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Retail hiring gets high tech juice as holiday season nears

Thursday, 3 Oct 2013 | 10:23 AM ET
Cornerstone OnDemand kiosk at trade show
Source: Cornerstone OnDemand | Facebook
Cornerstone OnDemand kiosk at trade show

As retailers gear up to hire hundreds of thousands of seasonal workers for the holidays, job seekers are likely to notice the application process has gone more high tech.

In-store kiosks may electronically blackball some candidates. They may also send a text message to managers about other job hopefuls who might be worth hiring on the spot and start training.

"It literally can all happen within one hour," said Adam Miller, CEO and co-founder of Cornerstone OnDemand, a talent consultancy with clients such as Neiman Marcus, Walgreens and The Container Store.

(Read more: Retail hiring: Who's boosting holiday payrolls)

Good hires are especially important to the retail industry, where the turnover rate is about 57 percent, with most of the departures coming within the first 90 days, said Craig Rowley of the Hay Group. That can add up fast, since the cost of hiring a new hourly worker is about $600 to $1,000 when you factor in advertising for the job and the time for interviewing and training, Rowley said.

"The objective is to get people who fit," said Rowley. For small retailers, the ability to work flexible hours may be a primary need, while others may craft behavior and capabilities questions to gauge honesty and other values.

One of the biggest staffing problems in retail, he said, is people who just fail to show up for a shift. How do you guess that in advance? "You can ask questions around it," Rowley said. "How important is it for you to be on time?"

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It's still unclear if these tests are worth the money companies are spending on them, but at least one study of personality tests used in hiring found that employees were able to easily manipulate their results.

"I think the consensus from the research is that faking does happen, but it doesn't really change the predictive role of the test. … They learn to be who they need to be to fit that job," said John Hausknecht, an assistant professor of human resource studies at Cornell University.

"Job candidates who fail a personality test the first time often change their responses dramatically on the second test—even though adult personality is known to be generally stable and unlikely to change in the short interval (in this study, one year) between tests," Hausknecht wrote in his 2010 report.

The research does support testing for one skill, though: conscientiousness. If you pay attention to details on the test, you're likely to do the same in your job, Hausknecht said.

(Read more: Next 45 days critical to save Xmas for retailers)

Software for the hiring and retention of employees ranges from off-the-shelf options to customized systems that even allow virtual tryouts of jobs using video simulations, he said.

The technology also has improved training for new employees, which is key to slowing turnover, said Miller. Most people who leave within the first 90 days quit because they don't like their job, and one big reason they don't like their job is that they didn't have the proper training for the work.

"What you find in exit interviews is, it's almost never about money," Miller said. Reasons for quitting are usually people who said they weren't learning anything, did not have flexibility in hours, didn't feel empowered to do their job well, or didn't communicate well.

While turnover has been historically high in retail, not all companies think of it as a major problem, said Ellen Davis, a senior vice president of the National Retail Federation.

"Retailers realize that when you have thousands of people in entry-level jobs, it's going to be a natural occurrence," Davis said. For some, it's enough to hire for a good personality and great customer service skills, even if that person is only on the job for three months.

"Retailers are very used to turnover in our business. That's the nature of the business," she said. "You're not going to say: 'I'm not going to hire a great high school student.' … Half of all working teenagers work in retail."

The improvement in the economy is also increasing retail turnover. While Rowley said retail turnover stands at 57 percent, that's up from 50 percent two years ago. Davis said private data her group collects also indicate a rise in turnover at cashier positions during the past three years. "However, it's still not back to prerecession levels," she said.

The recession, unemployment and underemployment have given retailers a big pool to choose from, said John Challenger, CEO of Challenger, Gray & Christmas.

"Retailers have had the ability to really sort through and find the people who will stay and do the job well," he said. "It's a big data problem. They're using technology to target the right people."

The technology is also leading to a permanent shift in the workforce that will widen the gap between skilled and unskilled workers, Miller said.

(Read more: US planned layoffs fall 20 percent in September: Challenger)

The unemployment rate is deceptive, he said, observing there is an "extreme demand for very skilled workers and very little demand for unskilled labor."

Unskilled labor, even in retail, is being automated away. Miller said when he was a cashier at 16, he had to memorize all the codes for all the products in the store. "Now with scanners," he said, "a single checkout clerk can simply process more transactions in a single day so you don't need as many people. So that's just one example of what is essentially unskilled labor, but you don't need as many of them because the tech has allowed them to be more productive."

The new economy needs fewer people with retail and manufacturing skills and more skills in health care (especially nursing), technology and expertise for advanced energy companies, he said.

"The solution is workforce development, Miller said. "Individuals need to find new ways to educate themselves, and governments need to figure out ways for better workforce development, a mandate that people need to be reskilled."

By CNBC's Amy Langfield. Follow her on Twitter @AmyLangfield.

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