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Avoiding the hiring mistakes of the dot-com boom.
Karen Bannan, CFO Magazine
September 1, 2004
According to sources, God never intended for Java programmers to pull down six-figure incomes. But in the late 1990s, that's just what happened. Panicked by a shortage of skilled IT workers — a shortage mostly caused by the dot-com boom — employers practically gave away the house in pursuit of tech expertise. Businesses set up weight rooms, agreed to telecommuting and flextime, and established onerous milestone payments. They offered IT workers lucrative — and dilutive — stock options.
To the dismay of caterers and foosball vendors everywhere, the IT gravy train came grinding to a halt. But now, after three years of corporate cost-cutting, technology spending appears to be on the rise once more. Surveys show that businesses are again purchasing new tech equipment (up 6 percent for 2004) and hiring additional workers to run that equipment. In fact, Forrester Research reckons IT hiring was up about 1 percent in 2003, marking the first time tech hiring grew since the go-go days of 2000. It should grow by another 1 percent in 2004.
But that increase has filled some employers with a feeling akin to dÈjÀ vu — except in this case, it's a sense that they've experienced something before and would rather not experience it again. Indeed, many corporate managers are determined not to repeat the staffing blunders of the past. "If you look at hiring mistakes [during the dot-com frenzy]," says Rudy Karsan, CEO of Wayne, Pa.-based Kenexa Corp., which provides human-resource software and services, "you can see them split into mistakes of quantity — too many people were hired — and mistakes of quality. The madness gripped all of us."
Have You Seen This Person?
So how do employers in 2004 avoid the hiring pitfalls of 1999? First, recruitment experts say it's important to recognize that times are different. While tech hiring is on the increase, it's not off the charts. And despite the U.S. economic recovery, there are still a whole lot of unemployed Web designers and usability experts out there. Thus, prospecting employers can be more selective than they were during the Internet frenzy. "[Back then] if someone's rÈsumÈ looked even close to a match, [managers] jumped all over [that person]," recalls Sharon Jordan-Evans, a workplace consultant and author of Love 'Em or Lose 'Em: Getting Good People to Stay. "They never stopped to investigate: Will he or she be a fit for the team? Are they motivated?"
These days, employers generally have the time to ask such questions. In fact, unlike the craziness of 1999, filling vacancies and staffing up departments now tend to be more leisurely affairs. Jane Williams, an industrial/organizational psychologist and professor at Indiana UniversityPurdue University Indianapolis, says managers should use the longer lead times to better map out their searches. At the top of the list: accurately crafting job descriptions. "Include empirical data so candidates can form good expectations," she advises.
Likewise, it's important for employers to form expectations of the kind of person best suited to fill a position. At Walnut Creek, Calif.-based Agentis Software, for example, CEO Jean-Yves Dexmier says the company begins job hunts by putting together a precise personality profile of the ideal candidate. "People compromise on a hire because they don't have a clear understanding of the [type of] person they are actually looking for," claims Dexmier. "Then they lose track of their goals during the hiring process."
To get the right fit, some recruitment experts advise employers to schedule a round of interviews with a candidate. The schedule, says Francie Dalton, president of Columbia, Md.-based Dalton Alliances Inc., should include mini-interviews conducted by as many people with whom a prospective hire would work as possible. That makes it easier to separate pretenders from contenders.
The approach is doubly important these days, insists Jordan-Evans, because unemployed tech workers are liable to jump at any offer. "Some people are taking jobs for which they are overqualified, or jobs that are not exactly what they want," she says. "When the economy improves six months from now, they're out of there."
One way to lessen the flight risk is to hire candidates on a temporary basis. This provides a fairly painless way of gauging a new hire's commitment. Conversely, a short-term contract also gives an employer an exit in case a new employee turns out to be a bust, says Scott Testa, COO of Mindbridge Software, a Philadelphia-based intranet software company.
Managers at Mindbridge have revamped their hiring strategy in recent years. During the late 1990s, executives would interview prime candidates twice, then hire them practically on the spot. Nowadays, they talk to candidates four or five times, then hire them as contractors. The practice reflects the new geography of tech hiring — a geography where employers clearly hold the high ground. Says Testa: "You're basically trying before you're buying."
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