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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: 36
Air Date: September 3, 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:                       Good Morning and welcome to HR Tech Week with One Step Closer with Stacey Harris and John Sumser. I’m not Stacey Harris, I’m John Sumser, but Stacey is on the phone. This is our thirty-sixth show, Stacey. What do you think about that?

Stacey Harris:                      It is. Thanks John. Good morning. Yeah. I can’t believe that we’re at thirty-six already. I’m waiting for that hundredth show celebration. We’ve got what, seventy more to go, right? But good morning.

John Sumser:                       Yeah. Let’s do the hundredth show in Jamaica or something like that.

Stacey Harris:                      I like that idea.

John Sumser:                       Belize or the Bahamas or … I’m going to Australia in late October. Maybe Australia will be good.

Stacey Harris:                      That would be very, very nice. We’ll make it a special on that hundredth show, but yes, we’ve got a couple of good topics today. As we have said this last couple of shows, the events and the industry news is definitely continuing this week.

John Sumser:                       Ramping up for the trade show season, so everybody is telling their story. Everybody is telling their story. What have you got in the bag? You’ve got the bag of goodies.

Stacey Harris:                      We do. We do. There’s been an interesting … I don’t know if it’s an interesting story per se, but I think it’s been a culminating story. It’s been growing I guess is a good way to put it, about what’s been happening … It was a New York Times story put out on August 31st about all the things that the Obama administration has been doing in support of the workforce. I think what’s really been interesting about that is that they mention a lot of things me and you have been mentioning over the last couple of months, which is the rule that was making more employees eligible for overtime, sort of broadening that idea of who’s eligible for overtime from what was originally set out in the ’70s to be more adequate today.

We also saw the guidelines for employee classifications being changed and some ruling around that. That’s going to affect what many people are calling the uber work environment. The one thing that I thought was interesting was that this week there was a Federal Appeals Panel that affirmed a regulation around particularly how the workforce could appeal if they were from a franchised or a organization that is not part of the corporate, but is associated with the corporate environment. We can talk a little bit more about that today because I think that’s really actually quite interesting because there are a lot more franchised organizations than most people probably realize in this industry.

We also have a story today about eHarmony and their aims to get into the workplace from a career and employer matching perspective. Then there’s a lot of conversation this week about Greenhouse. Greenhouse is an applicant tracking solution, recruiting solution. I think you could probably tell us a little bit more about that. They raised thirty-five million and did a relationship with Linkedin this week. That is their second round of money that they’ve raised that they’re C funding this week, so it might be a little bit about those.

Those are the big topics today that I’ve pulled. Anything else on your plate John?

John Sumser:                       I think when we start talking about the first topic, it’s also interesting to notice that the New York Times is wading heavily into the world that we are concerned about. They have been publishing lots and lots of stuff about engagement at work. The Amazon working conditions story is a piece of it. It looks to me like the New York Times is becoming a member of the community of people who are talking about human resources influence, and that’s very, very interesting.

The thing that caught my eye was a piece a couple weeks ago called Dining and Deception. In the piece about Dining and Deception they make the case that meaning at work is not so important. They use the restaurant industry as a way of saying that there’s another factor at work, which is the immediacy of action. When you are busy and doing stuff in a restaurant rush where time stands still and there’s nothing else, engagement isn’t the issue. Engagement isn’t the issue, choreography is the issue.

Stacey Harris:                      That is very much true.

John Sumser:                       As long as the choreography is right, everybody who is in that flow is in a state where happiness and meaning are irrelevant because the action is so complete. I thought that was an interesting add to the conversation about engagement. It says it’s really not necessary for a certain range of people in a certain range of occupations who do meaning, repetitive tasks to think about engagement because you can’t solve that problem with engagement. You can solve that problem by making the work flow so smoothly that everybody comes in, time stands still, and then it’s done and you go home, and that’s not engagement. That’s something else.

Stacey Harris:                      What it is, it’s trying to not disengage, right? Having put myself through college working as a waitress at many, many restaurants and understanding the concept of the rush that you go through at that point in time, when things aren’t choreographed appropriately, when they’re not set up … And this is with any I think factory work, this is with any kind of work where you’re doing the repetitive work you were talking about … When it’s not working well, when it’s not an oiled machine, what ends up happening is frustration happens. You end up having to do more work. You end up having to do more work for less money because obviously, at least in a waitressing environment, you don’t get tips because things aren’t working the way they’re supposed to.

There’s a lot of things that you become disengaged I guess is the better answer. If things are working well, it all works the way it’s supposed to. You put in your time, you know you’re going to get out of it what you want to, right?

John Sumser:                       I would say that there’s this kind of good place to work/not good place to work thing that happens very quickly in service oriented companies, restaurants being particular, but I think it’s probably also true in hospitality and retail. When the machine is well oiled and the parts are operating smoothly, it doesn’t matter whether or not you like your job. It matters that the work gets done and it happens in a way that transcends all of that stuff, so it’s beyond engagement.

When it breaks, and it always breaks, it always breaks, something always hiccups and you have to rethink how it works, the response from the system is almost immediate because compensation is so directly tied to performance in that setting that when it breaks the restaurant becomes a bad place to work and people quit, and they quit within weeks of the damage to the system.

The right manager makes a big difference, but the right manager doesn’t give people meaning and doesn’t give people necessarily a sense of belonging. The right manager creates a choreography that works all the way through the show. When that choreography is there if the people hate each other, they hate each other for fifteen minutes on the front and back of the workday and they go home because the choreography worked.

I think that’s an interesting adjunct to the engagement conversation. Again, the reason I brought that up is because this is out of the New York Times. This is the New York Times coming to our neighborhood and offering really interesting value.

Stacey Harris:                      I think the other side of the story that the New York Times wrote about bringing together all the various things that the Obama administration has done from a workforce perspective, this last thing, which I think was actually quite a large thing, larger than we probably give it credit for, is along those same lines but probably is seen from a different perspective, right? When the National Labor Relations Board pushed the ruling that made it easier for employees and contractors of franchised organizations to bargain collectively, what they were doing in some cases, because almost seventy percent of the, if you’re not counting mom and pop shops, individual stand alone restaurants, but seventy percent of the retail environments out there are in some form of a franchise model.

Most people don’t realize that. All of their favorite brands of service industries, the Taco Bells, the Pizza Huts, the TGIF Fridays, all of those are franchised environments for the most part. Usually there’s maybe ten, fifteen percent of non-franchised corporate headquarter businesses.

I had worked at a franchised organization for quite some time and I really think the idea of being able to connect the not engagement per se even here; now we’re going just basic worker rights to the corporate headquarters is going to have a big impact on our franchised environment. Franchises truly do … When they set up their agreements and set up their legal rules, their whole goal at the corporate headquarters is to control the brand and control the process, but to not have to have ownership of those employees.

John Sumser:                       It’s going to be an interesting thing. I think [inaudible 00:10:58] over at the HR Examiner published a piece a couple weeks ago that noticed that what matters to the government is that there are employees because employees pay taxes and the cash flow from employees is where all the money in the government comes from, so doing things that strengthen employees’ control over their world is good for tax collection. I think that’s part of what you’re seeing here. The notion that employer organization rules don’t apply to different ownership models is what they’re going after here and I think it’s real interesting.

Stacey Harris:                      It’s going to change some of the dynamics of not only models that organizations put in place for running businesses, but it’s going to change a lot about how they expect HR to work in those environments. I know in most of those environments that are franchised environments HR is primarily seen as a very limited role when you’re dealing with a large organization that deals primarily with franchised businesses. Actually they are very careful not to advise those franchises in many cases on HR requirements unless they have to do, again, with the brand model.

The idea is that they don’t own that HR relationship. If this becomes part of the dialogue, HR’s role is going to be elevated heavily in many of these corporate headquarters for franchised organizations and that could really change, again, what they’re expecting from HR, how much of a relationship HR has to the franchisees, and to your point it could actually change the whole decision process around how many franchises you have per se of corporate owned organizations in this kind of services or franchise model. It’ll be interesting to see if this plays out.

John Sumser:                       I’m seeing a growing, and it may be growing faster than I thought, a growing emphasis on HR inside of an ecosystem. The way that you would do HR in a franchise construct is more like HR in an ecosystem than not. I’m imaging a future that includes an API for every HR department so that they can acquire the data that they need from their vendors in the way that’s most interesting to them. You can imagine that same sort of philosophy in API based technology with functions at headquarters that can be accessed as required by people in the field, in the operations, depending on how they want to run it in their shop, that’s different from the way that conventional HR works and allows the franchisees to have some flexibility about how they deploy the corporate HR philosophy. This could be a very, very cool development.

Stacey Harris:                      It could, and what it could also do I think is give us a better understanding at some level of the total workforce, particularly in these industries. Sort of along those same lines is this topic about eHarmony launching what they’re calling elevatedcareers.com. It’s still in beta. If you go to the site it says beta on it. They basically have invested heavily it sounds like in putting a career component to what is eHarmony personal romance creation tools.

Specifically, they say that this is to diversify their industry. I thought it was interesting that they showed the dating industry worth is about two billion dollars, where a comparatively, at least based off of Lisa Rowan’s comment in the article that I read there from the New York Times … Once again I guess I didn’t realize that this was a … Oh, no, this was from Reuters, where this one was from. Lisa said that the current applicant tracking or matching systems are worth about six billion dollars in the market and she said that ninety-five billion for the total applicant and talent acquisition systems space.

I think those numbers are probably pretty close, knowing Lisa’s research on that space, but it was interesting that eHarmony is going into this space from a diversification perspective. How do you think this is going to work as far employees and employers connecting though? This isn’t just we’re looking for a job. They’re going to have a hundred different characteristics and this might be an idea of now more passive clients or passive employees looking for work in this type of environment than active. Do you see that happening with eHarmony’s new work?

John Sumser:                       I’m going to back up just a second and tell you that the size of the online career marketplace is three or four times what Lisa Rowan said. It’s a huge place. It’s a huge place. It’s twenty billion dollars anyhow.

I’ve been watching the job board industry since it started and when you try to launch a job board you have this chicken and egg problem. You have to have people in your database to get started and you have to have customers who are interested in those people in your database. Candidates won’t come to a job board that doesn’t have jobs and employers won’t come to a job board with their jobs if there aren’t candidates. The hardest part about starting something like this is solving that chicken and egg problem.

In the case of matching, the hard part here is that the first couple million people in the database have lower success odds than the later people because it’s early and it’s being built. To get to a hundred variables you have to have a huge and complicated questionnaire. The first question is what incents people to fill out that questionnaire on either side. What we’ve noticed in the job board business is recruiters also, because recruiters are administrative facilitators and not the owners of the job that’s getting filled; recruiters have a hard time filling out complicated forms and often don’t.

There’s some mechanical issues, but I’ll tell you, eHarmony has done extraordinary things, and even though this has been an impossible set of hurdles for anybody to conquer in the past, they are extremely likely to conquer it. That means that a very interesting thing will start to happen. If you can say with some degree of certainty that this person matches your culture and your job and they don’t work out, there’s a kind of feedback for you that hasn’t been available before. Up to this point in time, if you hired somebody and they didn’t work out it was either the fault of your source or the fault of the person who didn’t work out. Now accountability for the failure for a new employee to thrive essentially will be clearer.

That bodes very, very well for organizations that are interested in continually improving themselves. I think, even though I have a dark start to this, I think that the eHarmony offering is pretty important and that what will come from their emergence in the marketplace is a whole lot of rethinking about what recruiting actually is, so I think this is a watershed moment.

Stacey Harris:                      I think it’s interesting from my perspective that … I don’t know that this will happen. I think it depends a little bit on your earlier point as to what’s the incentive for doing it, but the idea that someone might be able to go in here, fill out their profile … This is the value proposition of dating sites. You can decide or not decide to meet with someone. You can make some upfront decisions about how much of yourself you’re going to put out there, but the idea is that you’re still in that ecosystem.

Now you have this idea that as you’re working you could have this system continuously looking for future opportunities that might be good for you. To me, that’s going to open up some interesting things for employees in this environment where we’re continuously looking for the next best opportunity. Is it going to force organizations like Linkedin to start putting some sort of assessment tools into their environments?

John Sumser:                       I’m not sure that the constant search for the next cool opportunity is as big a sales point as you do. I think eighty percent … I know eighty percent of the workforce lives in a city of five hundred thousand or less that’s two hours away from any other city and each individual works in some specific industry inside of that city.

The total universe of possible job in insurance in Omaha, for instance, is about sixty thousand. If you are in the insurance silo in Omaha, unless you’re some kind of a rock star, that’s where you’re going to work for your entire life. The number of opportunities is significantly less than you’d think for somebody who’s in insurance in Omaha, or worse, in government in Omaha or in the retail and service sector in Omaha. Those work environments don’t have enormous amounts of opportunity built inside of them, so tools that keep looking for a relevant local match often don’t produce much in the way of results.

Stacey Harris:                      I can see what you’re saying there. I might disagree, and I guess we could wait and see what happens. I do think there is that same group of people that are willing or maybe leave but don’t really know what their opportunities might be or what the options might be in the market. Going out to an existing job board as it stands today isn’t really set up to do something like that for them, but putting their profile out in something like an eHarmony would give them options that might entice them to move out of their environment that they’re in.

I agree with what you’re saying, that in that market there’s probably not a lot, but outside of that market there might be some interesting things. I guess we’ll kind of wait and see what happens. It depends a little bit on how much eHarmony attracts the population, because that’s the real big question there.

John Sumser:                       Right. Right. There’s another thing about eHarmony that’s really exciting. That is … You know this. Much of recruiting today is about this idea that you should staff your company with only the best possible people. The great thing about online dating is it doesn’t have that sense to it. Online dating is not a class system based service. It’s a who would it be cool for you to be with service.

The idea that there is no such thing as too big, little, pink, green, brown, ugly, beautiful, whatever the spectrum is, that’s not what happens in eHarmony. It’s not a beauty pageant. It’s not a reenactment of the high school clique structure. It is an actual way to meet people who you might like and that everybody is as good as everybody else in that context. Bringing that to the labor market is huge. One of the big constraints on people’s sense of their opportunities is that they think they can’t be in the Ivy League upper crust or whatever the beauty pageant is in the current labor market.

Stacey Harris:                      Exactly. That’s where I think … To me, you’re right. That’s kind of hitting it on the nose, this idea that maybe you could open up what’s happening where you guys are at in the Bay Area to someone who works in middle America. Now all of a sudden it’s not just about skills, capabilities, school you’ve gone to, background and that kind of thing. It’s a little bit more than that. Again, it depends a little bit on what eHarmony is doing, so we’re making some judgment calls here, but it’s an interesting perspective.

The other story that I had was the Greenhouse and the amount of investment right now being made in Greenhouse, which is, at least based off of their statement, is a talent and recruiting application solution. I’ll be honest. I don’t know Greenhouse all that well, but I picked up this article because this is the third time now I’ve seen investment into this organization and I continually am seeing news releases about them. Are they more of a traditional applicant tracking system environment? Is there still money being invested in this recruiting environment the way it stands today? What do you know about Greenhouse that warrants this kind of investment we’re seeing right now for them?

John Sumser:                       I went to the Greenhouse Users Conference this spring. Greenhouse is being built along the salesforce.com model. When I say that, what I mean is salesforce.com is a cult. When I go to Dreamforce this year at salesforce.com, I’ll kind of stay away from the Kool Aid. The way that the company is built is all of the customers are raving fans, and Greenhouse has done that extremely well. If you buy into their view of recruiting, and their review of recruiting is targeted largely to high technology startup and early stage companies … If you buy into that electric hyper-competitive view of recruiting, this is the place to be.

In their user group it was the most active user conference that I’ve ever seen. The trench customer was somebody who thought that competing to win in recruiting was what the job was all about. It was very exciting and very high energy, and that attracts other people in. There are exactly no other applicant tracking systems that have that feel right now. The rest of them are compliance utilities. That’s what’s exciting with Greenhouse.

Stacey Harris:                      Is it a true applicant tracking system then? It’s not just a recruiting build on? It’s actually a full applicant tracking system?

John Sumser:                       We can do a whole radio show on the answer to this question, and that is is any piece of software from a new software company what it’s advertised to be? Is Workday actually an enterprise system or is it the promise of an enterprise system with a lot of functionality to be discovered? That’s the same question that you’re asking about Greenhouse. The answer is they’re on the road to being a fully configured applicant tracking system.

Stacey Harris:                      That was more what I was asking. You are completely true about the broader question.

John Sumser:                       Yeah. Yeah, yeah, yeah. It’s surprising how much brand means. This conversation about Greenhouse has been all about its brand and not about its functionality. Brand marketed technology succeeds and non-brand marketed technology rarely succeeds. Isn’t that interesting?

Stacey Harris:                      We’ve only got a few minutes. I think it’s very interesting and I think the fact that … We’ve only got a few minutes, but one of the comments that you brought up and maybe it’s worth getting into for next week is that … You brought this up before the call today, that there are some changes taking place in the recruiting space overall. I think brand to me is a big part of why the recruiting space is on fire right now. It’s the one component that seems to be very connected both to the brand of the companies who are doing the recruiting and it does seem to be that it’s driving a lot of the energy in the actual industry itself from a technology perspective.

Brand management makes a big difference to the recruiting community, more so I’d say than the HR mass buying community or even the talent buying community. We don’t see quite so much focus I think on the brand concept as you do in the recruiting environment. Do you think that’s true, or is that just me standing on the outside looking in?

John Sumser:                       No. No. Here’s another way of saying that and there’s an interesting sub-story that we might follow a little bit. Recruiting is the only part of HR that’s actually outward facing. Everything else faces into the company in HR, but recruiting goes to the market. Recruiting is HR’s face in the market. It’s the company’s face in the employment market.

The things that work in consumer markets, branding in particular, are way more important to recruiting than they would be inside of HR, inside of the organization. As the employee experience consumer rises, the importance of that external brand for all aspects of the work experience is going to do nothing but increase. I don’t even know really how to think about that yet. As the employee experience becomes the center of what management does, the external brand will become more and more and more relevant to the person on the shop floor. There’s something that’s going to change because of this dynamic that you’re pointing out.

Stacey Harris:                      That’s an interesting conversation maybe we can definitely get into it next week. It think you sort of touched on it a little bit with the conversation about salesforce.com and how excited … Because I know … I’ve worked with quite a few sales operations teams and there is an element of are you using the right product or the right tool before I would come to work with you as an organization. Could we get there with an HR tool? Maybe. I don’t know. That’s an interesting question.

John Sumser:                       Yeah, let’s do that next week. Right now we are exhausting our window. It’s been another fantastic conversation. This is so much fun. I hope the people who listen have as much fun as we do.

Stacey Harris:                      Definitely. Yep. It’s definitely been a pleasure this week, John. Thank you and thank everyone for listening to us.

John Sumser:                       Yes. Thanks for tuning in. We will see you same time next week. Bye-bye now.

End transcript

 



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