In today’s economy, creating a fair and rewarding compensation plan for your employees can be a challenge. On Episode 118 of the Talent & Growth podcast I spoke to Jessica Zwaan about how she structures compensation plans for her employees. Jessica is the Chief Operating Officer of Whereby, as well as an external advisor for startups on operations, people and talent. We’ve previously talked about the science of putting together a compensation plan, and now we’re taking it a step further by explaining how to link compensation with performance. 

Why should businesses be connecting comp plans with performance?

A lot of companies haven’t really started building a consistent, repeatable compensation framework yet. Once you have, the next step is obviously saying ‘What do we do with it now?’ It’s easier to build a compensation framework than roll it out and maintain it year on year, especially at the moment. Compensation is a living, breathing market force. It’s not something that you can set permanently, like ‘We pay everyone at 50th percentile, and this is our data set’, and then that’s it forever. You need to think about it every year or every quarter, to get more data. Your team will come to you and say that there are things that have been pressing against their salary expectations or their own performance, which I think is what we’re mostly going to talk about today. There are lots of external market conditions, and this is really a tough time and place to be a people or operations leader. Focussing on your people’s performance makes your plans flexible and equitable.

What are the common pitfalls that companies fall into when it comes to compensation plans? 

Companies often don’t have plans. Changes are rolled out in a very ad hoc way, maybe every time someone’s anniversary comes around, or when somebody does a project that they’re proud of. There’ll be a vague structure about how performance ties to a compensation change. Let’s say Jane Austen is an engineer. She’s been working for a company for just over a year now, and a manager asks her in their one-to-one, ‘How are you doing?’, and she says, ‘I’d really like a compensation change.’ Her manager goes to the HR leader and says ‘I want to give Jane a compensation change. I propose 10%’, often the HR leader says ‘No, we haven’t given anyone 10%, we’ll give her 7%.’ That’s how the decision is made. The manager is completely shielded from the information about how those decisions are made after they make their proposal, and often, whoever makes the most compelling proposal wins. 

Because these proposals happen randomly throughout the year in siloed decision making funnels, purely by the HR team, there is very little input from the managers who work with key members of the team. The team feels like it’s not fair, because they don’t understand what the actual process behind the 7% is. The interesting thing that does happen, particularly for anniversary-based pay changes, is that if you have a pay change at the beginning of the year, it’s more likely your paycheck will be higher than if you have one at the end of the year. That’s because everyone’s running on tighter budgets at the end of the year, whereas at the beginning of the year, everyone has a brand new budget to spend. That ends up compounding pay inequality throughout the year if you haven’t got a consistent timeframe in which you’re looking at performance and pay as well. 

How do you determine which metrics to use when evaluating employee performance for compensation purposes? 

This is one of the areas that HR leaders can be really creative and strategic in. Of course, you can just rate people from one to five on performance, one being poor performance, five being great. A lot of companies do use that, and it works perfectly effectively for them. I really like the idea of using two axes to drive not just performance, but performance in the context of another axis that we think is relevant. I use a grid that has performance and potential along either side. Essentially, it’s like how likely are you to be promoted within the next 12 months? We use something called active growth, because we are encouraging autonomy, which is operationally necessary for us as a fully distributed company. If somebody needs a lot of hand holding and their manager works at different times, then it’s going to be very difficult for them to be successful at Whereby, no matter how strong of a performer they are. So, we look for independent, effective and consistent growth behaviours. 

We want people who are consistently looking for feedback, reaching out across different teams and asking them to collaborate on something rather than requiring a manager to make that connection, etc. That rewards the people within our business that are more likely to display independent growth behaviours. Another example I’ve seen in the past is using an axis full of values, behaviours and performance in your day to day role. If you require integrity from your team, then did they ship this new project while really thinking about the security features that were available to the customers and how it would be received by the press if something leaked? Your axes depend on what you need from your team. 

Another aspect you could look at is competencies and skills versus performance. That’s great if you care a lot about outputs. They’ll measure how effectively you do your role on a day to day basis, how skilled or competent you are and what behaviours you demonstrated. The more likely you are to do those things on the two axes, the more likely you are to receive a high performance rating. This is an area where you can go beyond the standard in your market and create something that’s bespoke for your company, that’s easy to understand and drives strategically relevant behaviour for the team.

How do we ensure that our comp plans are fair and equitable across different levels and functions within the organisation?

There are two things that we know people care about with compensation. One of the most important things is that people really want the compensation framework that they operate within to be procedurally fair, which means there needs to be some structure around it. It needs to happen in the same way for everybody, and take into account the inequalities or the challenges between different groups and assess them equitably. 

One of the things that really helps that sense of procedural fairness, both in the eyes of your team and the outcomes as well, is running a performance calibration. It doesn’t take an inordinate amount of time, but it’s not as easy as having a manager write an email saying ‘my team is performing well’. Performance calibration involves managers doing a one to five rating on performance, then a one to five rating on growth, before moderating the results. We put our results into a spreadsheet so that you can see the ratings for all the teams. We ask for clear, actionable, evidence-based feedback around why you’ve come up with that rating. This moderates all of our performance ratings, and shows us if a manager is not achieving their expectations as a manager as well. 

Once all that calibration data has been collected, we gather all of the data and completely anonymize it. We look at it against tenure, gender, ethnicity, level and team. We try to see if there’s any outliers against a bell curve and see if there are any trends. It’s just another way of really interrogating that we’re being fair and consistent about how we think about performance, and then overlaying it with the most commonly discriminated against characteristics.

What are some key takeaways that people can implement in their business to get the ball rolling in the right direction?

If you’ve got a compensation philosophy already, you can take all of your data from it and put it all in a nice spreadsheet that everyone in the company can see. After that, you need to create some methods for measuring performance, then a method for calibrating those decisions. That’s a crucial step towards empowering your managers to understand performance and compensation, and giving them a direct link to those decisions. Make sure that you’re using that exact same methodology to forecast compensation changes and give yourself room in the budget for that. Those are the three main things; measure performance, create a calibration process, and then spend time forecasting within your budget. 

To learn more about developing a compensation plan, tune into the Talent & Growth podcast here

Chat GPT has rapidly become one of the most useful tools in recruiters’ belts. On the Talent & Growth podcast I regularly talk to our guests about how they’re adopting it in their own work, and how we as an industry can use AI to improve our workflow. On Episode 117, I spoke to Chad Sowash, the co-host of the Chad & Cheese Podcast, about what vendors can learn from it, and how its accessibility is changing the face of RecTech. 

What impact do you think that Chat GPT could have for TA and RecTech?

You’ve got little companies that are tapping into AI now. There’s already tech in the talent acquisition space that is far better than Chat GPT, because it doesn’t focus on the broad picture, it’s more specifically geared towards the problems that we have in our industry. Chat GPT’s openness and transparency just makes it seem like it’s far ahead of anything else that’s out there, because we’re not seeing, touching or tasting those other pieces of tech on a daily basis, because they’re kept behind a wall.

There are two lessons that companies need to learn from this. The first in the first lesson is perfection. AI isn’t perfect – it’s like a puppy, and each variation trains on a different set of data. AI in itself is becoming a commodity, and its datasets are the secret sauce. If you input different data, it would give you different answers. That’s what we need to do in our industry; stop trying to be perfect on every single demo. 

Number two, vendors need to move in the direction of transparency quickly, so that the promise of your product can actually be seen, which proves it’s not vapourware. There’s also a lot of business and regulatory pressure to prove these algorithms aren’t biassed, so transparency provides two big advantages to businesses. As we’ve seen with Chat GPT, everyone wants it. That’s great for sales, marketing and revenue generation. Transparency also puts your tech team in hyper diligence mode, which ensures the AI outcomes are not highly biassed in process because the most biassed thing on this earth is a human being. All that’s happening is that the human being who’s actually coding the AI is transferring their bias to the algorithm. The big difference here is that AI can scale faster than a single human can, so it’ll scale the bias too. That’s why we need to keep that bias out. 

What vendors stand out to you as producing a really good piece of kit that TA and recruiters should be working with?

At the top of the funnel, you’re looking at programmatic players. Then you have the outsourcing and outreach players who are out there for engagement. They draw in individuals who meet the requirements of specific positions and match them with companies by using conversational AI. It doesn’t have to happen in one form or process on a website – it could actually happen through WhatsApp, SMS or something like that. There are so many different platforms that are out there today that are leveraging amazing algorithms. But again, it’s incredibly important that every single organisation does their due diligence to understand how those algorithms are audited, and if they should audit them themselves. It’s up to individuals to establish where AI can help in their own processes at each stage of the funnel. 

To learn more about using AI in recruitment, tune into the Talent & Growth Podcast here

On Episode 116 of the Talent & Growth Podcast I was joined by the legend himself, Lou Adler, to talk about how people can pick the right moves for their career. Lou regularly speaks about hiring and recruiting issues, with a focus on performance based hiring. This system is something he teaches through his company, Performance-based Hiring Learning Systems, where Lou is the CEO. On the podcast we tapped into his expertise and found the best ways to source top-tier talent. 

How did your Performance-Based Hiring system come about? 

I always thought about systems when I became a recruiter, because I realised recruiting was broken. People wrote bad job descriptions, they couldn’t interview, they couldn’t find candidates. So when you think about recruiting as a business process, it has a sequence of steps, and the process starts with how you define the job, but the process doesn’t end until a year after the candidate accepts an offer. If you think about all of those steps, in between, you can create a process. 

One is how you define the job. I do not use skills and experiences to define the job. I ask the hiring manager, what does this person need to do to be successful? Then you have to interview candidates. How do you know if a candidate is going to fit? Early on, I gave a one year guarantee, even before I became a retained recruiter. When you give a one year guarantee, you’ve really got to do your due diligence. So I learned to become a good interviewer. 

My next challenge was that I never had enough money in the budget. If you’re going after the top 20% of candidates, they expect top dollars. I gave them above average dollars, but not top. What I gave them was a better career move. You have to negotiate all those pieces, then ensure the candidate is successful on the job by getting involved with onboarding and post-hire management. 

That’s the system. It didn’t evolve on day 1, it took 10 to 20 years to get there. It’s important, because people are still hiring with the start date in mind instead of the anniversary date. In my mind, they’ve cheapened work. If you’re just hiring as quickly as possible, you’re creating a group of people who quit every year because the job’s not right. The faster they quit, the better people get at selling job postings. That to me is not a good solution. 

When you think about the whole system, you don’t need to optimise one step, you need to fine-tune all of them. Being a great interviewer won’t help if the best candidates don’t apply in the first place. You have to look at the whole process. You’ve got to optimise all the steps. I don’t think the people who design these systems think through ‘How do you define the job, how do you attract the best people and how do you make sure they’re successful?’, but answering those questions is the secret to successful recruitment. 

How can you use candidates’ career decisions to enhance your recruitment model? 

Let’s pretend you’re the candidate for this answer. When I talk to a candidate, I always say, ‘Paul, would you be able to chat about something that represents a career move?’ Most candidates say, ‘Yeah, of course’. I then say, ‘Paul, I’d like to conduct an interview with you.’ I want to make the general statement, like ‘I’m only gonna present three or four candidates to my client, the hiring manager, and one of those people get hired. We can agree to go forward with this job together, because I think you’re right for the right job, and it’s a career move for you.’ 

I sell them on the idea by asking ‘Would you really want this job if it weren’t for the money?’ before I give them an actual offer. Candidates always say yes, then I say ‘Why?’ Most candidates don’t really have the answer, so I say, ‘We’re going to give you the 30% solution, which is a non-monetary increase. It has to be competitive or I understand it’s off the table. We really have to give you the best career move, which consists of a lot of pieces:

Number one, you have to want to do that work, if you don’t want to do the work, forget it. Number two, you have to buy into the hiring manager and the team you work with. That’s critical to being successful. You also have to see it as an opportunity to grow over time. Number three, you need work-life balance, so our job over the next two to three weeks is to give you enough information to make that decision. I’m going to push you if I think this is the best career move for you, and it fits your needs at that point in time.’

That’s how the chat has evolved; to have people look at not just the start date, but to get everybody focused on getting a better job. Candidates are leaving for more money or to avoid pain. Companies and candidates alike are focusing too much on the short term, where really career growth is long term. If the company can’t keep you on a good career path, you should leave. But, as a candidate, you’ve got to be discerning enough that you can understand those things before you accept an offer. Don’t get seduced by the start date package. It’s the wrong decision. 

Companies and candidates need to buy into that idea of thinking long term and balancing priorities. I’ve been using those kinds of ideas and concepts every time I talk to a candidate because I’ve never had enough money in a budget to place a person. I always made the job into the best career move instead. I look for candidates who would see the job that way too. 

To learn more about long-term hiring strategies from Lou Adler, tune into the Talent & Growth podcast here

The relationship between TA professionals and hiring managers is an essential part of the recruitment ecosystem. On Episode 114 of Talent & Growth I spoke to Katrina Collier, author of The Robot-Proof Recruiter, about how we can improve those relationships. 

What’s annoying you about talent acquisition in 2023? 

For 2023, I really want to focus on intake. Both sides should be preparing for that critical meeting where you discuss that role in depth, but it doesn’t happen. Every time it doesn’t happen, the hiring manager loses a whole load of time and money, and the recruiter also wastes a whole load of time, plus the candidate experience and employer brand goes out the window. That can all be fixed by having a proper intake. 

What I’m seeing at the moment is when someone resigns, the hiring manager pulls their old job description out of the drawer and hands it over to the recruiter, who then goes out and tries to find this thing from the past. We should be asking ‘What does the team look like? Who has what skills? What do we really need here? What do we need going forward?’, but that isn’t happening. TA isn’t empowered to push back. Are they even allowed to have these challenging conversations? That needs to change. 

How would you approach this disconnect between TA and hiring managers? 

I would really like to see the TA leaders empowering their recruiters. I recently saw a TA leader who wouldn’t let their recruiters talk about salaries with the hiring manager. If they want someone with 10 years experience but are only offering a 50k salary, that’s only gonna get them an entry level person. These recruiters know that, but they’re not allowed to have the conversation. I want to see all that kind of BS just gone. The team should feel like they are equal partners. 

The whole point is for TA to be value-adding partners with the hiring managers. They don’t want to be seen as a service. They want to be partners and challenge them. I want to see more of that too. But, if recruiters don’t feel empowered, it’s never going to happen. It has to start at the top, with the C suite understanding that it’s a crucial role. 

I also want to run more of my design thinking workshops with hiring managers. These workshops get them to understand how they are losing time, money, and face. Not hiring  someone is actually losing them their bonus, or making them look stupid, or costing them their job. The trouble is, they don’t seem to see that. We need to reconnect TA and hiring managers by showing them the value of working together. 

What are the critical questions that TA should be asking hiring managers to ensure we qualify the roles in an effective way?

What is the cost to the bottom line every single day the job is open? 

What does the success of this person add to the team? How will you know they’ve succeeded in doing it? How will you know, at the end of 12 months, that you’ve hired the right person? 

What’s the problem they’re coming in to solve? What skills are required to fix that? 

All of these questions should be looking forward rather than backwards.

How do we push back on roles that aren’t fit for purpose while still protecting our position?

Talent acquisition does more than just recruit. To do that, they need to know that their leader has got their back. That starts with a conversation with their boss, explaining that ‘This hiring manager is treating me really poorly. I’m not going to waste any more time on it, because all it’s doing is delivering a bad candidate experience, which is impacting our employer brand, which means we aren’t better recruiters. So, I want your permission to just push back on this person. Are you going to have my back?’ That’s where TA has the ability to be more strategic. Sometimes people need to change companies because their leaders don’t have their back, which undermines their position.

Being aware of the people in your company is also essential. Know who’s a flight risk and who’s not and who could be cross trained. If we were going to lay off over here, why aren’t we moving them over there? Shouldn’t there be some cross training? Get out and talk to more people, have an open conversation to gain awareness of how the company is working. That will help because knowledge is power, and it will feed into your strategies. 

To learn more about talent acquisition in 2023, tune into Talent & Growth here

Generative AI has been a hot topic for a while now. On Episode 113 of the Talent & Growth podcast I spoke to HireSweet CEO Robin Choy about how we can use AI in recruitment and talent acquisition. We delved into how you can use programs like ChatGPT to streamline your processes and be better at your job. 

How can generative AI be used in TA and HR? 

TA has become a very text-driven job. We send a lot of debriefs, job ads and outreach messages every day. Everywhere a recruiter spends time writing text, AI can help. Outreach messages are one of the biggest ones for us, because people struggle with writing good outreach messages. There are best practices which generative AI can use to write a first draft. I say first draft, because you shouldn’t rely only on what’s generated, you should always revamp it and personalise it. 

Job descriptions and job ads are another great use case. We’ve heard people using it to generate assessment questions for screening candidates. You put in a prompt like ‘I want to assess this skill. Can you list me a top 10 List of 10 questions that I can use?’, and that seems to be effective. If you need to show a candidate to a hiring manager, you’ll often write a quick blurb that can standardise the presentation. Generative AI can be fed raw data, then it’ll write standardised blurbs, which saves you time and helps to eliminate discrimination or unconscious bias because it levels the playing field for candidates down to key skills and experience. 

How could generative AI make recruiters more efficient?

For a lot of the text we create, getting the information takes 20% of the time, while writing it up will take the other 80%. With generative AI, you have to fill it with the right information, because one of the rules is ‘garbage in, garbage out’. What AI does is allow recruiters to focus on getting that information and take 80% of the work off their plate. 

If you write a job description for example, you need to put the compensation offered and skills required into the AI. As long as you’re feeding it accurate information, it’ll give you a good output and free you up to understand what the candidate will be doing during the first six months of the role instead of writing a job description. Learning how to gather information and write good prompts can save you 80% of the work.

You can also use Chat GPT to figure out what’s missing in a job description. Ask it ‘What type of information could I include to make it better? What’s missing in that candidate blurb? How can we make that candidate description more interesting for the client? What’s missing?’ It’ll guide you and help you find that information as well, which improves your output and conversions. 

How can we get the most out of this tech as recruiters? 

Always check its output because it’s often wrong. My advice is to be paranoid about it. I’d also recommend that you try to use it daily, because the more you use it, the better you’ll get at working with it. Try tools that fit your workflow as well. Tools like Jasper.ai for instance makes it very easy to write content articles. If you use a tool that rates job descriptions or job ads, it will be programmed with the best practices for that output. That tool will be able to measure conversions and do all these other things because it’s specialised. These tools add a layer on top of generative AI which can save you a lot of time. It’s become very important to be up to date on these technologies if you want to keep up. 

How can recruiters use generative AI for outreach and messaging?

You can use AI to generate or review an outreach message that you’ve written. With reviewing, there are a few questions that you can ask. I’ll say, ‘Here’s an outreach message, what are the most fluffy, useless parts?’ and it replies with the parts of the message that are redundant to similar engineering positions. Basically it gives you better wording. It’s very easy to pinpoint and emphasise which parts don’t add value. 

Another helpful function is using AI to improve the message and make sure it’s not biassed against minorities. For instance, you’ll say, ‘Here’s an outreach message, can you pinpoint which parts are likely to be biassed against a minority?’ and it will look for gender specific language and things like that which you should rephrase. Not everything will be right, because AI has a tendency to lie because it’s not actually backed with data, but it can be useful for making you think more deeply about certain phrases. 

If you give a lot of context, you can get it to write a refusal email for a candidate. Give it directions like ‘Make it empathetic, explain what worked and what didn’t so that the candidate understands’. It can help you with candidate nurturing as well by keeping people up to date on their process. A lot of people don’t need to hire as much as they did a year ago, so we’re all thinking about how we can nurture our talent pool with outreach messages, email newsletters etc. to keep people engaged. It’s always a bit painful to get started writing a message, so go and ask AI ‘What should I say? How can I add value to the candidates?’ and it will come back with things you might not have thought of before. 

Can people outside of TA use generative AI for recruitment?

If I’m a hiring manager and I need to add someone to my team, you can use AI as a recruiter by asking it for 5 to 10 questions to help you refine the role. Chat GPT will ask questions about the role so you don’t even have to input data, and then write a pretty accurate job description. Then you can feed it prompts like ‘Rewrite the job description to make it 30% shorter while keeping most of the information’ etc. 

You can also say ‘I need to hire for this role. Here’s my notes, can you write a job description about it?’ The more context you give the better, so add context to make it very specific, which is more likely to drive a tonne of applicants. Just be straight to the point in a style that flows. 

To hear more about using generative AI in recruitment, tune into the Talent & Growth podcast here