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Recruiting in tight times
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May 15, 1997: 10:19 p.m. ET
David Lewin says you can pick top talent without paying top dollar
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NEW YORK (CNNfn) - The national unemployment rate is below 5 percent, and the economy is generating jobs at a blistering pace, pumping up demand for qualified workers.
The result for managers: a tough time recruiting for key jobs. The task can be especially irksome if your company's line of business lacks a certain pizzazz and if your payroll budget does not permit fat pay packages.
There is some hope, according to David Lewin, chairman of the Human Resources Roundtable at UCLA's Anderson School of Management. Appearing on CNNfn's Business Unusual, he shared helpful ideas on attracting employees in a tight labor market.
VAN DE MARK: How do you get people if you come from a business that isn't very sexy these days -- and you don't have fat pay packages?
LEWIN: .... If you're a mundane company -- if you're a utility, if you're a manufacturing firm -- you might make this argument: 'We're in a new era, we're trying to become entrepreneurial by hiring the right kinds of people, giving them more freedom and autonomy than they would have ever had if they joined the business before, organizing the work so that it's done on a team basis, with a lot of freedom, rather than with a supervisor looking over your shoulder.'
Those are some of the kinds of things that you can do to attract people, and they are some of the kinds of things that you have to do to try to compete in this current market.
VAN DE MARK: Is it just young people these days that want to be so entrepreneurial or is it older people shifting from company to company?
LEWIN: Well, good question. I think it is [also] older people shifting from company to company .... So I think, in this labor market, looking for experienced people, who are looking to make a change from the kind of work they've done and the kind of companies they've been in, is a very smart thing to do.
VAN DE MARK: Okay, so you hit the buzz words. I don't want to be too cynical here, but you hit the buzz words and then you say to people, 'You're not going to have a supervisor, you're going to work on a team, you're pay package is going to be based a lot on your own performance, we're really going to set you up as an entrepreneur.' That's how you do it?
LEWIN: .... To some degree, yes. Now, on the pay package, if you're going to entice people by saying you have freedom, but you are working with a team, to some degree you have to pay them on the basis of what the team does.
VAN DE MARK: Good thing?
LEWIN: I think it's a very good thing -- not just for their individual work. And if the team performs well, the payment is made. If the team doesn't perform well, the payment is not made.
The old pay system was either wage or a salary and a fringe benefit. You paid people for input or showing up. How the business did didn't matter. In paying for performance, you're paying for how the business is doing. And if the business does well, you have the payment. If it doesn't do well, you have base pay, but you don't have the payment.
VAN DE MARK: ....Do you do it with stock options or do you do it based on quarterly profits?
LEWIN: It depends on the kind of work that you're doing. If it is work in a manufacturing plant, for example, and you want to increase productivity or reduce costs, you do it by paying off for increased productivity or lower cost or increased quality -- or all three ....
If you want to do it for a business as a whole -- a service business or a manufacturing business -- you can look at the rate of return on capital and decide that once you've achieved a certain rate, you're doing a profit sharing arrangement with employees.
VAN DE MARK: Now, do you want to do this with management, middle management, hourly wage employees?
LEWIN: I am talking here not about management, because we've tended to do this with management. I'm talking here about the other major employee groups, particularly professional and technical workers, engineers, scientists, and lab workers who work for your aerospace companies and pharmaceuticals -- those who traditionally have been paid only on a wage, salary, or fringe benefit basis. I'm talking about office workers ....
VAN DE MARK: Now, I know that you studied this internationally ....
LEWIN: Well, what I've noticed about that is that more and more of our labor markets are becoming global .... U.S. businesses look abroad to Europe, to Central America, to Asia, and recognize that there are good performers there and want to try to bring them to the United States.
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