Smarter screening takes technology and HR savvy: there are fewer jobs now, but no fewer applicants. Here is how companies are staying ahead of the resume flood, and how they track, test, and screen applicants to find the best people

Workforce, June, 2002 by Samuel Greengard

Over the last few years, Armnon Geshuri has watched the labor market engage in more contortions than an Olympic gymnast. During the peak of the economic boom, attracting applicants was next to impossible. Then, when the labor market went into a tumble and layoffs began to swell, the director of global staffing at E*Trade Financial in Menlo Park, California, suddenly found himself taken to the mat with a glut of applicants.

The one constant throughout the entire period: a sophisticated applicant-tracking system and advanced screening methods have helped E*Trade Financial score when it comes to finding new employees. The brokerage and banking firm is finding better workers more quickly. "In any market, finding the right talent is key," Geshuri says. "Today, effective applicant tracking and screening is what differentiates companies and creates a competitive advantage."

As companies battle for talent and place a growing premium on human capital, they're looking for more advanced ways to conduct applicant tracking, recruiting, and screening. Many organizations are also concerned about the fallout from the events of September 11. "Over the last few years, there have been tremendous changes to the entire recruiting process. Organizations are turning to applicant-tracking and screening systems to find qualified candidates and make sure people's identities check out," says Jane Paradiso, recruiting solutions practice leader at Watson Wyatt Worldwide.

First-generation applicant-tracking systems merely collected resumes and offered rudimentary search capabilities. Current systems--whether they're used in-house or through job boards--enable human resources and line managers to oversee the entire recruitment and applicant-tracking process, from mining resumes and spotting qualified candidates to conducting personality and skills tests and handling background checks. In fact, some of these applications are able to generate detailed profiles, which include education, background, skills, behavioral attributes, work history, and salary requirements. In most cases, the goal isn't merely to reduce costs but also to speed up the hiring process and find people who fit an organization's success profile.

Finding diamonds in the coal mine

With millions of individuals posting resumes online, finding qualified candidates can sometimes seem like a Herculean task. And while the current economic downturn has alleviated the severe labor shortage that has wracked the corporate world in recent years, finding the right person and ensuring that he or she has the right skills for a particular job remains a daunting job--with or without technology. "Too often' says Lou Adler, president of Power Hiring, Inc., a recruiting and consulting firm in Tustin, California, "excellent candidates slip right under the radar while poor candidates wind up being interviewed and sometimes hired."

Companies are turning to more sophisticated human resource management systems from well-known companies such as PeopleSoft, J.D. Edwards, Oracle, SAP, and Ultimate Software to manage applicant tracking and candidate screening in a more centralized way. But these systems alone aren't enough to ensure success, Adler says. It's essential for HR and line managers to have additional tools to filter out unwanted resumes, search for candidates with particular skill sets, and use other filtering techniques such as skills testing and psychological testing.

That approach has worked at E (*) Trade Financial. A few years ago, the firm found itself buried under faxes, e-mail, and old-fashioned paper resumes. That slowed the hiring process to a crawl, Geshuri says. So, E (*) Trade Financial opted to migrate from paper to pixels. It installed an applicant-tracking system from Icarian, which connects to its Oracle HRMS.

Now when there's an opening, HR and line managers can pull the appropriate job code from the Oracle database and send a detailed list of job requirements to the Icarian applicant-tracking system. It's then possible to match resumes to specific criteria and view a list of potential candidates. The system also automates requisitions and can slot the appropriate new-hire data back into the Oracle HRMS. That has provided an 80 percent decrease in data entry, reduced the reliance on outside recruiting firms, and helped E (*) Trade Financial spot better candidates.

The increasing use of keywords to screen and filter applicants can prove dicey, however. Organizations that rely too heavily on software can find themselves overlooking highly qualified candidates who do not match specific criteria. "In some cases, the best candidate might not have a specific skill but can learn it," says Terry Terhark, a senior vice president at Aon Consulting in Findlay, Ohio. Other organizations don't spend enough time and resources fine-tuning a system to uncover the best candidates. They pull up too many resumes matching the desired keywords but too few that are outstanding.

As a result, applicant-tracking vendors are developing systems that not only let recruiters search on keywords but also conduct analysis of the words and weight them according to how often they're used and their relationship to one another. Others, including Wonderlic and ePredix, have introduced "performance" filters. Applicants fill out a brief questionnaire, and the system ranks them on the basis of specific criteria, such as their past ability to reach quotas, win awards, and earn a certain commission. At that point, a recruiter or HR specialist can schedule a brief follow-up phone interview to ensure that the information is accurate. Then the company interviews the finalists and makes a selection.