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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 7AM Pacific – 10AM Eastern, or catch up on full episodes with transcriptions here.

HR Tech Weekly

Episode: 68
Air Date: April 28, 2016


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 7AM Pacific – 10AM Eastern, or catch up on full episodes with transcriptions here.

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John Sumser: Good morning and welcome to HR Tech Weekly One Step Closer with Stacey Harris, John Sumser and we have Erin Spencer sitting in. This is show number sixty eight and we’re coming to you from all parts of the country. Stacey’s in Minneapolis, I’m in Sebastopol, California and Erin and is wherever Erin is. Morning Stacy, morning Erin.


Stacey Harris: Good morning.


Erin Spencer: Hi John.


Stacey Harris: Yep. For those who might not know Erin Spencer, you might’ve heard her on a couple of webinars, she works with me at Sierra-Cedar. She co-manages Sierra-Cedar HR technology survey, she does all the hard work, she does all the data cleaning so if anybody really wants to know what it’s like to be a cleaner and get to understand that but we’re really excited to be joining today, John. This will be a good conversation, lots of fun stuff to talk about in the little bag today.


John Sumser: Yeah, let’s go look at data cleaning for just a second. You did not give Erin nearly enough credit. Data cleaning is what you have to do to understand what’s actually going on in a survey. It’s my view that the single most valuable process in some sort of data thing is the process by which people figure out how the data sorts so that you can actually make some sense out of what’s in the bucket. Data cleaning is that process. It is dreary, it’s repetitive, but it’s the kind of dirt under your fingernails that makes for the most powerful insights. When you’re out in the world and talking to people who do surveys, always keep your eye on the people who clean the data because they actually know what’s going on.


Stacey Harris: There you go, Erin. How long, Erin, does it take you to clean the survey that we do each year? What is that process?


Erin Spencer: It’s a minimum of a month and then Stacey starts asking me, “Hey, can I look at the data yet? Can I start writing? Can I look at the data yet?” I have to say, “Oh no, not yet, hold on. There are a few more things.” Our survey is particularly cleansing rich because one of the things that we do is we go to third party sources and look up financial information for all of the publicly traded companies, so that in itself, looking up ROI and such things for six hundred companies, is not a fast process.


John Sumser: Yep.


Stacey Harris: The other side’s bringing in external data, so we’ve got a lot to talk about with data this week and all kinds of fun stuff, John.


John Sumser: What’s in the mailbag, Stacey?


Stacey Harris: Well, we do still have a little bit of time, the reason I’m in Minneapolis today is that I’m at the LEHRN Event. For those of you who might not know what Learn stands for, it’s the Leading Edge HR Network in Minneapolis. They were an offshoot of what used to be a regional IHRIM group but Matt Peterson, who runs the function here, has kept that function running long after they pulled all of those IHRIM regional groups away. We’re really having an interesting time with five hundred attendees here at their HR tech expo that they have annually.


We also have an interesting article today that everybody’s sort of talking about but I’m not sure … The conversations are probably worth having, the question is which of conversations are most important enough. There was a big article on Bloomberg just a few days ago about Scott Scherr from Ultimate on his CEO package of about thirty eight million today at last year and then increasing to forty five million this year.


Then we also have an article about another Asian Pacific international organization coming out with the first ever Cloud HCM solution, called Microimage. The thing that caught my eye as to why maybe we should talk a little bit about it is that they’re being supported by Microsoft and Microsoft Azure as their platform of choice and so we may have some conversations about platforms and what that means for innovation.


Then there was this fabulous article this week about GE using hot sauce to furnish their image with young recruits. They’re actually creating their own brand of hot sauce and wrapping it in some of their new technology so really going out of the way with branding.


Then if we have a little bit of time today, there is some great articles that were written by Harvard Business Review around how organizations are starting to do what I would consider as the next generation of recruiting. Right now they’re talking about simulations, competitions and analytics but they really start talking off about NFL’s combine draft and are we getting into genetic selection eventually.


Then there’s some great stories about GameStop, if we have some time, and their next level training approach for their onboarding and their recruiting as well. Lots of stuff to do with recruiting and data and how organizations are using it today. John, you’re not traveling this week though, right? You’re at home so you have no [crosstalk 00:05:42].


John Sumser: No, no. I’ve got my feet up on the desk, smoking big Cuban cigars, wondering if there’s anything to do. Yeah, I’m actually in the process of trying to thin my travels down so that it’s just every other week or so instead of all the time.


Stacey Harris: All the time, everyday.


John Sumser: What about LEHRN? LEHRN is a remnant of the good old days when there was something called IHRIM in the HR tech industry and IHRIM was a force to be reckoned with. Now it’s a sort of a splintered mess and this is an offshoot of the splintered mess, is that right?


Stacey Harris: I would say yeah. I know IHRIM’s trying to rebrand and regroup and so I think they’re working hard, [inaudible 00:06:34] who’s running that group. I think that what we found is that when IHRIM said we don’t need regional groups that it doesn’t make sense for them as a national organization, that it’s the regional functions that probably had more strength in some sense, right? Because those regional monthly meeting groups really did find, particularly in the HR technology space, a home, a place where they could have some good conversations each month and on a regular basis about what was happening in HR technology that was not vendor driven and that was the difference about a lot of these organizations is they’re not vendor driven. They might have vendors sponsoring them but ultimately the goal was to stay vendor neutral on all of these.


They really, [inaudible 00:07:19] has kept to that in a very Minnesota fashion, Matt keeps things a little bit fun so if anybody really wants to see how he keeps things fun you might want to take a look at my tweets this morning. Jason Averbook, who has been a big, longtime supporter of them because his home here was in Minneapolis, grew up in Minneapolis and he has always been a big supporter of the LEHRN organization. He was asked to emcee this week just fresh off all of his trips from Shanghai and India and doing amazing large events, speaking opportunities. He volunteered to do the emceeing here at this event. Matt Peterson asked him to … Well, take a look at my tweets this morning. Asked him to take some interesting headdresses for the sake of the hometown event to take a look like our Sparky, which is the mascot for the event. It’s a fun group and they really do have a good time.


The conversations last night that I had were really, really hard hitting conversations about HR analytics. The people here are asking questions about not just should we be doing predictive analytics but what dangers could predictive analytics be causing an organization? We were having conversations last night about what does Cloud really mean and what happens if you were owning your own infrastructure being in a Cloud solution like SuccessFactor’s done with it’s own infrastructure versus maybe another Cloud solution that is moving everything onto an Amazon Cloud or an Azure Cloud, Microsoft? These were questions that I think were real astute. This is a group or a community that really understands the HR tech space. It’ll be good to see what the events are today. They also have Watson IBM Jon Ferrar talking about Watson as their big keynote this morning as well.


John Sumser: Let’s talk about some of those questions a little bit more. I saw a demo this week from ERE, ERE is one of the oldest recruiting conference organizations. ERE is now developing benchmarking software so that recruiting organizations can compare themselves to each other. There are so many questions about analytics that it’s hard to get just even a comprehensive list, but as I looked at this thing, it seemed to me that what was going on is that a trade association, an events group is now going into the business of competing with the people who sponsor their events by offering a framework for looking at performance so that people can assess their performance. There are vendors out there who offer that form of analytics. I wonder if it’s smart to have this free for all and if what we’re seeing is a lot of category busting going on as the big consulting companies start to wade in and compete in this area and the vendors are wading in and competing in this area, what’s inbounds and what isn’t inbounds? What do you think?


Stacey Harris: I think you’re right on, John, with that. I mean, ultimately what we’re seeing, Deloitte, Mercer, Towers Watson are all great examples of this, right? All of them are launching products on some level, technology products. With the wrapping of services and then vice versa, we’re seeing all of the vendors wrapping their technology with services. That was a big conversation last week with the SuccessFactor’s and SAP when we went to their analyst event and [inaudible 00:11:14] as well. Then, I think your comment about the fact that we’ve got associations or media groups, right? ERE’s really a media group if you think about what it really has done from the beginning. They’re saying, “Look, we have more data.” Really it comes down to the question of who has the data because the data is king, right? It’s not cost anymore, it’s data.


John Sumser: I don’t know. Data’s king, sort of but if you make your living and then you shifted to something that puts you into a different business, that’s not a risk-free thing to do, right? When I saw the ERE offering, I thought, “Oh my.” If I was a sponsoring organization and I noticed that the event was competing with me, I wouldn’t go to the event. Not even vaguely. If I noticed that in the big consultancies, if I noticed that a big consultancy had an arm that offered objective analysis of vendors and at the same time, the big consultancy was delivering product that competed with those vendors, I’m going to guess that the vendors are going to stop talking to them. Because the idea that what you do is give people … The market opportunity that’s being exploited is at the expense of the people who paid all these years. I think that’s going to be a problem.


Stacey Harris: Here’s the other question, is this just really a matter of changing categories or are we becoming a bit more transparent. Haven’t we for years had many of the consulting firms and the publishing companies and the research firms, know the back office relationships, the negotiations saying, “Well, when I see something like this I will make sure I pass the deal onto you versus someone else.” Right? In some way, that was somewhat competitive or going against what [inaudible 00:13:35] your idea of being objective. That’s always been happening on some level in most of those organizations and I think we’ve all been a part of this process on some level. Are we becoming more transparent with the fact that now we’re saying, “Okay, so hey we’re going to own some of this as well.” Or do you think it really is a change completely?


John Sumser: Well, I think if the companies who used to recommend products, now offer products, I don’t know where that whole recommending function goes. In contemporary language you describe that as curation. I don’t believe that you can really curate effectively and sell a competing product. Let’s take it out of this and say it’s an oil company and the oil company is evaluating other oil companies. What do you think you’re going to get? Nobody’s going to pay for a business … Well, imagine if the Sierra-Cedar survey arrived at the conclusion that five other companies were better at implementation than Sierra-Cedar, I don’t think that would last very long. It wouldn’t last …


Stacey Harris: That’s why we don’t ask those questions, we don’t get into that particular area but no, but you’re right. I think that’s the challenge that all organizations face, right? That’s why I said, is some of this just becoming more transparent? We have data, we have information, maybe we want to be the one who owns it now instead of passing it off to someone else so we’re going to pass the deal off too, right?


John Sumser: Yeah, I think it’s a very hairy line because the only way you can build trust is by being transparent and at some point in time transparency about things outside of your organization runs the risk of being self-defeating. There’s some line there that we haven’t come upon yet that we’re going to come upon because people are pushing the boundaries here.


Stacey Harris: Talk about lines that we’re crossing on that front, right? The big story this week that came out was about Ultimate, Scott Scherr’s salary range. That’s an organization that has said, “Hey, we’re a single platform. We’re offering a single platform. We’re going to become the true Cloud solution on the market.” Right? That’s been their big pitch for quite some time. Do you think that being that transparent about salary is going to hurt them? Because we’re talking about transparency and what people share and don’t share in the market. This is a recent article about who’s making large salaries and Scott Scherr’s name showed up ahead of some very large company CEO’s like Microsoft. Is that transparency where we’re heading do you think or need to be?


John Sumser: The question about how much money Scott Scherr makes as the CEO of Ultimate, on some level it’s interesting to see it out in the world but it’s really a question that’s between him and his investors in this board. It’s interesting to note, I would like to make forty six million dollars a year. I would really like to make forty six million dollars and this year would be a good year to start. In fact, I only really need to work one year at forty six million dollars a year. I don’t know. I’ve met Scott and he is … Well, this is going to call it into question. I think he is a really sincere, really legitimate guy who has built a company with his heart and his tears and his blood and his sweat and so he’s getting a payday and I’m happy to see him get a payday. The problem with the information being published is it will make people question whether or not his legendary sincerity is an act. It’s a PR problem for him.


Stacey Harris: It’s a PR problem and one of the things that we all know about Ultimate is that, from the beginning Scott Scherr’s actually against, many times, his investor’s wishes, has been adamant that they pay full benefits including a hundred percent of healthcare for their employees, that they give employees various stock options and shares of the organization, that they have very large time off programs and very large education programs for their employees. Now, of course not everybody’s thrilled but they do have lower turnover than generally in this industry, right? They’re consistently on the top places to work, although I think they work at that so that sometimes puts you in a little bit of wonder of how much do people have to go in and say that they’re a good company? I think genuinely they talk to people who work at Ultimate and they think the company’s a pretty great place to work. A lot of people sort of equate this high salary to generally not treating your employees well, I don’t know that you could equate that in the Ultimate environment, wouldn’t you say?


John Sumser: There’s some really interesting stuff, the headline will be the number, right? The headline will be his big payday but it turns out that the reason for the big payday was so that he could keep his eye on the ball if Ultimate is acquired. This actually appears to be a way of bringing attention to the fact that Ultimate would be willing to be acquired. In the news release, it says, “The stock came in the form of shares which Ultimate awarded because Scherr accepted a smaller payday.” That’s pretty interesting. Usually where people get rich in these deals is in the final sale, whatever the final sale looks like, and he’s backing away from navigating the company in that direction. This is actually a pretty consistent story with the overall Ultimate story which is that they put the needs of the company ahead of everybody else. Even though that’s an astonishing number, I would probably be much happier with his compensation if he’d just give me some of it.


Stacey Harris: Wouldn’t we all?


John Sumser: Right. Then my understanding of what he’s doing wouldn’t be so clouded with envy.


Stacey Harris: Let’s talk a little bit, I’m going to jump over our Microsoft helps Omesti roll out Microimage, I think that’s a story maybe we might hit next week, but let’s talk a little bit about brand and image. Because I think if GE uses hot sauce to gain young recruiters … I saw this article, I’m like, “This can’t be true.” I’m reading it and I’m talking to my twenty one year old son, who is a fanatical hot sauce lover, and he’s like, “You know, it would make me interested to see.” Basically what they’re doing is they’re creating their own brand of hot sauce, a limited brand and they’re putting it inside of their silicone carbonized material that they use in jet engines to basically kind of say, “Hey, we are more than just your grandfather’s GE.” Which has been their big push on the commercials with the hammers that poor weakened little millennials can’t pick up. Do you think that this branding of trying to be the cool place to work, as GE divests it’s finance groups and healthcare groups, and really focuses on their gas turbine jet engines and the internet of things from a manufacturing perspective, do you think this branding thing will work for GE? Is this what the next generation of recruiting really looks like?


John Sumser: Have you seen these fifty five year old guys who make gang symbols in their selfies? GE is a powerful and interesting, very big company. It is not much of a fashion statement, it’s a powerhouse of technology and has been for a hundred and fifty years. The idea that what it needs to do to recruit the kind of people it needs to be successful is pretend to be young and hip is embarrassing. This is what happens when people who are not sophisticated about branding get given the opportunity to change things a little bit. This is kind of like, I think, it’s sort of a learning curve problem in employment branding. The people who do employment branding are generally not very sophisticated about branding. This kind of dissonance where you’ve got grandpa with his jeans hanging down below his butt on a skateboard making gang signs while skateboarding over to the locker, I don’t get it. I don’t get how they’re management is signing off on this stuff.


Stacey Harris: Well, and you know I think that’s the challenge, right? Do we embrace who we are or what do we need to do to change? Is it a brand that needs to change or is it a company internal culture that needs to change? The other story that I picked up was this story put out by Harvard Business Review around companies that are using simulations, competitions and analytics to hire. Which we’ve been talking about predictive analytics for hiring for quite some time and simulations are all about can the person get through a day in the life, right? Depending on how good the simulation is as it comes to how close the day is.


It starts this article off with the idea that NFL is using these combines now to pick their top players. These combines are all about how fit they are at that point in time in doing the combine and doing all these tests and analysis versus the years of data that people have tracked on these people before they got to the NFL selection. Are we getting to a point where to find the right people to work in a culture that we want we have to get them to compete and to go through simulations? I can remember my first instructional design job, way back in the day, I had to create for Key Bank, the organization that I was working for at the time, I had to create a training session on how to write a check. That was how I did my job interview. I had to write a training session on how to write a check and that was how I was able to prove I could instructions [inaudible 00:25:30] banking environment. Is this valid ways to select employees as well?


John Sumser: The basic step is that gut based decision making about talent is slightly less successful than flipping a coin. Most of these complicated hiring processes that people have in place result in hiring managers having remorse about their decision fifty percent of the time a year after the hire was made. We’re going to have to do better than that. The NFL’s an interesting case because competition involves razor thin differences that you accumulate in [inaudible 00:26:25]. They’re a really good model for places where competition is hyper important.


Not all companies in all industries have a competitive problem, not everybody focuses on that but if you do and you’re looking for that razor thin difference, people are starting to wake up to the fact that the education system beats all of the creativity out of people. When you get out of the education system at the top of the class, at the most elite organization, you’re operating with a set of biases that may not be very useful in an actual job. People are looking for other ways to get at what really moves the needle on value inside of their company. I think you’re going to see more and more of this and less and less of the “let’s arrive at a consensus because everybody is asking a weird set of questions.”


Stacey Harris: I think there’s some risk in this and Erin could probably comment on this because I think the Cleveland Browns would’ve really wished they would have thought a little bit more about Johnny Manziel, is that his name?


Erin Spencer: Right. Actually when you were talking about this, one of the things that I was thinking was that the NFL for years has used personality testing. I mean, they’re, I’m not going to say they’re one of the forerunners of that, but they’ve used caliper and other personality tests to make sure that the people that they recruit can actually, I hate to say, play at the level of the NFL but that’s one of the things they look for within their employees, shall we say.


Stacey Harris: Go ahead, Erin.


Erin Spencer: It’s not just physical skill, there is a mental component to the game, shall we say.


Stacey Harris: For those of you who don’t know, Erin is in Cleveland, Ohio, which is why the Browns are so dear and close to her heart, which we tease her about all the time once I moved out of Cleveland. What I think though what Erin is kind of commenting on, John, don’t you think is true? The NFL has had this sort of “let’s take the best person” concept for a very long time but how many of their players sort of blow up like Johnny does and do things that you wouldn’t expect? Are we going to be able to leave that out if we’re not really going through the interview process, we’re basing everything off of data, do you think?


John Sumser: Let’s do a couple of things. I’m not sure that there is any test or simulation or recruiting technique that can help a team overcome the fact that they’re in Cleveland.


Stacey Harris: [inaudible 00:29:06] John, so true.


John Sumser: They’re starting at a disadvantage there. The thing that happens in recruiting over and over and over again, recruiting is a discipline that is always looking for an edge. If somebody comes up with a really great technique for doing recruiting, it will get adopted very, very quickly and because it’s adopted very, very quickly it will lose it’s meaning quickly as it’s adopted. It’s an arms race and what happens in an arms race, when everybody gets a gun, then you need machine guns. Then when everybody gets a machine gun, then you need rockets. When everybody gets a rocket, you need a nuclear bomb and when everybody … That’s how it works.


The new thing is new and cool and then everybody gets it and you need another new thing that’s cool. What’s great about recruiting is that it is the innovation engine for all of HR. It is the innovation engine because of this arms race competition. The idea that we’re going to settle in on one method and that’s the method that’s going to work forever, yeah, no. The Moneyball method was the last method and people are starting to bail on that because it worked until everybody started using it.


Stacey Harris: Everybody did it and then we all have the same people that we’re going after because they’re all picked by that same criteria, right?


John Sumser: Yeah. What you’re always looking for is an angle on selection that is different from the angle that everybody else is using in selection and it’s not a hunt for the right thing, it’s a hunt for the next advantage.


Stacey Harris: Yeah. Well we just went through our entire half hour, John and ended, I think on an interesting conversation. We’ve had a great conversation about the LEHRN event here in Minneapolis and how important little regional events are where people get a chance to talk. We’ve talked about CEO salaries and whether or not those are important and how they fit into the market these days. Then we got into a great conversation about branding and recruiting, so we’ve talked about a lot of topics today in our little thirty minutes. Next week we’ll maybe try and hit the conversation about learning and what’s happening with that, some of the GameStop stuff.


John Sumser: Fantastic. As usual it’s been an extraordinary conversation, Stacey. Thanks for doing this and thanks for being here today, Erin. It was good to have you onboard.


Erin Spencer: My pleasure.


John Sumser: You’ve been listening to HR Tech Weekly One Step Closer with Stacey Harris, John Sumser and Erin Spencer today. This was show number sixty eight and thanks for tuning in, hope you have a great rest of your day.


Stacey Harris: Thanks everyone, bye.

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