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Why Net searches for jobs are so popular

Wharton looks at the ways that employers and recruiters can tap the best talent during tight economic times.

8 min read
The labor market is being shaped by the ability of employers and recruiters to tap top talent via the Internet.

Consider the following:

 Monster.com, the largest online job board, has more than 20 million registered users; on a typical Monday afternoon from noon to 4 p.m., six million people are conducting job searches.

 In a recent survey of employees by WetFeet.com, more than one-third of the employees polled said they are very happy in their current job; these same employees also said they are interested in finding out about other job opportunities and would be willing to move within six months.

 In a survey of MBA students worldwide conducted by PricewaterhouseCoopers, students said what they wanted most out of their first job was "a good reference for their future career." In the same survey, only 20 percent of those polled said they expected to stay with their first employer more than five years.

 General Electric last year announced that from now on, half of their new hires would be people the company had already employed as interns, co-ops or work-study students.

 In April 2001, employers said they expected to hire 19 percent more college graduates than the year before; by September 15, they expected to hire 20 percent fewer graduates.

What all this points to, says Peter Cappelli, director of Wharton's Center for Human Resources, is the emergence of a dramatically different labor market that is changing not only the way people are hired and fired, but also how they view their jobs, their employers and their careers.

Speaking at a Nov. 19 executive education forum on "Managing in Tough Times: Perspectives on Leadership and Change," Cappelli told executives in human resources and leadership development that changes in the labor market are taking place under conditions managers have never before faced--the need to cut juxtaposed with the increasingly difficult task of recruiting new employees and retaining those who are already top performers. All this under the cloud of a now official recession and the events of September 11.

"For those of us who study management," Cappelli says, "it is a unique" convergence of challenges.

The "Rank and Yank' model
Chief among those challenges is talent management--a recognition that the best people in an organization have a significant impact on that organization's success. To put this issue in perspective, Cappelli asked his audience to focus on the worst employee they have and then focus on their best employee. How much more valuable to the organization is the best employee versus the worst employee, he asked.

The typical response, Cappelli says, is five to 10 times better. And when you look at jobs where you can easily measure productivity--such as the amount of error-free code produced by computer programmers--the best programmer has been shown to be 22 times more effective than the average programmer.

Now consider how much the best employee is paid versus the worst employee. The typical response is about 10 percent to 15 percent more. In other words, the performance differences are orders of magnitude bigger than the pay difference.

Why does this matter? "The ability of organizations to hire away your star workers" has increased significantly in the last few years, says Cappelli. "If somebody can come along and figure out who your best employees are, they could double their pay and still make out like bandits. So being able to find good people and keep them is a new phenomenon."

How do you keep the prized employee? According to the WetFeet.com survey mentioned earlier, even employees who are happy in their jobs are willing to be enticed elsewhere given the proper incentives. These employees, says Cappelli, are called "passive applicants," people who could be lured to a new company if that company takes the initiative in finding them.

With online recruiting, it is easy now to do just that. The 20 million people plugged into Monster.com make up 15 percent of the U.S. work force. Peak job searching time is from noon to 4 p.m. Mondays (after morning meetings), and job seeking is currently the second most popular activity on the Internet.

But online recruiting is more than just posting, or responding to, a job listing. Cappelli points to Cisco Systems, a no-holds-barred master at both keeping its talent and hiring talent away from others. For example, the company runs contests on its Web site seeking input from outsiders in solving a particular problem in the area of, say, engineering. That helps the company identify good engineers outside the company and also allows Cisco to start flashing banner ads asking interested engineers to apply for jobs. Once an applicant fills out a job profile, that person is put in touch with an employee at Cisco in the same job category. The employee contacts the applicant. "It's called ?Making a Friend at Cisco,'" says Cappelli. If the applicant is hired, the ?friend' gets a bonus.

Cisco, it should be added, approaches the task at hand with a sense of humor. An employee of another company who is filling out a job profile for Cisco need not worry if his or her boss suddenly shows up. The employee can quickly click on a button labeled "oh, no! my boss is coming" and be transported to a page titled "Seven Habits of a Successful Employee." Scroll down and there is a list of gift ideas for boss and colleagues.

It's not just jobs that are peddled on the Web, but job information as well. Take Vault.com, a Web site that sells information to job seekers about what it is like to work in a particular company. Vault.com's information is based on interviews with company employees. Those interested in a particular company can buy that information, and they can also visit message boards where current employees post their own opinions of the workplace. "Do you think these boards attract your average well-balanced employee?" Cappelli asks. Hardly.

The point is, the company no longer controls the information that is out there, says Cappelli. "Company recruiters used to be able to direct recruiting by deciding how to pitch the company to job applicants. Now someone else is shaping that pitch."

So what are recruiters to do? One answer is to get more sophisticated about the way they do their job.

"We cheat death"
During the last 20 years recruitment in most organizations was not a hard task, says Cappelli. The company merely had to hint that it was thinking about hiring, and job applications poured in. That's no longer true. Since about 1998, companies have realized that recruiting deserves not just more attention, but more creative thinking.

Consider the following facts: This past year, half of the college graduates made commitments to employers at the beginning of their senior year; MBA recruiting now starts in the first year of the two-year program; Accenture has begun co-op and internship programs in the sophomore year of college; the number of internships and co-op programs in high schools jumped dramatically between 1997 and 2000; UPS is making pitches about job opportunities in junior high schools.

The reason GE and other companies now focus heavily on their internship and co-op programs, says Cappelli, is that they have already worked with these employees, and more importantly, these employees have worked with them. Someone who is already familiar with the company is less likely to leave shortly after signing on. The result is less turnover.

But the real challenge for recruiters these days is understanding the importance of marketing, especially on the Web. Statistics show that one in five people who apply for a job at a particular company do so because of that company's product market ads. "IBM is especially good at this," says Cappelli. "They generate ads that don't mention the products at all but talk about innovation, creativity, being future-oriented. People see the ads, think they are neat, go to the Web site and apply for the job.

"What we are moving toward is a model of thinking about hiring as an employee value proposition," says Cappelli. Look at it this way: Suppose, he asks, you had to sell your job in a competitive market, knowing that there are a number of other firms out there trying to hire the same people you want. What could you say to persuade these people to come work for you? What, for example, could you say about what it is like to work for your company?"

Some companies have already incorporated this question in their recruitment ads. McKinsey, for example, basically tells employees "that they will have to work very hard and that what they will get back is experience working with the cutting edge of the U.S. economy," says Cappelli. "Amgen has a motto in their employee value proposition that says 'we cheat death.' In other words, employees who work here will be creating drugs that keep people alive who would otherwise be dead. The Booz Allen Web site has a video description of a day in the life of an entry-level consultant. And some companies announce that new hires will never have to work with a team member who isn't carrying his or her weight."

Trying to determine how to sell a company to future employees is a "real wakeup call" to recruiters, Cappelli says. "It requires them to think like marketers."

What all this means, says Cappelli, is that it's fairly easy for companies out here to find your good employees. It's also easy for job applicants to find out information about a particular company that the company itself doesn't provide. "There is a sense that the labor markets have opened up. When that happens, and when people no longer expect careers inside the same organization forever, it begins to change the way they behave. Both talent management and online recruiting add to these new behaviors. The next generation of workers is the first group to experience this."

What's in it for me?
The question then becomes, just who is this next generation of workers? According to the study cited earlier of MBA students in industrialized countries (including the U.S.), the most important attribute of a new job for these workers is that it will provide a good reference for their future career. The second most coveted attribute is agreement with the company's values, including career/personal life balance, followed by likeable, inspiring colleagues (third) and competitive salary (fourth).

Is this new generation really different from other generations, Cappelli asks. The answer is yes, and no. The sharpest change in attitude among American workers occurs in people born before World War II versus people born after World War II.

"People born after the war have a dramatically lower sense of commitment, of community, of involvement, and a much greater sense of the importance of individualism and keeping their options open. It's the baby-boom generation moving forward. But if you look at people born in the 1970s and 1980s who are now entering the work force, they are not that different from the baby boomers. It's the baby boomers who are truly different from the generation that came before them."

The real issue for the emerging group of new workers is their view of the market. "They have seen their parents going through downsizing, restructuring, all sorts of cutbacks, so they don't have a particularly pretty picture of corporate loyalty," Cappelli says. "They don't expect it. Their attitude is, ?I had better take care of myself.'"

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All materials copyright © 2001 of the Wharton School of the University of Pennsylvania.