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Firms Tally the Value in Values-Based Recruiting

January 25, 2011

As an open-source software company, Red Hat Inc. is rooted in values: The company was founded in 1996 upon the belief in the free and open exchange of ideas.

To follow through on that commitment, the Raleigh, North Carolina-based company hires and assesses employees based on how well they match up with the company’s values. In the past year, however, the company has re-launched its recruitment strategy with more emphasis on values and greater customization to its unique culture.

Since Dallas-based Southwest Airlines Co. began promoting corporate culture as a source of competitive advantage—along with a defined mission and adherence to values—other companies have struggled to get their arms around these concepts. Yet, too many leaders create mission statements or value propositions and just hang them on the wall, says Ann Rhoades, author of Built on Values: Creating an Enviable Culture That Outperforms the Competition.

To truly operate as a values-based company, says Rhoades, a founding executive of Southwest and New York-based JetBlue Airways Corp., leaders must incorporate values into every area of operations, including hiring.

“Hiring is not just about competencies,” Rhoades says. “It’s about understanding a values match by building a model that outlines the behaviors associated with corporate values and assessing candidates for those behaviors.”

RedHat began drafting that model in earnest about three years ago. And although the company had used behavioral interviewing for years, leadership sought to codify the behaviors that most exemplified the “Red Hat Way,” as corporate culture is known—in part to improve new hires’ chances of success in the quirky open-source environment.

The company created a new competency model that gives equal weight to an individual’s ability to execute and influence, says L.J. Brock, senior director of global talent acquisition and infrastructure.

Represented as two halves of a sphere, the execution side includes functional skills and problem solving, while influence includes core behaviors closely linked to the Red Hat Way. The model guides a four-step interview process, each tied to a quadrant of the sphere.

Interviews are carried out by members of a team selected by the hiring manager and include peers as well as supervisors. Peer interviewers make a significant difference in the quality of hires, Rhoades says. “They’re tougher than HR people are.”

Values-based hiring can affect candidate sourcing as well.

“We have a better understanding of what we’re looking for and can pre-screen candidates more holistically against all four pieces of the pie,” Brock says.

Potbelly Sandwich Works in Chicago and Sunnyvale, California-based Juniper Networks Inc. are among the companies committed to integrating values into the recruitment process. Claire Domark, director of recruiting for the sandwich shop chain, finds a values-based approach makes her job easier.

“We try to source candidates from venues and other companies with similar values, and the approach has made the selection process clearer in identifying candidates to move forward,” Domark says.

Fast-growing Juniper Networks, which has boosted its headcount by more than 22 percent to 8,700 people in the past year, is piloting values-based hiring processes in Bangalore, India.

“We are upping our game to be much more explicit about what the best talent for Juniper looks like,” says Greg Pryor, vice president of leadership and organization effectiveness, adding that the computer network infrastructure provider operates in 70 countries.

Juniper has worked with Rhoades to help define its values and identify four to six behaviors that exemplify each value in action.

“We kept asking ourselves whether it is possible to hire, observe, reward and coach these behaviors,” says Pryor, who notes that recruiters give equal weight to technical competence.

Along with hiring, values guide Potbelly’s employee assessments. For example, coaching is a core company value, because it hires a large number of entry-level employees.

A manager might be asked to describe a time when he or she invested extra time or resources to develop an employee. This feeds into another value: promotion from within. Upholding company values accounts for as much as 40 percent of the evaluation.

Values-based recruiting benefits companies seeking to hire so-called “A players,” Rhoades says. “Retention goes up quickly, because you know who you’re looking for, and that in turn bumps up employee referrals.”

Juniper also is looking for shortened time to productivity. “We are good at finding the best technical expertise, but our challenge historically has been cultural fit,” Pryor says.

Brock describes a similar challenge, saying, “We have a markedly different culture at Red Hat; it is a focus of our business mission and it is felt on a daily basis.”

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