What is the Business Case for Hiring Entry Level Talent?
Recently, I have noticed many of my friends and colleagues talking about how hiring entry level talent is coming back in vogue. Indeed, many organizations are beginning to revisit the practice of college recruiting. This is mostly because the salary and recruiting costs for experienced professionals is increasing faster than most expected (though 10 years of reduced supply tends to drive up prices when demand even moves a little favorable).
In addition, many people make the ‘softer’ case around young people being innovators. A friend yesterday was drooling as they left a tour of Google, saying ‘those young people…wow do i wish i had some of that energy and creativity’. There is a stockpile of data that shows that most if not all of the innovation happening comes from the minds of young people. They do not think to question what is possible. They think without boundaries. A great yet simple example is the story about the design of the ‘scrinch’ feature of the iPhone touchscreen. A young person (rumored to be under 25) wanted the interface to work a certain way and did not think about preconceived ideas or HCI (human computer interface) conventions for touchscreens and mice. They just wanted to figure out how to make it zoom in and out on areas of interest. That is the kind of freedom that companies are desperate for right now. Freedom of thinking without boundaries.
The challenge among companies: Once companies decide they want to bring young people into their company, the question is: “How do we execute this?” You can’t just bring in someone straight out of college into an organization where everyone else has been there for 10+ years. The young person will feel like they are in a retirement community, and the experienced people will feel like you opened a daycare center. Since the beginning of time, 20 somethings and 30 somethings have not gotten along. Compounding this challenge is the fear (and reality) that after investing in young people, or creating internships, that they will not stay long enough to break even on your investment.
Most of us are familiar with the changing of the ‘social contract’ - the idea 30 years ago that you went to work at a company and they would employ you for life. Many people have written about the breaking of that contract, as companies over the last 20 years have regularly laid off 5-10% of their workforce, even in economic expansions.
The great thing about markets is that they take time to respond. There are delayed and unintended consequences with everything we do, particularly when our actions become trends.
The labor market is responding to the new ‘social contract’. The best people don’t want to stay around, even if you want them to. Today’s workforce demonstrates the same loyalty that employers demonstrated to their workforces over the last 20 years - none.
This is healthy, it’s a natural free market labor response, and it adds insight on the true cost to companies for breaking the social contract in the first place.
And it begs the question, “How do you get an ROI out of entry level hiring if it’s not predicated on long term retention and succession planning?”. For over 10 years I have walked into prospective corporate partner meetings for i.c.stars waving the GE Financial Management Program model’s ability to develop CFO’s as a sample business case for entry-level hiring - long term succession, cohesive culture, etc.. That business case is as dead as defined benefit pension plans.
Solving the business case is a critical issue for any company looking to access and capitalize on this growing and innovative talent pool. In essence this conundrum is like investing in stocks. A new opportunity to invest may look promising, but it is uncertain what value will be in the long run. But given the right environment and preparation the payoff could be huge.
What do you think is the best way to incorporate young people into your team? In my next blog post I’ll share some strategies people find most effective.
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Comments
PointBridge's experience with college recruiting
Eric- great article. We’ve been following the shift in supply for some time, and 3 years ago started to aggressively ramp up college recruiting. Recent grads with 0-2 years of experience currently make up about 15% of our technical team. for whatever their worth, I wanted to share some of our experiences and learnings for the benefit of the tech community:
- We find that our 20 somethings and our 30 somethings get along fabulously. To me, this is about your company culture, not the “conventional wisdom” of what a sociologist says is supposed to be true about some aggregate persona. If you embrace a team-first, values-based culture, and hire for those values, your people will get along fine.
- From an ROI perspective, we find that our new hires are able to provide 80% of the value and productivity of a 2-5 year consultant within 6-12 months of starting with us. In their 2 and 3 year with us, they’re incredibly valuable, and highly profitable. While we of course would like our college hires to stay with us over the long-term, we more than meet our ROI needs with a 3 year tenure.
- We’ve found that the best way to incorporate young people and realize success is to have great leadership from our experienced people, and to focus on on-the-job training. We have a couple of managing consultants who are exceptional teachers, mentors and leaders. Regarding OJT, we can approximate, but can’t come close to replicating, real-world client scenarios in a classroom. We have our new hires shadow senior people for much of their first 3-6 months, usually at no cost to the client. The investment is more than worth it.
Lance Russell
Smart move!
Hi Lance, Those are great tips. The three year ROI window is a common theme and will definitely be part of my next blog. Completely agree about the apprenticeship/OJT model. We are working on models for bringing some structure/measurement to the apprenticeship approach too.
Obtiva and Apprenticeship
I’ve spent a lot of time working on this problem of bringing newbies into organizations. I live in the world of software engineering and lead Obtiva’s apprenticeship program. One of the ways to make apprenticeship successful is to ensure you do *not* have a big gap between the rest of the company and the entry level person. Instead, it’s healthier and more sustainable to bring in people who are just a bit less experienced than you currently have on staff, and over time, “stretch” your organization downward toward entry level by slowly hiring less and less experience people. Over time, you’ll end up with a nice spectrum of ages and skill levels, which is much more preferable to having a sole 23 year old trying to fit into an organization of 35 year olds. More thoughts on this here: http://vimeo.com/19739866
Exactly!!
This is exactly what I’ve seen as well. Large age gaps make for disaster. I also agree you have to move down gradually from experienced toward entry level, e.g. start with hiring people with 5 yrs, then 3 yrs, then 0-2 yrs. I believe this is because we simply forget how much knowledge we’ve actually acquired. Having someone with 5 yrs experience supervising someone with 0 doesn’t work because they can’t remember to teach the hidden/assumptions they are using. They are just doing things automatically.
Without Judgement
Eric, part of the article really hits home for me. Here is the quote: “In addition, many people make the ‘softer’ case around young people being innovators. A friend yesterday was drooling as they left a tour of Google, saying ‘those young people…wow do i wish i had some of that energy and creativity’.
My table talked about this last week at the iOpener event. Young people are innovators; they keep us honest, and push limits. I firmly believe hiring young people is an investment in the future of your company. Here’s where I think us “old” folks sometimes get into trouble however. It’s fine so say “what is the business case?” but when we talk about “What is the return on investment?” I think we’ve missed the point already. I’ll explain.
The business case is the “why”…that’s easy:
Because, we want to infuse our company with energy, new ideas, innovation, and creativity. We want to open our minds to a new, more collaborative culture. We see the value of fresh minds and seasoned business people coming together to create a new business model that we never thought possible before.
If we’re asking about ROI before we even get started, I think we’re unlikely to succeed. I am a business person who has written many business cases and developed ROI and cost models, but I think this is a case where we do it because we’re ready to fundamentally change the way we do business, not because of some measureable productivity or dollar number.
Your friend said it when he left the Google tour. “I wish I had some of that energy and creativity.” That type of thinking is exactly what we need. I have found just being around young people, without judgment regarding age or naivety, you will be impacted by them and all that energy and creativity will start to wear off on you. As a result you will find you are more excited about and invested in your own work. This type of payoff is not easily measured. We are at a moment in time where we need to take a leap of faith.
I’ll add that there has been some question about whether Millennial are “willing to learn” from Boomers. Simply put, Millennials are not willing to learn when they know they’re being judged; and who can blame them, really? Millennials can smell our fear and don’t understand our resistance to true collaboration. Let down your guard and I have found that young people are more than happy to learn from you.
If we can’t get older people to believe that younger people have something to bring to the table, then regardless of what programs we put in place for hiring straight out of college, the program will fail, and the young people will move on to another company where people “get it.” I really look at this as a diversity training challenge rather than a skills training problem. We’re so busy trying to teach young people we forget we’re the ones who might need to learn something.
-Morgan Hunter, President of Meramec Consulting, Inc
Case Study
I have been leveraging collage hires since the 90’s and it’s been super rewarding. I’ve even hired kids right out of high-school and watched them grow into outstanding business professionals. I’ll share a case study with you:
In 1998 Alltel Information Systems elected to open an office in the Kansas City area which would become the hub for its Rapid Application Development. The Kansas City office’s mission was to lead the way for Alltel’s cutting edge development in support of the Financial Services Industry. What made this opportunity particularly interesting is the development team was fresh out of college with no previous programming experience. The group was put through a six week programming bootcamp and then sent to Kansas City to start what was what for many of them was their very first job. I was brought in to lead this team and to create the software development methodology that would insure our success.
Challenge:
1. Complete several key initiatives that would insure the on-going success of the organization without incurring any additional cost for the company in terms of headcount, hardware, software, or overtime pay for current employees
2. Provide career growth and training opportunities to employees in an organization with no training budget.
Solution:
Create a volunteer only project team that would use non-work hours to complete the key projects. Allow team members to take on roles outside their area of expertise. Mentor and coach team members in their new roles. Tie training and project accomplishments back to employee development plans.
Execution:
To execute on this program I first defined program objectives and presented the proposed program and projects to Sr. Management for buy-in. The eight projects in the program were: 1) Business processes automation for project management, 2) Code re-use repository, 3) Sales force automation tool, 4) Knowledge management repository, 5) SDLC methodology, 6) Software estimation tool, 7) Standards compliance program, 8) Project auditing and continuous process improvement program.
Once I had buy-in I pitched the idea to the employees in the local office and also opened the opportunity up to other employees in the US. 90% of the potential employee volunteer pool committed to joining the program. All projects had to be completed in six months and under the agreed upon parameters: at no cost to the company, during off-business hours, and if you signed up you had to commit to finishing.
Project plans and resources were then defined for the eight separate projects. One of the key attributes to the program was challenging people to take on project roles outside their comfort zone or area of expertise. Programmers became project managers or business analyst and vice-versa. Volunteers were mentored on the projects in their new roles and knowledge was immediately applied to the business problems we were out to solve.
Since these projects were not part of the official corporate project channel, employees were tasked with putting together the necessary, communications, training, and on-going support plans to keep the systems fresh and post launch. Once the projects were successfully launched employees received continuing education credits on their employee growth plans. This program was so well received by the employees that the program extended after all eight projects were completed and many of the volunteers stayed on to form the Software Development Standards Committee and Committee for Project Management Best Practice.
Results:
• Successful on-time completion of eight projects
• All projects, developed and supported by this group were done at zero cost to the corporation. Corporate savings came to $550k in initial savings with a reoccurring annual savings of $225k
On-going volunteer committee work:
Volunteers managed discussion groups, message boards, and newsletters, promoting peer mentoring, standards compliance and change management. Members of the team were geographically dispersed and represented various functional groups across the organization.
This whole thing started out as a way for me to direct the new-hires’ boundless energy…apparently working on a project that ran 24x7 was not enough :) This volunteer project was when I first realized how valuable a resource young people can be.
-Morgan Hunter, President of Meramec Consulting, Inc.
Hiring Entry Level Talent
Eric,
Great topic and I think you hit upon an answer as you started to talk about the conundrum of investing in stocks. Just as diversity of a portfolio manages risk, diversity (in all of its forms) of human capital does the same. Every single “flyer” (in this case, young/innovative/potentially short-timers) doesn’t need to pay off but as a portion of your organization, the few that do spark a truly new idea more than make up for the busts. An organization’s mix of people - its culture - is dependent on its own risk profile.
Hiring young and loyalty
You raise some interesting points about innovation and young ideas. It is fascinating to look at employee loyalty through lens of the current economic times and what it has done for career longevity. The problem many organizations must be facing is how to create a sustainable company and work culture with so much shift while embracing the creativity of fresh minds and perspectives. How are businesses handling this?
You make some great points on
You make some great points on the compounded challenge of trying to balance the needs of all concerned in this business case. I think another key is the focus (or lack thereof) on the company culture. In my experiences, I have seen too many circumstances where the ‘culture’ is defined by the established individuals throughout the company. In some cases, these individual conventional ways of doing business among both colleagues and clients creates a series of inconsistencies for the young person trying to make a sincere, positive, and immediate impact. As you point out, the changing social contract dictates a different set of expectations for all concerned. Perhaps for many company leaders the question is what can they do to define and execute on a company culture that facilitates a more direct opportunity for young people to be productive, rather than navigating a subdivided set of ideals.