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When Brand Alone isn't Enough

March 13, 2006
It’s not often that you find a head of human resources on his hands and knees scrubbing the bathroom floors of his company’s restaurants. But two years ago, that’s exactly what Rich Floersch, executive vice president of worldwide human resources at Mc- Donald’s, was doing.

   After just a few days on the job, Floersch decided to spend two weeks working at a McDonald’s in Darien, Illinois, to find out what makes a good store manager or restaurant worker.

   For McDonald’s, the exercise was crucial. After posting straight quarterly gains over its 47-year history, in the fourth quarter of 2002 the company saw its first loss—$344 million.

   In reaction to the decline, McDonald’s management brought former CEO Jim Cantalupo out of retirement to run the business. Within a year, Cantalupo announced a revitalization plan that would focus on people development, among other things, and hired Floersch to lead the charge in this arena.

   Big-name companies like McDonald’s traditionally could rely on their brands to attract good job candidates. But as the war for talent heightens, these companies recognize that they need to do more. As a result, firms with strong and names are revamping their recruiting initiatives to focus more on communicating to prospects the key aspects of their corporate cultures that they believe will attract the best candidates.

   So far the new recruiting approach seems to be working. McDonald’s has seen its turnover decrease consecutively for the past three years, Floersch says. Now it is below the industry average, which hovers around 130 percent for restaurant staff and 42 percent for managers, according to People Report of Addison, Texas.

Employment branding
   After working at a restaurant and interviewing 50 senior managers and 120 human resources staff members, Floersch sat down with his team to figure out what message McDonald’s should convey as part of its recruiting effort.

   The company wanted a contemporary message that would really speak to its corporate culture, he says. One fact that really struck Floersch about McDonald’s was that 40 percent of its top 50 executives started out working at the restaurants. "This was really not a message that we had communicated before," he says.

   Floersch and his team made sure that all of their recruiters emphasized at job fairs and recruiting events the skills that people could get by working at McDonald’s. "We wanted to instill pride in our employees and get them to think about the skills they are learning," he says.

   To get the message out to the public, McDonald’s launched a television commercial in September that features people whose first jobs were at its restaurants. The "My First" campaign includes celebrities like Olympic gold medalist Carl Lewis as well as less-well-known people—like Leo Lopez, a franchisee from Florida—talking about how the skills they learned from working at McDonald’s have helped them in life. For example, Lewis learned about the value of teamwork, which came in handy as a relay racer, Floersch says.

    Talking about opportunities rather than just relying on corporate brand in its recruiting has been a turnaround for American Express as well, says Murray Coon, director of recruiting. Five years ago, it would have been enough to talk about the brand and breadth of products at American Express to bring in candidates. But as the market has become more competitive, the company has decided to take a more aggressive approach at communicating the corporate culture.

   Like McDonald’s, American Express in 2002 took a hard look at its business processes, including its recruiting, as part of a companywide effort to become more competitive. Not only was the financial services industry still reeling in the aftermath of 9/11, but American Express was grappling with increased competition and wanted to make sure it was focusing on the right aspects in its recruiting, among other areas, Coon says.

    The company conducted focus groups of its employees worldwide to find out what they valued most about their corporate culture. Through the focus groups, Coon and his team identified eight points that all of the company’s 500 recruiters should touch upon when talking to job candidates: brand, culture, the company’s position within the financial services industry, global opportunities, career path, compensation, training and development, and location.

    "Five years ago, when we went to a career fair we would have talked more about the American Express brand and products, but now we are talking more about these eight areas," Coon says. "Now it’s more about the industry, the people and the culture."

   Ultimately, the company’s goal is to appeal to candidates’ emotions, says Joan Gutstein, who has been a recruiter for American Express for 20 years. "We want candidates who, like our card members, aspire for more," she says.

Finding the right people
   Just getting the right message out there is not enough, Floersch says. McDonald’s also wanted to make sure that the people it hired were the right candidates. To make sure of this, McDonald’s, with the help of Aon, developed an online questionnaire for job candidates in the U.S. The questionnaire asks candidates an array of questions about their work experiences, preferences and how they would respond to certain situations.

   Based on the results, the questionnaire will either prompt a green light to the hiring manager, signaling that the candidate would be a good hire; a yellow light, meaning that the manager should ask more questions; or a red light, meaning not to hire the person.

   "Basically, we are taking the subjectivity out of the store manager’s interview process," Floersch says.

   McDonald’s has seen good results from the program, he says. "We are seeing that hires that have gone through this system and received the green light are getting higher performance ratings in their jobs and higher salary increases," Floersch says. The company is discussing introducing the tool internationally.

   To get the right people in the door, American Express is prompting its recruiters to be more aggressive, Coon says. "Instead of a recruiter passively posting jobs on the Web and hoping they get filled, they are now seeking out competitor intelligence and looking to see how they can make a difference in terms of sourcing competition."

   When Avaya, a Basking Ridge, New Jersey, communications company, was spun off from Lucent Technologies in 2000, it had the dual task of defining its own corporate culture while trying to figure out what to emphasize to job pro­spects, says Doreen Amorosa, director of talent acquisition.

   "We wanted to communicate that we were established but also had the drive and ambition of a startup company," she says. To make sure that the company appealed to the right type of job prospects, Avaya’s recruiters focus a lot of questions around leadership, no matter what type of position they are looking to fill. "We ask questions around whether the candidate is competent to do the job, but we also ask how good they are at impacting others," she says.

Establishing metrics
   
To gauge the success of Avaya’s recruiting, Amorosa has set goals for how many experienced hires it acquires from competitors. Additionally, the company measures performance of individuals who move internally from one business to another compared with the average performance in that division.

   "Most companies will say their recruitment is successful if they retain the people that they hire," she says. "We look beyond that and set very specific goals for ourselves."

    Amorosa won’t comment on specific numbers, but she did say the company is seeing a steady number of candidates come from competitors. The goal of this approach is not to just keep bringing in new people, she says, but to get people who are better than who the company has. "It’s not about retention rates; it’s about bringing in people who can grow the business in a way that someone else isn’t," Amorosa says.

   It is too early to tell how successful American Express’ new recruiting method is, but the company is keeping a close eye on 15 to 20 different metrics for experienced positions, including how long it takes to fill jobs, how many offers the company makes before a job is filled, and retention rates. For campus hiring, the company is looking at acceptance rates as the key metric, Coon says.

   On top of looking at its turnover rates and quality of hires though its online questionnaire, McDonald’s also looks at its employee commitment surveys, which restaurant workers and store managers take every year.

   The survey asks employees to say how they feel about the company’s offerings in 12 different areas, such as skills development and compensation and benefits. In its 2005 survey, McDonald’s found that the company was up in its commitment ratings for eight categories, flat for four and down in none.

   The company also has seen an increase in the number of workers who take advantage of its training and development programs, dubbed Hamburger University, Floersch says. The number jumped by 45 percent in 2004 and 38 percent for 2005.

    Focusing on training and development and communicating about those programs will continue to be a growing part of recruiting, Floersch says.

    "I really believe that the strongest employment brand that you can have is one where employees say they are proud to work for their companies," he says. "Our goal is to continue to build that sense of pride."

Workforce Management, March 13, 2006, p. 1, 39-41 -- Subscribe Now!