Despite the shortage of skilled labor, Stallion Security, a South African-owned security services firm based in Johannesburg, is recruiting 15 to 20 managers and 150 non-managerial employees every month to meet client needs.
Five hundred of Stallion’s 4,000 employees fall into skilled or managerial classifications, and the company places a particular emphasis on recruiting top talent for these positions.
"We concentrate on getting the right management in place for everything from recruiting to quality control," says Clive Zullberg, Stallion Security’s managing director. "If we have effective managers, they can shape the rest of the workforce."
Two years ago, Stallion overhauled its recruiting process to deal more effectively with the extremely uneven labor markets that characterize the South African economy. Stallion’s new approach includes tools designed to ensure that candidates fit the jobs, plus extensive training and promoting from within. To keep new hires on the job, the company has built a culture of loyalty underpinned by competitive compensation and a retention policy that bans re-employment for workers who leave the firm.
Stallion’s new recruitment process has allowed the company to meet its hiring goals under difficult conditions. The company competes for talent against other local companies and the broad range of multinationals that are rapidly expanding their operations in South Africa.
"There is a feeding frenzy among companies looking for black managers, with extensive poaching, and the same employees poached again and again by other employers," Zullberg reports.
Foreign investment and domestic growth are rising in South Africa, and for the first time in a generation, the country is creating jobs faster than new entrants are joining the workforce. Unemployment stands at a whopping 25.8 percent, but the shortage of skilled workers and managers is acute. In a working-age population of 23 million, only 30 percent of those over age 25 have some secondary school education and only 6.5 percent have any tertiary education.
The recruiting difficulties generated by South Africa’s uneven labor markets may be extreme, but they are only an exaggerated version of the same challenges that recruiters face in other countries where there is a large surplus of unskilled labor and a shortage of skilled and managerial talent. Employers like Stallion are responding with new recruiting and retention techniques to support growth until labor markets adjust.
Although the labor markets in South Africa reflect a broader pattern, recruiting there is complicated by several unique factors.
"South African labor laws are among the toughest in the world, from recruiting to dismissal," Zullberg notes.
In the World Bank’s difficulty of hiring index, which ranks countries on the rigidity of regulations pertaining to the hiring process, South Africa scores a 44, compared with 0 for the U.S., one of the least regulated countries.
"In addition, Black Economic Empowerment regulations pertain to everything from black ownership to employees and suppliers," Zullberg reports. "We must submit detailed current statistics on the racial makeup of our workforce to maintain our status under BEE."
Also, under the BEE program, many companies must significantly increase the number of black managers.
"If you are a black manager in South Africa, you can write your own salary check," Zullberg says. "Part of the problem stems from the brain drain that South Africa has suffered over the past five to eight years because of high levels of crime. Many skilled workers, who find it easy to locate positions abroad, have emigrated."
Recruiting at Stallion is also complicated by the fact that while the rise in crime in South Africa, including white-collar crime, has created more business for the security industry, it has also generated higher risks in hiring. Because of the nature of Stallion’s work with clients, targeted recruitment and careful screening and training are essential.
In 2004, Stallion executives attended a conference and realized that the company’s HR function was archaic in many of its practices and inadequate given the organization’s rapid growth.
"We decided that we would create the best recruiting process in the South African security industry," Zullberg recalls.
Stallion brought in consultants to develop a new recruitment plan that covered everything from basic policies to technological support.
It also adopted the Predictive Index, a behavioral assessment process produced by PI Worldwide of Wellesley, Massachusetts, that is used at more than 6,000 companies in 138 countries. Stallion uses the Predictive Index in conjunction with PI’s PRO (Performance Requirements Options), a worksheet that defines the specific behaviors that lead to effective performance in a specific job.
Under the new recruiting process, the company’s HR department develops the job specifications and PRO and posts the position internally and externally through recruiting agencies, which are briefed on the specifications and PRO. The agencies provide weekly feedback to HR.
The vast majority of Stallion’s skilled candidates come in through the recruiting agencies.
"It took us a long time to find the right agencies," Zullberg says. "Most of them just want to pump out CVs to you and don’t want to work with companies that use behavioral assessments or other complex tools for evaluating candidates."
Stallion now does most of its recruiting through three carefully chosen agencies.
The agencies forward suitable CVs to Stallion’s HR department and skilled candidates are called in for the Predictive Index survey and a PRO evaluation. On the basis of those results and other factors, the company evaluates the candidate’s qualifications and determines if there is a match to the position. Stallion does not use the Predictive Index for unskilled positions, but plans to eventually push it down further in the organization to include all employees.
"We use the Predictive Index as a point of reference," Zullberg says. "Once you understand the Predictive Index, you understand the nature of the candidate. Then you know what to push in the interview to become more familiar with the candidate’s strengths and weaknesses."
Zullberg believes that the Predictive Index is a reliable indicator of workplace behavior.
"We looked at the Predictive Index survey and found it was an exact fit for our needs," Zullberg says. "It provides not only specific reports, but also an understanding of what those reports mean, which is crucial. Through the use of the Predictive Index, we have been able to align personnel with available positions, which ensures that our recruitment process is streamlined and contributes to a reduced rate of employee turnover."
The company also uses Predictive Index results to make better-informed coaching, performance management and leadership decisions.
"The Predictive Index has helped our managers understand how to communicate with employees," Zullberg says.
"If a problem arises with an employee, we check the worker’s Predictive Index report before we approach the employee to ensure that management understands the employee in question before the actual intervention occurs. The Predictive Index also helps identify which employees have specific abilities, such as the ability to close deals, and which managers belong at headquarters."
For unskilled positions, Stallion uses a mix of in-house recruiting staff and recruiting agencies. To address the shortage of candidates with suitable education and experience, Stallion puts new hires through an extensive training at the company’s learning academy. Induction training goes well beyond the industry’s regulatory requirements and works as a competitive advantage. The company continues training employees with on-site training for new clients and ongoing quality assurance training.
"Not just in South Africa but elsewhere, in the security industry all you have to sell to both clients and employees is your culture," Zullberg says. "We sell our discipline and training to clients, and for employees, we sell our pay and benefits package and our promise of training and advancement."
Because of the difficulties in recruiting and replacing managers, Stallion focuses heavily on promotions and retention.
"We try to address this by promoting a culture of loyalty," Zullberg reports. "We have a very strong policy of promoting from within. We have employees who were hired on as security officers and are now senior managers, and we hold them out as examples for other employees to let them know that if they stay on and perform well, they can move higher and higher in the organization."
In stark contrast to many U.S. firms that maintain extensive alumni networks and actively recruit former employees, Stallion has a policy of no re-employment, which it views as part of its retention policy.
"If you leave the organization, you cannot come back," Zullberg says. "This policy is not common in South Africa, but we found that re-employment has failed for us. We enforce no re-employment as a hard policy with few exceptions—perhaps 15 in 15 years. Our managers know that if they leave to test the market outside, they cannot return."
For Stallion and other South African employers, labor market shifts will relieve some of the pressure on recruiting, but the process will be slow. The South African government is pouring money into education and training programs, but rapid economic growth and rising foreign investment continue to ratchet up demand for skilled labor. Employers in South Africa and other uneven markets might have to look to Stallion’s approach of careful selection, training and promotion to weather the skills shortage.