Seth Mason's  Instablog

(Author's note: The original article can be found on my libertarian economics and politics blog, ECOMINOES.)

In my last article, I described the broken American hiring paradigm: company leaders delegating the all-important task of staffing to people who are far disconnected from the company goal-setting process. Today, I offer a revolutionary--yet feasible--solution to this problem.

As I argued in the previous article, congruence with company goals is a far better measure of candidate value than years of experience in a particular role. Under the current American hiring paradigm, however, most company recruiters rely on years of experience as a baseline for candidate value. They do this because they have no choice but to use experience as a baseline: 1) they aren't part of the company goal-setting process, and 2) even if they were included in such discussions, they often lack the unique attributes and personality of a business leader.

A company is only as good as its employees, and business leaders should therefore take a greater role in the staffing process. However, busy executives will always have to delegate the unglamorous--yet monumentally-important--tasks of candidate aggregation and initial applicant screening. What if, instead of delegating these tasks to "HR professionals", company leaders delegated them to real businesspeople, recruiters who could participate in the company goal-setting process and approach hiring from a business mindset? This country has an abundant supply of underutilized, readily-available talented businesspeople who would salivate at such an opportunity.

Competent businesspeople have the intuition and grasp of human psychology of "HR professionals" as well as something that the majority of HR professionals can never have: the ability to select candidates based on congruence with company goals. Furthermore, they can quickly learn the nuances of--and tools utilized in--the recruitment process. And, long-term unemployed or underemployed competent businesspeople already know the recruiting process like the backs of their hands.

Company leaders might be apprehensive about hiring businesspeople as recruiters out of fear of that these "nontraditional" HR hires will move on to bigger, better things when the economy improves. This is the old "overqualified" argument, an argument that became invalid in 2008. A job is sacred in this "new normal" economy, and any competent businessperson who has experienced the suffering that is long-term unemployment/underemployment--as I have--would cherish the opportunity.

(Author's note: The original article can be found on my libertarian economics and politics blog, ECOMINOES.)

Readers of this blog know that government-provided employment data aren't to be trusted. The BLS is notorious for crushing down the labor force participation rate in order to make it appear that the unemployment rate is falling, and the agency's survey methodology is fundamentally-flawed. But even if you take the government's word on unemployment as the "Gospel truth", a 50,000-150,000 monthly net increase in jobs--as we've been seeing for years--is woefully insufficient. At this rate of increase--with the unemployment rate dropping by a tenth of a percent each month--, it would take until 2017 to get back to the lower end of the "full employment" range. And that's IF the economy has no additional difficulties and WITH the crushed-down participation rate.

But the raw jobs numbers don't tell the full story anyway. Who cares if 50,000 or 150,000 or even 1,000,000 jobs are created each month if the jobs are menial and don't provide full employment for the segments of the population that need it the most? And make no mistake: we've been seeing little but a monthly increase in low-paying, dead end jobs for years. The April jobs report showed more of the same.

The overwhelming majority of jobs created last month were in leisure and hospitality (waiters, bartenders, hotel employees, etc.) and temp jobs. Industries that actually produce something, whether it be information or physical goods, actually lost jobs:

There was a net decrease in jobs for Americans of prime working age, i.e. there was a net decrease in "career" jobs. But there was a net increase in jobs for Americans of prime restaurant worker and Walmart greeter age:

In fact, the number of jobs for Americans of prime working age (i.e. career age) has been flat since the economy collapsed:

So what's this I hear about a positive jobs report?

(Author's note: The original article can be found on my libertarian economics and politics blog, ECOMINOES.)

Central banking has made a mess of the economy, and increasingly onerous jobs-killing federal legislation has impeded hiring and thus has impeded economic recovery. But the Fed and Washington aren't the only culprits in the nation's continued economic malaise. The American hiring paradigm is also to blame.

As a perennial job seeker, I frequently respond to job posts. I've noticed that--with the exception of small numbers of listings posted by entrepreneurs--listings by American companies almost always outline desired amounts of applicant experience as opposed to what's far more important: congruence with company goals. Lou Adler, entrepreneur and best-selling author, best summarized this phenomenon in an article he recently published on LinkedIn:

"Successful candidate will develop a new approach for reducing water usage by 50%," is a lot better than saying "Must have 5-10 years of environmental engineering background including 3-5 years of wastewater management."

Indeed. Before the economy crashed, I was able to grow a local Spanish-language newspaper into a regional Spanish-language entertainment magazine published throughout 2 states. My company enjoyed such robust growth primarily because I staffed it with great people who contributed to specific company goals. I found these great employees not by seeking applicants with X years of experience in Y roles, but rather by seeking applicants who made the best case that they could contribute to the objectives I outlined. With this approach to talent acquisition, sifting through resumes was easy: I just looked for accomplishments.

As both an employer and a job-seeker, I can say with certainty that the common American approach to talent acquisition--valuing years of experience over capability--creates tremendous opportunity costs for the company, and therefore retards economic recovery. (This is evidenced by the automatic rejection of the long-term unemployed.) This unfortunate approach to hiring is almost certainly a function of the increasing trend of management delegating the all-important task of staffing to people who are not only far disconnected from the development of company goals, but aren't businesspeople at all. These people--call them recruiters or HR professionals or whatever you wish--use years of experience as a baseline for applicant value because they have little frame of reference as to who could best contribute to company goals. And they can never have this frame of reference because 1) they aren't part of the company goal-setting process and, 2) even if they were included in such discussions, they often lack the unique attributes and personality of a business leader. As Adler puts it, "only a thinker can determine what to look for in a thinker."

The solution to this problem is simple: American company leaders should play a greater part in the hiring process. This begins with creating jobs listings outlining specific company goals and ends with taking the lead in determining which applicant(s) could best contribute to achieving said goals.

Obviously, company leaders can't be tasked with filling low-level positions. But when it comes to filling positions that directly affect the company's bottom line, they should absolutely take charge.