RIGHT RECRUITING

I recently spoke to a group of college students about their career expectations. It was a typical group of kids - some smart, some dumb, some sharp, some naïve, etc. I do this often and usually begin by asking about their long-term goals and their plans for the first year after they graduate. As is usual with kids, they all had lofty goals but their short-term plans were fuzzy. They wanted houses at the shore, nice cars, vacations and a large house but they had no idea what they were going to do next month. Most of them had a very hazy idea of what their work life would actually be like. Many of their beliefs came from a combination of three inputs - family, TV and faculty. Unfortunately, none of those inputs are highly reliable. Families overemphasize a child’s skills and worth. TV can provide a highly unrealistic view of professional life. Faculty can be astonishingly ignorant of the business world. However, every person in that room was absolutely, positively, staggeringly sure that they would be successful in any chosen field, apparently without much effort on their part. Without even having a job, they were already concerned about work/life balance and their personal requirement for 4 weeks of vacation. Many felt that a year off before joining the workforce was their birthright because they deserved a break. I hadn’t even realized that this pre-employment hiatus had a formal name – a “break year”. They rationalized this pre-vacation vacation by saying that it would make them well-rounded and a more valuable employee.

At that point, I reminded them there was one little thing they were forgetting – competition. I will tell you what I said to them and then I will tie it in with my analysis of how to evaluate small and mid-sized companies as employers. Much has changed in the last 60 years, both for employers and employees. Understanding these changes may help you manage your career better. It should also allow you to evaluate an employer better. More on that later. First, here’s what I said to the group …

Looking for a job is a competitive event. So is doing the job once you get it. Getting a job means competing with other people for that job. The best person is hired. Doing a job means doing it better than other people will. A marginal person is fired. It’s a simple as that. Now, for the kids in that room, here’s the bad part.

I am 56 years old (ouch!), which means I entered the professional workforce in 1975.  My father’s generation entered the professional workforce in 1950 and rarely had to compete with blacks and women in the workplace. Frankly, if you were of the right gender and skin color and had a college degree, your life was set. You got your first job and could ride the escalator up for as many floors as you liked. For the chosen few, a wonderful life was almost guaranteed. For the rest, it was impossible. There was a low level of competition once you became established and the criteria for getting established was more about credentials than performance.

Of course, my generation – the boomers- had a bit more competition. There were actually women in our management training classes and people with other skin colors as well. Our career advancement was not guaranteed and decisions and relationships were more complex. The old-boy network was slowly destroyed, finally. For example, for the first 5 years of my career I only competed with one female recruiter at my employer. Now, my industry is about 50% female. That’s a huge change. The level of competition was growing and performance matters.

Please imagine the level of competition that the kids in that classroom will face. It has increased exponentially. They are competing with 3 billion educated and ambitious Asians, Africans and South Americans. Every person in that room was now in direct competition with someone 6,000 miles away. They want the same job. They want to do the same work. They will want the same promotion. And they will work hard to get it. Not only that, they don’t need to even live here to do the job! Technology has almost eliminated location as a career advantage. A job can be done anywhere. A company can be started anywhere. Location is a secondary characteristic to workforce quality. Competition is intense and continues throughout your career. Credentials still get you in the game but performance keeps you in the game.

Mouths dropped. Faces fell. People gulped. When they crawled down off the ledge, I gave them the good news. Along with competition comes opportunity. For example, everyone in the world who enters the middle class wants to buy more stuff. They want to do more things. They want a better life. Their personal improvement provides someone else with an opportunity to sell them something. Business is not a zero-sum game. While it can be composed of small, zero-sum skirmishes, the business war itself, if properly fought, can enrich all. However, my young friends had to do two things. One, they had to recognize that nothing in their future was guaranteed. Two, they had to constantly acquire new skills that would allow them to continue to participate in the game. In other words, if they exerted effort throughout their career they would inevitably earn the rewards. The technology that allows someone across the globe to compete with you also allows you to compete with them. Don’t be scared of them. Be so darn good at performing your job that they are scared of you. Why assume that they will win and you will lose? It’s useless to whine about the world anyway. Learn to live in it, was my advice. Whatever your political feelings about free trade and immigration, the trends are inevitable. Personally, I’d love to see a constitutional amendment that bans whining.

Recessions bring out resumes that are unseen during better times. It brings out the non-degreed mid-level manager with a 25 year career in administration in one company. It brings out the executive with a series of C-level jobs in progressively smaller companies with no record of growth. It brings out people who buried themselves cozily into nice tidy little corporate nests who became redundant. It brings out those who became complacent about their permanence in an organization’s future. It brings out those who forgot that competition applies to them too. Those people in my generation and my father’s generation had a higher margin for error in their careers than those who are entering the workforce now. Unlike their parents and grandparents, the kids in that room will need to constantly upgrade their skills throughout their career and change jobs and industries more than a few times. While my message to those kids might sound depressing, it actually energized them. We don’t lack resources for those who want to succeed. We lack people who understand that success requires effort. I wanted to send a message to those students about the importance of equipping themselves with the right attitude and training to make them the next generation in the American success story. One kid said that it was the first time anyone spoke to him like he was an adult.

On the ride home I realized that the same thing applies to small and mid-sized firms. Recessions also bring out things in companies, especially small companies. To use a cliché, it separates those who walk the walk from those who just talk the talk. For example, it’s easy to talk about new methodologies in production and supply chain management. It’s easy to talk about professionalizing marketing. But remember, just like getting a job is not the same thing as doing the job, talking about improving a small company is not the same thing as making the improvement. A person who wants to give themselves new skills must work hard; night school, tuition, etc. Many think about it but only a few do it. A small business needs the same continual commitment in its efforts. Upgrading a company requires difficult decisions; employee changes, capital expenses, etc. In this competitive world, neither an individual nor a small business can ignore they fact that someone, somewhere wants what they have. Recessions show us which companies and which people stay in the game and which ones leave.

As many of you know, most of my client base is composed of small to mid-sized manufacturing and technology firms. I firmly believe that these can be the best type of employers. All of my analysis of careers has shown that a growing company offers the best chance of upward mobility. In a large company, the rate of growth is often slower, due to size. That means ambitious employees must often rely on attrition for promotion. Compare that to a firm that grows for $30,000,000 to $60,000,000 over three years. That growth will create numerous new jobs and often creates a new level of management to manage that growth. Being with the right firm at the right time can really bootstrap your career.

However, I also think that small companies can sometimes be horrible places to work. It’s a reverse bell curve, with very few small firms in the middle. Most are either exceptionally good or, frankly, lousy. Large companies occupy the middle of the bell curve. Size requires large firms to be organizationally similar. Structurally they are not very different. That’s not the case with small and mid-sized firms. They are like families; each one is different in their own way. Some families are like the Waltons and some are like the Mansons. It’s difficult to tell them apart from the driveway. For candidates who are interviewing with small and mid-sized employers, it can be tough to tell the Waltons from the Mansons in the interview. Like employees, small and mid-sized firms have been affected by increased competition. However, some small companies haven’t noticed it yet, don’t take it seriously or think it’s a temporary phenomenon. Let’s face it, there was a time where you could own a nicely managed, family owned $30,000,000 company that made widgets. You could sell regionally through a series of distributors with whom you had a cozy relationship – golf outings, dinners with clients, etc. Back in the past, business itself was an old-boys network and you could control any competitive pressures. Maybe you were the only widget manufacturer within 500 miles. Maybe 15 years ago you added a unique feature to your product that gave you a competitive advantage. Maybe clients liked your salespeople and because they themselves were in a cozy little market niche, your clients had no need to aggressively manage vendors. Candidly, some companies were like a fellow who received his BS degree in 1960 and went to work for GM. The escalator would drive his career slowly but predictably upward. For the small company, their business and contacts would allow them a marginal but easy level of growth. Inertia would take care of everything.

You can probably see where this is headed. Think about today’s reality. That little company with their comfortable regional market is now seeing competition from 6,000 miles away. The Internet, better supply chain management, and global systems have opened up previously “secure” markets to everyone. That firm may now be seeing other local, more aggressive firms take advantage of supply chain improvements or lean improvements and use the advantages to put price or quality pressure on them. That great product improvement from 10 years ago may now be obsolete without anyone noticing. Remember, that escalator sometimes goes both ways. For those who were content with a slow, steady, marginal, upwards trip, the ride down can be much more precipitous.

There are aggressive small companies that want to grow from $20,000,000 to $100,000,000. There are also passive small companies that want to milk a $20,000,000 market base for as long as possible. Working for the first type can be the most enjoyable experience in your business career. Working for the second can suck every bit of life out of you. I am going to tell you how to spot the difference.

1)      Ask them. Sometimes it’s as simple as that. If you are interviewing with a 30 year old, $20,000,000 company, ask them how much they’ve grown in the last 5 years. If they’ve grown from around $10,000,000 to $20,000,000, that’s good. If they’ve grown from $19,000,000 to $20,000,000 in 5 years, that’s bad. If they’ve shrunk, that’s worse. If they won’t tell you informal revenue figures in an interview, that’s bad. Some privately held firms can be secretive about revenue but they should be willing and able to give you a ballpark figure for you to evaluate. Think about it – if a company hasn’t grown in 10 years, why will they start growing now? Isn’t it more likely that they will shrink? If your business strategy revolves around treading water, sooner or later you will sink.

2)      Evaluate their growth prospects.  Once again, in the interview ask them what size they want to be in 5 years. That’s a fair question. After all, a typical interview question for you might be “What do you want to be in 5 years?” Reverse the question. A company or manager without an answer to that question is basically saying that they are happy where they are now. That’s a sign of lack of interest in company growth. That’s also a sign that you’ll have to wait till someone dies to get promoted.

3)      Is there a plan? If the manager says they plan to grow from $20,000,000 to $30,000,000 in 3 years, ask him how they will get there. Is there a specific plan? Don’t be afraid to ask follow up questions to the answer. For example, if the manager expects growth from new products, ask him the size of the product development group. If it’s one person, that person better not get sick! That’s a pretty thin platform for $10,000,000 in new product revenue.

4)      Ask the background of everyone you meet. If you meet 5 people in the interview and all 5 have been there 20 years and have never completed college, that’s bad. If 3 of the 5 joined the company in the last 2-3 years and have good career and educational credentials, that’s good. There is something positive occurring that keeps them working there. Which of the two groups of people are you most likely to learn from? Which are the most likely to be complacent?

5)      Look around you. Do you see happy people? Growing, optimistic companies are fun places. Stagnant or shrinking companies can be miserable. Growing companies are excited about revenue. Shrinking companies are only focused on cutting costs. Would you rather work with optimists or pessimists?

6)      What is HR like? HR is a funny department and it can reveal a lot about how ownership thinks. It means different things to different companies. It’s usually the last department to be upgraded when a company grows. Small companies that don’t plan on growth can turn it into an administrative function. A professional HR manager at a $20,000,000 company can be a sign that the company will invest for its future. A miserable hack or a secretary with an important HR title can be the sign of a company that mistakes form for function. Pay attention to HR’s professionalism in the interview and recruitment process. If all the HR person cares about is your lowest possible salary requirement, run, don’t walk, away!

7)      Who owns the company? Most small companies are privately owned and some are family owned. This, of course, can be good or bad. A well-run privately held firm can have longer investment thresholds than public firms. They don’t need to respond to Wall Street quarterly stock price pressure. This allows them to think long-term when making decisions. On the other hand, a poorly run privately held firm can be owned by someone that sees every dime entering the firm as theirs personally and not the company’s. These companies can limit budgets dramatically because, to the owner, every dollar invested is a dollar out of his or her pocket.

You should be able to get a handle on the “quality of ownership” question by asking the first six questions in our list. However, you also want to consider the stability of ownership. Is a family firm first, second or third generation? How soon will it transfer? How old is the owner? These are all legitimate questions. Generational ownership changes can be either very good or bad. A lot depends on the commitment of the new generation of owners to the long-term viability of the business. Do they see themselves as the stewards of the company for future generations or just see themselves as short-term winners of the generational lottery? The former may bring new blood, new plans and excitement to a stodgy firm. The latter will bring new budget cuts and pain to the employees. Also, don’t forget that a lot depends on the skill and talent that the new generation brings to the table. Have the new owners worked in the business or parachuted in from an outside career at the last minute? Are they savvy enough to know where they need help and do they have enough humility to go out and hire that help? 

These are all legitimate questions for a candidate to ask in an interview. Of course, the way you ask the question is important. Coming up with a checklist of questions is generally not appreciated. Sprinkling these questions into the flow of the interview is usually the best method. It’s less challenging and, because it’s more subtle, can also provide the most accurate responses.

Uplifting Synopsis/Advice Section

It’s important to understand how the world has changed and how to respond to those changes. Increased competition has put pressure on individuals and companies. Recessions magnify that pressure and speed up the pace of change. Remember that while most individuals who are laid off from jobs in this recession will eventually get back on track, some won’t. Those that don’t will be those who delayed in upgrading their skills and education. On the other side, most small and mid-sized firms will bounce back from this downturn and will prosper again. However, some won’t. Working for a growing, small company can be a career-maker and can be a lot of fun. Managing or owning a small company can be challenging and can be rewarding both personally and financially. For those on both sides of the desk, employers and employees, the biggest danger right now is misreading your level of competition and, in doing so, deluding yourself into thinking that you can relax.

Simply put, neither an employee nor an employer will be able to use a marginal effort to garner a credential as a selling point. Employers under pressure from clients can’t be complacent about their staff and its usable skills. As an example, XYZ Inc. may be under pressure to cut costs and their CEO might know that lean manufacturing may be helpful in that regard. His default solution can no longer be to send his VP Ops to a 2 week lean seminar for $2,000 so that he can get a certificate to wave at his clients while saying, “See, we’ve got a lean manufacturing expert on staff.” That won’t work. In that scenario XYZ Inc.’s “lean expert” will be competing in cost cutting and efficiency with a fellow at a competitor, here or overseas, who has 10 years of industrial experience in designing and implementing lean systems in actual workplaces. Between those two competitors, which is more likely to drive costs down quickly enough for clients to notice? Companies need to be voracious in their desire to increase the skills available in their workforce because, after all, their competitors will not allow them a margin for error. On the other side of the desk, professional employees must actually be able to master a skill and demonstrate this mastery. What does this mean? It means that a credential will not get you a job if it’s not backed up with real experience. Employees must also be voracious in upgrading their skills, both through education and through practical work experience. If you currently work for a company that has no six-sigma related systems, for example you will be at a competitive disadvantage for every job or company that uses six sigma. This disadvantage gets deeper over time. The quality of your employer defines the quality of your career. If you work for a firm that is aggressive, investment focused and competitive you will get up-to-date skills. If you work for a complacent firm that is treading water, you will gain no new skills and be left farther behind every year.

The employee faced with a job choice between a comfortable commute to a stagnant company and a longer commute to a growing firm may need to re-jigger his or her priority calculation. That extra hour a day in the car may pay dividends in career advancement for years to come. The shorter commute may end in career disaster. That CEO at a mid-sized manufacturing facility that wants to upgrade a tired quality team, for example, may have to bite the bullet and make a tough decision. The easy decision might be to, once again, send your 30 year veteran incumbent to another meaningless seminar from which he will bring back nothing. The difficult answer might be to invest in someone who has internalized and actually used the tools that can upgrade your quality system. The tough personal and financial choice, like for the employee deciding to commute farther for a better job, might actually translate into a significant competitive advantage in years to come. The easy choice may be the wrong choice. It might open the door to a competitor’s products, hampering your business for years to come. Competition is not going to go way so you might as well embrace it. Earn your competitor’s respect.

As ever, thanks for getting this far and try to remember Right Recruiting for all your employment needs.
Jeff Zinser