KELLER (2017). POSTING AND SLOTTING: HOW HIRING PROCESSES SHAPE THE QUALITY OF HIRE AND COMPENSATION IN INTERNAL LABOR MARKETS

Author:

JR Keller – Cornell University, School of Industrial and Labor Relations

Interviewers:

Yuna Cho – Yale School of Management

Rui Shen – Peking University, Guanghua School of Management

Article link: http://journals.sagepub.com/doi/abs/10.1177/0001839217736045

Question 1: This article is based on your dissertation work. Could you share with us how the research idea was developed and evolved along the way? What motivated or inspired you to pursue this research question?

At the risk of boring anyone who reads this, I’ll give you the long answer. I have always been curious about how people move across jobs and organizations. When I was a kid, my dad would take me to Denny’s every Friday afternoon and we’d split up the newspaper – he’d take the actual news sections and I’d take the sports section and pore over the transactions, wonder why this team signed this player, why trades happened, etc. I still love sports, but often find myself more intrigued by the transactions than the games themselves.

Then when I got my first job out of college, what struck me the most was how challenging it was for the organization to hang onto employees in whom they had invested incredible amounts of time and money. I was a part of a rotational development program and by the end of the two-year program, half of the participants had left for other organizations or to pursue entirely different careers. I found this endlessly more fascinating than finance, so I made a career change. I took a job at a career center in a business school, where I counseled students about their careers and help employers interested in recruiting our students. I thought this would give me unparalleled insight into contemporary careers, but all it did was lead me to ask more and more questions and eventually to a PhD program so I could figure out how to answer them.

When I got to Wharton, I had the fortune to work with some amazing folks who were asking similar questions. In particular, Matthew Bidwell had recently authored a paper (at ASQ, of course) showing that internal hires routinely outperformed external hires. He and I then collaborated on a paper looking at when managers were more or less likely to hire internally or externally. Through this work, I came to become very familiar with the literature on internal labor markets. It struck me that much of the most influential work on this topic was written in 1970s and 1980s. I love all of this work, including Doeringer & Piore (1971), Sorensen & Kalleberg (1981), just about everything by James Baron, much of which was published in ASQ. I wanted to pick up this mantle (in a very small way) by helping to advance our understanding of the structures and process that facilitate mobility within contemporary internal labor markets. Examining how people actually move across jobs within firms seemed like a good place to start.

Question 2. Your article tells a very interesting story about posting and slotting strategies in internal hiring. Your findings suggest that hiring through posting (rather than slotting) generally leads to better outcomes. From your perspective, why might many firms still hire people by slotting? What do you think could be the boundary conditions for your findings? For instance, when you presented your findings to HealthCo, how did they respond?

I think that there are four primary reasons some managers prefer to slot. The first is overconfidence. Managers feel that because they know someone, they have better information on how well they will perform on the job as compared to someone they do not know who applies to a job posting. The second is that managers are likely to use the process that worked for them. If they were slotted into their job, they are likely to assume that slotting works best. I actually find some evidence for this in the data. The third is time. When managers have an open job, it means that work is either not being done or that the current employees have to take on a heavier workload. If a manager has someone in mind and can fill the job without going through the process of reviewing resumes and interviewing candidates, slotting that person in the job can be quite appealing. The fourth is some combination of politics and favoritism. Managers may simply want to help their friends or help someone out who will “owe them one” in the future. However, I do not think this happens as much as we might expect, in part because hiring an underqualified candidate can make a manager’s life very difficult. Understanding when and why mangers use these different processes would make for an excellent follow-up study. In fact, I had hoped to be able study this as part of my dissertation, but I did not have access to the data I would need to do it.

Perhaps my biggest caution, and something that came up in my conversations about the results with HealthCo, is that simply requiring managers to post jobs will not lead to better decisions. When presenting these results to practitioners, I make a concerted effort to emphasize that posting is not a cure-all to internal hiring mistakes. For posting to be truly effective, managers must be willing to fully consider all of the candidates that apply, evaluate them against a set of established criteria, and be required to explain to unsuccessful candidates why they were not selected. Posting does not result in better hiring decisions if managers just go through the motions, posting jobs because they are told to while turning around and immediately hiring the candidate they otherwise would have slotted.

Question 3. As you mentioned in the article that one of the reasons for “little research” on internal hiring is the data availability. Based on your experience (for this project and others), what might be some tips and suggestions that you would give for gaining access to such extensive and private data (e.g., personnel records)?

Access to personnel data can be challenging and my sense is that it is getting more difficult both because organizations have heightened concerns about data privacy and because of an (often unfounded) concern that our findings will somehow paint them in a negative light.

Against this backdrop, I would offer two pieces of advice for accessing organizational data. The first is to understand what the organization is struggling with and how you can help them. This often starts by approaching an organization with questions about what they are experiencing rather than with a formal research proposal. If you can then convey how the question you are interested in maps onto their concerns, you are in position to get the buy-in you will need from key decision makers within the organization. This will also get them invested in the project, so if you later need additional data or have clarifying questions about the organization or the data, they will be much more receptive to your requests.

The second piece of advice is to proactively address concerns an organization is likely to have. For example, make sure to express that the company will remain anonymous, that no individual employees or unit will be identified, and that they will have the opportunity to review any publications prior to publication to ensure this is the case. You also want to let them know that you have a data security plan in place. I have found that one way to address these concerns is to send them actual contract language from a typical NDA/DUA that your university has negotiated with another company. You can ask your Office of Sponsored Research for previous templates.

Question 4. Together with the main quantitative analyses, you also conducted interviews with HealthCo employees as well as surveys with 50 other large U.S. firms. How did you think to combine these different research methods, and were there any challenges that you faced?

In terms of using multiple data sources, my reviewers encouraged me to account for the full universe of internal hiring process used within organizations and how slotting and posting fit into this universe. Having talked with multiple organizations about internal hiring during the course of this and other projects, I felt I had a good sense of what these processes were and how often they were used, but I had no data to backup this largely anecdotal evidence. Because I always complain about the lack of data on internal hiring, I thought it made sense to put in the effort to collect this data myself. I spend a couple of months trying to partner with an HR consulting firm in order to survey several thousand US organizations about their internal hiring practices, but that effort was ultimately unsuccessful. However, I was fortunate to have access to a number of large employers through the Center for Advanced Human Resource Studies at Cornell and the Center for Human Resources at Wharton. Because these organizations are interested in HR topics, I was able to get a good response rate. While the survey is not representative, it is nonetheless illustrative and, I hope, call attention to the value of basic descriptive in some of the work that we do. I had connections at those centers, as I currently work at Cornell and did my PhD at Wharton, but that isn’t to say that such centers are inaccessible to others. One of the reasons organizations join these centers is to find out more about what other members are doing, so to the extent your data collection efforts can provide useful insights, it is worth considering which centers you might approach.

I also conducted additional interviews to address reviewer concerns. In the paper, I theorized that posting and slotting work lead to different starting salaries through the way they influenced salary negotiations, but did not have data on the negotiations themselves (e.g. initial and final salary offers). A consistent challenge I have run into studying hiring and mobility as a macro-oriented researcher is that it can be difficult to observe the mechanisms underlying many of the outcomes I am interested in and that is what happened here. In this case, the interviews allowed me to shed light on what was really going on, as employees and hiring managers were very candid about how they approached internal salary negotiations.

Question 5. The topic of internal hiring is new and relatively under-researched. Did you face any particular challenges during the R&R process? What were the most challenging comments raised by the reviewers and how did you respond to their comments? What are some follow-up research projects that you are planning to pursue in this domain? 

The R&R process was challenging but supportive. I submitted this paper to ASQ because it is the home to much of the seminal work on internal labor markets. It is only because of the time Forrest Briscoe and three anonymous editors put into articulating their concerns and suggesting ways to address them that this paper now shares the pages with some of my all-time favorite articles. I discussed two of the more challenging comments above. Perhaps the most useful (and challenging) comment was that I needed to provide a more coherent and realistic model of hiring. In doing so, the reviewers encouraged me to engage more directly with the HR literature on hiring, which eventually led me to conceptualize the hiring process as a decision-making process involving multiple stages.

This paper extolls the virtues of posting, but one consequence of posting jobs is that it generates rejections. When an organization encourages its employees to apply for posted jobs, it also increases the likelihood that an internal candidate will experience rejection, and prior research has shown that rejecting an internal candidate can have significant negative consequences for an organization. Facilitating internal mobility through posting while minimizing the potentially harmful consequences of internal rejection is therefore a central challenge associated with managing contemporary internal labor markets. The follow-up project I am most excited about explores how firms can mitigate the negative outcomes associated with internal rejections. Because I was able to develop a good working relationship with HealthCo, one of my talented doctoral students, Kathryn Dlugos, and I are now collecting data from a field experiment that we hope will allow us to identify actions organizations can take to convince high caliber individuals to remain with the organization even after they have experienced an internal rejection.

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