Capital One is Renowned for Innovative Recruiting Strategies

Noone said it would be easy to find and retain roughly 5,000 qualified employeesin less than a year – especially in an industry that’s renowned for its highturnover rate. But where others failed, the Falls Church, Virginia-based CapitalOne Financial Corporation flourished – thanks, in part, to a series of humanresources strategies.

    Lastyear, Capital One realized another explosive 41 percent earnings growth. As oneof the nation’s largest issuers of Visa and MasterCard credit cards, withmore than 16.7 million customers and $17.4 billion in managed loans outstanding(as of December 31, 1998), the company found itself in the envious position ofhaving to quickly hire and train personnel for customer service, informationtechnology, marketing and management. After sifting through 40,000 résumés,the company enticed new employees and continued to keep the old ones bypromoting its existing corporate culture and compensation package.

    Tolearn about how Capital One continues to win the war for talent and keepturnover at under 10 percent, Workforce interviewed Dennis Liberson, thecompany’s senior vice president of human resources.

In roughly one year’s time, you hired 5,000associates to accommodate your company’s explosive growth. Where did you lookfor candidates?

Ourbusiness is about 75 percent nonexempt associates working in our call-centeroperations. We hire about one in every 12 people who apply for these jobs.Because we have tough selection standards, and because we didn’t want tocompromise the quality of our people, we needed to figure out a way to improveour flow of applications.

Wewent through close to 40,000 candidates to hire 3,800 nonexempt associates. Therest were IT professionals, operations managers, analysts, corporate staff andexecutives.

Oursingle largest source is internal associate referrals. We have a program inwhich our employees refer candidates and we pay them for successful hires. Wealso do a lot of paid media – both newspapers and radio. We’re not bigclassified advertisers, though. We’ve found that, typically, the only peoplewho read classified ads are those people looking for work, often because theydon’t have jobs. These people are not the most attractive candidates forCapital One.

Sowhere did you find the energy to sift through 40,000 résumés?

Formost of the jobs, we didn’t rely on résumés, per se. We first used avoice-response system. We had a number of questions that served as a screeningprocess: previous work experience, compensation levels, whether they’recurrently employed and why they want to change jobs. We screened approximately40 to 45 percent of our applicants this way. We also had an online applicationform and a credit screening. We then put people through a battery of tests:cognitive tests, personality tests, role-playing. The last phase was theinterview, in which we used a strict behavioral interview approach.

Canyou be more specific about the “strict behavioral interview” approach?

Ourbehavioral interview techniques are based on the premise that the best indicatorof future performance is a demonstrated behavior in a previous role. We may aska potential employee to give us an example of an interaction with a customerwhere the customer wasn’t satisfied with her or her answer. The candidatewould then take us through a real-life situation. We look for the existence ofpast behavior to predict future behavior.

Clearly, you didn’t sift through 40,000 candidatesyourself. How did you handle the flow?

Ifound people who knew the HR stuff – selection and recruitment. Then I broughtin managers who knew how to focus on operational or administrative processes. Inmy mind, the number one thing we did was put people in charge who were veryresults-oriented.

What were some of the challenges you faced in tryingto hire so many people at one time?

Thisprocess isn’t like human resources problem-solving. This process moved intothe realm of running a major business. One of the biggest challenges wasbuilding a strong enough system that allowed us to move people from one part ofthe hiring process to another without having them disappear on us. If you don’t handle it efficiently, people end up taking another job ordropping out of the pipeline altogether. You start to collapse under the weightof the process itself.

What sort of employment package did you offer togenerate a cachet of 40,000 candidates?

Wewant to differentiate ourselves through our benefits and compensation programs.We want people to select a career with Capital One, so we designed our benefitsprogram in a way that said, “We’re different.” To that end, we firstconducted focus groups to determine which benefits our current employees enjoyedthe most – time off from work, ability to save money – and we plowed money intobenefits that our associates said were important to them. Now we offer threeweeks of vacation in the first year of employment, three family-care days andemployee benefits that include up to a 9 percent company contribution to our401(k) plan.

WhichHR strategies did you find drive employee satisfaction?

We doa lot of associate listening at Capital One. We conduct surveys every sixmonths, even though every expert in the field said it couldn’t be done[because] people would become cynical. We think they’re wrong.

Ifyou can quickly turn around the results of your survey and communicate that toyour employees, they’re less cynical because they can see the results. Weactually provide people time on the job to go to a room and fill out theirsurveys and mail it or drop it in a box. As a result, we get huge participation.In fact, 93 percent of our associates participated in the last survey – a goodindication that people aren’t cynical of the process.

Wealso do a lot of modeling based on the results of our survey responses: “Wouldyou recommend employment with Capital One with a friend or family?” “Howlikely is it you’ll be employed at Capital One 12 months from now?” We thenlook at the other survey questions to see what drives those responses. We usethat analysis to help us set priorities.

Whatstrategies have you used to boost retention?

We’recareful about selecting people. Everyone goes through a week-long assimilationprogram during which we talk about the culture, competence and behavior thatemployees need to exhibit to be successful here. We’re very deliberate aboutletting them know what makes our company unique. We also spend a lot of timearound performance management and team building.

Theaverage manager will go through 10 days of training and development, includingan extensive six-month program in team effectiveness. The training begins with afour-day team-building program. We then have two-day follow-ups, every four tosix weeks for the full six-month period, with team meetings and coaching inbetween. We also train on people-management skills, and we just began a four-dayprogram on change management. In an environment where you grow as quickly as wedo, helping our managers understand how to deal with change is an importantskill, and it will help us increase retention.

Which is more important when hiring that many people -corporate culture or a compensation package?

They’reintertwined at Capital One. We believe people and culture are a source ofenduring competitive advantage. We spend a lot of time trying to build ourculture. We’re performance-oriented, we believe in entrepreneurship andownership. If you’re asking me is culture more important than just payingpeople a lot of money, then yes. But your compensation has to be integrated withyour entire culture. That’s why we’re successful at aligning our peoplearound corporate goals.

How do you go about creating an “entrepreneurial”environment that emphasizes creativity and growth?

We’rerelentless in pursuit of innovations. We keep a million balls in the air and wetry everything to see what works. We put emphasis on having only top-qualitytalent in the organization. We’re also fast to take things to the market, andflexible. We focus on people adding value and we work hard to let people knowwhat we expect of them. We do this by communicating how important it is that wepursue new ideas. We might test a new marketing program, and as a result wemight identify a target group of customers that we can mail new solicitationsfor credit cards.

It’sabout being relentless in pursuit of new ideas. We avoid hierarchicalorganizational structures and multiple signoffs that get in the way of tryingnew things. We also grant stock options to everyone in the company, and we’vepromoted our employee stock-purchase program. The real rewards come when thestock prices go up because we’ve created a company of owners.

You’re currently recruiting in the United Kingdom.Do you have any tips for HR pros who are recruiting abroad?

Recruitingoutside the United States is very much like recruiting inside the United States.You have to work back from the kind of organization you want to be and the kindof culture you want and then execute a people strategy. If those two thingsaren’t linked, I don’t think you have a chance to be effective. I believe alot of HR programs fail because there’s this soup-of-the-day mentality. As aresult, things are fairly disjointed. We work hard at making sure all our HRefforts point in the same direction.

Workforce,April 1999, Vol. 78, No. 4, pp. 92-94  SubscribeNow!