Thoughts from our CEO

talent recruitment
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Talent Recruitment: How to crack the talent test
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By Paul Breloff & Shloka Nath

Running a social enterprise is hard, particularly when catering to “base of the pyramid” customers. Marketing to low-income customers, infrastructure and distribution challenges, razor-thin margins, raising money from investors — these challenges would test even the hardiest entrepreneur! Then, of course, there’s the major task of talent recruitment.

In other words, hiring and retaining great people. Although this challenge around talent recruitment is typically overlooked, it is probably the greatest factor driving the success or failure of the social enterprises we’ve worked with.

When Village Capital surveyed its portfolio of over 400 entrepreneurs in 2012, they cited talent acquisition and retention as their number one barrier to growth, easily surpassing financing. In 2015, a survey of C-suite executives by Bain & Company for Accion Venture Lab identified human resources as the biggest organisational need across 21 enterprises.

The challenge exists throughout the talent life cycle — from initial recruiting to training, ongoing development and retention — across hierarchies, from junior unskilled workers to senior executives. Unfortunately, it’s not a challenge that can be magically solved with more money.

Why are human capital challenges tougher for social enterprises?

Let’s be honest. Hiring and talent management is a challenge at all companies, but here’s why talent recruitment is far harder for social enterprises:

Mission, not just skills: Beyond finding skills and experience, most social enterprises also need to see a demonstrated passion for the organisation’s mission. For many, this shrinks a small talent pool into a puddle, making it even harder to find a fit.

Unknown brands: Most social enterprises are relatively young, small and little known beyond specialised circles. With less inbound interest in the company, it becomes more of a sales job than an HR one to convince candidates and, sometimes, their families, who might prefer they join more established organisations.

Talent doesn’t come cheap: As revealed by a 2012 Intellecap report, early-stage social enterprises cite low salaries as a key constraint to hiring and retention. Personally, we don’t believe there should be an inherent trade-off in compensation when choosing a career of meaning and impact, and it is encouraging to see this slowly changing. But, for now, social enterprises often pay a fraction of what talented people could be earning elsewhere.

It’s not an easy life: To top it all off, many social enterprises operate in remote areas with few creature comforts. Five-star hotels are traded in for village cots. Express trains and Uber make way for motorbikes and rickety rickshaws. High-speed internet and stable electricity are swapped for molasses-slow Wi-Fi and off-grid living. This is obviously not always the case (and for many this experience can be a draw), but some companies find it challenging to convince senior talent to take the plunge.

So, what do we do about talent recruitment?

Yes, talent recruitment at social enterprises is hard. The good news is there are many ways to make it better:

At a system level

  • Enmesh impact with education: We need more secondary and tertiary schools and institutions of higher education that present opportunities for students to learn about social enterprise and encourage the pursuit of careers of meaning and impact. This is happening increasingly, particularly at business schools globally, but classes and clubs on these topics at undergraduate universities are just emerging.
  • Create access to real experience: We must make it easier for students to get access to internships or projects to help ignite a career passion. This could be promoted by colleges, governments, investors or the companies themselves. Global impact investor Acumen Fund, for example, runs a programme to recruit fresh graduates into an apprentice scheme, giving exposure to grads while also reducing the cost and effort of recruiting and training new talent.
  • Make mid-career transitions possible: Support more programmes that help talented mid-career professionals transition from mainstream to impact, like Impact Business Leaders.

At a social enterprise level

  • Start early: Even when you’re not actively hiring, be on the lookout for great talent, particularly inbound inquiries from people acutely drawn to your mission and impact. Keep your talent recruitment pipeline of candidates warm and engaged so that when the time comes to bring on new folks, you already have a pool to start from.
  • Invest in employee referrals: Actively engage your existing team to probe their networks and bring in great people. Having employees who are brand ambassadors can be particularly effective for lower-level jobs that require community and local language knowledge.
  • Build a strong brand: Not only does having a strong employer brand increase the visibility of the social enterprise, it aids in employee retention. By strategically building strong credibility in the health sector, Aravind Eye Hospital routinely receives job applications from all over the world, despite the organisation’s strict policy of not advertising for job placements.
  • Mentorship and training: Your employees are your future leaders. Create effective training and mentorship programmes that can target specific skill development. A RippleWorks survey found that entrepreneurs as well as employees reported higher degrees of satisfaction with increased and frequent engagement with mentors.

So where does this leave us? While money will always be a concern, human capital is often more important. Luckily, we believe there’s something to be done at all levels to drive talent recruitment and help bring that talent to the social enterprise space while supporting job seekers in finding dream jobs at impact businesses.

Perhaps social enterprises have the most to gain or lose in solving this, and we hope to see more social enterprises recognise the importance of getting their team and talent equation right.

We’ve seen many times at companies globally that to create something persuasive and extraordinary in the marketplace, one must often first create something persuasive and extraordinary in the workplace. This principle may hold even more strongly for social enterprises, who must create a unique kind of mission-driven soil to attract and grow a talent foundation for scale and impact. If we get this right, the chain reaction of impact will extend beyond the enterprise to customers, employees, and the world at large.

This article was originally published on India Development Review on September 20, 2017. You can access it here.

Co-author Shloka Nath is Director, Development and Publishing, Jnanapravaha Mumbai, India’s premier Cultural Institute for the Arts. Prior to this, Shloka co-founded and was Managing Partner, Sankhya Women Impact Funds.

 

Related Article: Talent acquisition trends 2019: Top seven in Kenya

 

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Welcome to the Jungle
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Mridvika and I at our baby booth on the main drag.

A wise man once said that big conferences have a lot in common with zoos — many different species, all out of their natural habitats, perched awkwardly and confronted with a whole lot of sizing up. My colleague Mridvika and I just attended the annual People Matters TechHR Conference in New Delhi, and it was a zoo in the best possible way. Boy was it fun to see all the animals!

We were there as one of about 20 “Spotlight Startup” participants, which entitled us to a 1-meter frontage with logo on the main drag between the entry staircase and main hall. That meant lots of traffic, lots of people wandering by, and lots of people for us to accost with endless variations of our elevator pitch: “Hi, we’re Shortlist, we’re an all-in-one platform to manage top-of-funnel screening…” and “Hi, we’re Shortlist, we build customized digital application flows to assess candidate quality beyond the CV…” and “Hi we’re Shortlist, wanna go get a beer?” (In the unofficial test we conducted, this last pitch was the most popular.)

As I type this, delirious from a couple of intense days, a few salient impressions are crystallizing:

1. Buzzwords in search of a problem: Like my previous field of fintech, there were lots of acronyms on display. ATSes and CRMs and HRISes and HRMSes for sure, but also lots of “modifier” acronyms like ML and AI and a little bit of AR/VR. In fact, there was even an acronym that meant two different things: NLP meant both “natural language processing” and “neuro-linguistic programming” at TechHR! Everything was “integrated,” everything was “real-time” and “omni-channel” and “mobile-social” and the rest.

This gave a heady futuristic feel to everything, but I couldn’t help but feel that the buzzword arms race was sometimes more about showing off shiny new toys than a genuine breakthrough (yet) in how we can get, keep, and develop the best people.

2. Don’t forget the human touch: On a related point, with all the focus on tech, one can get the feel that we’re just around the corner from an all-digital future in which we’ll never have to actually talk to a human being as we hire. At the same time, several insightful panelists and folks we met emphasized their belief that human touch is still central and essential to getting people equations right. Yes, there’s room for automation and tech, but there are still some parts of the recruitment and on-boarding and training and cultivating process that can and should be done live and in person. For businesses like ours, success may depend on getting that critical balance right.

3. Focus on the how, not the what: When looking at the “forest” of HR tech in India, I noticed that a lot of the “trees” appear quite similar on the surface. There were a number of different recruitment tech businesses out there, most with subtle differences in pitch and product, but usually boiling down to some version of automated searching and matching using lots of data. I was reminded of the Thai t-shirt hawker on Khao San Road with the insistent “Same same but different” trill (if you’ve ever back-packed in Thailand, you know what I’m talking about).

But I am ever more confident that what will separate the winners from the non-winners will be the “how” of getting results, not the “what” of the summary pitch; it will be the execution, not the idea. Ultimately, some of these new approaches will work, some won’t, and the difference will likely be found in how each company shows up every day to deliver big value for its users.

Giving a rapid-fire pitch to the mentors/judges. Good questions ensued.

4. The jobs of the future are here: There was a lot of talk of the number of jobs that are in demand today that didn’t exist 10 years ago: Data scientists, UX designers, 3D printing engineers, AI architects, etc. There’s a recognition that hiring this talent is critical to get right as companies grow, as well as a recognition of the often thin talent pools for these positions. Training programs like those offered at Udacity and UpGrad, which teach these new skills, will become ever more important until traditional school curriculums catch up. Employers will also need to find new ways to evaluate these skills in absence of traditional markers like grades in the major.

5. Passion for talent & people ops: Perhaps my biggest and most exciting takeaway was: People love this stuff! In years past I’ve heard HR referred to as a backwater, an administrative more than strategic function within corporate hierarchies. Not at TechHR! I met so many thoughtful, visionary, brilliant folks who are truly engaged and passionate about finding better ways to find, recruit, train, retain, and unlock human capital at their orgs.

It was a terrific event for us to attend, particularly as relative newcomers to the HR tech space. Big thanks to Ester Martinez and the entire People Matters team for putting on a great show!

What are the other must-attend HR and tech conferences that we should make it to — in India and beyond? Let me know in the comments!

paradox of choice
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When Deciding Is Hard: The Modern Recruiter’s Paradox of Choice
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When Barry Schwartz first wrote and spoke about the “paradox of choice” in the early 2000s, he was grappling with the cute problems of an analog world, like how to sort through the varieties of jeans at a Gap, or how to choose among the bottles of olive oil at a supermarket. I wonder what he makes of our modern digital cornucopia of options and decisions, of all the choices beamed directly to our computer screens available for one-touch purchase. If he thought he had it tough then…

What is the paradox of choice?

Quick reminder: Schwartz’s idea is that, paradoxically, more choice is often worse for us, not better. It seems counter-intuitive — we like to be in control, we like it our way, right away, so the more options the better, right? Wrong.

Research continues to show that beyond some minimum threshold of optionality, more choice leads to trouble in three ways:

  1. Too much choice leads to paralysis, not liberation, as we try in vain to sort through options and make the “best” decision
  2. Too much choice leaves us less satisfied with our decision (when we can actually make one) because we’re confronted with a bewildering array of opportunity costs in the paths-not-taken
  3. Too much choice sometimes even leads us to make objectively worse decisions, because our brains grasp onto faulty heuristics to guide us through the data and variables.

The reality is, deciding is hard! Deciding requires cognitive effort, of which we have limited reserves. Ask Barack Obama, who as President of the United States was charged with making hundreds of critical decisions every day, and wisely found ways to reduce non-essential decision-making to a bare minimum. As he told Michael Lewis, he limited sartorial hemming and hawing to preserve energy: “You’ll see I wear only gray or blue suits…I’m trying to pare down decisions. I don’t want to make decisions about what I’m eating or wearing. Because I have too many other decisions to make.”

How does the paradox of choice effect recruiting?

So, imagine the double-edged sword of the modern recruitment marketplace. Job boards and social media have succeeded in aggregating jobs and job-seekers so that candidates are inundated with hundreds of what-might-have-beens and the-grass-might-be-greeners. And now, employers can often generate candidate pools into the thousands. The thousands! For a split second, this could sound like a recruiter’s utopia — and then the paradox of choice is front and center. The reality of stacks and stacks of CVs sinks in and we’re reminded of the scientific reality that this will almost certainly lead to a sense of paralysis, dissatisfaction, and poor decision-making.

Sure, you say, reviewing a thousand resumes would suck and might lead to a creeping dissatisfaction with whomever one ends up choosing. But does this proliferation of options actually lead to worse decisions?

More decisions = worse decisions

I’d argue yes, in most cases. When a recruiter or hiring manager is confronted with a thousand resumes, she or he must figure out a quick way to make sense of the pile, a strategy to quickly screen. Unfortunately, the most common strategy to triage a stack of resumes is to look for markers of familiarity, a thought process that sounds like, “Do I recognize the school names, do I recognize the company names, does this person seem like ‘us’?” Unfortunately, biases of this sort (which are often operating implicitly, not consciously) lead us to enshrine pedigree over ability and entrenches like-hiring-like, rather than diversity.

What can you do to simplify hiring choices?

At Shortlist, we’re hoping that our automated approach to screening big candidate pools will remove a large part of the bias creep and decision fatigue that hiring managers face as they grapple with the paradox of choice. Here are a few simple steps to reduce the number of choices you face on a daily basis, and improve your satisfaction with those decisions:

1. Establish upfront screening filters

For most positions, there are certain factors that are necessary to function in the role — things like speaking a local language, having a certain salary range or being willing to relocate. By pinpointing and filtering for these basic must-haves, you significantly cut down on your number of options to consider for a role, and save yourself the time of getting to know a candidate who ultimately couldn’t accept an offer or succeed on the job. We use an automated chatbot that asks candidates questions regarding basic fit (location, salary range, etc.). If they don’t fit the must-haves, we don’t advance them through to the next round.

2. Use competency-based assessments to identify top performers

Whenever possible, test applicants with competency-based assessments or case studies instead of relying on CVs and unstructured interviews to make hiring decisions. Generating data points on performance will help you objectively rank a long list of candidates and ease the stress of making choices.

3. Present decision-makers with essential information only

Whether you’re a recruiter sharing a list of candidates with a client, or a talent acquisition head who needs the hiring manager to make a decision, chances are at some point in the recruiting process you will be sharing information on candidates with others. Think about how much information you need to share on each candidate to help them make smart decisions without the stress. At Shortlist, rather than include every one of the hundreds of data points we collect on candidates, we share the important stuff while holding enough back to create a subtle sense of “magic” when the candidate who shows up for an interview is just right.

This article originally ran on People Matters.

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When Oxford Isn’t Enough: The Consequence of Network & Knowledge When Chasing Opportunity
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Oxford University is probably one of the only places that Harvard could envy for name recognition and prestige. It’s one of the oldest — and widely considered one of the best — schools on planet Earth. Surely, graduating from Oxford (and not otherwise screwing up) would mean you’re set for life. Right?

Maybe not. I read a New York Times story by Jenni Russell recently that showed the ways that even a top notch education wasn’t enough to ensure professional success today. With a focus on the UK, but telling a story that is true most places, Russell writes: “New graduates are entering a working world that is pitched as never before in favor of the well-connected, the socially knowledgeable and the rich.” The story goes on to discuss the various ways that class and social divides widen through childhood, secondary school, and university, in ways that contribute to a truly uneven playing field.

At Shortlist, we’re no strangers to the unfairness of the modern opportunity marketplace, and addressing the above disparities is what motivates us as a company.

This story was different though. At Shortlist, we often focus on those who miss out on opportunities because they didn’t work at the right company or go to the right school, but this story shares how even Oxford graduates face an uneven playing field, albeit a different kind.

Russell tells the story of one Oxford grad who grew up in a lower income household, working much harder than many of his peers to make it at Oxford. After graduating, he faced a host of issues that caused him to realize going to the right school isn’t enough if you don’t have other advantages, like friends who know the right companies; mentors who guide you towards the right internships at the right companies; and a financial backstop that lets you pursue unpaid internships and front the working capital for an apartment, a wardrobe, and those other sizable professional startup costs.

So even among Oxford graduates, differences in class, socioeconomic status, and social capital dramatically determine what opportunities one becomes aware of and is positioned to grasp.

I know it’s hard to pity an Oxford graduate; many have it so much worse. But that’s exactly the point: If even a hard-working Oxford grad can’t find a good job, what does that mean for the rest of the world?

For me, this piece was a great reminder of the (unfortunate?) importance of social capital in how opportunities are discovered and pursued.

In a similar vein, political scientist Robert Putnam differentiated between bonding social capital (networks among folks that are largely similar to each other, like family or a tight group of longtime friends) and bridging social capital (networks among those that are different, like the diverse network of people you might meet across a series of jobs or at business school). People have said that bonding capital helps one “get by” (as, for example, family or friends may provide food or shelter in a pinch) but that bridging capital helps you “get ahead” (by changing circumstances or creating opportunities).

Bridging capital can serve as an informal referral network permitting access to more diverse ideas and opportunities, particularly career opportunities. This is the kind of network in which your college friend at DreamCompany pings you with a “Hey, I’m going to share your resume for this amazing job that hasn’t even been posted yet” or “Hey, you really should try to do a summer internship before you apply for a full-time role.”

For many, university is the time to create these “weak ties” that lead to lifelong professional networks and career opportunities. And often the most privileged and savviest college students figure out that they may be better served by getting to know more people through athletics, extracurriculars and socializing at the expense of those extra hours of solo study to get an “A.” Unfortunately, it’s often those from first-generation college and lower-income households that don’t get the memo.

I’m struggling with what to do with that, and how we can recognize those disparities and do something to help as we try to create a more level playing field for talent, particularly in markets like India and Kenya.

Do you have any ideas? If so, I’d love to hear from you.

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Human Capital: The Other Capital in Impact Investing
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Why Human Capital May Matter More than Money, and What Investors Can Do About It

human capital

Impact investing, in the words of Mugatu, is “so hot right now.” More than $15 billion a year is flowing into impact investment, fueled by a growing appreciation for the ways business and market-based mechanisms can drive positive change in the world. This is great news! I’ve been working in the social enterprise world for more than a decade, from my early days as a wannabe begging for an unpaid internship in India, through stints at a fast-growing microfinance institution and a seed impact fund, and now co-founder of a social enterprise of my own. But money is not enough for impact businesses to succeed; they desperately need an answer to their human capital challenges to unlock their world-changing potential.

As an investor, I saw firsthand how deeply companies struggle to recruit and retain the best talent, cultivate senior leaders and define the right culture and values. This cross-cutting challenge is not confined to one sector, and deserves much broader attention and action, in a similar way that multiple sectors unified and rallied around impact investing over a decade ago.

There is definitely some great work underway in worlds beyond impact investment, with myriad funders, nonprofits and even companies dedicated to human capital issues around the world. Firms specialize in delivering leadership training, running fellowship programs as social enterprise on-ramps, providing all varieties of up-skilling to in-market talent, and promoting talent management best practices. But while impact investors have at times mobilized around cross-cutting ecosystem factors like capital markets, regulatory frameworks and distribution infrastructure (which is great!), most relegate talent topics to side conversations and suppose portfolio companies will figure it out on their own.

I hope impact investors can start to understand the many ways that human capital issues are worthy of more attention, lest all this money flowing into the space will not be leveraged to its fullest potential.

Why does human capital matter?

How do we dimension this human capital problem, and why should the impact investing world care?

Bottleneck to growth and impact

Entrepreneurs and managers consistently cite variations on “not finding the right people” as one of the biggest challenges and constraints to scale, ranked on par with or sometimes even higher than funding. One study recently found that once they’ve raised capital, 75 percent of early-stage entrepreneurs believe that the inability to attract and retain talent is a critical impediment to scaling. McKinsey has found that over half of companies the world over cannot find qualified candidates for entry-level roles. During my time at Accion Venture Lab, we surveyed 35 financial inclusion CEOs around the world and found that talent was the top issue facing their organizations and the single most important issue to them personally (above funding).

For companies, vacant positions stall growth and cause quarterly targets to slip. Making the wrong hire can be even more costly than none at all, given the amount of time and money invested in new employees. A recent global study found that 69 percent of employers reported that a bad hiring decision put a strain on their company, and other data reveals that up to 50 percent of hiring decisions were considered a mistake. Even further, if a company can’t effectively develop its team, the failure of employees to realize their potential directly impedes the company’s growth and impact potential.

Fixing a rigged opportunity marketplace

Beyond measures of enterprise-level underperformance, impact investors should care about fostering more fair and transparent job marketplaces as ends in themselves. More than just income, work for most people shapes identity, self-worth and personal fulfillment.

Unfortunately, today’s labor marketplace is rigged. Job opportunities are determined far more often by factors like pedigree, connections and bias than genuine ability and merit. Researchers from the University of Chicago and MIT have found that white-sounding names had a 50 percent better chance of being called for an interview than African-American sounding names, and similar biases exist globally around race, gender, religion and more. Further, in emerging markets, where access to opportunity is more often determined by “birth lottery” (the initial conditions into which someone is born) than ability, mindset and hard work, impact businesses need a better way to identify competencies and match talent to opportunity. We need to shift the recruiting paradigm from pedigree to potential.

This isn’t charity, it’s just about leveling the playing field and giving talented people the chance to be considered for life-changing opportunities on the basis of what matters, rather than what doesn’t.

Why is human capital being under-supported by impact investors?

If focusing on talent is such a big opportunity, why wouldn’t impact investors be all over this? How can we account for this apparent “impact market failure”? Without belaboring the point, there are a few issues that might explain the minimal attention:

· No owner: Most funders are issue- or sector-specific, and because human capital doesn’t “belong” to a single sector, it often slips through the cracks.

· No comfort zone: When all you have is a hammer, everything looks like a nail — and at present, most impact investors come from financial backgrounds and are more comfortable talking money than people.

· No easy answers: Human capital is a many-headed beast, implicating structural issues like local education systems and globalization; individual differences in personality, circumstances and abilities; firm-level differences in organizational context and culture; and so on. It touches everything and resists easy fixes.

· No success stories: Most sectors become “a sector” when a successful new model shows potential. Microfinance’s rise gave birth to “financial inclusion” and solar pioneers gave birth to “access to energy” as fields with dedicated funding pools, in-depth research and dedicated convenings. There haven’t been human capital posterchildren yet, but I’m hoping the rise of impact-oriented talent players like RippleWorks, Omidyar Network’s human capital team, African Leadership Network, Spire, African Management Initiative, and my company Shortlist can start to change that.

· No convening body: Financial inclusion has CGAP (and others), solar lighting has GOGLA, cookstoves has the Global Alliance for Clean Cookstoves — and, of course, impact investing has the Global Impact Investing Network (GIIN). Unfortunately, the GIIN of human capital just hasn’t been created yet.

What can we do about it?

I hope more funders start to recognize the critical importance of human capital as the foundation for the success of the impact enterprises and initiatives we’re all supporting. A number of groups have started doing research and a small but growing body of literature is emerging on talent and human capital. But we need more to further diagnose the problem, understand the ecosystem, contextualize issues and ideas to local markets, and make recommendations for action (at both an ecosystem and firm level).

We also need more pioneering investors to see this as an area of great opportunity. Omidyar Network has been a leader here, setting up an in-house “human capital” team to help their investees attract, develop and retain top talent — but I’m not aware of other impact investors who have shown such commitment. Organizations like Argidius Foundation, Blue Haven Initiative and AHL Venture Partners (all funders of ours) have made human capital a focus area, but they are the exceptions (unless the broad bucket of “education” or “edtech” counts). At Shortlist, we just went through a fundraising process and heard a similar refrain from many impact investors: “Human capital is not within scope or is not a mandate fit,” or “human capital only counts as ‘impact’ if focused on people making less than $2 a day.” I’m hoping more investors and funders start to see this as an important issue with the promise of system-level impact, up and down the salary scale.

Even for investors who don’t start investing in human capital companies, I hope they can focus more actively on human capital issues within portfolio companies. When making an investment, go deeper than assessing the co-founder biographies: Spend time understanding the organizational structure, staffing plans, recruitment strategies, training programs and the company’s values. I’ve seen impact investors spend weeks digging through financial models, formation documents and board minutes, but not ask a single question about the culture and sub-C-suite team. If investors cared more about people, so would entrepreneurs — you can help entrepreneurs prioritize people just by asking about them.

We also have an opportunity to learn from mainstream global trends around the future of work and the evolving higher education landscape. It’s a heady time with many calling for the unbundling and disruption of higher education, the digitization of economic opportunity, and new tools to help companies find, recruit, manage and train talent. Let’s learn from the best and bring these new practices and technologies into our markets and investments.

Finally, let’s turn this into a sector, shall we? I, for one, would love to see a dedicated resource center focused on “talent for impact” that could bring together the best research, resources, brains and energy around the world to help impact investors and social enterprises alike. That’s a conference I’d show up for, and bring my friends.

This article originally ran on NextBillion.

Related: To Be or Not To Be (a Social Enterprise)

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