No One Left To Hire

Slackers. Felons. Misfits and clueless beginners. Here's how to manage the workers you wouldn't hire if you didn't have to

Here's how it goes on the front lines of the labor shortage these days. Gail Laindley, CEO of Denver Bookbinding Company, is learning new executive skills, such as negotiating with her workers' parole officers to schedule time off for their "anger management" classes. Or showing an immigrant from an upper-class background how to use a broom. Or smoothing the feathers of a man who balks at taking orders from women--in a company run by three generations of them, no less. Ask Laindley why she puts up with it, and she'll ask you, in turn, just what alternatives you have in mind.

With unemployment nationally running at 4% and even lower in some hot regions, it's a great time for anyone to be an employee: You can hop jobs and demand raises practically at will. But for those who might be called the "challenging worker"--like the account rep at a D.C.-area PR firm who for months took cat-naps during client meetings without getting fired--it's an absolutely extraordinary time. People whose resumes five years ago would have hit the trash can in the blink of an employer's eye are now considered precious hires.

No denying, there's a social benefit here. Folks with no skills, for instance, can get a foot on the economic ladder, and people in need of a second chance find one. No denying, either, that the "challenging worker" poses a major challenge, if not an outright threat, to the beleaguered entrepreneur's business. At Laindley's 80-year-old family bookbinding business, the error rate has soared from below 0.5% to 3%, an increase she attributes to a less skilled workforce beset by many more personal and social problems. Some employees, like several political refugees and the paroled prisoners, need big chunks of time off to handle family problems. More often, her workers are tardy. To make up for lost time and productivity, she's had to extend the workday to nine hours, and lately, she's been out on the factory floor with a crew that includes felons convicted of assault and vehicular homicide.

You got a problem with that? David H. Melvin doesn't. He not only hires convicts and parolees--he prefers them to the alternatives. Melvin, who owns a 50-person consulting engineering and land-surveying firm in Marianna, Fla., got tired of what he found at the bottom of the barrel: guys who walked off the job whenever the weather turned overly hot (which, in Florida's panhandle, is pretty often). "It's just that we seemed to be hiring employees who didn't have a lot of work ethic," complains Melvin, whose company has about five unfilled positions at any given time.

So these days, Melvin chooses "character" over specific skills. It's not clear whether convicts develop character behind bars or take it to prison with them, but the fact is, Melvin finds that the ex-cons and participants in various work-release programs in his county show up--and stay all day. At first, he worried how his existing staff would react to the new workers, so he promised he wouldn't bring them on over their objections. "Some of them had to think long and hard. One guy had to watch Touched by an Angel one night to finally change his mind," he says. "But ultimately everyone signed on."

Sure, there are problems. He has to work around the prisoners' travel restrictions, and, he acknowledges, some of his supervisors don't "feel as comfortable leaving people here to work at night, unsupervised." But there haven't been any incidents, Melvin says happily, nor have any old-timers quit. Still, that's not a benchmark he--or any other sane employer--would have used a few years ago.


As the comedian might ask, how bad is it? Bad enough that 61% of small Chicago firms polled by consultants Challenger Gray & Christmas say they have had to lower hiring standards. Bad enough that 61% of small and mid-size companies surveyed by Arthur Andersen in March said the shortage of qualified workers is the "most significant challenge" they face to both growth and survival. Bad enough that the American Management Assn. reports many employers are dropping pre-employment drug, medical, and psychological screening. And bad enough that Howard Leifman, "Chief People Officer" at Inc., a New York Internet startup, pines for the 1980s, when he worked as a job placement counselor at New York University.

Back then, employers had the upper hand, recalls Leifman, whose company runs an online job placement board and information Web site. "Now it's the total opposite. The candidate can sit there like a lump and get hired." Leifman isn't talking about factory workers. His "lumps" are the kind of people who work for chi-chi dot-coms in places like Manhattan. Specifically, he's talking about, where the whole notion of "qualified worker" has undergone a radical overhaul. "We used to be a lot more selective," he says. "If a person didn't have 12 specific qualifications, we wouldn't hire them."

No more. Under the company's New Thinking, they've broken down the list of qualifications into two categories: Essential skills first, and second, other nice traits such as a pleasant disposition or strong work ethic. "What we sacrifice is their personality, and they can be difficult to manage," he concedes.

Take punctuality. "People were not just coming in late, they were coming in any time they wanted to," he says. Although the company allows some flexibility in work hours, problems arose when no one on a particular team showed up until noon and clients went unserved. His solution: let teams create their own schedules. If anyone on the team doesn't stick to the schedule, they face termination. "I don't care how tight the labor market is," says Leifman.

Such notions of compromise are becoming common at small companies. The issue, say experts and entrepreneurs, is setting realistic goals and then managing your challenging workers creatively--and aggressively.

Sometimes it pays off, as it did in the case of the hopeless data entry clerk that a temp agency sent to Nelson Motivation Inc., a management consulting firm in San Diego. President Bob Nelson could have dumped the clerk right away, but there was something about the recent high school graduate that he liked. By taking a little time, he discovered the young man didn't even have basic data entry skills--or enough experience in the world of work to know he should ask for help. So, he offered him a full-time job, answering the phones and handling other light office tasks. "He was a very quiet, focused, steady type of employee, someone you could see investing in and that he'll be with us a while," says Nelson. Then, having freed his office manager of routine tasks, he restructured her job to focus on data entry and other higher-level tasks. The alternative to such creativity? Give up--which is more or less what Richard M. Alessi, owner of Alessi Manufacturing Corporation, a 30-person machine shop in Collingdale, Pa., has done. He tried hiring unqualified workers with hopes of "home growing" them, but they tended to quit two or three months down the road. Lately he's passed up several million dollars of new business. "I think that my business could have, and should have, grown a third larger than it is today--and that's being conservative," he says.

Few entrepreneurs are willing to take such hits without a fight. So, they continue to cope, improvise, prod, maneuver--and put up with the unthinkable. There's the employee of a data-processing firm who works weekends as a deejay on the rave scene, and makes Monday his day of rest. The receptionist at a publishing company who is out two days a week to deal with her problem teenagers. The executive at a CPA firm with a sought-after speciality--and a temper that's led seven of his assistants to quit. And that's just what David Halpern, president of the Alternative Board, a consulting firm in Denver, reeled off the top of his head.

Yes, it's the best of times. And if they get any better, business owners will fondly recall the days when there was still a barrel with a bottom to be scraped.

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