It is hard to imagine that 20 years ago the U.S. was in the midst of a “jobless recovery” after the 2001 recession. The recovery following the downturn brought on by COVID-19 and related lockdowns looks very different. Organizations were struggling to find workers before the pandemic, but over the last several months in particular, the number of available jobs has far exceeded the number of job seekers. Any hesitancy in hiring promising candidates increases the likelihood that they will accept a competitor’s offer.
More than at any other time in the recent past, this environment is pressuring organizations to fine-tune their talent acquisition strategies around five pillars:
- Company brand and reputation
- Candidate experience
- Current and future talent needs
- Talent costs
- The recruiting process
In this second blog post in our series about talent acquisition, we are exploring current and future talent needs, talent costs, and the recruiting process. We covered company brand and reputation and candidate experience in our first blog post, which you can find here.
Current and Future Talent Needs
The same talent that helped an organization grow to its present state may not take it to where it wants to go. What are the knowledge, skills and experiences that a company needs to fulfill its new vision, strategic direction and goals? How do organizations tailor their talent acquisition strategies to fit this new labor pool?
Too often, recruitment leaders tend to maintain a point of view of the company from the past when executing talent procurement strategies. This approach is less likely to put companies on a path to the kind of growth they envision, and it can create silos.
Organizations should conduct a skills inventory to understand their current talent base and determine where gaps may exist. Companies also need to ensure that recruiters are fulfilling their roles and should consider expanding sourcing tools to include professional social media sites and recruitment avenues such as LinkedIn, Indeed, Monster, Handshake, Dice and Google for Jobs.
Assessing current and future talent needs, or workforce planning, is especially critical for private organizations that are contemplating or preparing for an initial public offering, the completion of which will usher in a new and significantly different operating paradigm. This generally requires companies to identify and fill talent gaps exposed by the changing and maturing business model.
Accurately assessing the recruitment strategies needed today as well as tomorrow also applies to the cost of talent. Organizations must access how much it costs to obtain, manage and retain talent. Organizations must have a process to measure and analyze these expenses so that they can enhance their talent acquisition approach to be the most cost-effective while maintaining the quality of hires. Furthermore, organizations should benchmark their metrics to those of their industry to ensure that they are in line with their competitors and optimizing their resources to the fullest extent.
At one time, costs could be mitigated by the natural attraction of a company’s brand bringing in an excessive amount of talent for available jobs. But today, even market-dominant companies are discovering that they no longer hold that enviable position, particularly in high-growth markets. That is forcing firms to tweak their strategies by adjusting compensation plans to retain workers longer and by spending more on various recruiting sources and events.
Given the very competitive job market, the cost per hire is continuing to rise, and recruiting top talent can be a very expensive endeavor. The cost per hire can vary based on industry, job type and job level (executive versus non-executive) and should be considered within these parameters. Given this expense, no organization wants to experience high turnover rates. This is especially true for new public companies as they begin to answer to a new set of investors who are focused on finances.
To fully understand talent costs, organizations should consider the impact of the following metrics:
- Cost per hire
- Recruitment costs, including cost per recruitment source
- Return on investment of recruitment sources
- Turnover costs
- Promotion speed ratio
- Quality of recruits
- 90-day turnover rate
- Proportion of first-option candidates accepting positions
- Acceptance rate
- Time to recruit
- Internal mobility rate
By understanding and baselining these metrics, organizations will be able to measure and track the impact of the changes made in the talent acquisition process. Additionally, these metrics will identify pain points occurring in this process to help focus time and efforts on areas that need the most improvements. This will lead to improved recruiting results for the business and a better experience for candidates, thereby attracting more qualified recruits to the organization.
Today’s young workers grew up with instant gratification and feedback imparted by video games, social media and food-delivery apps, and they expect similar ease and speed in most other parts of their lives, including the job search.
The recruiting process and the technology used to facilitate it are key early impressions that organizations can make on job candidates. Therefore, a technology-enabled strategy that is quick, efficient and easy is critical to competing for talent.
Indeed, a recent article from SHRM that reviewed a study by Appcast that examined 30,000 completed applications and tracked 500,000 job seekers looking at online applications across a range of platforms made the following discoveries:
- If the length of an application process was five minutes or less, the rate of candidates who completed an application after viewing an ad for the job improved by up to 365%.
- Application completion rates dropped by almost 50% when an application asked 50 or more questions versus 25 or fewer questions.
- Recruiters who reduced the time it took to complete an application from 15 minutes to five cut their cost per applicant by up to 250%.
Timely feedback and communication are also important. The more delays in responding to applicants, the greater the chances are that candidates will wind up working for a competitor. A good rule of thumb is to respond within 48 hours and to highlight the next steps in the process.
Here are some additional points to consider about the hiring process and the attendant role of technology:
- Can candidates apply on a mobile device?
- Is the application easy to find on the website?
- How much manual data entry is required?
- How clear are the guidance and expectations for each step during recruitment?
- Does the internal recruiting process allow recruiters to spend more time with candidates instead of on technology?
- Is the number of recruiters sufficient to meet the organization’s new talent demands?
- How long does it take for an approved candidate to receive an offer?
Tune Up the Approach
While job growth ebbs and flows with economic cycles, organizations have been feeling the pain of labor shortages for at least the past four years, and they should anticipate that the hiring market will remain exceptionally competitive for the foreseeable future. Companies that hone their talent acquisition strategies by assessing current and future talent needs, managing talent costs, and ensuring that the recruitment process is easy and speedy stand the best chance of winning the battle for talent today as well as tomorrow.