Recruiting and Staffing

Refusing to Consider the Unemployed? Read This and Then You Decide

HR should not ignore or avoid hiring the unemployed.

Is it a good idea for firms hiring to purposely exclude the unemployed from consideration?

If you missed the news last summer (June 2010) about the growth of this practice, then you might be scratching your head and thinking to yourself, “that’s crazy.” However, for those that follow trends and deal with job postings daily, it’s clear that postings increasingly contain some variation of the phrase “you must be currently employed in order to be considered.”

For example, a posting made last week to CareerBuilder by an Alabama restaurant chain made the requirements crystal clear by putting the word “currently” in all caps”

“Must be CURRENTLY employed as a restaurant manager”

Finding examples of the phrase in use is not difficult; postings can be found on all of the major job posting sites including Monster, CareerBuilder, and Craigslist. The increased usage of this practice can most likely be attributed to a growing percentage of unemployed persons who have remained unemployed for more than 18 months. While not a proven fact, many assume that prolonged unemployment leads to deterioration in skills and knowledge, or obsolescence in roles where knowledge becomes obsolete quickly.

Refusing to consider the unemployed is not a practice limited to a few professions. In my research, I found ads for manufacturing roles, medical provider roles, and law firms.

This practice raises a great deal of emotion among both the unemployed and advocates of social responsibility. While I have never recommended this practice, corporate recruiting managers should examine both understand the benefits and drawbacks prior to dismissing/adopting it.

Drawbacks of refusing to consider the unemployed

There are more negative arguments associated with the practice than positive ones, including:

  • A smaller talent pool. In some cases, layoffs are designed to eliminate poor performers and those with obsolete skills first. However, facility closings also contribute to unemployment, and this hiring restriction would cause you to miss former top performers who were released do the facility closure. If skill obsolescence is the issue driving the restriction, managers need to remember that it is possible for the unemployed to maintain/improve their skills through classes, reading, and self-directed learning. Is also true that some skills like customer service do not deteriorate a great deal during long periods of unemployment.
  • Potential legal issues. Although the practice is not illegal (unemployed people are not a protected class under U.S. law), it may certainly result in an adverse impact if the unemployed population is disproportionately made up of protected individuals.
  • Employer brand image. This practice may result in a barrage of negative comments and questions from the media, your socially conscious customers, and even your employees. Most firms remove the restriction when the press begins to call.
  • Lost sales. If the unemployed have been, are now, or will be future customers, you can expect your sales to be negatively impacted if there is a large amount of negative publicity.
  • Desperate people will ignore it. Because unemployed people are “hungry,” it is highly likely that they will work hard and be loyal. It is highly likely because of that hunger or desperation that many of the unemployed will simply ignore your limitation and apply anyway. As a result, you may still have to sort through almost as many applications.
  • It runs counter corporate social responsibility “talk.” While many firms that claim to be socially responsible rarely move past talking about it, if your firm truly tries to be socially responsible, this practice would most definitely violate all adopted standards.
  • Missed tax breaks. If you refuse to hire the unemployed, you will miss out on some significant tax breaks.
  • Lost wage rightsizing opportunity. Skills increase and decrease in value, but rarely do firms adjust wages downward. Refusing to hire the unemployed, who would be more likely to accept a reduced wage, ignores an opportunity to help adjust real wages to actual market value.

Obviously the ability to adopt this practice and the impact it would have varies around the world and from organization to organization. Government agencies and not-for-profit organizations would never consider such policy, and firms that count the unemployed among their key customers would suffer more economically post adoption.

Benefits of refusing to consider the unemployed

The primary driver of refusing to consider the unemployed is a desire not to hire someone whose skills have grown rusty, who has lost their contacts, or that possesses outdated knowledge. Some of the other benefits driving adoption of this practice include:

  • Reduced new hire time to productivity. Hiring individuals who are sharp and “not rusty” means that the new hires will reach their “minimum productivity levels” much faster.
  • Reduced training costs. If new hires have obsolete skills and outdated knowledge because of their long period of unemployment, the organization would need to invest more in training (compared to currently up-to-speed individuals), thus raising costs and lowering the ROI of the hire.
  • Current contacts are needed. In some jobs, contacts and continuing relationships are essential. Although it is unfair to assume that all unemployed fail to maintain their contacts, it is also sometimes true that key individuals don’t have the same interest in maintaining relationships once someone loses their title and power.
  • Knowledge of current technology is needed. In jobs where large enterprise-wide technology (both hardware and software) is continually updated, working knowledge of the latest generation of technology is required. Unfortunately, unemployed individuals cannot easily maintain their fluency on technology that is not available to someone outside of a corporation.
  • Reduced recruiter workloads. Reducing the number of applicants (because of recruiter or hiring manager bias against the unemployed) lightens the workload of both recruiters and hiring managers. Because every applicant has the right to file a complaint or to sue, reducing the number of applications could conceivably reduce your legal risk. For resource managers who must calculate the likelihood of success, the question must instead be “what percentage of the unemployed are top performers and is the ratio high enough to justify the cost and time involved.” In a resource-limited process, probabilities must rule over emotion.
  • Increased learning from competitors. Hiring exclusively from among those currently employed increases the chance that you will learn about a competitor’s current best practices during interviews and upon hire. If you want to proactively “hurt” or learn from a competitor, hiring its best current employees is clearly superior to hiring individuals who may not have worked at a competitor previously.
  • An abundant talent pool — even if firms exclude the unemployed, in most states 90 percent of the population is still available to them as potential hires.
  • Lower turnover rates. Currently employed individuals are at least theoretically more likely to take a job and stay in it for a while. The unemployed, because of their weak economic situation, may be “forced” to accept any job initially, then may trade up the moment better opportunities arise.

Final thoughts

All good recruiters should know what the competition is up to. Whether you agree or disagree with this particular practice, the concept of restricting applications to save time, money, and to avoid legal issues is here to stay.

Organizations have begun to learn the most effective and legally viable methods to reduce applications from applicants who have no real probability of reaching the interview stage.

Restricting applications from the unemployed is a controversial approach, but others do exist. Realistic job previews, more distinct job descriptions, discouraging text on the application, and requiring applicants to pass a preliminary assessment screening are options for reducing not-qualified applicant volume.

Dr John Sullivan is an internationally known HR thought-leader from the Silicon Valley who specializes in providing bold and high business impact; strategic Talent Management solutions to large corporations. He’s a prolific author with over 900 articles and 10 books covering all areas of Talent Management. He has written over a dozen white papers, conducted over 50 webinars, dozens of workshops and he has been featured in over 35 videos. He is an engaging corporate speaker who has excited audiences at over 300 corporations / organizations in 30 countries on all 6 continents. His ideas have appeared in every major business source including the Wall Street Journal, Fortune, BusinessWeek, Fast Company, CFO, Inc., NY Times, SmartMoney, USA Today, HBR and the Financial Times. He has been interviewed on CNN and the CBS and ABC nightly news, NPR, as well many local TV and radio outlets. Fast Company called him the "Michael Jordan of Hiring”, Staffing.org called him “the father of HR metrics” and SHRM called him “One of the industries most respected strategists”. He was selected among HR’s “Top 10 Leading Thinkers” and he was ranked #8 among the top 25 online influencers in Talent Management. He served as the Chief Talent Officer of Agilent Technologies, the HP spinoff with 43,000 employees and he was the CEO of the Business Development Center, a minority business consulting firm in Bakersfield, California. He is currently a Professor of Management at San Francisco State (1982 – present). His articles can be found all over the Internet and on his popular website www.drjohnsullivan.com and on www.ERE.Net. He lives in Pacifica, California.
  • http://twitter.com/CareerCurve Jen Turi

    Good post. I still think the bottom line is that by not considering the unemployed and assuming the stereotypes are true, you run the risk of missing out on potentially great employee. I wrote a post about this a few months ago and really thought this practice would probably be gone by now. Guess I was totally wrong about that.

  • Rich Boberg

    I just don’t understand this practice. In today’s economy, I see it as an opportunity to be able to hire high quality candidates that would not have been on the market in a stronger economy.

  • http://www.planbcomms.com Susan San Martin

    One of the mistakes I see employers making if they feel strongly about excluding the unemployed from the candidate pool, is that they are not looking at the reasons behind the unemployment or the duration of it. In some cases, entire functions (like Communications) were severely cut or eliminated completely with the remaining responsibilities being absorbed by other already overburdened professionals. (This differs from facility closings where a range of functions are eliminated.) Now, many employers are realizing the impact of over-cutting and are slowly rehiring. The original decisions, however, should not be seen as a reflection of the value or potential contribution of the individual, but rather the perception of where strained budget dollars should be allocated.

    Additionally, as a retained recruiter, I have talked with hundreds of viable candidates who are not willing to risk the stability of their current roles to engage in a new search — a better safe than sorry philosophy. While this, too, is changing, an employer who insists on hiring only those currently employed can face a prolonged search process that could hurt the company if the immediate need is a critical role. I am always focused on understanding the reason for the unemployment and then sensitively articulating that to my hiring clients who, thankfully, always listen.

    • http://twitter.com/Pat_Hirigoyen Patrick Hirigoyen

      Good post, Susan, especially in terms of what employers ought to consider. As for job seekers, they can deal with this reality by showing how, during their unemployment, they’ve done consulting or contract work to “keep their hand in the game,” developing new skills or knowledge (e.g., getting an MBA), or applying skills/knowledge and developing professionally through volunteer work. It’s one way of “closing the gap.” If hiring managers don’t recognize that, they may be missing out on good talent.

    • JB

      I wish there were more thoughtful and intelligent recruiters out there like Susan. I decided to take a professional hiatus from a very large corporation. Some people thought I was crazy. Others could not have been more encouraging. I have worked part-time as a consultant and now am looking to re-enter the full-time corporate world. After much work and reflection, I am now a completely ‘self-aware’ person, highly motivated and excited about my future. I have never been better and I will be a fantastic new asset to the next company I join. Is my story a bit unconventional for an Ivy-league MBA?? Sure!! But I think that those companies that are striving to be excellent in today’s marketplace need to “think outside of the box” in the event that somebody like me is ready to dedicate the rest of their career to their organization.

  • Djghost215

    Employers miss out. Interviewing the possible best candidates is the best practice no matter if they are unemployed. In this day and age, people are being laid off for many reasons. They can be top performers, and depending on the industry, skills don’t become obsolete that fast.  Also, some may have gone back to school while unemployed too.  You have to go through the interviewing to see.  If the employed jump ship from another company, they will do it to u, especially if they don’t like your work environment.