How To Easily Attract, Acquire And Stop Overpaying For Truly Top Talent (podcast + text)

By James Santagata
Principal Consultant, SiliconEdge

A great deal has been written and said about the difficulties companies face in finding, attracting and acquiring top talent. And yet even when companies are able to accomplish that they still often find themselves overpaying for this talent in terms of both the compensation package extended and the time and effort expended to find and close the desired candidate. 

And if that isn't reason enough to rethink the entire talent acquisition process we must be honest and acknowledge that the entire process also often takes far, far too long which introduces a number of possibly very expensive opportunity costs along the way.

So why does this happen?

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Listen To The Podcast

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Well, for starters, while we've all heard so much about the so-called War For Talent and how important top talent (supposedly) is to the bottom line success of a firm or organization, the reality is that many, if not most companies, and their employees (often unbeknownst to themselves) are actively engaged not on a War For Talent but instead are engaged in a defacto War On Talent.

That bears repeating: A War On Talent. Not a War For Talent.

A minor change in preposition yields a huge difference in meaning.

They are actively, and quite successfully I might add, chasing away the very top talent that they so desperately need and desire (or are at least stating that they need and desire). In some cases they are chasing away the top talent from even applying -- "Why would I apply there? It's a resume blackhole"....."Why would I apply there? Who wants to go through a maze of interviews only to get knocked out by one interviewer who doesn't like you or is afraid of your talent?". 

In other cases, they are chasing away the talent from continuing on in the process after the first interview -- the company or hiring authority wants to move the candidate forward in the process but the candidate opts out and pulls the rip cord.

In still other cases, we find that they're extremely effective in filtering out the top talent during the initial resume screening process -- that's right, extremely effective in cutting out, in booting to the curb, the top talent during the resume review or screening process.

And as if that isn't enough, in other cases, they're simply drop kicking the best candidates to the curb after the first or second interview.
How fast this occurs most often depends on how soon it becomes evident to the hiring company, manager or future peers that the talent at hand is hot (the more talent a candidate has, the more often and faster this can happen -- yes it's counter intuitive but it's a reality).

"James, James, what are you blabbering on about? What do you mean companies are blocking and booting top talent to the curb? Why would they do that? And for the top talent they hire how can you possibly say that they are overpaying?"

You asked, so let's take a quick look at these.

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​First, it's no secret that companies often spend large sums of money trying to recruit and acquire what they consider to be the top talent on the market and in the market. It would behoove us to remember that the total cost to successfully hire one candidate accrues not only from the direct expenses paid to advertise the open position but that it also comes from the often steep fees (steep from the perspective of the hiring company -- I've never heard a hiring firm say that a recruiting agency's / third-party agency's fees were "too low".) which third-party (agency) recruiters charge. These fees may be as low as 15% to 20% of the new hire's first year salary in many places such as in the US but the fees may also range to as much as 30% to 35% in places such as Japan (in some cases, accelerating up to 50% -- yes, 50% -- this is not a typo).

But even fees of 15% to 20% can be painful - this is especially the case when annual salaries are running at $100,000. $120,000 or $150,000 or even much more. One must also determine the volume of positions to be filled -- not just for new positions but for existing positions (dictated by the churn rate or conversely the retention rate). It doesn't take a financial genius to realize that these expenses can and do add up rather quickly. We also must consider how much time and energy is spent bringing in each of these candidates for an interview.

And by the way, if you aren't paying fees to a third party agency then you are most likely relying on your in-house recruiters so again you must fully burden their compensation packages and costs -- salary, bonuses, health care, expenses, HR management / compliance fees, payroll taxes and processing and facilities - desk, telephone, computer, etc.). We also need to consider the time and energy spent by the HR department as well as the hiring manager. We must also include the costs associated with the participation of the interviewee's future peers who often asked to assist or are required to participate in the (again, often very lengthy) interview process.

We should have no illusions that the very act of Interviewing external candidates can quickly chew up a huge amount of an employee's valuable time and also reduce their productivity due to the increased stress they experience from the distractions that participating in so many candidate interviews brings to each of the interviewer's already hectic and fully-packed work schedule.

This is not to say that interviewing is not an important part of a hiring manager's or even a team member's job. The fact is, participating in these interviews is not just important but critical. For the company. For the department. For the team members.

But it does mean that we must take into account all the costs (and who pays them) associated not just with the recruiting or talent acquisition process but more specifically with the talent acquisition process we have chosen or that we have been "gifted".

Beyond this, it also means that the candidates who are brought in for an interview should be (properly and effectively) screened to ensure that each is of sufficient constitution to be "employable" at the firm. Further, all participating interviewers must know how to define talent and test for fit both within the broader company and within their particular department as well as the particular team they would join if successful. Going even beyond this, we find that the all interviewers must know how to effect the aforementioned items.

For instance, all interviews must know what techniques to use to extract the required information as well as guide the interview and they must be able to use them competently if not fluently. They must also know what questions to ask and how to ask them, and most importantly, how to interpret the interviewee's responses to these questions.

Interviewers seldom think about this and even if they do their definition of talent is most often found to be both suspect and even deficient as is their ability to effectively and efficiently interview and assess the candidate at hand on an absolute basis as well as relative to the available talent on the market (and at their price range).

In practice, this leads to a hiring process which favors either the selection of a patently "wrong" candidate or the selection of a subpar candidate. It also often leads to the hiring of Safe Candidates or in the case of the hiring which is done by marquee companies (think Microsoft, Oracle, Facebook, SFDC, etc.), it means hiring or leads to hiring only properly pedigreed candidate.

And here's a news flash.

Almost anytime you hire the properly pedigreed candidate you:
(1) Overpay for the talent.
(2) You end up with higher candidate expectations which often lead to less loyalty, faster job changes and/or an attitude problem.
(3) You end up with an employee who is likely to be recruited away / more receptive to sweet whispers or more likely to look outside.

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But are companies, especially companies in say, Silicon Valley, actually worried about compensation packages being too expensive, too high? Are they really worried about overpaying? Can't they just slough that off and "expense it"?

Well, in regards to the overpayment or overcompensation of talent, we only need be aware of the proven collusion to hold down wages in Silicon Valley through the enforcement of illegal anti-poaching agreements among some the top firms (e.g., Apple, Google, etc. although to Facebook's credit, they apparently declined to participate). 

If hiring companies weren't concerned about fast rising wages and the total costs of finding new key talent or replacing it, why would they take such great risks through the involvement in such collusion? What's the upside of the collusion if everything is kosher as is?

This further begs the question: Why, why would they do this? And why would wages be rising so much and so fast?

Yet again, Economics 101 to the rescue. We need only look at, as a starting point, supply and demand. The hiring firms most likely felt that the supply of the top talent they desired or required was in short supply compared to their own hiring demands/needs as well as the aggregate market demand.

To be clear, this is top talent which is defined as top talent per their often narrow and erroneous definition(s). 

Now it is also highly possible that the true top talent is and was in short supply although this doesn't justify illegal arrangements.
However, it is even more probable, based on what I've seen in my own HR Consulting and Executive Coaching over the years, that this was brought on by the firm's HR department's or the firm's hiring managers' own broken definition of what talent is (let alone what top talent is) as well as the inability of the hiring firm and/or the hiring firm's interviewers to properly attract, assess and close down said talent.

What is needed is to develop a cohesive framework starting with the definition of what the desired or required talent looks like as well as the techniques, processes and questions needed to identify, assess, attract and close it. This rarely happens. Instead we often find that firms' hiring efforts are impeded by a multitude of cognitive biases such as the educational pedigree or the status and ranking of the candidate's current or former employer and so on (halo effect, horns effect, social proof, the safe candidate, just world hypothesis, etc.).

Yet as we've discussed time and time again, the firm's operating or assumed definition of desired or required talent is almost always wrong and these mental short cuts further invoke a series of destructive cognitive biases which rapidly compound and become a vicious circle.

For instance, when you see a "talented" Google sales person can you really accurately determine how much of that person's success at sales at Google is or was due to their own talent?

How much of their success was due to the team behind them?
How much of their success was due to the resources they had access to?
How much of the candidate's success was due to Google's market power which is almost a monopoly power?
How much of the candidate's success was due to the Google brand?

In terms of the salaries paid, higher salary doesn't automatically buy better talent nor more loyal talent.

Yet the myth and meme that it does still persists.

We've already seen numerous cases of extremely loyal talent, often top talent which is motivated far less by market-rate or above-market rate salaries and motivated far more by other factors.

Examples of occupations or roles where the compensation may be well below the market rate include military pilots and other military or intelligence community specialists as well as the clergy and various medical volunteers working in dangerous places around the world.

Turning to other more extreme or unsavory cases of motivation by non-monetary means, we immediately note members of cults and suicide bombers. These are often extremely motivated and loyal individuals who, in the case of cults, are often willing to not just work for FREE but to first donate to the organization their entire life savings.

In the case of suicide bombers, well, they are willing to blow themselves up. Talk about dedication and passion, however twisted, debased or unsavory one may find it.

So don't try to tell me money is the greatest motivator. It isn't.

Now since you most certainly aren't going ask the successful candidate to commit to such a radical program as giving you all their assets and working for free or blowing themselves up when they join your company but will most likely pay going to pay them at least a "decent" if not competitive salary, we need to ask again:

"How hard can it really be to close the candidate down and get them to join your company?"

If you can't answer that satisfactorily then it's time to look at adjusting or reconsidering your recruiting / talent acquisition process. 

And for those not interested in re-inventing the wheel or who would like to access an immediately actionable system that provides an extremely powerful framework and system to identify, attract, assess and close top talent all while not overpaying or chasing the desired talent away we'd suggested our Supercharged Candidate Interviewing training and consulting program as well as our High-Performance Talent Acquisition training and consult program.

Something to think about.

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How To Close Top Talent Without Overpaying >>