This is No Kind of Relationship

Corporations are spending millions of dollars on “relationship-management software” that enables them to build ongoing relationships with job candidates until hiring picks up. Funny thing is, hardly anyone is making much use of the systems.

January 5, 2004

With the job market seemingly on the way to revival, corporate recruiters such as Mark Long find themselves in a position that they would have envied during the tight labor market of the late 1990s. Long, vice president of staffing for Prudential Financial, has amassed a database of 260,000 résumés from people eager to work for his company. Whenever he has a position to fill, with a few mouse clicks he can generate a list of potential candidates--already prescreened for worthiness by an electronic questionnaire when they originally applied--and send a slew of e-mails alerting them to the opportunity.

    Even so, the Prudential executive knows he has only scratched the surface of his talent-management system’s potential. The powerful software on his desktop not only gives Long the ability to fill currently vacant jobs, but also provides myriad ways to nurture relationships with promising talent who might be tapped for future openings. He has the ability to communicate with large numbers of applicants or with a few in a high-priority specialty, soliciting information to update candidate profiles or touting Prudential’s latest products or financial performance.

    So far, though, Long hasn’t bothered to do any of that. "I could be sending out e-mails, telling people that if they haven’t thought about Prudential in a while, why not take another look at us," he says. "But when you’re already getting 200 to 300 responses to every job you post on your Web site, it doesn’t seem necessary."

Short-term ROI missing
    That’s the paradox in which the once-dazzling notion of talent-relationship management seems stuck. In recent years, companies have spent millions of dollars building elaborate systems that can sort and analyze pools of promising potential employees. According to IDC, hiring-process automation is the fastest growing segment of U.S. recruiting and staffing services, and in 2002, almost $123 million was spent on such systems. IDC projects this figure to more than quintuple by 2007, reaching nearly $656 million.

    These systems enable recruiters to keep in touch with prospects for months and even years, periodically updating their data and reminding them why Acme Widgets would be a great place to work someday.

    Theoretically, given the combination of computer technology and the vast number of résumés filed during the economic downturn, companies are in a position to engage in the recruiting equivalent of "just in time" manufacturing. Instead of stockpiling talent to prepare for growth, they could wait and fill a job at the last moment with one of several highly qualified candidates already on deck and raring to go. Thus far, however, few companies seem to be taking advantage of the opportunity to mine their mountain of applicants in a forward-thinking fashion.

    "In theory, relationship management makes great sense," says Wayne Tarken, managing principal of the HR Technology Group, a consulting firm in Cherry Hill, New Jersey. "In practice, it’s not that easy to make it work. And the short-term return isn’t there, so it doesn’t become a priority."

    Indeed, talent-relationship management tends to rank so far down on the to-do list that one major company, General Motors, doesn’t even have a software system for maintaining ongoing contact with applicants. (GM spokesman Rob Minton says the company is planning to add such capabilities in 2004.)

Powerful but unnoticed
    Other companies that are nurturing relationships with potential future hires seem to be doing it on a rudimentary basis. At Advent Software, a San Francisco-based maker of applications for the financial industry, staffing manager Mason Wong says he has sent out a few mass e-mails, such as holiday greetings and reports of the company’s quarterly earnings, to the entire 40,000 applicants in the company’s electronic database.

    But only when he has an immediate position to fill does Wong mine the database and send narrowly focused messages--for example, to candidates with sales experience. "That sort of targeted communication is hugely valuable to us," he says. "We could take things to another level, but we really haven’t needed to, up to this point."

    Talent-management software has become sophisticated enough that a company can build relationships with potential hires without even knowing their identities. cofounder and president Hank Stringer cites the example of a Midwestern pharmaceutical company. It noticed that a top scientist--working for a competing company across town--had filled out a profile on its site, using the "anonymous" function that allowed him to omit his name and set up an e-mail address that masked his identity. The drug company, according to Stringer, sent the scientist messages about the company’s economic fortunes and plans, including the fact that they were going to be working in a scientific area similar to what he was already doing. "Eventually, they were able to hire him away," Stringer says.

 "In theory, relationship management makes great sense. In practice, it’s not that easy to make it work. And the short-term return isn’t there, so it doesn’t become a priority."

    Such potentially powerful functions apparently often go unused. Ironically, high-powered recruiting technology also seems to be part of the reason why relatively few companies appear to be putting much effort into nurturing long-term relationships with potential hires. Corporate Web sites and systems for processing electronic résumés, set up to attract applicants during the late-1990s talent shortage, have been doing their job too well during the downturn. Bethesda-based defense contractor Lockheed Martin receives about 80,000 résumés each month, and Microsoft receives 50,000. Drugstore giant Walgreens, which holds in-person job fairs at the sites of new stores, has been known to attract hundreds of job-seekers competing for a dozen openings.

    "When you’re not making that many hires and you’re continually deluged with new résumés, there’s not much of an incentive to keep in touch with people," says Peter Capelli, director of the Center for Human Resources at the University of Pennsylvania’s Wharton School. "What are you going to tell them--‘We’re going to keep you in the hopper because we might need you in three years’?" Additionally, the longer a résumé sits, the more it decreases in value. "The jobs change, the person’s skills may be out-of-date," says Capelli. "Human capital has a limited shelf life."

Investing time pays off
    One company that has put considerable emphasis on talent-relationship building is Chiron, an Emeryville, California, pharmaceutical firm that is an aggressive recruiter of talent. Chiron human resources director Anthony Damaschino says that even with sophisticated software to assist in the process, human recruiters still have to invest considerable time and focus. "Do you really want to try to build a relationship with someone just through e-mail?" he says. "That doesn’t work. You’ve got to have a feel for each person because everybody’s different." Damaschino also says that "an e-mail once a week or once a month" has its pitfalls. "If you get that wrong, your message just becomes more spam."

    Additionally, applicants’ small errors in filling out their electronic profiles sometimes lead to recruiting faux pas. "Whenever some senior scientist gets an automated message about a janitorial position, I’m going to be the guy who ends up having to apologize to him," he says.

    Instead, Damaschino tends to favor old-school methods for relationship building, such as face-to-face meetings at job fairs and follow-ups by phone. "In our field, for example, there aren’t that many directors of clinical research in a certain specialty," he says. "Even if you keep them in a database, there’s nothing that beats simply calling them every six months and having a conversation. That’s really how you find good people and get them for your company, and it’s not going to go away."