S.G. Cowen: New Recruits - Case Study Example

Written case analysis: S.G. Cowen: New Recruits It is a well established fact that employees are the most important assets for an organization. Inorder to obtain the right candidate it is essential that the selection process be effective in the first place. It is true that there is no surefire way of knowing whether a promising candidate will fulfill expectations, but many companies now have evolved various characteristics in the selection process so that the risk of obtaining unsatisfactory candidates can be brought down. Another important factor is that recruitment and subsequent training and loss of productivity due to high labor turnover is a costly affair. According to Hirschman, “interviewing is a high-stakes game: You spend an hour with each of a dozen potential job applicants, make a choice, then roll the dice and take your chances. Choose the wrong candidate and your organization could pay the price for months or even years to come” (Hirschman 1). S G Cowen, a financial services company also has developed a planned strategy to identify and recruit potential performers. This section of the paper will focus on the selection process in the said organization. It will also review the concept of core school strategy followed by the company and also the effectiveness of the presence of company officials on campus for initial screening and elimination. The concept of the Super Saturday selection plan will also be reviewed in the process. The selection process at S G Cowen involves a series of steps that will eliminate candidates until the best of talent are identified. Pfeffer and Veiga provide seven guidelines for effective HR management and selective hiring of candidates is one of them (Pfeffer & Veiga 40).The first step in the process involves identifying candidates from Universities and also conducting preliminary interviews. The post to be filled in this instance is that of associate, and is overseen by the company’s director of recruitment Chip Rae. The company makes the decision with regard to the number of associates needed during winter through spring of each year so that the positions can be filled by the coming summer. One way that it does is through internal promotions (of interns) and the other is through campus recruitments. The former practice does not require an elaborate selection process and hence the company focuses its recruitment skill on the latter process. The focus is on what the company calls ‘core business schools’, selected on the basis of the quality of education provided. They include business schools such as NYU, Chicago, Columbia, Notre Dame and Cornell School. The company does not restrict itself to the core schools and also accepts and employs applicants from other campuses if found suitable. A process of informational interviews (informal) during the year as a preliminary to the formal recruitment plan is also conducted by mangers. The company has placed team captains in the core business schools so that students can have a preliminary knowledge about the company. S G Cowen also sends its managers to provide presentations about the about the company and the relative advantages for working within a dynamic environment with opportunities for career advancement. Then applicants are selected through open and closed lists who will then be interviewed by either Rae personally or by the firm’s associates. Rae admits that he becomes a tough interviewer so that only the stronger candidates remain. This is also the time when candidates are assessed for cultural and geographical fit. Ray assesses this fit by explaining the organizational culture and by asking question like whether the candidate is willing to come and work in say New York. If the candidate does not feel comfortable with the culture or the place of work, he or she is eliminated at that point itself. Once this is done, the candidates are called for the Super Saturday selection process. As the name suggest, the day will be a Saturday, and each of the selected candidates from the campus will then be interviewed in detail by heads of as many different departments (senior bankers) as Rae can get. Each head and other managers (and associates) in the department have to assess each candidate in a printed assessment sheet. After this is done everyone gets together for a discussion that will result in the final selection. S G Cowen is a well respected company, but not in the same league as some of the other players in the industry. Due to this factor, the company could only interest the middle graders from top business schools because the top performers preferred the bigger companies to work with. So the company eventually chose to recruit from the second rung business schools in the country. When Rae came up with this idea, there was opposition from the top management. Many directors and officials felt that this would dilute the talent available to the company. But Rae managed to convince them that this was the right strategy for a company that is not seen as the biggest in the industry. The argument was that when top companies like JP Morgan or Merrill Lynch approached campuses for recruitment, the top academic performers preferred them to companies like S G Cowen. The end result was the company was faced with recruiting middle level and average performers from the top business schools. But when the company approached the second rung business schools, it could in most cases, attract the top talent from them. Rae adds that there is not much difference among best students of top and second rung business schools. The core school strategy also helps the company to focus on select institutions instead of relying on applications from many institutions. Moreover, company mangers and departmental heads have other day to day matters to attend to. They would be wasting their time if they were engaged in interviewing each and every applicant. The elimination at the campus brings down the number while improving the overall quality of the applicants. On the whole, the strategy followed by the company has its advantages. This is especially true if the observation of Rae regarding the quality of top performers in top and second rung schools is correct. The one major drawback could the tough stance taken by Rae during campus interviews. This could be stressful to the applicants. According to psychiatrist and management consultant, Pierre Mornell, “stress puts up walls. Maybe its okay if you’re interviewing a football coach, a criminal defense lawyer, or labor negotiator, where stress in going to be part of the job” (Mornell 28). Mornell adds that interviews are supposed to facilitate active communication from the applicant and bringing in an element of stress may result in not being able to identify potentially capable employees. The concept of core business schools seem to be working for the company in attracting good talent and hence does not really matter whether the market is an employer’s one or an employee’s one. S G Cowen is primarily in the banking business. Its focus is on investment banking especially in highly volatile but lucrative ventures. The candidates that they are interested in are banking professionals and not lawyers or engineers/technicians. It is felt that the process of selecting these job categories which is outside its core competency need not have such an elaborate process. Moreover, the number of openings under these categories will be much smaller when compared to direct banking jobs. Hence, S G Cowen need not waste resources in putting the above categories under the same selection process. They can be filled through regular interviews by concerned departmental heads and the HR department. Super Saturday interviews formed that last part of the hiring process. All selected candidates from the campus will be invited to a dinner meeting the previous night in order to impress them before the final interview starts. Mornell calls this form of strategy ‘shifting the burden of hiring’. Any candidate who may have a relatively poor opinion of the company will now be more wary and attentive which shifts the decision making towards them rather than the managers. The whole process on Saturday is similar to the final interview processes found in most other organizations. There is also a clear-cut division of labor among associates and senior bankers. As mentioned earlier, it is the associates along with Rae that conduct preliminary interviews. This is primarily to relieve the senior managers and bankers from wasting their time in identifying potential candidates from a relatively large database. They are only present on Super Saturday where their collective knowledge and expertise is needed in selecting the final candidates. 2. The recruitment of associates in S G Cowen is a well established process as mentioned in the earlier section. There are several key points that the company and its HR head Rae looks at while finalizing the candidates. In the initial screening process at the campuses, the strength, resilience and seriousness of the candidate (towards the job) are tested through tough interviews. The factor of cultural and geographical fit is also taken into account so that students unwilling to adjust are eliminated at this stage itself. The final selection on Super Saturdays are done by senior bankers that goes on for half a day, followed by a get together to finalize selection. It appears that many factors are taken into account during this part of the selection process. The interviewers may take into account the job signaling factor even though it is not specifically mentioned here. The signaling process will be explained later in this section. An element of gut feeing is also apparent as seen from the comments senior managers and bankers from Rae’s evaluation book. It contains observations regarding non-technical skills by interviewers. For example, the term ‘weak candidate’ is seen in several instances. As mentioned earlier, it is not possible to understand the character and capability of a person during an hour or so of interviewing. So, most of the references to non-technical skills can be the result of a gut feeling and first impression. An article titled ‘The New Boy Network’ is about the positive gut-feeling experiences by three veteran managers about Nolan Myers. Myers was a fresher looking for a job and the three managers had not known him until they met him under various circumstances. But each of them without exception had a feeling that the boy would be an asset to their company even though he was not academically brilliant. The fact that capability and character can to a large extent be correctly gauged has been established in several experiments done in this area. An ideal example would be the series of experiments on non-verbal aspects in teaching done by Ambady and Rosenthal at Harvard University. Participants in the study were shown ten second video clips of teachers taking classes. After watching the clips, all the participants gave a uniform rating on teaching effectiveness based on a fifteen item checklist (Gladwell 70). This was repeated even after the clip was shortened to two seconds. Strikingly similar results occurred when these teachers were rated by their students later on in their respective universities. According to the researchers, people make a judgment about another person very early, in this instance, when candidates walk in and introduce themselves. The cliché’ that ‘the first impression is the best impression’ holds good here also. In other words, the comments on the non-technical capabilities of the candidates in Rae’s evaluation book are the result of the first impression and gut feeling of the interviewers. Potential candidates for jobs should be well aware of this fact because ‘gut feeling’ and ‘first impression’ is a part of the process even in such well-planned recruitment processes conducted by companies like S G Cowen. The one problem here is that interviewers may make snap decisions regarding the quality of the candidate even if this may not be correct. There are several aspects to be considered when conducting recruitment drives like the one discussed here. Many experts in field of HR feel that the best results are obtained from conducting structured interviews rather than open ones. According to Campion et al, “in the 80 years of published research on employment interviews, one of the mostly strongly supported conclusions is that structuring the interview enhances its reliability and validity and, hence, its usefulness for prediction and decision making” (Campion, Palmer & Campion 77). The authors provide the following recommendations on developing an effective structured interview procedure. The important thing in such interviews is to base questions that are focused on analysis of the job at hand. Each candidate for a particular job must be asked the same set of questions. The candidate should not be interrupted when speaking and there is should absolutely be no prompting or elaboration of questions. The quality of questions is also important and should have elements of hypothetical reasoning. They should also be able to elicit maximum information about the candidate with regard to technical and non-technical skills, background, experience etc. The candidate should not be allowed to ask questions until the interview questions are all answered and the interviewer should not provide any ancillary information. Finally the candidate should be rated by analyzing the answers or by comparing them with a rating scale. Using multiple interviewers for a single candidate and taking detailed notes during interview is also very effective. Multiple interviewers can eliminate any bias or gut feeling errors to a large extent. Interviewers also take the concept of job signaling when recruiting. People can transmit signals from various factors like qualification, experience, race, gender, social and criminal (if any) records which are used by employers in assessing the quality of the person being interviewed (Spence 357). Spence adds that it is possible to get a reasonably clear picture of the technical and non-technical attributes of a potential employee using this method. He adds that people incur signaling costs (expenses) in order to get the required qualification for a particular job. For example, an employee will spend more on education if he or she feels that it will maximize the returns on that investment. It can also be spending on soft skills, time spent on internships (for experience) etc. Market forces will create a signaling equilibrium through which costs and expectations will sort of be standardized. Spence had also developed formulas for calculating and understanding job signaling factors. Baron and Kreps state that there should be a consistency in HR practices and companies should not change it every now and then. It should take into consideration factors such as technical qualification, culture (organizational and individual), workforce diversity, the external and internal environment etc. Organizations are complex and the authors compare it to a menagerie. HR strategy should be in tune with this complexity as well as the business strategy of organizations. The concept of fit is extremely important because this factor has a direct positive relation with employee turnover (Baron & Kreps 34). Another aspect that interviewers should be careful is employee references. There have been legal decisions (in the United States) whereby an employer can be made liable for employee misdemeanors and crimes if it is proved that the former had not exercised due diligence in enquiring about the past of the employee. Most states now view negligent hiring as a crime of torts (Harshman & Chachere 30). It is also seen as a practical approach to prudent recruitment. According to Hirschman, “to increase the odds of making the right hiring selection, many HR managers and consultants recommend behavior-based interviewing, an approach that looks at past behavior as the best predictor of future performance” (Hirschman 1). The author adds that this practice will also result in reduced employee turnover. Another factor to be considered is that many students tell lies about their past in order to get recruited. Studies have shown that 95% of college students are willing to lie, and 15% had false resumes in order to get a job. 45% of those selected admitted to lying during the interview process (Bliss 5) The above factors now can be compared to the recruitment process in S G Cowen. It is seen that they do follow a consistent approach with regard to their HR policies in recruitment. It also appears that recruitment methods are in tune with the overall business strategy of the company. Selective hiring is also a practice here which is an effective way to bring down turnover. The interviewers also depend on the gut feeling approach when assessing a candidate. The tough interview policy may result in some good candidates being intimidated even though Rae specifically states that they need only the tough ones. The stress on cultural and geographical fit is correct and practical. This policy is followed by managers, associates and senior bankers as well. For example, the candidate named Natalya Godlewska was seen a culturally unfit by one of the associate interviewers. It is not specified whether the company uses job signals in assessing candidates though it is possible. Since the recruits in the present case are students, previous experience may not be relevant. Some students may have held jobs before, but the company does not seem to stress references. The interviewers should also take into consideration that some students may also lie about their qualifications especially if there is no way for cross verification. The whole approach indicates that the policy followed is a semi-structured approach rather than a structured one. This might affect the assessment of candidates to a certain extent. But on the whole, the recruitment process at S G Cowen is well established, consistent, and practical at least for the present. It is also getting the desired results for the company. The investment market is dynamic and the company may be forced to make changes if required in the future and the management must be adaptable to it. References Baron, James N & Kreps, David M. Consistent human resource practices. California Management Review. 41. 3 (1999): 29-53 Bliss, Wendy. Avoiding ‘Truth or Dare’ in Reference Checks. HRFOCUS, 2000 Campion, Michael A, Palmer, David K, Campion, James E. Structuring employment interviews to improve reliability, validity, and user reactions. Current Directions in Psychological Science. American Psychological Society. 7. 3 (1998): 77-82 Gladwell, Malcolm. The New-Boy Network. The New Yorker, 29, 2000 Hirschman, Carolyn. Playing the high-stakes hiring game - includes related article on questions for employee interview. HR Magazine, 1998. 14 September 2009 < http://findarticles.com/p/articles/mi_m3495/is_n3_v43/ai_20853288/ > Hirschman, Carolyn. Playing the high-stakes hiring game - includes related article on questions for employee interview. HR Magazine, 1998. 14 September 2009 < http://findarticles.com/p/articles/mi_m3495/is_n3_v43/ai_20853288/ > Harshman, Ellen & Chachere, Denise R. Employee References: Between the Legal Devil and the Ethical Deep Blue Sea. Journal of Business Ethics Kluwer Academic Publishers. 23 (2000): 29-39 Mornell, Pierre. How to shift the burden of hiring onto the candidate. Hiring smart for competitive advantage. Harvard Business Press, 2005 Pfeffer, Jeffrey & Veiga, John F. Putting people first for organizational success, Academy of Management Executive, 13. 2 (1999): 37-49 Spence, Michael. Job market signaling. Quarterly Journal of Economics. MIT Press. 87. 3 (1973): 355-374 Read More