The Purple Squirrel

A Hiring Paralysis?

There is an interesting story hidden within the news about the rise in employment. The big news, trumpeted on the front page of The New York Times, is that “the United States economy gained 236,000 jobs in February, well above what had been expected, while the unemployment rate fell to 7.7 percent.” And this despite the loss of jobs in the public sector, due largely to declining tax income in cities and states.

At the same time, that story noted what has become a familiar disturbing theme: As the number of employed rose, “the size of the labor force contracted by 130,000. Some of that was due to retirements, but some was also a result of discouraged workers giving up the search for jobs entirely.” So while employment is up, the ranks of the permanently unemployed are also increasing. (See “Unemployment at 4-Year-Low as U.S. Hiring Gains Steam.”)

But the hidden story, reported the day before, is that “despite a slowly improving economy, many companies remain reluctant to actually hire, stringing job applicants along for weeks or months before they make a decision.”

The lack of proper skills on the part of those seeking jobs is part of the answer, but “the bigger problem seems to be a sort of hiring paralysis.” As a management professor who consults to HR departments put it: “There’s a fear that the economy is going to go down again, so the message you get from C.F.O.’s is to be careful about hiring someone.” Being “careful” means extended interviews, delays, additional tests and more delays.

According to The Times, a recent internal review at Google, showed that the optimal number of interviews for any given candidate was four. But many individual accounts in the story report seven, eight or nine interviews and a process that can drag on for months. Even Google expanded the interview process from an average to 21 to 30 days in the past two years. So it is reluctance, resistance and ambivalence that rules the process.

“They’re chasing after that purple squirrel,” noted one HR professional, using an industry term for an impossibly qualified job applicant. (See, “With Positions to Fill, Employers Wait for Perfection.”)

That is the hidden story: this negative attitude towards hiring new workers. As employees carry with them not only the cost of their own salaries but also the additional expenses of benefits and insurance, as well as the problems of absenteeism, potential interpersonal conflict, etc., it is not surprising that companies put off as long as possible to risks of hiring, especially if they can rely on the willingness of existing employees to take on extra loads. In the process they accumulate profits for that rainy day.

If these were simply individuals faced with a task they are reluctant to perform, we’d call it “procrastination.” The difference here is that it these delays are strongly motivated and highly rewarded. This tells a different story, but one that is rarely emphasized in the news.