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Hosts Stacey Harris and John Sumser discuss important news and topics in recruiting and HR technology. Listen live every Thursday at 8AM Pacific – 11AM Eastern, or catch up on full episodes here.

HR Tech Weekly

Episode: 35
Air Date: August 27, 2015


This Week

This week John and Stacey discuss:

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Hosts Stacey Harris and John Sumser discuss important news and topics in recruiting and HR technology. Listen live every Thursday at 8AM Pacific – 11AM Eastern, or catch up on full episodes here.

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John Sumser:                       (music) Good morning and welcome to HR Tech Weekly, One Step Closer. With Stacey Harris and John Sumser. Good morning Stacey, how are you?

Stacey Harris:                      I’m good, good morning, John. I’m doing really well. We have a beautiful day here in North Carolina and lots of news to be talking about. As you said last week, we are coming up against the season of news and topics for HR Technology, so lots of good stuff to talk about.

John Sumser:                       Yeah, Yeah, it’s an exciting time, and it’s just going to rain stories.

Stacey Harris:                      Yeah,

John Sumser:                       For the next 10 weeks or 12 weeks. It’s going to be a good fall I think. So, what are we seeing?

Stacey Harris:                      Well I think there’s a couple of great conversations to have today. First, two of them having to deal with the assessment industry. There’s a great, well it’s not great, but there was a story about Target being required and fined $2.8 million dollars for discriminatory hiring tests that they had in place. We can talk a little bit about where that came from, the back ground around that. At the same time there was a great story about JetBlue talking about its hiring assessment process and what it’s doing and how it finds value in it. I think there’s a really good conversation about what’s happening in the assessment space market right now and how that’s changing. A couple of interesting tidbits on topics on things that are changing in the market. LinkedIn launched an App called Lookup. We can talk a little about that. Where LinkedIn in saying they know your company better than you, better than the organization.

Then Coursera just put in for another round of funding, $60 million dollars in venture capital to add to $85 million dollars in venture capital to expand their online course development tools, particularly for the business market. They are really, really focusing on trying to connect with the business environments, were previously they’ve been independent learning programs in their MOOC environment. We probably will round out today, making sure that everyone is aware that September 1st is coming up very quickly, which is the date which Russia has stated that they are going to put in place the data law requirements, which requires everyone to have all of their personal employee data, if you have employees in Russia, on Russian soil. That’s worth having a conversation because it effects all of the cloud based organizations right now.

John Sumser:                       Okay, that’s great. Last night I went to the Cornerstone Investment Fund lodge and it was an extraordinary thing to see a firm that is profoundly a Los Angeles based firm come to San Francisco to show off the first 4 investments that it has made. It’s really a very, very intriguing times, I think. Where do you want to start?

Stacey Harris:                      Lets, quickly talk about the assessment space, because that’s the conversation me and you had right before we got on the call and I think it’s definitely worth sharing with our audience and talking a little bit, some of your experience working in the assessment space and my experience doing research in this. The story reel starts out with Target, like I said $2.8 million dollars they were fined for hiring tests. Now if you look at the article, the tests were back in 2006. They have said that they have stopped doing these assessments. I don’t know if they stopped doing these assessments prior to being fined, so the article wasn’t real clear on that. I couldn’t find anybody that could give me any more detail on this particular topic. Target is one of those organizations that we’ve all seen in the news it has really  had some of the most forward thinking talent management strategies and approaches in the market.

They’ve had a  tough couple of years with some of the stuff going on financially for them, but this I think is a real blow to see that they were called out by the EEOC for the assessments that they were providing. These were their basements for nonexempt employees, so for supervisors, statisticians people who were not getting paid for overtime, and they were specifically focusing on their psychology assessments and their work assessments. Saying that they were not focused enough and didn’t have enough detail that was tied to the actual job requirement. They were disproportionately ruling out Black, Asian and female candidates. That was what the story was all about. What’s your thoughts on this John? Are you surprised first of all that Target got hit with this and secondly do you think this is something other organizations need to worry about?

John Sumser:                       Its… Targets headquarters are in Minneapolis, where the University of Minnesota is. The University of Minnesota produces the lion’s share of great industrial psychologist in the United States. If you are a great industrial psychologist and you get your Masters or Doctorate at the University of Minnesota, one of the most important employers in the space is Target. Target is legendary for the quality of its assessment. Its Legendary for its use of science in its hiring processes. The fact that they can’t figure out how to get this right, that’s an indicator that’s probably worth paying attention to.

Stacey Harris:                      Yeah.

John Sumser:                       I’m not sure what to make out of it other that, wow, if those guys can’t do it what do the little guys have?

Stacey Harris:                      One of the things that target got hit with in the announcement was also that they found they had failed to maintain required records to properly assess the impact of its hiring procedures. I think one of the things in all of my research about assessments, it was hard to explain to organizations who were trying to make assessment decisions is that, the assessment organizations and there’s a lot of really, really great assessment tools out there. There’s some assessment tools that come out of different types of studies and programs at university levels and various things. A lot of them have some great resource and backing behind them but when they get into the work environment there’s really three criteria, and you probably can add to this even more. The three criteria that I was always, explained to me. It had to be very, very closely tied to the work, you had to show that the criteria that you were assessing was connected to work related capabilities. It had be validated, and the validation issue for most organizations is that there’s no real way to validate an assessment, unless you continuously give it, test it and track it. Right?

In many cases its validated by actually going to court and being upheld in court, that’s part of the validation process. Which is a bit tough for organizations who are trying to build good assessment models. The third this is that it has to be unbiased, and the challenge with being unbiased is that it has to go through a lot of different processes to ensure that you’re not biasing on reading capabilities, you’re not biasing on where people were born, you’re not biasing based on background or culture. It’s not just some of the standard biases that we think about in our everyday environment. Can you add a little bit to that. I mean you’ve worked with assessments I think, longer than I have, John, do you think that covers the three big areas, or is there more to add to those elements people should be? [crosstalk 00:08:28]

John Sumser:                       No, no, that’s the arena and that’s the story that all of the big assessment companies give. Most of the sale in big assessment projects includes a very heavy emphasis on the output being legally defensible. There is quite a school of thought that says assessment companies are really in the insurance business and that a case like this is exactly the sort of insurance that they provide. If you use our approach you won’t get sued and have to face this. I’m sure that’s going to be a song that small to medium size companies hear a lot. If Target’s going to get sued, how in the world can you be compliant?

Stacey Harris:                      Yeah.

John Sumser:                       Is the story they will be bringing to the market place.

Stacey Harris:                      I don’t think this actually didn’t go to suit, that’s one thing I was reading in the article. This was a fine by the EEOC under the ADA and I think, Target chose not to take it further. That’s an interesting perspective on it, and I don’t know if some of that is a brand issue or some it was they’ve realize there was some issues that they had to address. That’s something to note in the article. On the other hand you’ve got JetBlue here, who’s sharing their article about the fact that they’ve been using their hiring assessments for flight attendants for several years based on characteristics, they have characteristics, 8 characteristic target assessment. They’re finding that the measureable benefits are pretty impressive for them. Not only are they finding they have higher employee engagement and retention but a 12% decrease in total absences.

When you think about the cost of absences in the airline industry, which isn’t just someone doesn’t show up for work and you have to replace them. That is a delayed flight, missed opportunities to keep your time schedules, all kinds of things. That’s a huge impact for the airline industry and JetBlue had some great date and stats on that from their perspective.

John Sumser:                       If they can do this it’s a great step forward for the company and the only question will be whether or not the people who come out the end of the assessment process are cookie cutter people. If they’re cookie cutter people then don’t be subjected to the same sorts of scrutiny that Target was. I think, my sense is that it’s really hard to get this right, it’s really hard to get this right, because the definition of the kind of person who’s successful inside of your culture is going to have at least some discriminatory flavor to it.

Stacey Harris:                      Yeah.

John Sumser:                       How could it not? [crosstalk 00:11:36]

Stacey Harris:                      I think it is a challenge for organizations to get this right on multiple levels, not only discriminations but also in the challenge that often times by just weeding out certain personality traits or weeding out certain approaches to things organizations often times also lose not just the diversity in the overall type of employees they have in the organization, but often times they lose the ability to create and organization that can flex when needed, in a marketer industry. That’s really I think, a challenge that many organizations are facing today which is that market changes are happening so fast, shifting so quickly that having a single type of work force can often times cause you challenges. Because you can’t change out your work force in different environments and different places. Those are challenges, I think every organization is going to face when they look at their talent management models in the market today. Which is, that we’re in an environment that’s changing dramatically and the assessment have to be able to think about that as well, I think.

John Sumser:                       There’s a bigger problem here, which is, what you just said, organizations who have extremely specific task oriented work forces have a difficult time adjusting when the market changes. I think that’s correct, but I wonder who it is that puts the budget in that says “we need to hire 20% more people so that we can be more flexible”.

Stacey Harris:                      Yeah.

John Sumser:                       Or, who puts the budget in that says “we need to hire people who appear to be less than capable to us or less than qualified to us, so we can be flexible”? I don’t know how you get people to do that.

Stacey Harris:                      Yeah.[crosstalk 00:13:34]

John Sumser:                       If the theory’s good have different kinds of people in case something bad happens. That’s a really good theory, but when you’re trying to make a profit, the idea that having extra people who you don’t need, except in an emergency on the payroll, you have to be pretty rich to do that. Increasingly companies are driven by very thin margins, and so I don’t see where the money comes from to take the view that diversity is this big plus if something bad happens.

Stacey Harris:                      That idea of building a bench strength, that is a flexible bench strength, I think is a challenge in the market today. Most organizations don’t have the capability to build a bench strength even in the roles and skills sets that they think are definitely going to be needed in the future let alone for those that might be needed in the future. A really good Segway into the LinkedIn Lookup application. This was just launched last week. I have not had a chance to look at it, so I’ll be very honest I have not downloaded it, I have not looked at it. It just came across my desk as this big announcement from LinkedIn. Supposedly Lookup is going to allow you to basically look and find your coworkers. The key here is that you have to use your work email as your LinkedIn email. I actually was wondering if this wasn’t maybe a major ply to get people to use their work email. I know personally for me on LinkedIn, I use a personal email because I don’t want to get everything in my work box from the LinkedIn box.

That’s one of the keys, you have to use your work email, then it will look, use your email to see who else is in your organization and it will show you your organizations skilled employees, supposedly. Have you had a chance to look at this app at all John?

John Sumser:                       Yeah, I have taken a look at it. I’m not sure I get your question, because everybody in LinkedIn already has their company information in their profile. That’s why you go to LinkedIn, to get the company information in your profile. It seems to me that it’s more a way of helping the organizations see LinkedIn in a different light. LinkedIn is now the company directory, and probably a better company directory than you have. They’ll do it for free, and keeping the company directory right is a really hard thing to do. If LinkedIn will do it for free you can see people relaxing and going “you know we don’t need to spend more money on that, because our ability to keep track of who’s were is terrible and we need somebody on the outside to do it.” That said, this idea that LinkedIn knows more about your employees that you do is the big negative in the market place.

It’s part of a larger story that we should spend some time on, about what having aggregate data means. LinkedIn being in the position to offer this, saying “if you want to find somebody in your company, ask us”. I’d be a little nervous about that.

Stacey Harris:                      My comment when I first saw it was, okay so your basically saying the idea of talent profiles, or employee profiles inside companies has busted, it’s not working. Depending on who you ask, I think there might be some agreement, some disagreement on that. The other side of that picture that you were just talking about, is that I know, at least in our research, I think you asked some similar questions in some of the work you’re doing John. One of the number one modules, if you want to call it, or applications that organizations were planning to purchase this year, if you look at this year’s data it looks like that forecast has a least come to some partial fruition, was the talent profile component of their talent and HRMS suites. This idea that I have a single profile within my company. Do you think that the HR technologies are going to come back at this and say “hey we can actually do this better you just need to give us more time”?

John Sumser:                       Why would an employee fill out a profile in multiple places? Why would they do that? Because the boss says to? Because HR wishes they would? I think, we’ve talked back and forth about this, what I think is a crazy idea of systems of engagement, it’s becoming a buzz word in the industry. The Systems of engagement means we’re trying to figure out how to get you to fill out your profile.

Stacey Harris:                      Exactly.

John Sumser:                       We couldn’t figure out how to get you to fill out your profile, now we’re going to give you a game or $5.00 or a free Starbucks or something so that you fill out your profile. That’s why you need a systems of engagement in the first place. The truth is it’s a fluid economy that we’re living is, and so if I want to find you I’m going to go to LinkedIn to find you, I’m not going to go to the company directory to find you. I probably can’t remember how to use the company directory. Because I’m looking for a job off and on I know how to use LinkedIn so I’m going to go there to find out things that I need to find out, as a user level thing. I don’t know, it would be a great question to ask them, if they have plans to move more fully into the HRIS space because they could make an interesting move there. I’d be nervous if I was an HRIS provider about this particular thing.

Stacey Harris:                      Yeah. I think the other thing you mentioned there is that as LinkedIn has more and more of this data there is a bit of a gap in what their gathering, if you look at it, which is a skilled labor market often times. If you’re really looking at your employees in the total employees, one of the things, I think LinkedIn is going to have to fix if they’re going to become, in their mind, the record of your company, is getting down to hourly employees as well. Because there really is  as drop of in terms as far as people who put in their details and their positions at that hourly rate. At least, I haven’t seen the total numbers and I should admit that, but I will have to say just narrowing the system and what people are in there.

John Sumser:                       I find it astonishing and I see it over and over and over again in the Silicon Valley view of the world, the fact that people are hourly workers is a surprise. You see somehow this extraordinary infrastructure of talented management stuff and it’s all oriented towards white collar workers, salaried workers. There’s nothing, there are no operators for the robust management of an hourly work force. Just nothing. Just nothing, time and attendance, make sure that their hand cuff are on tight give them a drug test and try not to pay attention to them. It just a step up above prison in the minds of the companies that issue human resources software in Silicon Valley. You end up with that problem that you’re describing were the talent network, the LinkedIn talent network doesn’t address the vast majority of the workforce.

Stacey Harris:                      Exactly.

John Sumser:                       Because, the vast majority of the work force didn’t go to Stanford or Berkeley, doesn’t have a College degree and isn’t hourly. I mean is hourly.

Stacey Harris:                      They are hourly and they’re also …  The idea of accomplishments is a challenge when you’re working at those type of environments in some cases, and building that case for your own work environment. I’ve had this conversation with family and friends of mine who work in construction and who work in other industries, and their like “you know, we really have to think hard about, because you know what’s really valuable about us as a worked doesn’t really show up in many cases on a lot of that stuff, right?. What’s valuable about them is how often they show up on the job every day, how hard they work those aren’t things you get degrees in those are things that generally show up in the thoughts and comments of their peers and coworkers in the environment, right?

John Sumser:                       Yeah, it’s a very fluid thing. I was never … I worked construction when I was a kid, and the construction crew, there was a central crew who stayed the same, but generally it was a lot of coming and going wrapped around a central crew.

Stacey Harris:                      Yeah.

John Sumser:                       The administrative parts of that are hard and you don’t really care about improving the productivity of somebody who’s on the job for a week. You can’t, you can’t afford to care about that.

Stacey Harris:                      Yeah. Maybe that leads into the next article that I pulled up, which is Coursera. Coursera built itself along with a lot of the other MOOCs.  [yu du mi 00:23:50] and even on the idea of personal professional development for everyone, not just those that have the opportunity and the great ability to go to some of the highest level universities and colleges. Coursera specifically known for some of their skilled workforce courses and content as well as their MOOC’s, their Massive Open Online Course Content. There an online course content provider where individuals can basically fund ongoing training and development in that environment. They’re continuously getting more funding now to make better partnerships and better relationships, specifically with businesses. Previously they were in individual buying program, now they’re trying to do a B to B model in some cases. Do you think that these online course, these certifications and institutes could have a place in tracking and certifying and giving some insight into the skill sets of someone who has taken some of these courses and content? For people who are not in the traditional LinkedIn environments?

John Sumser:                       I think that’s possible. What I notice about the Coursera thing is that part of their expand… They’ve raised a lot of money and their expanding. Let me quote this to you, ” They’re expanding so that university professors can create Coursera content with input from private sponsors, augmenting the university systems”. That tells me that it’s a bunch of here’s how to make an incision using the scalpel. I wonder if the commercialization of on the job training at the level that it looks like in alternative news weekly in every city. I wonder if that’s what is going to provide an infrastructure having all workers in a single page space. I doubt it.

Stacey Harris:                      I don’t. [crosstalk 00:26:14]

John Sumser:                       There’s a problem.

Stacey Harris:                      I don’t think Coursera. [crosstalk 00:26:17]

John Sumser:                       Go ahead.

Stacey Harris:                      There’s a challenge but I do think there is, whether its Coursera or any other of these guys out there doing this. I do think there is a need in the market to track the type of learning and development, they type of certifications, the type of work, that someone is doing, in serve your own profile concept. What that looks like and who’s going to be able to do that I think, is a really, really big questions in the market. I think that is the area that organizations like Coursera are trying to address, maybe in a not so connected way.

John Sumser:                       This is a great Segway. I went for two seconds. I went to see the people behind cornerstone investment fund and they showcased 4 companies that they’re investing in. One of those is a company called One Month that produces content so that you can learn to do something in one month and they are the fastest growing company that anybody has ever seen in that area, in that sort of fair haired child talk. There’s a very acute awareness, I think, of the fact that the education system is leaving a gap that has to do largely with technical things or practical things, how to do things. That these commercial operations are able to come in [inaudible 00:27:58] very smoothly. There’s this entrepreneurial opportunity, I don’t know if you could last forever, but right now it’s a very interesting effort.

Stacey Harris:                      Definitely. Were there any other organizations that you guys were highlighting other than that one, because that’s actually quite interesting, knowing their, cornerstone’s focus on learning, it makes a lot of sense. Were their other organizations they were investing in?

John Sumser:                       Yeah there was Recruitment Automation Play and there was a market place for hourly workers play, and one other, it was a small hand interesting entrepreneurial companies and all of the areas that we’re talking about as the emerging areas. What cornerstone funds and provides office space for the people in their and they’re calling it their accelerate. It’s a great idea, it’s a great idea. Workday has done the same thing.

Stacey Harris:                      Yeah.

John Sumser:                       This model is, we invest in companies so they do R&D for us because we know we’re too big to get that stuff right. That’s the blunt shorthand for what’s going on here. Smaller, more agile operations have a better chance of solving problems that are not quite on our road map and we want to invest in them and bring that to our customers. It’s a new way of thinking about what you get when you get in bed with a software provider. Probably a great topic for  a long conversation.

Stacey Harris:                      I think that would actually be a very interesting conversation down the road. It’s the next version of what was with Bell and Lucent Labs back in the day. It will be very interesting to have those conversations. I think we if we’re wrapping up, I know we’re just at the half hour mark, but it probably is worth mentioning that September 1st is the deadline for Russia’s data requirements, around the employee information. There is very specific information that they are saying cannot leave Russian soil about their employees. John have you run into any of the vendors who are finding that they are challenged by this, or any companies who are talking about this? I had one company last week who mentioned they have got their servers now on Russian soil. They have all on premise HRS Environment so it wasn’t a huge deal for them. Have you run into anybody else who is having challenges with this so far?

John Sumser:                       I haven’t, but I don’t actually spend an enormous amount of time talking to people about their customer base in Russia. I probably should, but it will go on that list of stuff I should do.

Stacey Harris:                      Yeah.

John Sumser:                       In the stuff that I actually do I’d love spend some time talking about the Russian market place but it hasn’t come up.

Stacey Harris:                      I think that this is going to be a bigger issue for the Cloud vendors, so it’ll be an interesting place to watch.

John Sumser:                       I agree.

Stacey Harris:                      Any online stores, online resources, booking airline, hotels, insurance and online HR systems are going to have challenges about where their keeping data and if they’re compliant with what’s happening in Russia. A spot to watch for future commentary.

John Sumser:                       I think the bigger issue there is the only way a nation can enforce its privacy regulations is by insisting that the data be within the national boundaries.

Stacey Harris:                      Yes.

John Sumser:                       That move, which is that nations are going to assert their authority over corporations, that’s very predictable. You can’t do business if you don’t do it our way, is what nations do. The EU had done some of this already. The Company specific nature of the Russian requirement is another step. You can imagine this being the stuff that the futures made of. You can imagine this being the end of the Cloud.

Stacey Harris:                      It very much could put… This is the challenge. I can remember Mike Ettling saying to him the most, the biggest concern for Cloud systems right now is data privacy issues. We have to think about this. This isn’t just we want to protect our people, that also we don’t want to be as transparent on some levels. Each of these countries is very, very careful about what is happening and what is getting out into the market. We’re, I think, going to see a lot of things start to change in the next 5 to 10 years, if not, and probably rapidly in the next 2 years, around how different regions are handling basically where their data is held and how their data is held. That could affect much more than just the Cloud, it could affect anyone who’s planning to do business that goes across regions and markets.

John Sumser:                       I’ll tell you things are really changing. Last night I had an experience. I been doing this a long time and never had this experience before. At the event everybody had a name tag and my name tag had red on it, there was a pile of red name tags. It was a cocktail party so I struck up a conversation with somebody and about 2 or 3 minutes into the conversation, he looked at my badge and said “oh, red badge, your press” and walked away “bye”. Just walked away. Just walked away. It was the funniest thing ever. But all of the analysts had the same red badges as the [talk leaders 00:34:14] and bloggers, and journalist and the company had a very clear enforcement of their policy that you should only talk to these people in certain ways and certain people shouldn’t talk to them.

Stacey Harris:                      (laughter)

John Sumser:                       That increased sensitivity to who’s aloud to talk to who about what, I think is part of the environment that we’re hopping into and that this thing is a reflection of.

Stacey Harris:                      Very much so. That’s a great way to wrap up today, that image of someone walking away from John Sumser because he has a red badge on.

John Sumser:                       I don’t think he thought it was a red badge of courage.

Stacey Harris:                      Yeah.

John Sumser:                       Okay, another week, this is 35 now Stacey.

Stacey Harris:                      Yes I know.

John Sumser:                       We are starting to get good at this. Thanks so much, and for the people who tuned into this, thanks very much for listening. Alright you have been listening to HR Tech Weekly, one step closer with John Sumser and Stacey Harris. Bye Bye Stacey.

Stacey Harris:                      Bye John, Bye everyone, thanks again. (music)

End transcript


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