them and that's what i talk aboutthe 60 to 70, 80% of the market, they're either tiptoers or passive candidates. those arethe people you want at the top of your funnel. and that's what performance based hiring isdesigned to get those people. the top of the funnel, the middle of the funnel, the endof the funnel and you hire them. that's how you hire great people every time. recognize that there are two job markets.one based on active candidates, about 15% of the total market, largely transactionallytrying to force fit people to ill-defined jobs and you're giving these people lateraltransfers. the career market, largely passive 85% of the total market, much more consultativerecruiting. you've got to give these people
a 30% increase which kind of blows you away,but it's actually a non-monetary increase. it's comprised of three things. number one,a better job which means it has job stretch meaning bigger job, more important job. jobgrowth meaning the opportunity for growth and learning is significantly better thanthe one they have, and then a better mix of more satisfying work. you get those things,compensation will be not unimportant, but less important. and that's what we're tryingto do is recognize our two job markets, we want to tackle the total job market. bottom line, we're going to spend 85% of thepassive market, 15% of the active market. this starts with actually developing a talentstrategy. the strategy going after the surplus
market is fundamentally different than thestrategy of going into the career market. and again, 15% surplus, 85% careers. you followthe leader strategy which is largely in the surplus market and say let's get as many peopleas we can in the funnel and weed out the weak ones. a scarcity strategy is totally different.let's attract the best people. let's identify, attract, and nurture them. the time is a lotlonger in the career market, it takes time for a candidate to recognize this. not transactional,not trying to fit people into a job you have open, but consultative, "hey, let's talk aboutan opportunity that makes sense." let's find out what motivates this person to excel andsee if we can customize our job to some degree
to fit that person or find people who findthat job career motivating. not the best people who apply but people who find that job careermotivating. that's why the key is you've got to definethe job as a series of performance objectives, not a series of skills. the goal is not maximizingefficiency and reducing costs, it's maximizing quality of hire and having the right roi,return on investment. the truth of the matter is that if you maximize quality of hire, thecosts should be about the same and you're going to be efficient doing the right thingand not being fast doing the wrong thing. so that's...you've got to get the strategyright. in my mind in the career market it's a raising the bar strategy, attracting thebest, not weeding out the weak.
but we've got to have a measure of qualityof hire. and everyone is, "oh, i don't know how to measure quality of hire." i think that'sa bunch of bunk. i was with 150 software developers this past summer and i asked them, "let'sdefine the best people you've ever hired. the best people. let's assume you hired someonetoday and a year from now you hired a great person." and you call me up and say, "hey,we hired some great people." what would you describe as a great person? first off, they exceed expectation, 150 peopleagree, they exceed expectation. well, i say you'd better define expectations up frontbefore they can exceed them. they work well with a team, they coach and develop or mentorothers, they manage others. well, let's define
the team. we can define all that and findpeople who do that stuff. number three, they're good at organizing and planning and gettingstuff done. well, let's see if they have organized and planned stuff we need done and comparableresults to what you need done. well, they're real great a problem solving. what kind ofproblems do they need to solve? let's see what they're great at. all of these things are predictable beforeyou hire the person. even though this is what you say you need after you hire the personsix months or a year later. well, are they flexible, they've got to fit with the culture.we can define the culture and find people who have worked in cultures just like oursand just like yours and work for people just
like you. all of these things are predictable. and bottom line, these people get it done.they don't make excuses. we can find people who have a track record of doing similar workin a similar environment who don't make excuses and organize, plan, and work with the samepeople. none of these things are impossible to find. so why do we say we cannot define qualityof hire is a misnomer. using skills and experience is the problem. that doesn't find it. comparableresults define quality of hire. so to shift to a performance qualified attraction to shiftto a performance qualified attraction and assessment approach starts with redefiningthe work and what we define as quality of
hire. this, in my mind, means we have to eradicateor severely limit the use of traditional skills and experience based job descriptions. justthink about it. that is not a job description. a list of skills, experience, academics, industrybackground, competencies, is not a job description. maybe the responsibilities are, but we won'tlet people who can who have all of those skills who aren't top performers and yet we've allmet people who are top performers who have a different mix of those skills. so this isan indirect approach that doesn't get us any closer. if you try to measure quality of hireusing that you'll never get there. what i always do when i talk to my hiringmanagers, i say, "let's put the traditional skills based job description in the parkinglot." for one thing it's not a job description,
it's a person description. what do you wantthis person to do? if you hired a person today, what would they do a year from now you'd say,"yes, we've hired a great person." it all starts with clarifying performance expectations.every single job can be defined by five or six performance objectives that all startwith action verbs, describe a task that's deliverable, and some result. now the key is you'll find people who cando that work. don't compromise on the work. i guarantee if they can do that work they'llhave exactly the right set of skills. now if you are a great person, you're not lookingfor a job, you're talking to a recruiter, you just started chatting, which job wouldyou be interested in? "hey, i have a great
job for you. you have this, this, this, andthese skills. hey, how would you like to take over a new project and launch it and be partof an important team?" a performance profile starts opening up thecandidate pool to everybody. diverse candidates, high potential candidates, returning militaryveterans, people who have a different mix of skills and experience. why would you wantto exclude those people? that's why my idea is you have to a performancequalified system that starts by defining the results. it opens up the pool 100 times topeople who can deliver the results. i will not compromise on the results you need. butgive us a little relief on the skills to do. if they can do the work they have exactlythe skills needed. it's what a person does
with what they have that makes them successful,not the skills that they have. so in my mind when you conduct an interview,first find out what skills they have very quickly, then find out what they've achieved.you'll discover the best people have achieved a heck of a lot more with a lot less skills. so now, how would you measure quality of hireif we have a performance based job description that lists five or six performance objectives,the big things they have to do in the whole year, a couple of things they have to do inthe first quarter, the second quarter, but the process of success. not only the majorobjectives but also how they get there. when we start interviewing candidates, whatwe're gonna do is we're going to assess them
to see if they actually can do that, but i'mgonna contend that there's a couple of measures that we can use to predetermine quality ofhire. number one is obviously they have the basicskills, but i'm going for the bare minimum. enough to get in the game. what i'm reallygonna focus on is have they have a track record of comparable results. if they don't havethat, they're out of the game. so i'm gonna look at have they done work, comparable workto what we need done? number two, is their growth trend up? if they'redoing more and more work that indicates that they have the ability to take on bigger projects,bigger teams, then i'm gonna say, "hey, that's two factors that make sense." comparable results,trend of growth, and basic skill set. right
away, i say, "hey, this person is in the game."but now i'm gonna say, "do they fit the culture? are the comparable results and trend of growthin a culture consistent with ours in terms or pace, in terms of working with the samekinds of managers and working with the same kinds of resources, same kind of customersand team players?" all of that stuff has to fit. i got those four things basic skills,comparable results, the right culture, and a trend of upward growth, i'm in the gamehere. now i'm also going to look for is what i callthe achiever patterns. this is evidence in the person's track record that they're inthe top 25 to 30% of their peer group. engineers get assigned bigger teams. marketing peopleget assigned cross-functional teams very early
in their careers. sales people get a trackrecord making quota and get in the president's club. you start looking at a job and there'sthings that people do that gives evidence that these people are in the top third orthe top 25% of their peer group. that's the achiever patterns. now with those five things, "hey, i've gota pretty good person," but it's not done yet because we don't have the person figures out.the only way a competent person who has got the ability to do the work, it also has tobe a career move for the person. part of a career move is the person wants to do thiswork. they're highly motivated to do this work. and in fact it is a career move. thishas job stretch, job growth, and a richer
mix of work that the person finds more satisfying.you get those seven things and you can rank them any way you want. you get those seventhings and you've got a hot candidate. and you have a hot candidate before you've hiredthe person. how are we going to find these people? howdo we get them in the top of the funnel? now we know what our metric is, i want great peoplein the top of the funnel, i want great people in the middle of the funnel, i want greatpeople at the end of the funnel. but what i've discovered is that most people, whenyou really think about people who apply, that represents probably 1% of the total marketat best. now we've got 50 or 100 for every one who applies that skills and experiencequalify, we've got a lot of people who aren't
qualified. so we spend a lot of time tryingto find that one person out of a sea of 50 or 100 people. but if we start focusing on, "hey, let's havebetter advertising, more compelling jobs that focus on what the person can really do, we'regonna at least increase the pool by 10x." we're going to get skills and experience qualified,but we're gonna get both active and passive people. these are the people who saw yourjob posting who didn't apply or never even saw your job posting. so just that alone,even if you don't shift to a performance qualified, you'll get some better people with betteradvertising and focusing on performance. but if we go to performance qualified, meaning,"hey, if you can do this work, and you can
see this work is important, we want to consideryou," you'll increase the pool another 20 to 30 times in comparison to one person whoapplies who is qualified. these can be active candidates as well, but if we want the entiretalent market, we have to go after the performance qualified people who are passive, we haveto get them in the top of the funnel and it's that little diagram there is really, if ilook down the funnel, that's how i would build the total talent market to get 100x biggerthan one qualified person who applies. we have to target the entire talent market. to get there, understanding the candidatecomes before sourcing. we've got a lot of passive candidates here. so when i talk topeople i've got to find out why they're even
engaging in a conversation, why they wouldlook, why they would engage and why they would accept an offer. so i have what i call thejob seekers decision grid. when you think about it, people leave jobsfor negative reasons and accept them for positive reasons, but it's the reasons that are criticalso i break these down into two parts. extrinsic reasons which are short term and tacticalor superficial and core reasons. and a core going away reason is they've got a going nowherejob. they might be actively looking but the job isn't fulfilling. i ask people, "how long have you been looking?why are you looking?" and what i hear, a person leaves a job for a core reason. i'm okay withthat, that sounds okay, they should leave.
that's exactly right. the extrinsic reason,the short term is the daily grind and a lot of people just leave jobs because they getfrustrated. i'm not getting enough money, it's inconvenient, don't like the boss, whateverit is, it's something. now i don't mind that but if i see a pattern of people leaving thedaily grind that raises a concern. what i also find interesting is that too manyrecruiters and too many candidates focus on what they get on day one. they get a salary,they get a job, they get a title, they get a company. and they negotiate this beforethey even know what the job is. the job is the work. those five or six performance objectives.the 30% solution is increase growth, increase job satisfaction, and increase stretch. youget those things and you're in the game. but
unfortunately, recruiters and candidates alikeshort circuit that conversation. i call it the vicious cycle. you call a candidate up and 85% of them arepassive. "hey, would you be open to talk?" "yeah, but what's the money?" or if they don'tsay that, would you be open to talk but let me ask you what the money is. "how much moneyare you making? sorry, you're not qualified." it's amazing how often candidates and recruitersalike focus on skills and experience, they get someone in the game and then compensationwhat they get on day one is their negotiating strategy, and they do that before they eventalk to people. i call that the vicious cycle. candidates accept jobs for what they get onday one. recruiters force people to take the
job by what they get on day one, they filtereach other out on the wrong stuff. that's why 68% of the us work force is disengaged.because the job was ill defined before they took it. in my mind, simply, let's have aconversation about a career. "what's the money?" let's be real frank. itdoesn't matter what the money is. let's see if it's a career move first. we want to hirepeople based on what they can do. that requires good recruiting skills and a true understandingof real job needs. this is what i call the consultative recruiting process. it's nota transaction. to pull this off, it's a consultative process so i ask candidates when i get themon the phone, "are you looking for a job?" i want to focus on the career move. i don'twant them to focus on the daily grind, i want
them to focus on the career move. i want themnot to focus on what they get, i want to focus on the career move. i'll ask them how long have they been looking.did they just start? that's great. i've got to tell you guys if you're finding candidatesand they said they've been looking three to four weeks and haven't found, you have a sourcingproblem. good candidates or bad candidates. passive candidates shouldn't be looking atall. i say, "why are you looking?" and i ask this for every single job once i get themin the game. and i want people, i don't mind people looking for the daily grind, but ireally like people who have careers that aren't going as well as they could, and my job isto craft a career that really maximizes what
they're going to do in year one. part of this is how do i get enough peopleinto the funnel? the big thing now is...well i don't think the big thing now...i wouldsay the big thing in the past, in the recent past has been employer branding. let's getas many people to follow our company and then we'll force fit the best people into the jobwe have open. to me that's kind of passive. the big shift lately is talent branding whichis you take all of your job, you put them in a micro site and you fit people to thefunction. it's easy to find a micro site. hey, all chemical engineers, all sales reps,put them in this function and then based on your open jobs, you can fit people to theappropriate job. it's a heck of a lot easier
to brand it, but if you can get performancequalified people combined with talent branding you're gonna fit the job to the person. let'sget everybody. let's discuss it. that's how you really tackle the whole marketplace. get as many people as you can, passive candidates,active candidates, but focus on the job itself and what the impact of that makes on the person.you do those things and you're in the game. but to get to 100x, to get the entire talentmarket, you've got to focus on performance qualified not skills qualified. you have tohave an employee value proposition, that's the evp. why does this person want this job?why is it a career move? you have to get their attention somehow, that's what the agm is.attention getting mechanism.
you've got to emphasize what they do, notwhat they need to have. you've got to sell the conversation about a career move. notthe conversation on what they get on day one. you've got to create a career move real time.in my mind it's not a job description listing skills, responsibilities, and level of experience.it's what a person is going to do. i call that a performance profile, a performancebased job description. it's what they do with what they have is what's important. everyone of those performance objectives. grow sales by 10%, build a team, evaluate a process.they start with an action verb, build, do, create, upgrade. they include a task and adeliverable that's measurable. that's what gets people excited. you ask whydid you take this job? "oh, i'm going to be
doing this work and here's what i can becomeif i do it better." but you need a warm up. you've got to get people into a discussion.it's consultative recruiting, it's not transactional. don't drive people to the job, drive peopleto a discussion. emphasize in your advertising and your messages and voice mails and emailswhat they're gonna do, the evp. what they're gonna become if they do this? for example, lead the turn around of a bigproject. own the plan. improve the lives of somebody for people in the health care orwhatever it may be. those are good evps. rebuild our team. turn around our company. emphasizewhat they're gonna do. create the roadmap, upgrade the team, figure out the problem,train a user group. if they can do that work,
they've got the skills to do it. i'm not gonnacompromise on the work. they have to do it. i totally agree with that. they might havea different mix of skills, you'll see if it's enough. maybe a little bit of training. don'tfilter people out on skills. get people excited about the evp and what they can do and thenyou've got a whole different pool of candidates in your talent pool at the top of the recruitingfunnel. here's an example. you might want to pausethe screen. i'm not gonna read the example, but this is a real example of a real job thati completed a couple of years ago for the vp hr. i created a story out of it. it wasin a non...it wasn't in a great location. this story overrode the location. the ideais lead with an attention getting mechanism.
an open letter from the ceo to my next vphr. i probably sent about 70 of these, 65 were opened. the emphasis is on the future,the present, and minimize the past. i emphasized what the person was going to do, learn andbecome. if you read that, you'll see that. i told a story. it was a warm up act. "hey,let's just set up a chat." i didn't ask for a resume. "hey, why don't you write up a oneor two page paragraph, half-page write up of something you've accomplished most relatedto the job. let's discuss it." that's a great way to send out all of youremails. if you get too many people responding, just send them an email, "hey, like your background,here's what we need done, if you've done something similar and you think it's a career move let'stalk about it. send us a write up." it's a
great way to filter out unqualified candidateswithout disrupting your system to any great degree. now all of a sudden you get new people inthe funnel. all those things we've said, you will get good people at the top of your recruitingfunnel. i make sourcing similar to driving a tour bus, and that's a tour bus, not a metrobus with a fare and a location. i try to get people on the bus. "would you be open to explorea situation if it [inaudible 00:24:55] to what you are doing today?" i can get 100 people.most of those people would say, "yeah, i'd be happy to get on the bus, but what's themoney?" "let's be real frank, if it's not a career move, we'll definitely pay you. let'sfirst have a conversation and see if it's
a career move." what i'm trying to do is create this opportunitygap. this is what i call the 30% solution. i tell the candidate, "for this job to bea career move i at least got to give you some job stretch, some job growth, and an increasedmix of job satisfaction doing work that you find more satisfying." if i can get 30% ofthat, that's a serious career move. "let's go review your linkedin profile and see ifwe can get there." most candidates will do it and i start reviewing their profile. partof that profile is understanding if my job really does offer that 30% solution. if itdoesn't, "hey, i love your background, you're probably too heavy for this position. let'snetwork. let's see if we know someone who
might be interested." on the other hand if the job does fit, i say,"you know, i really like your background. it might be too much of a stretch though.i'm a little bit concerned you haven't done enough of this or you might be growing toofast." if the candidate sees the job as compelling, he or she will say, "no, i think i can dothat and here's why." when that happens, you've just put that personin the back of the bus. good candidates want to drive the bus. good recruiters can controlthe conversation. that's what i call consultative recruiting. you do those things, you willbe seeing and hiring more people. you'll be getting people in the top of the funnel, stayingthroughout the funnel and being candidates
whom you want to hire. so here's one way to do it. don't offer ajob. "hey, we're doing our work force planning for next year. would you be open to consideringone of these opportunities if it represents a true career move?" sell the discussion,not the job. get the candidate to sell you by offering too much stretch but not thatmuch that they couldn't get it. this is how you enter into a conversation. this is howyou move from what they get on day one to what they can do in year one. manage the drive.i don't really know where this location is going to be. the candidate is great, it'sgoing to be my job, maybe i'll modify the job a little bit, maybe i'll network withthe person, but i, the recruiter, have to
be in control of this process. i have to gainconsensus. "if i get you a meeting with the hiring managerwould you be willing to take a little less money?" recognize that this is going to bea remarkable career move. i gain consensus all the way. i want to get the hiring managerengaged early in the process. that's what performance based hiring is all about. havingthe strategy to go after the best people. raise the talent bar. it's not about costand efficiency. it's about hiring the best people and justifying an roi basis. recognize there's two job markets. one forjust jobs and lateral transfers and ones that are careers. if you're in a surplus market,maybe jobs are okay. but if we're in a scarcity
market where talent is tight, you can't assumethere is a surplus so you have to use a different process. you also have to start creating acareer move. it's not an ill-advised or an ill-defined lateral transfer move based onskills and experience, it's what a person needs to do to be successful. you have toknow that. eighty-five percent of the market is going to ask you that who are passive.the best people are not looking will ask you well, "tell me about the job." you the recruiter,you the hiring manager had better understand the job or you're never gonna get there. youcan measure quality of hire and that's what i track. quality of hire at the bottom ofthe funnel, quality of hire at the top of the funnel, and quality of hire after you'vehired the person.
those 7 metrics can be tracked at the beginning,the middle and the end. after you've hired the person, reevaluate the same things. wouldyou rank the candidate exactly the same before you hired them and after you hired them, andyou can do it. if there's a difference it's probably because the job changed or you didn'tfocus on something. that's what i call the feedback system. use quality of hire as yourtarget and then develop a system to track quality of hire. top of the funnel, middleof the funnel, bottom of the funnel and after the person is hired. but you have to do allof those things if you want to attract the total talent market and i'm gonna contendthe total talent market is huge in comparison to one good person who applies. at least 100times. probably bigger than that, but most
of those are passive candidates and you haveto have a different strategy to go after them. the strategy really is we're going to offercareer moves, not lateral transfers. that requires good recruiters, involved hiringmanagers and a consultative recruiting process based on needs analysis. understanding whatthe candidate wants out of his or her career then trying to offer something that's mostclose. you do those things you will be hiring great people every time. now frequently people ask me as i discussperformance based hiring they say, "lou, do you make this stuff up?" practically speaking,i did make it up. but i made it up as an experiment. i tried a dozen things. maybe one or two ofthose would work. i tried a dozen more things
and got a couple other things that workedbut after time we tried things eventually you get on the right path. that's what's calledperformance based hiring and professor todd rose at harvard university and president ofthe center for individual performance and author of "the end of average," recognizedthat performance based hiring is the secret sauce for hiring better people, but it allboils down to finding jobs that people are motivated to do. not finding people who areskilled and force fitting them into a job. that's what hiring great talent is all about.understanding the job, great recruiters, great hiring managers, and a process that's basedon consultative recruiting and matching with their motivating interests. you do that everytime you will hire great people every time.
good luck. i wish you the best of luck withyour hiring great people. thank you.
