Over the last few years, Armnon Geshuri has watched the labor market engage in more contortions than an Olympic gymnast. During the peak of the economic boom, attracting applicants was next to impossible. Then, when the labor market went into a tumble and layoffs began to swell, the director of global staffing at E*Trade Financial in Menlo Park, California, suddenly found himself taken to the mat with a glut of applicants.
The one constant throughout the entire period: a sophisticated applicant-tracking system and advanced screening methods have helped E*Trade Financial score when it comes to finding new employees. The brokerage and banking firm is finding better workers more quickly. "In any market, finding the right talent is key," Geshuri says. "Today, effective applicant tracking and screening is what differentiates companies and creates a competitive advantage."
As companies battle for talent and place a growing premium on human capital, they’re looking for more advanced ways to conduct applicant tracking, recruiting, and screening. Many organizations are also concerned about the fallout from the events of September 11. "Over the last few years, there have been tremendous changes to the entire recruiting process. Organizations are turning to applicant-tracking and screening systems to find qualified candidates and make sure people’s identities check out," says Jane Paradiso, recruiting solutions practice leader at Watson Wyatt Worldwide.
First-generation applicant-tracking systems merely collected résumés and offered rudimentary search capabilities. Current systems -- whether they’re used in-house or through job boards -- enable human resources and line managers to oversee the entire recruitment and applicant-tracking process, from mining résumés and spotting qualified candidates to conducting personality and skills tests and handling background checks. In fact, some of these applications are able to generate detailed profiles, which include education, background, skills, behavioral attributes, work history, and salary requirements. In most cases, the goal isn’t merely to reduce costs but also to speed up the hiring process and find people who fit an organization’s success profile.
Finding diamonds in the coal mine
With millions of individuals posting résumés online, finding qualified candidates can sometimes seem like a Herculean task. And while the current economic downturn has alleviated the severe labor shortage that has wracked the corporate world in recent years, finding the right person and ensuring that he or she has the right skills for a particular job remains a daunting job -- with or without technology. "Too often," says Lou Adler, president of Power Hiring, Inc., a recruiting and consulting firm in Tustin, California, "excellent candidates slip right under the radar while poor candidates wind up being interviewed and sometimes hired."
Companies are turning to more sophisticated human resource management systems from well-known companies such as PeopleSoft, J.D. Edwards, Oracle, SAP, and Ultimate Software to manage applicant tracking and candidate screening in a more centralized way. But these systems alone aren’t enough to ensure success, Adler says. It’s essential for HR and line managers to have additional tools to filter out unwanted résumés, search for candidates with particular skill sets, and use other filtering techniques such as skills testing and psychological testing.
That approach has worked at E*Trade Financial. A few years ago, the firm found itself buried under faxes, e-mail, and old-fashioned paper résumés. That slowed the hiring process to a crawl, Geshuri says. So, E*Trade Financial opted to migrate from paper to pixels. It installed an applicant-tracking system from Icarian, which connects to its Oracle HRMS.
Now when there’s an opening, HR and line managers can pull the appropriate job code from the Oracle database and send a detailed list of job requirements to the Icarian applicant-tracking system. It’s then possible to match résumés to specific criteria and view a list of potential candidates. The system also automates requisitions and can slot the appropriate new-hire data back into the Oracle HRMS. That has provided an 80 percent decrease in data entry, reduced the reliance on outside recruiting firms, and helped E*Trade Financial spot better candidates.
The increasing use of keywords to screen and filter applicants can prove dicey, however. Organizations that rely too heavily on software can find themselves overlooking highly qualified candidates who do not match specific criteria. "In some cases, the best candidate might not have a specific skill but can learn it," says Terry Terhark, a senior vice president at Aon Consulting in Findlay, Ohio. Other organizations don’t spend enough time and resources fine-tuning a system to uncover the best candidates. They pull up too many résumés matching the desired keywords but too few that are outstanding.
As a result, applicant-tracking vendors are developing systems that not only let recruiters search on keywords but also conduct analysis of the words and weight them according to how often they’re used and their relationship to one another. Others, including Wonderlic and ePredix, have introduced "performance" filters. Applicants fill out a brief questionnaire, and the system ranks them on the basis of specific criteria, such as their past ability to reach quotas, win awards, and earn a certain commission. At that point, a recruiter or HR specialist can schedule a brief follow-up phone interview to ensure that the information is accurate. Then the company interviews the finalists and makes a selection.
Yet even this method has its limitations. The rankings are only as good as the questions. "Sometimes, companies ask the wrong questions or focus on the wrong issues," Adler says. In fact, the problem can carry over to conventional job applications, whether paper or Web-based. For example, an employer might ask applicants up front whether they’re willing to relocate. Top candidates often will say no to such a question in theory, but will agree to move when presented with an excellent job opportunity, Adler points out.
Building an enterprise from the people up
As recruiting moves online, companies face a growing array of choices about how to conduct applicant tracking. While some organizations choose to use their own Web sites as the primary point of contact with job applicants, others are turning to job boards such as Monster.com, CareerBuilder.com, Hire.com, and HotJobs.com, and more specialized job boards like Medzilla. Even in the digital age, of course, paper résumés and faxes continue to stream in, though most companies either scan the documents or file them electronically in their applicant-tracking database.
At H&R Block Financial Advisors, a financial services firm headquartered in Kansas City, Missouri (a wholly owned subsidiary of H&R Block), recruiting has evolved from ads in the Sunday newspaper and HR staff sorting manually through résumés to a highly automated applicant-tracking and screening system. Using Hire.com, the company collects and segments résumés submitted through a specialized recruiting Web site that appears as part of its own corporate site. It also searches the Web for keywords on résumés posted at various sites and then invites individuals to apply for certain positions. H&R Block often uses specific keywords that apply to the industry, such as "certified financial planner," "insurance license," competitors’ names, and other industry-specific terms, to find qualified candidates. That helps to ensure that all the data it collects is consistent and makes searching for candidates simpler.
Although most of the company’s hiring takes place at the branch level, the firm has developed a national database to better track and screen applicants. Equally important, it relies heavily on human resources to manage the interviewing process, which serves as one of the best screening methods of all.
Improving processes is essential, says Scott Burton, a vice president at Development Dimensions International, a consulting firm in Ridgeville, Pennsylvania. "The goal isn’t only to automate processes and collect résumés; it’s to find better candidates." Ultimately, organizations that succeed streamline business processes so that they can conduct more effective filtering, screening, testing, and simulations. Remarkably, less than 30 percent of companies surveyed by DDI reported extensive use of testing and assessment methods.
Ultimately, effective screening comes down to meshing new technology with old-fashioned HR smarts. It’s about using software to improve applicant tracking and spot potential candidates, and then relying on solid interviewing techniques to choose the right people. "A solid applicant-tracking system is a powerful tool," says Arlene Klingaman, senior staffing consultant for Ingenix Pharmaceutical Services in Basking Ridge, New Jersey. "But it cannot replace human decision-making. Companies that use both effectively are likely to gain a competitive advantage and achieve greater success."
Workforce, June 2002, pp. 57-60 -- Subscribe Now!