Let’s face it, everyone hates interviewing. Hiring managers struggle to carve out time from their busy day to meet with candidates, most of whom they won’t wind up hiring, only to play catch up after the interview is over in order to complete the day’s tasks. Meanwhile, candidates need to sneak around the office, trying to keep their private phone calls with recruiters and competitors undetected. The hardest part is planning for the face to face to interview. Even the most truthful and loyal employees turn into bold faced liars, requesting off due to a “doctor’s visit” or a parent-teacher conference (which eat up ever so precious vacation days). Interviewing with multiple companies? Better have a solid list of excuses along with a healthy PTO bank.
On the other hand, the only way to grow a business and battle attrition is to continue to attract and retain unbelievable talent. Like it or not, interviewing is a necessary evil that can produce extraordinary results. The good news is that there are ways to streamline the process to cut down on everyone’s time, but still thoroughly vet a potential candidate. First, let’s explore why is it beneficial to reduce the time to fill open job vacancies.
Why Reduce Time to Hire?
1.Top Talent is a Hot Commodity
No matter what industry you work in, top talent is always in demand and gets harder and harder to find. The most successful talent acquisition campaigns focus on the candidate, not the job. The better a candidate’s experience with your interview process, the better the talent you will attract. Once you identify top talent, pull the trigger, because if you don’t your competitor(s) will. If I had a dollar for every time a phenomenal candidate was hired by a competitor that moved more quickly, I would be writing this from my own private island, not my home office. Most of the time, the scenario is the same. A company loses out to a phenomenal candidate because their competitor gave more immediate feedback after submission, scheduled a phone interview that took place within the same week, had a face to face interview the following week and extended an offer 24 hours later. What was the other company doing during this time? They just scheduled the first phone interview because one of the managers has a busy schedule. Top talent doesn’t wait, neither should you.
2.Use Psychologic Warfare to Your Benefit
During the interview process, there is a psychological benefit to being first. When exposed to a list of data, people remember the first and last bit of information better than the data in the middle. Therefore, the first company that moves forward with the interview process burrows themselves a little further into the candidate’s mind (the same is true about the last, but we will see why companies who are last to interview lose out nine times out of ten times).
The first interview is also a powerful behavioral statement. There is a principle called “cognitive dissonance” that explains mental discomfort occurs when your ideas, beliefs, or behaviors contradict each other. We justify our behaviors by aligning our thoughts, ideas, and beliefs to align with our actions. Keep in mind, it is easy to change our minds, it is harder to take back actions. Taking the step from “thinking about a new job” to “interviewing for a new job” now marries idea with behavior to further identify with the thought of change. Backing out now would cause internal conflict.
Cognitive dissonance also plays a role in justifying behavior. For example, after a great interview, candidates start to reflect more on the negatives of their current situation and the positives of the new company. I have seen completely passive candidates go from one extreme to the next, starting out by having their arm twisted into talking about an opportunity that would be “too good to refuse” to them speaking with every competitor in their industry. Taking that first call was enough to turn them from not even considering a change to daydreaming about giving notice. The more effort we extend, the more we need to justify our behavior. The more time spent interviewing, the harder it is to back out from the thought of change, especially once an offer is in hand.
The first job offer is a tangible justification of the interviewing efforts, a materialized pat on the back for a job well done. It is very easy to identify with the offer because all of your hard work during the interview process finally paid off, giving you an opportunity to be consistent with your past behaviors and change jobs.
It is always best to be first. Statistically, the first offer, even if it isn’t the best offer, is more likely to be accepted. The candidate has made many sacrifices to get to this stage (such as sneaking around the office and taking PTO to interview) so the first job offer creates an instant relief to otherwise wasted sacrifice. Furthermore, the first offer is a compliment to the candidate’s skill sets, making them feel appreciated and needed, perhaps more than in their current position.
3.Better Offer-Acceptance Ratio
The quicker a candidate’s submission turns into an offer, the better the change the offer will be accepted. There is nothing more frustrating from a candidate’s perspective than waiting. It doesn’t matter if it is waiting for feedback, waiting for an interview date, or waiting for an offer. If I have heard it one time I have heard it a million times, “Time kills deals.” The longer that it takes to go through the interview process, the more distracted the candidate becomes with outside factors, juggling their work life with family events and, most likely, other interviews. After a while, it can be easy to lose interest, like going on a date with someone that doesn’t call you back for a month. More than likely you have moved on. The same is true with interviewing, especially when it comes to the time between the final interview to offer. The final interview marks the final leg of the interviewing journey. It is like you are sailing across the ocean and you can finally see land. The longer it takes to make an offer, the more the land-sighting seems like a mirage. It is not uncommon to see offers made 24-48 hours after a final interview. If you are taking a week or more to make an offer, you are setting yourself up for failure, giving too much time for the candidate to disassociate themselves with the opportunity.
Hiring is costly. There are costs associated with interviewing and there are costs of having the vacancy open. First, consider all of the time that goes into filling a position including, sourcing for candidates, phone interviewing, conducting face to face interviews, checking references, and drafting offer documents. Add all of the administrative time that it takes to move each candidate through each step of the process, getting availability, checking manager’s schedules, and sending confirmation. The most time-consuming factor is sourcing talent. There are countless hours spent creating job ads, sending hundreds of messages to competitors, sorting through all of the applicants (most of which who aren’t qualified), responding to each email and voicemail, and weeding out candidates after an initial phone screen.
After all of that time and effort, a select group of candidates is moved on to hiring manager review. The hiring manager now steps in, usually working with the scheduling department to set up phone interviews and then face to face interviews. It is not uncommon to have anywhere between three and ten hiring managers involved in the interview process. Multiply all of the time spent by HR, the scheduling department, and the hiring managers by the number of candidates being interviewed and you can see the dollar figure add up. Streamlining the process cuts costs: Time = Money.
On top of the labor costs of interviewing, there is an additional cost for having the vacancy open. Every headcount should be profitable, even if nonbillable, to the greater good of the company. This is especially true with public companies who need to show a maximum profit with the least amount of spend to satisfy their stockholders. If a position is not adding value to the company, it shouldn’t be approved. Keeping that in mind, every day a vacancy goes unfilled the company is losing money, or in other words, losing the profit to which the position will bring. This actual dollar figure is harder to calculate, but understanding that the loss increases each day should motivate the team to reduce the time the vacancy is open.
How to Reduce Time to Hire?
Reducing time to hire may sound like a risky task. No one wants to sacrifice quality for speed, especially when it comes to growing a business. It’s not about moving quickly as much as it is about being efficient with time. Following these best practices will help speed up the hiring process while increasing the quality of candidates that you bring into your company, making it a win-win proposition for both candidates and companies alike.
1..Work on Your Approvals
Realizing that there is a monetary loss every day a job vacancy goes unfilled, it can be tempting to begin the hiring process before a position is officially approved. In theory, the interview process can take four to six weeks to identify and vet the proper candidate and, in a perfect world, the team could save time by starting the process before the position is approved (as long as the approval comes in prior to the offer stage). The problem is when the crystal ball stops working. There is nothing worse from a candidate’s perspective than finding out that they are interviewing for a position that hasn’t been approved. Candidates are making personal sacrifices to carve out time to interview. Wasted efforts lead to negative impressions.
When possible, make sure your positions are approved before identifying talent. This means having headcount and budget approval. If you are pre-screening for an upcoming position, let the candidate know. Realize that you are going to be missing out on candidates who are actively looking and be able to let them go rather than stringing them along. The goal is to identify passive candidates who don’t mind being given a heads up on a potential opportunity. Just make sure you follow up with them once the position is approved.
From personal experience, I have seen countless hiring managers lose sleep over interviewing the absolutely perfect candidate that they can’t hire. The team is usually all on board with bringing the person on board, but for whatever reason, upper management is either not approving the position or there is a long enough delay in approval that the candidate’s interest fades. Many times, the same candidate would have worked out if the interview process began later and ran smoothly through the offer stage. Remember, time from the last interview to offer is a key criterion for an increased offer to acceptance ratio.
2.Know What You Are Looking For
Most candidates will agree that it is extremely frustrating to go through an interview process that takes longer than it needs to because the team isn’t on the same page. If managers aren’t clear about what qualifications they are requiring (or if there are conflicting requirements coming from different team members) the process ends up as an exercise of trial and error. On the other hand, when the hiring team is laser-focused, they have the advantage of sniping talent before their competitors.
If HR is going to be conducting sourcing/first phone interview support, the hiring team should provide as much information as possible regarding the required “must haves” and the preferred “nice to haves.” These qualifications should be agreed upon by the team prior to the beginning of the search and required versus preferred skill sets should be clearly distinguished. If the team isn’t clear on what they are looking for, how is recruitment supposed to be hit a bullseye on a moving target? The key to streamlining this process is to create a list of qualifications and communicate clearly and concisely to whoever is sourcing and screening candidates.
Utilizing internal or agency recruiters can drastically reduce time to hire as long as they fully understand the vacancy in order to properly qualify candidates. A rule of thumb to saving time is: vet early and thoroughly. Let the hiring managers do their job and make the hiring process as easy as possible. Hiring managers should only need to spend time speaking with a handful of candidates who are prequalified and interested in the position. In other words, each candidate should match all of the “must have” qualifications and have a good amount of the “nice to haves.” Let the recruitment team narrow down the search from countless candidates to around five that the hiring manager can phone interview. From there, the team can meet with the top three and hire the one that fits best with the corporate culture, using the other candidates as backups. The 5 phone interviews, to 3 final round interviews, to 1 offer ratio is a solid ratio to shoot for (more on the 3 final round interview rule below).
In summary, a successful time saving prescreening process is a simple three-step process. First, the hiring team needs to identify clear qualifications. Second, those qualifications need to presented to the staffing team, whether internal HR or their external agencies, so the staffing team can work their magic on sourcing and screening candidates. Third, only prequalified, prescreened candidates should make it to the manager’s inbox. Identifying candidates that match the requirements, fall into the salary expectations, and who have a good reason for contemplating a career change is the majority of the battle and the most time-consuming part of the hiring process. The rest should be smooth sailing.
3.Map Out the Interview Process
Like most things in life, the more you plan, the less room for error. Map out the interview process prior to beginning the search by setting expected timelines for each part of the process. Identify who is going to be a part of each step and try to save time by having multiple managers interview candidates together. For example, if two managers need to be a part of the phone interview process, try to find a time when both managers can talk to the candidate at the same time. You can easily reduce time to hire while retaining quality by having group phone calls and face to face interviews. Setting up multiple calls on separate days or having the candidate return to the office more than once is inefficient in most cases.
Furthermore, always set timelines for interview feedback and next steps. For example, it would be realistic for HR to forward along a CV to the hiring manager the same day they screen a candidate that they feel is fit for the position. The hiring manager should provide feedback on whether or not they want to speak directly with the candidate within 24-48 hours and should provide several days and times they are available to help with scheduling. Repeat this process for each step of the interview process, trying to cut the number of interviews to the least amount possible while making sure that each decision maker gets their opportunity to speak/meet with the candidate. Setting timelines hold the team accountable for providing feedback, keeping the process moving in a forward direction. Otherwise, it is easy to get distracted with day to day responsibilities delaying the interview process.
Side note: A recent technology that has been gaining in popularity is video interviewing, especially for remote positions. Not only is there a cost saving compared to paying for flights, hotels, and Ubers, but many of the platforms allow for the interview to be recorded. This way other team members who were unable to meet during the interview time can still review the candidate’s performance at a later date.
4.Give Feedback and Keep Things Moving
Feedback is extremely important in keeping candidates motivated to continue with the hiring process which is why a smooth interview process includes regular feedback. The most important feedback is sharing the team’s interest in moving forward with the next steps in the interview process. The longer it takes for post-interview feedback and the more time between interviews, the less likely a candidate is going to retain an interest in the position (and the more likely one of your competitors is going to wind up snatching them up). Is one of the managers traveling for the next two weeks, postponing a potential face to face interview? Have another team member conduct a short phone interview while the manager is out. Try to fill in the gaps as much as possible and make sure that candidates are hearing from you at least once, if not twice per week. Set a goal to provide interview feedback within 24-48 hours.
Giving feedback to the recruiting team is also important as it will aid in sourcing better-matched talent. The idea is to replicate success and minimize failure. Learning why previous candidates are being declined will result in better screening efforts. This leads to more qualified candidates being forwarded to the hiring team, thus saving time and streamlining the process.
There is an added value of a long-term staffing agency partnership. The more familiar a staffing partner is with their client (and specific hiring teams), the better able they are able to screen potential candidates to make sure that they not only fit the qualifications but also match the corporate culture. Every “no” leads to a shortcut to the next “yes.”
5.The Three Interview Rule
Earlier I mentioned the 5:3:1 target. Five first round interviews should turn into 3 final round interviews which should lead to one offer. Here, we will discuss the importance of the 3:1 ratio. Inviting the top three candidates to participate in the last round interview is advantageous in many ways. First, it gives the team a goal to shoot for, three. If there are a ton of applicants, use the previous interview(s) to narrow down the pool. If you are struggling to find three candidates, open up your search criteria. Second, it limits the amount of time spent interviewing. It is very easy to fall into the trap of interviewing every candidate in order to leave no stone unturned. If you have a solid screening process (utilizing recruiters and initial phone interviews) you should be able to weed out candidates that don’t fit and narrow down the pool to only three. Keep in mind, these three candidates are the team’s favorites, so why bother with the others who didn’t make the cut? Third, bringing in three candidates will allow the team to consider multiple top-tier talents to protect against the fear of missing out on a better candidate.
Each of the three interviews set the bar for the next. The first candidate sets the bar of comparison for the following interview. The second candidate will either dethrone the first candidate as the team’s favorite or will provide further evidence that the first candidate is the better fit. The third candidate will do the same, either dethrone candidate one/two or provide further proof that one of the others is a better match. As long as you have three qualified candidates, there shouldn’t be a need to interview a fourth. Should the first candidate not accept the offer? Hopefully one of the other two is a close back up.
If you don’t like any of the candidates after the three interviews, it is time to put the position on hold and set up an internal meeting to get back on track. Most likely, there is one of two issues going on. Either the team isn’t clear on what they are looking for and it is time to get back on track before wasting any more time, or, the candidates were not screened properly and attention should be made to find the gap and plug it. If the need itself has changed (which happens quite often), make sure the recruiting team is kept up to date so they can change the focus of their search and screening process.
Many of the changes are minor, involving a little more planning and goal setting to create a better candidate experience. An hour conversation creating an interview plan and bringing the recruiting staff up to speed on the vacancy can save exponential time and money, giving you the ability to identify and attract better talent more quickly. Once you experience the results of streamlining the interview process (hiring better talent and saving money) it is much easier to replicate the new and improved process going further, while ironing out smaller inefficiencies on the way.
Strive to be the company that snatches up the best talent in your industry, pulling the rug out from your competitors. Do this every time and think of the type of talent you will be surrounded by.
The One Thing You Need to Do to Nail the Interview (Even if You Are Not the Most Qualified Candidate)
In today’s job market there is a buzzword taking over the recruiting process: cultural fit. There is a clear shift from hiring the most qualified candidate to hiring the best “fit” for the company. In some ways, this makes perfect sense. Just because someone is good at their job, doesn’t mean they are going to represent your brand in a way that aligns with the company’s mission. Some of the most qualified candidates may be lacking in the two areas that you can’t teach: motivation and drive.
While being qualified for a particular vacancy is still a top priority, there is more wiggle room for personality to shine. The question that you need to ask yourself is, “How can I make a good impression to show the team that I can fit into their corporate culture?” Research from behavioral psychologists like Robert Cialdini, who is best known for his research on influence and persuasion, suggests a simple solution that can be complex to execute…be likable.
No company promotes a corporate culture full of needy, greedy, lazy, self-centered, tardy, unprofessional, and difficult to work with staff. Following the principals derived from research by behavioral psychologists, such as the aforementioned Dr. Cialdini, there are actions that candidates can take to increase their likability and, in turn, increase their perceived cultural fit.
Dress the Part
Although no one likes to admit it, appearance plays a part in cultural fit. Research has shown that there is an unconscious shortcut that causes us to assign positive traits to those who are physically attractive. This phenomenon holds true across gender lines even when evaluating someone of the same sex. While we need to work with what our mammas gave us, we can control certain features of our appearance, such as dressing the part.
The general rule of thumb is to dress one “level” nicer than what the situation calls for. Try to find out the dress code and take it one step further. The idea is to take the corporate policy and one up it, just a little bit. If the dress code is business casual (button down and a pair of slacks), then go formal (suit and tie). If the dress code is casual (T-shirt and jeans) then go business casual.
When in doubt, err on the side of dressing more formal. Most companies’ corporate cultures include being detail oriented, representing the brand in a positive way, and working in a team environment. By dressing similar, but a little better than others in the organization, you are portraying professionalism and social similarity which can immediately make you more likable to the people you are meeting.
The only time that dressing formal can backfire is if the corporate culture is ultra-relaxed. Showing up in a suit while others are walking around in flip-flops and tank tops may make the interviewers think you are “stiff” and in turn harder to relate to.
It is probably no surprise that we tend to like people who are similar to us. There are many types of similarities that cause us to be more likable, such as dress (which we just spoke about), opinions (i.e. – which football team to cheer for), interests (i.e. – hobbies), lifestyle choices (i.e. – being a working parent) and backgrounds (i.e. – growing up in the same neighborhood).
How does this translate to being more likable during the interviewing process? We can assume that those who have been appointed to have the authority to hire are trusted to represent and replicate their corporate culture. They are seen as examples of success and have been given the power to replicate their success by hiring the next top performer. The more similarities you can tie to those who are exemplary of what is means to be successful within the company, the more you will be perceived as being successful. In other words, if the hiring managers are seen as being successful members of the company and you are similar to the hiring managers, then you should be successful as well. It is much easier to replicate previous successes than it is to reinvent the wheel.
This is where being qualified for the vacancy helps immensely. Be able to draw similarities from the job description to your job responsibilities and achievements. Talk about comparable challenges that you have encountered that are parallel to those that the company is facing (and offer solutions). Talk about the trends in your industry and where you see things heading. Talk about related technical skills or systems that you have used along with initiatives that you have led that fit with the current vacancy.
Not all similarities need to be business related. Perhaps you and the interviewer used to play the same sport in high school, share the same taste in music, or went to the same college. When traveling with my wife’s side of the family, no matter how far we are away from home someone always comments on my brother in law’s Penn State hat, usually screaming the school chant. Sometimes the most obscure similarities make you the most likable. For example, what are the chances that you and the interview both have a passion for bobsledding or underwater photography? Sharing membership in a small group can have its advantages.
If you are struggling to find shared commonalities to talk about, take a look at your surroundings. See a picture of the interviewer’s family? Bring up their kids and talk about yours. Do they have a mug with a golden retriever on their desk? Ask if they also have a dog. It doesn’t take much effort to find and exploit these similarities. At the end of the day, you are making a living working in the same industry, are most likely working for a competitor in a similar capacity, and interviewing for a specialized role on a similar career path that you share with the interviewing team.
A Little Flattery Goes a Long Way
People like feeling good and like to be recognized for accomplishments. We also tend to like people who like us. Taking this one step further, research suggests that this continues to hold true even when the person being flattered fully realizes that the flatterer has something to gain from their perceived likability.
Armed with this knowledge, approach your interviews with positivity and compliments. Talk about the successes of the company and talk about how exciting it must have been for the interviewers to be a part of the company’s successes. Google the names of the interviewers or research them on LinkedIn. Perhaps they have a publication (or a blog…wink, wink) that you can reference and give praise to. If you can’t find anything, use the obvious. Compliment their outfit, “I love the tie,” or simply compliment the company as a whole, “I have heard a lot of great things about the company and appreciate you for giving me the opportunity to interview for this position.”
Try not to be too overbearing as there is a fine line between dropping a few flattering comments and coming off as being desperate.
Find Common Goals
Achieving resolutions to common problems brings us together. Even our enemies can become our friends when we are faced with a common problem that requires mutual effort to solve the issue, thus increasing our (and their) likability. The good news is that the interviewers are not your enemies, in fact, they may even be your proponents based on previous contact or excitement over the qualifications that you presented on your CV. Throughout the interview process, it is important for the team to feel a sense of perceived comradery where they can envision you as being a part of the team.
To achieve the feeling of comradery, try to identify the team’s pain points and, as mentioned before, offer solutions. A solutions-based approach is the key ingredient to the recipe. The better you are able to identify and tackle challenges, the more the interviewers will perceive you as being part of the team. The best case scenario would be to talk about how you were involved in solving the same or similar problem in your current or past positions. Not only are you offering solutions, but you are showing them that you have experience with an executable plan that can be modified and replicated to bring immediate value.
Relating to corporate culture, most organizations look for employees who are able to work independently, without much direct supervision, while also being able to collaborate internally, either within their group or cross-functionally with other teams. With this in mind, the best solutions involve your individual contributions along with how you would interact with other team members. Perhaps you would delegate and motivate junior level staff while you are off working on a specific task. Maybe you would be meeting with the department heads to create a plan that would split up tasks that best fit each person’s, or department’s, skill sets. Either way, identify the pain point and offer a solution that includes your individual contributions along with your interactions with the team.
Be Associated with the Positives
Another unconscious shortcut that we use is our tendency to associate people (and objects) to their surroundings and actions. For example, if we are driving down the road and we see someone driving a brand new Ferrari in the other lane. Most of us would associate the driver of the car with wealth and success. However, the driver could simply be someone who is valeting the car for the owner, or perhaps it is an admin from the dealership who is moving inventory around. The same is true when it comes to the company we keep. We assume that people have similar personalities and traits to those they keep in their inner circles. What is helpful to know is that the power of association goes both ways, influencing both positive and negative connections.
In the context of interviewing, we only need to associate ourselves with positive outcomes to produce a positive influence. In this spirit, it is advisable to keep the conversation positive and focus on successes. Talk about personal achievement, but don’t leave out team or company achievements as well. For example, working in the drug research field, although you may have played only a small role in the clinical trial, it is powerful to say that you were a part of the team involved in getting ABC drug approved by the FDA. You are surrounding yourself with success which in turns makes you more likely to be perceived as successful.
The principal can also be applied when utilizing internal referrals. Candidates who are referred by internal employees are exponentially more likely to be hired compared to outside applicants. The idea is that top producers keep other top producers in their network and if they the employee is willing to put their reputation on the line by referring a potential candidate, then there is a good chance that the candidate is someone of a similar caliber. Taking this one step further, even if a friend of a friend works at the company, it could be useful to “name drop” in order to make the association. However, keep in mind that this only works when the person doing the referring is perceived in a positive way. Using a below average performer as an internal referral will surely backfire. No one wants to hire the friend of the guy that is about to get the axe.
Making a positive connection can be extremely helpful in determining cultural fit. Using the principals of association, the referral coming from a top producing employee most likely shares similar traits of the referrer. This is probably the easiest of the shortcuts to determine cultural fit because a positive association is created from very early in the process and it is harder to change an impression after the initial one is made. It is important, however, to continue to exude those traits throughout the interview process to add validation to the assumptions. Another benefit of having an internal referral is simply being able to pick their brain on what challenges the team is facing, which will allow you to get a jump start on creating a possible solution to offer.
Lastly, it is worth mentioning the importance of being cognizant of the reputation of those who you provide as professional references. In accordance with the association principal, you want to be associated with others that will provide a positive influence. Avoid providing references from those whose opinions are not well respected, even if you are confident that they will sing your praises. You want to be perceived by others as walking amongst giants.
After discussing some of the ways to be perceived as being more likable and aligned with corporate culture, the most important tip is to be yourself. It shouldn’t take a lot of effort to be likable. If it is, then maybe the position (or company) is not right for you. The worst thing you can do is to pretend to be someone you’re not during the interview to then have to assimilate yourself with a company that doesn’t align with your wants and needs. The more you are interested in a company/position, the harder it is to detach yourself from the short-term benefits which, in turn, makes it more difficult to assess long-term happiness. Luckily there is a telltale sign that things may not be as perfect as they appear.
There will be a lot of emotions floating around during the interview process. It is common to feel nervous or critical of yourself, second-guessing some of your responses. It is normal to want the position more the further in the process you become (which is partially to justify the time you spent with the interview process). Regardless of the emotions that pop up, it is important to identify the nature of the feeling. One of the telltale signs that a position may not be right for you is when you are trying too hard to be liked. There will be a feeling in the pit your stomach, either when you are knee deep in the interview or afterward when you are reflecting on the conversations. If something doesn’t feel right, it is worth evaluating all of the emotions bouncing around your brain to see if your “want” of having the job matches your personal “need” of finding satisfaction with your career. Remember, an interview is a two-way street and the company has to be likable as well, aligning with your goals and personality. There is no harm in giving yourself an advantage by being a little more likable, but the key is to do so in a way that protects your career interests.
A reference check can be a phenomenal tool to help avoid hiring someone that may be hiding something during the interview process. References can be used before an offer is made to provide higher level detail on two (or more) top tier candidates to give more information before an offer is made. They may also be used as a part of a full background check to add an extra layer of confidence beyond confirming employment, education, and lack of criminal history. When done properly, reference checks provide confirmation of a candidate’s skill sets, achievements, and work ethic (making sure they match both their CV and their interviews). When done without structure, they can instill a false sense of comfort.
Reference checks can be quite tricky. By nature, references tend to be very positive. At the end of the day, a candidate is referring people whom they expect to sing their praises. It is very easy to ask vanilla questions and receive vanilla responses regarding past performance. However, by following these best practices, there are tricks and tools that hiring managers can use to sleep better at night, knowing that their next rock-star is on the way.
The Hiring Manager Should Conduct the Reference Checks
Sure, hiring managers are busy running their department, managing people, and trying to sneak in some time to hire the next person on their team. There can be a case made that they just don’t have the time to perform reference checks with all of their many duties pulling them in other directions. Sometimes they will past the duties onto HR or their agency recruiter, only wanting to be notified if something drastically negative comes from the call(s). However, if you consider the time and money that it takes to onboard and train someone that isn’t going to work out, it is fair to say that two to three 10 minute phone calls are well worth the time. Vetting a candidate is important, but unfortunately, some of the best interviewers are not top performers. The 20-30 minutes that it takes to check references can be well worth the peace of mind and be a huge time saver in the future. Furthermore, hiring managers can be strategic with their Q&A ensuring that all of their questions or concerns are being addressed.
Make Sure the Provided References Will Be Able to Provide the Information You Want
Most professional references will come from a past manager, colleague, client, or someone else who can attest to the quality of work and behavior of the candidate.
It is important to figure out whose opinions matter most when checking references. Ask the candidate to provide the best match for your criteria.
A general rule of thumb is to always ask for current or previous supervisors, especially if the hiring manager is the one conducting the calls. When a hiring manager calls a past supervisor they immediately have something in common which leads to advantages. First, it is easier to gain one another’s trust as they sit in similar roles, or least, have somewhat similar responsibilities…hiring talent. Second, the supervisor will be able to better address the hiring manager’s concerns, with the underlying assumption that the supervisor is also involved in hiring and vets for certain qualities when hiring on his or her team.
If you are hiring someone that will be responsible for direct reports, ask to speak to one or two of their previous direct reports. A supervisor can make or break a team so making sure people like working underneath them is extremely important. Time and time again I have seen top talent driven off from a terrible manager who interviewed well, but was not a great leader. Don’t make the same mistake.
If you are hiring someone who is client facing, ask to talk to one of their clients and see how satisfied they were with the relationship. At the end of the day, anyone who is client facing is supposed to be leaving a positive impression with their end user. A happy client is a repeat client.
Checking colleague level references can be important as well, but it is usually hard to get a full understanding of the candidate’s achievements. Most colleague level references will say nothing but great things as it makes for an easier call. They also tend to have a narrower idea of performance and are less able to answer specific questions about past achievements. Not to mention, colleague level references tend see themselves as being equal as their colleagues and will project the positive feelings that they have of themselves to their colleagues. No one wants to admit that they are working in a similar capacity to group of bottom-level performers as it would discredit their professional experience.
Something else to remember: sometimes HR has a policy that does not allow supervisors to answer any reference check questions outside of confirming employment dates and titles. If this is the case, ask the candidate to provide another reference.
Understand Who It Is You Are Speaking With
Start the conversation by getting a better understanding of who the reference is, including their current company, title, how long they worked with the candidate and in what capacity. The best references come from those who have worked with the candidate the longest and who are the most recent. Since many companies will conduct reference checks before a candidate gives notice, you may not be able to talk to their previous manager which is not uncommon. However, you may be able to talk to a previous manager that is no longer with the company or a supervisor from a past company. The more background data you collect, the better idea of whose perceptions you are questioning.
Identify What Information You Want to Walk Away Knowing
Have a plan of attack when reaching out to references. Identify what knowledge you want to gather prior to making the call and create a plan on how to extract that information. If your two main concerns about the candidate are their ability to work independently along with their technical skills then ask questions regarding their experience working on projects by themselves along with what skill set they would be able to mentor more junior level colleagues. Make a list of the information that you want, then start to come up with questions that will lead to appropriate responses. It is highly suggested to have a list of questions written down to keep your conversation on track. There is nothing worse than hanging up just to realize that you forgot to ask something that was really important going into the call.
Ask the Right Questions to Avoid Generic Responses and Encourage Candid Answers
With the human tendency to provide nothing but positive feedback, how do you get references to feed you the unfiltered truth?
The first step is to gain their trust. Assure them the conversation is completely confidential. Second, you need to warm them up. Always start by talking about something positive and talking about the industry. A good tactic is to ask the same type of questions that you asked the candidate during the interview as it will show that you are both industry professionals and it will set the tone for the rest of the call. Third, phrase your questions in a way that don’t allow for generic positive responses. Avoid questions that allow the reference to answer with a couple of words, but instead, need to be explained.
Do Not Accept (Just) Written Offer Letters
Written reference letters can be extremely persuasive, especially when they are written by someone whose opinions carry a lot of weight. The challenge is that the letter is only a snapshot taken at a specific time which doesn’t mean that their performance could have gone downhill since.
Written reference letters can also be used for mangers trying to do the candidate a favor even though they really didn’t perform. I have seen many people who were terminated, only to find their supervisor writing a reference out of guilt. This is especially true with newer managers who are still uncomfortable letting their team members go. To take this one step further, some managers will provide a written reference so they won’t be called for a reference check. There is nothing more awkward than checking a reference of someone who did not perform well. The reference has to either lie and stay positive or have that uncomfortable conversation of throwing the candidate under the bus. The written reference makes for an easier way out.
Be Wary of Red Flags
When conducting a reference check you need to decide what information is important to you and your team. Some previous strengths or weaknesses may not relate to the position you are considering the candidate for and each question (and answer) needs to hold a certain amount of weight in your decision making process. That being said, there are a list of red flags that should at least be taken into consideration if they come up during the reference check process.
The best indication of future behavior is past behavior. Humans tend to be extremely consistent in their behaviors. If you check three references, all of which are telling you to hire this candidate immediately, there are probably good reasons to do so. On the flip side, no one is perfect and you need to figure out if your team is able to work on areas for improvement. Generally, it is easier to take a motivated employee and teach them rather than hire an expert that lacks drive. As they say, you can lead a horse to water, but you can’t make it drink. If the horse isn’t drinking you just need to find a thirstier horse.
Epic Interview Fails: Real Life Examples of Poor Decisions That Led to Rescinded Offers and Terminations
Proper interviewing technique and etiquette are taught very early in life. Being professional, courteous and attentive to detail are all important factors that lead to job offers, whether you are brand new in your industry or a seasoned vet. The longer I have been in the staffing industry, the less I am surprised by the crazy things even the most intelligent people do. Some of the most qualified candidates who have some of the best interviewing skills may be the worst hire you make this year, leading to an implosion of wasted time and money.
One of the goals of The Headhunter Guide is to help you learn from other people’s mistakes. The following accounts are real-life examples of some of the jaw-dropping actions that I have personally encountered (either directly, a horror story from a client, or through close colleagues) that have led to disaster. The names are fake, to protect confidentiality, but the stories are real. Although these are extreme examples of what NOT to do, the morals still hold true.
Each are examples of seasoned professionals who are considered experts in their field with annual salaries of over $100k (some much higher as noted below). Many are well educated and some are even subject matter experts in their respective fields.
Sit back, grab a cup of coffee, get ready to shake your head, laugh a little, and introduce your palm to your forehead reading these epic fails of intelligent people making poor decisions.
Dr. Dre was a very successful US Board Certified Doctor who liked to be challenged. After many years with his current company, he looked for an opportunity that would help him continue to multiply his brain cells by better utilizing his education, extraordinary work history, leadership, and drive.
Due to his executive-level status, Dr. Dre was historically a very busy guy. Most of the calls that I had with him were from his Porsche as he was zigzagging from meeting to meeting. We had identified an opportunity that checked off all of the boxes on his career goal wish list. The position was an executive level role at a company across the country that would allow him to work from home part-time, travel to the office from time to time, and would involve both domestic and international travel to act as a subject matter expert representing the organization. The position was paying well over $300k in base salary, plus all of the bonuses and perks of executive leadership.
Throughout the interview process, Dr. Dre wound up charming the company as he proceeded through seven separate phone and video interviews. Yes, seven. After the seventh interview, the team wanted to have him fly out and meet with the rest of the executive staff to shake some hands and extend a formal offer. All Dr. Dre had to do was show up, smile, nod a few times, and he would be signing the offer letter in no time. Unfortunately for the doctor, his ego got in the way.
He arrived at the interview well dressed and a little early. Off to a good start, right? As he checked in at the receptionist’s desk he began to (and I am quoting the feedback directly from the team), “uncomfortably flirt with the receptionist to the point where she felt that she needed to remove herself from the situation and leave him by himself until the first interviewer was ready.” He then proceeded to meet with all of the top executives, each of whom were appalled by his language. He had dropped more explicit content than your favorite rapper’s last album.
Needless to say, Dr. Dre was sent jet-setting back across the country empty-handed and is now blacklisted by the company. Good thing they didn’t hire off the seventh interview, right?
Ben and Jerry- The Double Dippers
The story of Ben came from one of my clients, Ben’s direct manager. Ben was an independent consultant in a work from home position who was billing $85/hr for his services. He had multiple clients and managed his workload so that he would be able to bill well over 40 hours per week from his combined assignments.
From time to time Ben had to travel for his job and once in a blue moon, he would travel with his manager. This particular instance was one of those times. Ben and his manager had a couple of days to work on site together to meet a deadline. The first day went well. Both Ben and his manager were able to collaborate throughout the day. They both had individual tasks, but would meet multiple times during the day to collaborate.
They had planned for a similar process for day two; however, the execution didn’t quite go as expected. Ben and his manager broke apart to work on their separate tasks, but when it was time to get back together Ben was nowhere to be found. Hours went by, still no Ben. Ben’s manager went door to door trying to track him down, hoping that he was okay.
An hour into her search Ben’s manager finally found Ben locked away in an otherwise empty conference room, back to the door, on another laptop. At this point, his manager didn’t know what to think. She was partially relieved that Ben was okay, partially shocked that he was calmly sitting down after she has been frantically trying to find him for over an hour, and partially in bewilderment that he had two laptops with him. She confronted Ben and asked him what was going on.
Cool as a cucumber, Ben casually turned to his manager and proceeded to explain that he was trying to meet another deadline with one of other company he was consulting for and he needed to work on the other assignment for the last three hours. Time must have slipped away from him. Furious, Ben’s manager exclaimed, “But, Ben, we are here together to hit our deadline TODAY and I just spent the last hour trying to track you down. Now you are telling me that you have spent the last 3 hours on another assignment? This is unacceptable.” Ben apologized, shut down his other laptop, grabbed his company laptop and picked up where he should have been three hours ago, now with his manager trying to pick up the slack. Both he and his manager had to stay an extra three hours to complete the work.
When Ben returned home he proceeded to send his client a bill for 11 hours that day, trying to double bill both clients for his hours. The end result, he was paid for 8 hours and immediately terminated.
Jerry was also a career contractor like Ben, but after years of hunting contract assignment after contract assignment, he had decided it was time to settle down and find a permanent position with a reputable company. Luckily for Jerry, he wound up getting a job offer that was paying $100k (back in 2007) with a company car, stock options, annual bonuses, among many other perks. The company was one of the top in his industry. Everything was going well, until one day Jerry was caught red-handed with his hand in the cookie bowl.
Jerry thought he was ready to retire from contracting, but the extra income was just too tempting. He violated his non-compete and confidentiality agreement by working with a competitor on a part-time contract basis. The kicker, he was using his company’s equipment to run his side hustle. He used their company provided cell phone, company laptop, company email, and office supplies.
How did he get caught? Jerry accidentally forwarded an email to the wrong manager. Jerry was terminated and the company no longer hires career contractors for permanent positions (which is a shame that he had now ruined future opportunities for others).
Buzz was a nice guy, but not happy in his work situation. He was in a job that he didn’t really like. He was underpaid, under-challenged, and the commute was over an hour each way. He had an opportunity to interview with a company that was offering a better situation all around. The job responsibilities were both rewarding and challenging, the salary was 15% more than what he was currently making, and his commute would be cut in half.
After Buzz’s interview, the Director gave us a call and proceeded to tell us that we wouldn’t believe what just happened. He started by telling us that Buzz was extremely qualified, everyone on the team was impressed with his background, and he was quite a personable guy. Sounded great so far, so what was I missing? Well, Buzz was spitting fire when he was speaking. Each interviewer could smell liquor on his breathe and was having a tough time concentrating. Buzz was literally buzzed for the interview.
Obviously, the team didn’t move forward with Buzz and he had made it on my “do not call list”.
Paula the Photo-shop-lifter
We had just extended an offer to an ecstatic Paula. She had gladly accepted, gave notice, and was going to be starting her new position in a couple of weeks. A couple of days went by and our client reached out to let us know the background check company was having a tough time confirming her education because the university couldn’t find records of her degree on file. I looked back at her CV and her application, both clearly stated that she obtained her degree. She had listed the college name, her major, along with the date of completion on both documents.
I called up Paula and gave her the update, assuming that one of the kids in the registrar’s office didn’t look in the right place. The background company asked if she could provide a copy of her degree, which they would use for verification. “Sure, not a problem,” Paula said. A couple of days later, no response from Paula. I called to check to see how she was making out in her search only to find that she was still looking. I had gotten a long-winded story that it must be in one of the boxes she had in storage. At this point, the background check wasn’t verified and the team was required to postpone her start date another two weeks (to the next training class). Frustrated, the team had now set a deadline that the degree must be supplied by the end of the week or the offer would be rescinded. Paula said she would get it to me the next day.
The very end of the next day, Paula sent a poor quality photocopy of her degree. Something didn’t look right. Maybe her scanner was on its last leg, I don’t know. With the deadline closing in, I passed it along to the background check company to close out her verification. The following morning the background check company sent an email with two attachments. A sample of what the degree from her university is supposed to look like along with the copy that she supplied. There was a night and day difference! I called Paula back to update her once again and to get down to the bottom of the issue.
Keep in mind, for the last 8 weeks, ever since our first call, she had sworn up and down that she had a degree. Well, on this day, the wall finally broke down. In teas, Paula said that she had almost finished her degree, but there was a life circumstance that forced her to leave a few credits shy. Embarrassed by her lack of formal degree she Photoshopped a copy hoping it would pass the scrutiny of the background check.
The company immediately rescinded the offer and Paula was left with no job as her previous company already found her replacement. The saddest part of the story: the position did not require a degree in the first place! The company would have hired her, paid her the same salary, and she would be working there at this very moment if she was upfront on her CV that her degree was not complete. Palm meet forehead moment all the way around.
Should have been Bud-wiser
If you didn’t learn the message from Buzz, this is a second example of how mixing alcohol and interviewing is a disaster cocktail.
This story came from a close colleague, who was working with a candidate named Bud that he had been trying to place for a while. Bud was far along into the interview process, already having two phone interviews. So far, everything was going great. He had interviewed for a remote position and had one final interview left, a video interview with a few hiring managers via WebEx.
The managers dialed into the interview to see Bud sitting in his office. Directly behind him were a pile of empty beer cans. Not one or two, like a half of a case.
The team ended the call early, Bud did not get the job, but he Bud became a little Bud-wiser that day. From now on, he tests his video to see what is in his webcam’s view before going on a video interview.
Jackie and Jill- The Fraternal Twins
This is another account from a client. Preface: Like in Bud’s situation, the position was home based with the interview process including a couple of phone interviews with a final round video interview.
A couple of weeks into Jackie’s new position, the team started to show concern for her performance. She had interviewed really well and the team picked her over the other dozen applicants. She had answered situational questions perfectly, but didn’t practice what she was preaching on the interview. Since the company was quite large, Jackie had never had the chance to meet her manager face to face outside of the video interview. Conversations were limited to phone and email, but with her lack of performance, it was time to have an in-person meeting to try to get Jackie back on track.
Jackie and her manager eventually met up. Immediately, her manager was sitting there dumbfounded. Jackie looked a lot different than during her interview. She literally looked like a completely different person. After the meeting concluded, the manager reached out to HR and asked them to dig a little deeper. Luckily, the company had access to all of the video interviews as the software that they used recorded each session (which candidates were aware of, similar to when you put a call into customer support and they say, “This call may be recorded for quality reasons.”). These recordings gave hiring members who were unable to attend the interview access to the interview, thus giving them an opportunity to review the candidate at a later time.
HR quickly located the recording. The manager was right! Jackie was not the one who interviewed, it was her colleague Jill, an expert in the space who was doing the interview for Jackie to help her get the position.
Jackie was immediately terminated and, to this day, no one knows who Jill really is as she would only be recognized from the recorded video interview.
Following this event, the company (who has tens of thousands of employees globally) went back and started reviewing additional video interviews only to uncover MULTIPLE other examples of “Jill”s interviewing only to have “Jackie”s show up. Baffled, they shared their story with other companies in their industry who went back and checked out their recorded video interviews, only to find the same thing! I have seen people provide fraudulent information on background checks (having a friend or family member pretend to be their past manager) and fraudulent self-written references (which is why I don’t accept them at face value), but having someone actually interview on behalf of someone else was dubiously ingenious and absurd at the same time.
Dr Jekyll and Mr. Hyde
Like our other doctor, Dr. Jekyll was a highly intellectual board certified Physician. He had just received a job offer for $300k plus 40% annual bonus, a vacation home worth of stocks, along with a relocation package and temporary housing.
After signing his offer letter, we all thought this was a start to a long-term relationship between Dr. Jekyll and his new company. I mean, Dr. Jekyll had quite a few interviews, both phone and in person. The company had fully vetted him and had turned down many qualified candidates before they decided to extend him an offer.
As soon as the ink dried on his offer letter Dr. Jekyll had morphed into Mr. Hyde. Every day he had a new demand. The first day he wanted to have his title changed. Day two he wanted to change who he was directly reporting to. By the end of the week even demanding the team order very specific furniture for his office space.
He went from being extremely professional and flexible throughout the interview process to, almost in an instant, having changed his personality 180 degrees after signing the offer letter. Before his start date, the company rescinded Dr. Jekyll’s offer as Mr. Hyde wound up prevailing, never to see Dr. Jekyll again.
Although candidates can elicit bad behavior and poor behaviors, clients can be a little crazy too.
I had worked with a Director who had looked to start her own consulting business. She had interviewed for a position in which the company was floored by her experience. In order not to lose her to a competitor, they made her an offer the following day. She gladly accepted and had planned on giving a two-week notice the following week. All of the paperwork was signed with us (the staffing agency) and with the client. We were all just waiting for the start date to sneak up in a couple of weeks and she would be off to start training.
At the end of the week, our client called to say that they had to cancel the contract because they wanted to hire an internal referral instead. Shocked, we didn’t know what to do. They gave a commitment to her, she gave a commitment to them, and we are stuck in the middle trying to make sense of the situation.
We called back our soon-to-be consultant to give her the news, praying she hadn’t given her notice earlier than expected. Thankfully she hadn’t, but what if she did? Hiring on a contract basis is considered hire and fire at will. It is actually one of the beauties of hiring contractors because there is no long-term commitment. That being said, I have never seen a contract offer disappear out of thin air like this AFTER the contract was formally accepted, but before the contractor started their assignment.
Most people will look at these examples and think to themselves that this would never happen to them. You would never do anything like this. You clearly have the foresight to understand the implications of your actions. Unfortunately, most of the people who committed these epic fails would have said the exact same thing…until they made their poor decision(s). Some have learned from their mistakes while others are gluttons for punishment who continue to try to scam the system. It must be respected that everyone has their own personal situations, reasons for their actions, and sometimes the best intentions. If I can, at least, talk one of you off the ledge from doing something that you will later regret in your career (or, if you are a hiring manager, help you vet a candidate just one step further to patch a potential hole in your interview process), then I have fulfilled my goal of sharing this epic fails.
According to the American Staffing Association (https://americanstaffing.net/), Temporary and Contract Staffing accounted for $127.5B in annual sales across the staffing and recruiting industry in 2016. On average more than 3 million temp/contract employees were on assignment during an average week with a total of 15 million temp and contract employees hired each year. Of the 15M contract employees, 76% work full time and 35% were offered a permanent position by the client they were assigned to. Contract and temporary revenue has been steadily rising since 2009 and has nearly doubled since 2002 which is no wonder why a majority of staffing agencies (55%) only provide temporary and contract staffing services.
*Note- These statistics don’t take into consideration the number of contractors working directly with their client/employers so the industry is quite larger than $127.5B with well over 15M contractors placed each year.
With contracting becoming more and more commonplace it is important to understand the differences between the types of contracts to get a better understanding of what contracting model works best for you.
Types of Contracts
There are two main types of contracts: W2 and 1099 (which are both government tax forms). Under W2 we will discuss the differences between W2 salaried (of annual) vs W2 hourly. With 1099, we will discuss self-employed consultants vs Corp-to-Corp contractors. To note, there are similarities will all contracts in that they are considered temporary and will either be completed (or renewed) based on a predetermined length of time or project completion.
Generally speaking, W2 contracts are the most straightforward as they are set up very similarly to permanent positions with only a few exceptions, including an end/renewal date to the contract. The main similarity comes down to payment terms. W2 contractors are generally paid on a normal schedule with the employer taking care of withholding income taxes, social security, and Medicare. Come tax time, the employer will send a W2 form just like they do to all of their permanent employees. If you worked multiple W2 contracts throughout the year you will receive a W2 from each employer. Employers will also pay their portion of taxes and may pay for part of your healthcare premium (if benefits are offered).
W2 Salaried contracts can also be called W2 Annual contracts. W2 Salaried contracts are set up just like permanent positions where you are being paid an annual salary broken down into pay periods. These contracts are perfect temp to perm or for longer-term assignments as salaried contractors are generally able to participate in company benefits such as healthcare, benefits, along with PTO which makes the temporary status feel more like a permanent position. Depending on job duty, W2 salaried contractors can be classified as being as Exempt (meaning employers are not obligated to pay overtime). Similar to their permanent counterparts, W2 Salaried contractors may work over 40 hours and only get paid for 40 hours. On the flip side, if they work under 40 hours, they may have to dip into their PTO bank to receive their full, regular payment. If non-exempt, the employer may limit the hours to 40 per week.
Due to co-employment law (check out my blog “Why do companies use agencies when they have their own recruiters?” to learn a little more why co-employment law has become such a hot topic) there is usually a maximum duration of an assignment followed by a mandatory break before you are eligible to return to the assignment. For example, you may be allowed to contract for 2 years followed by a 6-month break in the assignment before you are able to return.
W2 Hourly is set up similarly, in many ways, as W2 Salaried in that taxes are still taken out by the employer; however, payment terms are a little different. Instead of being paid based on an annual salary you are paid based on an hourly rate. Payment is still on a set schedule which can include weekly, bi-weekly, or monthly. Depending if you are classified as Exempt or non-Exempt, companies may limit the hours to 40 per week (or 8 hours per day in some states like California which have daily overtime laws). If you are approved to work overtime, you will be paid for every hour you work with overtime hours being even more lucrative, time and a half (or 1.5 times your rate for those hours). You may not be eligible for company benefits (especially if you are working under a certain amount of hours per week); however, you may be able to decline company benefits and negotiate a higher hourly rate. This is a great opportunity for someone who has another source of healthcare benefits and is looking to make more per hour.
If you are planning on working full-time hours on a W2 hourly assignment, an easy “hourly rate” to “salary” conversion is: “Hourly Rate” x 2080 work hours per year = Annual Income. Keep in mind this does not take into consideration any PTO or hours missed due to company shut down nor the potential of time and a half for overtime.
W2 contracts are pretty simple and straightforward compared to their 1099 counterparts. They can be a foot in the door when a company wants to “test” out a new employee before bringing them on as permanent headcount and if you are working hourly you can protect your home/work life balance or have the ability to build up your nest egg by earning overtime compensation.
W2 contracts are pretty easy for most people to digest because the differences between permanent employment and working on a W2 contract are relatively minimal. In both situations, you are being paid on a regular basis with taxes being withheld. 1099 contracts can be a little more confusing, but offer the most flexibility, allowing greater control of your workload and the projects you accept along with the highest hourly/project rates. In other words, more risks = more rewards.
1099 contractors can be self-employed or business owners who are responsible for paying their taxes on their own, meaning their invoices are paid in full without any taxes being withheld. These types of contracts require an expert knowledge in bookkeeping and will generally have the additional cost of using an accountant to ensure proper IRS compliance along with maximizing tax deductions. 1099 contractors are generally reporting their taxes quarterly and are responsible for their own benefits.
1099 contractors can bill for each hour worked; however, their clients are not required to abide by overtime laws. They can still bill over 40 hours, but will only be paid straight time for all hours worked (unless otherwise negotiated in their contract).
As mentioned above, independent contractors/consultants are self-employed and are responsible for paying all of their applicable taxes and benefits. If you are working on a 1099 you are not eligible to enroll in company benefits. Independent Consultants are strictly unincorporated and companies who utilize services from independent consultants MUST follow the IRS guidelines for 1099 classification. These guidelines are a laundry list of conditions that classify an individual as either an employee or consultant and can be interpreted in many different ways; however, if a project is short-term or if you are working on multiple projects at a time, you may be just fine working under a 1099 without having a business set up. All of your profits are subject to self-employment tax and income tax and you are not protected by any minimum wage laws.
Regarding proper classification of consultant vs employee, according to the IRS (https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee) there are three common law rules that the IRS uses to determine whether someone is properly classified as an independent consultant. In short, summarize the 3 common rules as:
Corp to Corp (C2C) Consultants
Many agencies will only engage in a 1099 contract with people who are incorporated (also called Corp to Corp or C2C) to help protect themselves against co-employment law risks. One of the easiest ways to become a C2C contractor is by setting up a single member Limited Liability Company also referred to as a Single Member LLC. A Single Member LLC is a business entity that is registered to the state as a business and operates as such.
The business owner takes money out of the business for expenses to run their business. Expert level bookkeeping is required as one of the beauties of running your own business means that most expenses are taken away from revenue which means you are taxed on your profits. In other words, business expenses become tax deductible. Working with an accountant is highly suggested as they will make sure that you are deducting everything possible to save as much as you can come quarterly tax time.
LLC owners will generally carry liability insurance and members are not typically personally liable for debts of the business. For example, if the LLC gets sued (hopefully this never happens), or if the LLC goes bankrupt the owner’s personal assets are not at risk. Whereas, if you are working on a 1099 as an unincorporated individual (in other words you are working under your SSN) and are involved in a lawsuit, your bank accounts, home, etc. are all fair game!!
Single-member LLC's should register for an Employer ID Number (EIN), even if the business has no employees. Most banks require an EIN to open a business bank account.
If working through an agency, the contract will be between the agency and your company name. If they offer direct deposit they may require the bank account to be a business account (another step to ensure co-employment laws are being met).
Similar to 1099 consultants, C2C contractors are able to take on multiple projects at a time and have more flexibility to choose which projects to accept. There is an opportunity to add employees and grow the business if the opportunity arises, though many companies may classify a multi-member LLC as a vendor and may prohibit work being given to these types of companies to maintain confidentiality and quality.
1099 contracts require more work, more bookkeeping, no option for client paid benefits, and do not offer any tax withholdings. You are going to be physically seeing your tax dollars go to Uncle Sam every quarter and there is a lot of extra administrative time and costs associated with going 1099.
On the flip side, 1099 contracts pay the highest hourly/project rates. The reason why they pay high is because of the lower cost to the client compared to W2 (no employer taxes, no benefits, etc.). You have the flexibility to be the boss of yourself and have the opportunity to pick and choose the work you accept, something that employees can only dream of.
Best Practices: if you are working on a 1099 basis, do yourself a favor and find a really good accountant. Unless you are an expert accountant or have a lot of free time on your hands, the costs associated with utilizing an accountant are offset by maximizing tax deductions along with the peace of mind knowing you are complying with all government regulations and policies.
If you are thinking about setting up an LLC or another type of business, Legalzoom.com is a widely accepted resource that will help educate you on the process and can walk you through the process of setting up your company at a cost that is generally much lower than an accountant or lawyer.
Learning to think like a recruiter will help you make impactful decisions to better your career search. To better understand what we do, let’s walk through the typical recruiting process from receiving a new job order to preparing candidates for the first day on the job.
Steps to the Recruiting Process
Step 1: Detailing the Vacancy
This is probably the most important part of the process as it sets the stage for everything else. Even a short five minute Q&A session the hiring manager can save countless hours “route recalculating” the recruiting GPS. Detailing the vacancy means finding out what the hiring manager/team is actually looking for, both inside and outside of the job description. Example questions are:
Step 2: Outreach
Outreach can be done in many ways: searching databases and calling/emailing candidates that have the “must have” qualifications, advertisements and job postings to attract active candidates, cold calling, networking on social media, and working on a referral network among others.
Working with referrals is a great way to identify talent. For example, if I trust you based of your background, personality, and job experience and you say, “Give John a call because he is amazing, has the skill sets you are looking for, and is open for a change,” then John is someone I want to speak with. I know and trust you, you know and trust John, and therefore I should know and trust John. In the simplest way you are giving him a brief positive reference.
Regardless of the method, the interview process can’t begin without outreach. People can’t interview for a job they don’t know exists.
Best Practices: Even if the person you are thinking of referring isn’t looking, it would still make sense to pass the information of the vacancy along. Recruiters specialize in working with passive candidates and I have personally had countless of referrals who were eternally grateful for the introduction.
Step 3: Initial Phone Screen with Recruiter
The first phone call between a potential candidate and a recruiter should be a mutual exchange of information. The potential candidate wants to learn more about the job opportunity while the recruiter wants to know more about the candidate’s qualifications.
It is helpful if the recruiter has an updated resume prior to the call so they can collect their questions. If they are “flying blind”, the first phone call will generally be very brief and one-sided.
Using the information gained in Step 1 the recruiter can paint a better picture of the company, the position, the expectations, the interview process, and answer most questions candidates have in order to identify whether the opportunity fits with their career expectations and goals.
Once the candidate is interested in the job opportunity, the recruiter needs to make sure that the candidate meets the “must have” qualifications prior to moving forward with the submission. Candidates should be prepared to answer very specific questions regarding their backgrounds/experiences, be able to walk through their job history and reasons for change, and discuss salary history and expectations.
This process may take more than an initial phone call. In fact it could take a handful of calls going back and forth to get to the point where both parties are comfortable in moving forward.
Best Practices: Be upfront yet professional during your calls with your recruiter. They should know the truth about your situation at all times to be able to best represent your candidacy. This is a topic we will tap into in the weeks ahead.
Step 4: Submission
Once there has been a mutual agreement to move forward from the initial phone screen(s), the recruiter will then forward the resume and notes from your conversation to the hiring team.
If your notes make it to the hiring manager, it means that the recruiter feels you are qualified for the position.
Step 5: Scheduling the Interview
Once the hiring team shows interest in scheduling an interview, the recruiter will usually be the liaison to help set everything up by collecting availability and confirmation contact information along with confirming the interview once set.
Step 6: Interview Preparation (only when working with an agency recruiter)
If you are working with an agency recruiter, before every interview there should be a call between the candidate and recruiter…no exceptions! This is your inside track to nailing the interview. First, this is an opportunity to ask any questions that have come up since your earlier call(s) to get a better picture of the opportunity. Second, it gives you a chance to learn from prior experiences. Learn why other candidates made it through the process and why others didn’t. If you are working with an internal recruiter, they will most likely be unable to provide such information.
Step 7: Interview Debrief
Your recruiter will debrief with the hiring manager(s) to discuss next steps. If there is continued interest they will facilitate next steps. If not, they will let you know of the team’s decision not to pursue.
Step 8: Assuming Interest: Repeat Steps 5-7 Until the Interview Process has Been Completed
Step 9: Offer Negotiation
Once the team decides to move forward with an offer, the recruiter will work obtaining internal approvals and will then extend the offer to the candidate. Usually, the verbal offer will come first, allowing for any negotiating to take place. Once the verbal offer has been accepted, they will then work on getting out a formal written offer (which may take a couple of days to produce depending on whose signatures are needed).
If you are working with an agency recruiter, they are master negotiators who should be trying to fight for the best possible offer. After all, their fees are usually based on a percentage of your first year’s salary. Higher salary equates to higher commissions.
If you are working with an internal recruiter, they may also be able to help guide your salary expectations as they are motivated for their positions to fill, a metric their performance is based on.
Step 10: Preparing for the First Day
Whether starting a new permanent position or a contract assignment, recruiters should be checking in with both the candidate and the hiring team to make sure everything is ready for the first day. Background checks and references should be completed. IT should have all computers and systems ready to be accessed and email should be up and running. HR should also be able to provide information regarding what time to report, where to go, and who to ask for.
Candidates should be completely done their previous position prior to starting their new role (part time contractors are an exception), have their first day info, have any office equipment ready (if relevant), and any pre-onboarding paperwork filled completed. At this stage it is common for the candidate and their new manager to be in touch directly, but the recruiter should always be there to help as needed.
Thinking like a recruiter means planning for the long game. Getting an initial call back is your first goal, but make a plan to the nail each interview, plan for an offer, and get ready for your first day. Hiring is largely an insider’s game. The more you know the rules, the better the advantage you have. Don’t hesitate to pick your recruiter’s brain. The information they provide might just be the difference between offer and rejection.
The Headhunter Guide is RECRUITER WRITTEN'S way to provide insider's knowledge to candidates and employers alike. Enjoy!