The human resources department at many of the large Wall Street firms is taking a larger role in the hiring process these days as firms try to standardize the recruitment process.
It used to be that department heads had the ability to do what it took to get someone on board. Today, that process is much more tightly controlled and managed by human resources, which is taking a more active role than it ever has before, sources say. Line management now knows it needs the support of human resources (HR) to get someone hired.
"In the old days, this almost never came up. Now, when you call up, there's an internal compensation person ruling on it, and their influence is considerable," says Jay Gaines, president and CEO o f Jay Gaines & Co., Inc. "Today, the process is much more standardized and managed by the enterprise."
The HR department deals with all the "people issues" at the firm, from hiring and firing to devising reward programs and resolving disputes. They cover employee relations, recruitment, compensation and benefits.
Gaines says he understands the newfound discipline at firms, particularly in light of the corporate scandals and discrimination claims. The result has been a lot more management benchmarks and criteria, some of which is overkill, he says. But having HR involved can provide a firm with the auditing trail it needs in the face of litigation or regulatory action.
"If a company routinely violates its compensation standards, it will have chaos," Gaines says. "I think companies are doing this the right way, but sometimes it makes it more difficult for a line manager to structure a special situation than in the past."
He adds that you still see companies being aggressive -not just with salaries but with up-front incentives - but it's in the context of a much more standardized salary structure.
"They're stepping up to the plate, but they're doing it without bending," says one recruiter, who prefers anonymity. "They're maintaining the integrity of the salary structure."
If a senior management team creates a package for someone, they want to make sure it's not constructed half-hazardly. Companies are using a lot more internal and external benchmarks as a basis for comparison, the source said.
"The need to do that is much more pronounced today," the source says. "HR has become increasingly more involved, particularly in the last few years. They pretty much call the shots in terms of compensation."
Although HR always influenced the hiring process, he says nowadays they generally control it.
According to one employment expert, firms have become fairly rigid about having new employees sign non-compete clauses, for instance. The clauses prohibit employees from working for a competitor for a year after they leave the firm. The imposition of that rule is a direct result of the rising influence of HR and its desire for uniformity across the firm, he says.
"I think it's a function of standardization, and it goes beyond financial services," the employment expert says.