A better interview process can eliminate the shortage of talent that middle market companies report. NCMM Executive Director Tom Stewart interviews Kathleen Quinn Votaw, Founder and CEO of TalenTrust on how to middle market companies can improve this process.
Transcription
Middle market companies report a shortage of talent. They need more people. But they're letting great candidates slip through their fingers because they're not doing as good a job as they can on that interviewing process when they've got a prospect right in their office. We'll learn how you can do it better.
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Welcome to the market that moves America, a podcast from the National Center for the Middle Market, which will educate you about the challenges facing mid-sized companies, and help you take advantage of new opportunities.
Today's podcast is about finding the people you need, the people who are right for your company, and the people for whom your company is right. I'm Tom Stewart, the executive director of the National Center for the Middle Market at the Ohio State University Fisher College of Business. We're the nation's leading research outfit studying mid-sized companies, which account for a third of private sector employment, and GDP, and the lion's share of economic growth. It's the market that moves America.
We are a partnership. The National Center for the Middle Market is a partnership between Ohio State and SunTrust Banks, Grant Thornton, Grant Thornton LLP, and Cisco Systems. I've got a special guest with me today, Kathleen Quinn Votaw, who runs a Denver, Colorado firm named TalenTrust. And that's two T's, talen, t-t- with just one t in the middle, TalenTrust, which works to help middle market companies strengthen their talent planning capabilities. Kathleen, welcome to the market that moves America.
Oh, Tom, thank you for having me. I'm really looking forward to this discussion.
For the last two years, our middle market indicator, which has a quarterly pulse check of business among mid-sized companies, has shown that mid-sized companies rank talent at the very top of their list of challenges. It's tougher than beating the competition, it's tougher than controlling costs, it's tough for them planning growth, it's tough for them dealing with regulations. In fact, speaking of growth, four out of 10 middle market companies say that a lack of talent is actually constraining their ability to grow. Does that surprise you?
No, unfortunately, it doesn't. Quite frankly, it's an inventory problem. We have people exiting stage right out of corporate America, and not enough people coming in to fill their positions. So we have a true inventory problem for the first time in our country. And we need to solve it for middle market companies.
When you say there are not enough people there, if you look at-- one of the things that you must see is you must see the talent pool. Is it a mismatch between supply and demand? We've got a whole lot of millennials out there. We've got a very large young generation supposedly coming into the workforce. Is it just that we're near full employment or is there some sort of structural problem with who's in the workforce?
All of the above. So we have an inventory problem from a skills perspective. We also have a simple math problem. But it's up and down the org chart. So at the very senior leadership of the organization, we have people wanting to go into retirement, or which I affectionately call your encore. Then you have middle management also on that journey. We just don't have enough people coming up the ranks, the millennials that you refer to that will be 75% of the workforce by 2020. It's just a simple supply and demand issue.
And then on top of that, they don't have the skills that the people exiting into their encore, if you will, have in their position. So we just need to think about this differently. And coupled with that, there's a lot of choice. So the people coming up the ranks, Tom, have a ton of choice. They can usually have three to four job offers right now in this particular economic climate.
And if I know analytics, I can have 30 or 40 job offers, right?
Exactly. Exactly.
So some of these things are-- I'm a mid-sized company, I've got 400 employees, I don't know, whatever it might be. Some of these things are outside of my control. I can't control demographic changes in the workforce. I may not have a lot of direct ability or even much indirect ability to influence the way, the skills people are taught in schools, or the curriculum at a community college if that's important. So some of these things are big macroeconomic issues.
But what can I control? I'm one of those four out of 10. I need to grow. What are the things under my control where I can get to that talent pool, or make better use of the talent pool I've got?
Great question. And there's so many things you can do to enable yourself to get the talents that's out there. We believe in many different things. I'll give you a couple of key points. We believe that recruitment is a sales process. And it begins with your marketing, and your message, and your culture. So step one, define who you are to the marketplace so people can find you, because unfortunately, nobody really knows the identity of these wonderful middle market companies.
So step number one, define who you are, and start messaging to the audience that you want to come work with you. Then step two, once you get their attention, start engaging them in more meaningful conversation. We all know how to do this when it comes to our customers or revenue generators, but we don't apply the same principles that we do in our sales process to our recruitment process. So it's time to introduce your marketing people to your HR people. They can make a lot of change and impact your ability to fill the pipeline.
In step number three, make sure that your first touch with any applicant is meaningful, because remember, they have a lot of choice. And I'll end with, make sure your hiring managers know how to conduct an interview, because if you put a great person into a company that doesn't have a good culture, hasn't defined their values, and has a terrible interviewing process, because they have a choice, they're going to go with the other company. So those are just a few key takeaways.
So I almost want to go in reverse order, because what you said about the interview process strikes me as being one of those things that people forget about. They forget about some of the other stuff too. Define who we are and how we want to be known. We did some research a couple of years ago that showed that only about a quarter of middle market companies actually have thought through their employer brand.
And similar, about a quarter of them have actually thought through their employee value proposition to make it distinctive. So they're out there saying, oh, I don't know. They're being passive. They're letting the job-- they're expecting the workers to come to them, or the potential employees to come to them, and they're not coming. So they could do a lot more there. But the stuff about your first contact with the potential employee and that interview. And those may be the same too, the hiring manager stuff.
I don't know too much about what companies should be doing to make that. I'm seeing the marketing funnel in my mind, right? And we've gone from awareness to consideration. And now I've actually got the customer in my showroom and the employee in my showroom. I've got to close the sale. When you look at that process, what are people not doing and what should they be doing?
Well, great question. And the first step is engaging that person in a meaningful fashion. The people coming into the workforce want meaningful, purposeful work. So what do you stand for in helping them understand what you stand for as a company, as a brand, to your most important buyer, which is your employee? And second, lots of us have kids out there who own middle market companies.
And I'm sure some of us have sent them off to play sports, in some cases, Little League. And you've always tossed the ball around with your child before you send them off to play ball. What we're doing how are in the middle market is we have all these hiring managers. And we're making assumptions that they come to the table prepared with interviewing skills, and that they've been trained.
But I'm here to tell you in every company that we work with, no one is formally trained on interviewing, they don't know how to conduct a behavioral-based interview to save their life, they don't have a process, they don't have any metrics, they don't know what good looks like, because knowing what questions to ask is key. That's a good step. But knowing what the answers to those questions need to be is just as vitally important for your culture.
So unfortunately, it's an engagement issue, and then in the interviewing issue. And I love your analogy. You get the customer into the showroom. Then what do you do with them?
I've hired people in my life many times and been hired a few times too. And nobody's ever sat down with me to say, Tom, here's how you should think about the interview. And maybe they've given me a few talking points or things that I might want to emphasize. But usually, I've had a resume on my desk in front of me, a resume on one side, and a job description on the other. And I say, well, tell me about your last job, or tell me why you'd like to work here. And that's about it.
That is about it. And many people spend less than 10 minutes preparing for a job interview. And think of the economic implications, because if the middle market thinks of how much they invest in one person, and their people are spending 10 minutes on average preparing for that very important decision, that is so misaligned.
So how do I start? Think about this. If you're working with one of your clients, and maybe you've got a story to tell him about-- it seems to me from what you're saying-- and if you've got numbers around this, that would be great too-- that if I can improve my interview process, I'm going to do two things. Number one, I'm going to get a larger percentage of offers that are accepted. And number two, I'm going to make offers to better people. And both of those are probably relevant.
Those are very relevant. So having a predictable process in any area of your business yields better results. We know that scientifically. When you have a better defined culture, and then you map your interviewing process around that culture, and align it with your business objectives, you're going to have better outcomes. We've researched them. We're subject matter experts on this, Tom, and--
That's why you're here.
Go ahead.
That's why you're here.
Thank you, sir. And there's a really good benchmark for measurement to your question. Bersin, which is a division of Deloitte, has come out with the a talent acquisition measurement of the maturity of a talent acquisition program. They have level one through level four. And I suggest that there's actually a level zero, which is doing nothing. They're just letting the marketplace happen to them. And they will be left behind.
So we grade clients on this talent acquisition maturity level. And the lowest level is you're doing nothing, middle is reactive, and then the fourth level is really integrated with the whole business strategy process, culture, values. And the company is trained on it. It's best practices. And they have a common language around what the best athlete looks like for their environment, their culture, their customers, their colleagues, and how to define that in their company, because every company has their own language.
You said something interesting there. You just said best athlete. And I know that sometimes hiring managers and HR sometimes want to know, do I want the person with the most perfectly honed skills for the job I have, or do I want the best athlete, and I can teach her those specific skills? Am I sensing that in general-- there may be plenty of exceptions on this with some certain technical skills-- but that best athlete who gets the values and responds to the values is more often than not their way to go?
You are absolutely right. I'm sure you have heard of Simon Sinek. He really preaches to hire someone for their attitude and aptitude, and teach them the skill, because people don't buy what you do. They buy why you do it. It's the same methodology and application as why employees choose you as a company. They buy why you do what you do, not what you do. So if you had somebody who is aligned on culture, values, attitudes, beliefs, and traditions, and you can teach them a skill, then you will be much better off.
So we have some of the data that we recently connected collected show, one, that mid-sized companies in general wait until they have an opening before they're looking for talent. They're not out there feeding the koi in the koi pond against the day. They're saying, now I need a job, now I have an opening, I'll go out. So they're dealing with the spot market for talent.
And the other data point is that a slight, near at almost 50/50, just under 50%, or just a little over 50% say that they train regularly. I can't remember. It's about 45% say that they only train on an as needed basis. And a lot of that training that they offer, if you ask about what it is, it's on company policies. It's onboarding training. So it's not really development.
So I'm seeing a pattern in which companies are saying, I'm going to go to the spot market, I'm going to want to hire somebody who fits that position rather than have a talent pool, and find my best athletes, and develop them so that they fit, fit my needs. So that would be a strategic mistake, I would think.
Yes, it is a strategic mistake, because what they're doing is-- I call that crisis management. So they wait till Sally, their top producer in sales, exits the building, who represents $1 million to $2 million of revenue. And they don't have a pipeline. That's why I suggested earlier that recruitment is a sales process. So you have to keep the top of the pipeline filled with the best athlete, who has the best attitude, who is aligned with your culture, attitude, beliefs, and traditions that you can bring into the system when you see something happening.
It's also best to have a culture of transparency. So you know if Sally's deciding to move to Boston with her significant other, you're prepared for this event versus surprised by the event. Another startling statistic to add to what you just said is that 76% of the people who currently work for middle market companies are either open to or actively engaged in another business opportunity, another employment opportunity. So it's a startling statistic.
And what most owners are focused on is the openings that they have or the crisis hiring that they have. They're not even thinking about retention. They're not even thinking about the 76% of the people who are sitting in their offices right now interfacing with customers, employees, and vendors, that they might be exiting stage right.
And as we have less and less unemployment, if I need to hire somebody, I'm not going to be hiring somebody from the unemployed ranks. I might, but the odds are, the increasing odds are I'm going to have to poach somebody from somebody else.
Exactly. That's why recruitment is a sales process, and you start with lead generation, and then you focus on engaging those people who fit your culture, values, attitudes, beliefs, and traditions, and start cultivating them over time versus waiting for things to happen to you. We call it designing things versus letting things happen to you by default.
There's Fred Reichheld, I think had a great line about customer loyalty. And it applies to employees as well. He says it's a lot easier to keep a bucket full if it isn't leaking.
Exactly. Well said, Tom. That was good.
So one of the things I'd like-- we're coming toward the end of our time here, and I want to circle back to this moment when marketing turns into sales, this moment when we actually have a candidate or a number of candidates and some potential best athletes, and we're bringing them into the company, and we really want to teach hiring managers how to close the deal. And it's a two-sided [INAUDIBLE]. I also want to find the best person among those candidates that I've got. If you want to give me a couple of pieces of advice about how I can start to get that hiring manager interview process smarter--
I'd be happy to. First, it starts with a good, old process map. And what is step one, what is step five, what is step 10, and really understanding the journey of an applicants in your environment. So mapping that out is a good first step, and understanding all the touch points that happen. The second step is training your managers on how to conduct the conversation.
I'm sure you've heard a lot about crucial conversations? Well, this is a pretty crucial conversation in the business world. And they are woefully unprepared for it. So they need some training. They need some tools. And there are some things out there in the great world that you can Google to help them start reading about conducting critical conversations, crucial conversations. Because remember, they are making a very important business.
This is a very important business interaction that costs, on average, $40,000 to $100,000. So how make sure they're well equipped to have the conversation. Then define what questions your people need to ask by job function. And most importantly, understand what the answers to those questions need to be.
It sounds like map the process, train the people, understand the questions, and understand the answers. And if you can do those four things, you're going to get a better chance of closing the sale, and not only that, making sure that you've brought in a better candidate. Does that summarize it?
Exactly. And also, make sure that the experience is memorable. So think of the last time we went to a lovely restaurant and it was unmemorable, and when you went to a restaurant, and it memorable, and you tell people about it. So you want to make sure that the process that you take this person through on their journey is memorable, and exciting, and they're going to tell people positive things about the engagement.
That's a really interesting thought because when you think about-- you mentioned somebody's significant other. Everybody comes home from that interview, or goes out to a bar, or whatever they do after the interview. And somebody says, so how did it go? And I don't think too many hiring managers actually put themselves in the position of the applicant to wonder what while she or he say when the spouse, the friend, whatever says, so how did it go? And what is the what's the impression you want to make?
[INAUDIBLE] question, Tom. So a great way to close an interview with somebody you really want to pursue is, what are you going to tell your significant other when you go home tonight about our discussion?
That's great. And you might again ask, what will she or he ask me or ask you so that we can make sure that if they're going to ask a question that we haven't addressed, we can address that question here and now.
Exactly, exactly. So giving your people the tools, like you and I are doing here, and having those role plays, and have human resources and marketing work together on this-- because there is a messaging component, and as you can see from our discussion-- and how to best position the company and the culture to these people, who are really, really in high demand.
Kathleen, this has been terrific. And one of the things I'm thinking about, as we play the tape back medley in my mind, is we started from this real challenge that mid-sized companies have about getting the talent they need. There's challenges in supply, but there's also challenges with how they address supply, and that they need to be thinking about how they define themselves into the marketplace, how they get themselves known among a pool of potential candidates, and then having done that, how they actually deliver on that promise when they're talking to those candidates for the first time, and in that moment of truth in the interview.
And if you get that process right, you may not be able to fix some of the demographic issues, but you can fix and improve your ability to take advantage of the talent that's available to you, and get the best possible people working for your company. Did I wrap that up right?
You wrapped that up brilliantly. Thank you, Tom.
Well, Kathleen Quinn Votaw, who runs TalenTrust, a talent consulting firm in Colorado, check out her website. Check out their website. It's talentrust.com, one T in the middle of that, talentrust.com. And thank you all for listening to the market that moves America. Never miss a new episode. You can subscribe to the podcast on iTunes, Stitcher, Google Play, or whatever find podcasts can be found. And you can subscribe and learn more about us at our website, which is middlemarketcenter.org. Thanks very much.
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