Although 2009 was a painful year for many of our clients, it was a very productive year for researchers like ourselves. In flush times so many people do well that the differences between good and poor business practices can be obscured. Anything and everything seems to work. In lean times, poor business practice is easier to spot. Although all businesses face similar problems, those doing things better pull ahead, while those doing things poorly fall behind or fail.
The three staffing insights we have drawn from last year’s research are:
- The critical importance of talent at all job levels and for all companies, regardless of size, location, or industry
- The difficulty of competing for talent in an increasingly fragmented job market
- The growing efficiency gap between technological haves and have-nots.
Competition for Talent
When corporate hiring began slowing late in 2008 and applicant tracking systems began overflowing with resumes, it was often said that the “war” for talent was, if not over, then irrelevant. Millions more able workers were going to be available because of layoffs and baby boomers’ eviscerated retirement plans. For some employers this has turned out to be true: a deluge of resumes over the past 18 months to the point that coping with “resume glut” has become a prominent topic of discussion.
However, we find in talking with clients during this period that their perspectives on that war are merging. For companies mining the top end of the talent market for the elite candidates, little has changed. The supply-demand equation is about the same. However, companies working the lower end of the market, who usually recruit lesser candidates and worry more about quantity than quality, have become more interested in raising the talent bar.
Early in the recession there were three distinct camps:
- Camp A - The war for talent is over (if it ever really existed)
- Camp B - No, you’re quite mistaken, it’s real and ongoing
- Camp C - It’s real, but avoidable
Camp A – There’s no talent war.
These companies had a simple, logical argument. They were fully staffed and had all the resumes they could handle. Hiring times and costs had not risen. Some even said that candidate quality was up because selection could now be made from a larger applicant pool. A slightly more refined version of this argument came from multi-nationals whose offshore hiring took into account worldwide talent availability. They, too, saw little to complain about. If 1,000 workers couldn’t be found in one place, with a little planning they could be found in another.
For such employers, the quality vs. quality issue was not paramount. Their staffing systems were geared to a funnel that was wide at the top and narrow at the bottom. They sought capable candidates with decent credentials who could meet historical company benchmarks. “A” or “B” level candidates were both acceptable, and since the poor economy had slightly lowered the historical ratio between the two (because of more available “A”s), all was well now and would be for some time.
Camp B – Yes, there is a talent war.
These companies had three counter arguments:
1) They were already living with shortages before the recession and, despite more resumes, they were still short-staffed because so few of the many new applicants were well qualified.
2) All their labor markets were local because their people couldn’t deliver remotely (think nurses and teachers). Off-shoring was not the answer.
3) Their wealth consisted of intellectual capital. “A” candidates drove their business, not “B”s. Whether the times were boom or bust, there were never enough “A” candidates to go around. Companies always had to compete hard for them, and always would.
Camp C – Of course there’s a war, but we’re not concerned.
This group was a subset of Camp B. They also believed in the power of exceptional talent to drive business results, set very high standards for job applicants, and drew from a very small talent pool – in Microsoft’s case only the top 8% of all known certified software engineers.
But this group, which included Google, Microsoft, Cisco, Coke, E & Y and others, told us that while competition for talent was a top concern, they had no doubt they would be able to find the people they needed. In their view, recruiting was simply another aspect of competition, and they were very experienced and successful competitors.
So 18 months after the recession began, our research indicates that the perspectives of the three camps appear to be merging. The recession did not alter the views of camps B and C, who have always viewed staffing as a kind of war and are constantly challenging themselves to perform better. If anything, they have used the recession to experiment with new ways of attracting and keeping the people they want.
However, Camp A has modified their original position. Companies that had to implement painful layoffs, reduced hours, furloughs and plant closing also had to figure out which employees were the most valuable. In many cases, this was an overdue exercise that corrected hiring mistakes that had long been tolerated instead of addressed. In other cases, it forced companies to see that two good employees, working with adjusted responsibilities and new work rules, could do the work of three. Optimizing talent did produce a net savings.
Research has long since documented a basic, common sense rule of productivity. At any job level, 50 good employees will consistently out-produce 50 mediocre employees. This applies universally, to factory workers, clerical workers, professionals, managers and executives. The differential may be 10% or it may be 100%, but it’s always there. In a competitive world, and the current recession has emphasized how ruthlessly competitive it can be, that difference is critical.
So now, the three camps appear to have merged. Camp A appreciates quality more and the value of trying harder to recruit and retain it. Camp B already appreciated quality but has had to struggle to attract top candidates in a tougher recruiting environment, and has also had to watch Camp A out-recruit them. And Camp C, who understood the war all along, has kept innovating to keep their recruiting edge.
Three additional observations raised by the recession:
Metrics & Measurements – Metrics have received a boost. Accurate decisions about efficiency and productivity can only be made by comparing sets of hard data. Indeed, we have received more calls in the past year than ever before from companies wanting to create better programs to accomplish this.
This is a welcome development. The 21st century staffing model discussed throughout our upcoming 2010 Corporate Recruiting Report assumes much more quantitative analysis than the 20th century model. For example, the efficiency of accepted practices such as wide funnel recruiting (100 resumes yielding 10 candidates and 5 interviews to produce 1 hire) is being questioned through analytics that calculate the full cost of hiring and accurately compare the efficiencies of different recruiting channels. At the same time, candidate quality is being linked to corporate performance by comparing the productivity differentials between workers (say the "A"s and the "B"s above) over their working lifetimes.
Social Contract – The already pummeled employer/employee social contract took another beating in 2009. A reprieve may seem to have been granted as employees hunkered down nervously, worked harder, and hoped to avoid pink slips, but this is a short-term effect. Fear of job loss does not equal job loyalty.
Companies focused on either candidate quantity or quality are in the same boat when dealing with an increasingly fluid, transparent job market. Our pre- and post-recession studies show that “job sniffing” involves roughly half of all employees. They may not be looking frequently or diligently, but they do have easy access to opportunities via the Internet, and if they come across something interesting they definitely are looking. The recession has not curtailed their access or diminished their latent interest in better opportunities.
Corporate Instability – In recessions all companies in an industry tend to suffer together; however, because all companies are not equally strong, the weak suffer more. Therefore, the performance gap between the two tends to widen, enabling the strong to reshape their competitive environment. Not only the biggest companies can benefit. So can the more nimble and more clever small companies.
The same dynamic applies to staffing. The weak suffer because they have to let people go and their good people become more poachable. The strong benefit because they can keep more of their best people, attract the best new people and also poach from weaker competitors.
Our candidate surveys before and during the recession confirm this. Strong companies benefit the most because the best people insist on opportunity plus security. The Internet allows them to search until they can find both in one place, which in a down economy usually means with the stronger companies.
Job Market Fragmentation
The recession has not halted the continuing fragmentation of the job market. This trend has had three phases: 2000-2001, when the big job boards developed; 2008-the present, when social media and mobile recruiting developed; and the interim period, when niche job boards proliferated.
The problem for recruiters has been that these innovations did not supersede one another, they merely layered themselves one on top of the other. The innovators of the late ’90s now do business side by side with those from the mid-'00s as well as those from last year. Today’s employers must master a monster mash-up of both old and new recruiting tools, decipher the pros and cons of each one, and concoct efficient usage programs. This requires a switch from job posting to job marketing, and from market branding to brand marketing and management. These are foreign skill sets for most staffing departments.
Brand Management and Marketing – When it comes to anything related to corporate branding, most staffing departments would have to punt. Branding is sales’ responsibility, or corporate PR’s. Staffing’s job is to take the corporate brand and sell around it, not to create and tend it.
The problem with that approach, which surfaced increasingly in 2009, is that the tail is wagging the dog. The people charged with attracting and landing talent don’t have any say in one of the primary factors governing their success, the creation and crafting of the corporate marketing pitch. If the brand happens to be compromised in some way, say by negative press, social media pushback or blogging, or if the brand happens to lack marketplace clout, then staffing just has to live with the consequences, which are usually higher recruiting costs, slower time to hire, and decreased candidate quality.
Over the past 18 months, a few companies have clearly thought differently. Knowing their success depends on being talent magnets, they have brought aggressive, active brand management to the job market, putting as much effort into attracting and wooing candidates as they normally do into attracting customers. Some of the most successful examples include Google, Yum Brands, Tata, E & Y, Enterprise, Sodexo, Microsoft, Sun, Deloitte and the U.S. Army.
These companies are conducting brand audits, studying candidate behavior, analyzing web traffic, producing more creative job postings, developing CRM and social media based contact strategies and feedback loops, and they are measuring everything. Rigorous performance metrics are taking these companies into new recruiting territory. They want candidate mind share and market share. They want to win the talent war. And they are.
Job Marketing – Internet job postings grew out of print classifieds and have generally shown equally little originality. They usually adhere to a limited format and use similar language and content. In other words, they all look pretty much alike. It has been the candidate’s responsibility to parse the words, deduce the content, reference that to the company’s corporate brand, and decide whether to apply.
Internet job marketing, on the other hand, has much more in common with product advertising. There are dozens of different liquid kitchen soaps on the supermarket shelf today and they all clean dishes. Yet each brand manager has committed extensive research and promotional dollars to create a distinctive market presence and customer appeal. Our 2009 research suggests that this is where job posting is headed. As the sea of job choices becomes vaster and choices proliferate, creative job marketing campaigns, linked to distinctive, well-researched, candidate-focused corporate marketing campaigns, will become more and more essential.
Rapid Tech Changes
Nowhere is recruiting changing more rapidly than in technology. While the recession may have dampened sales, it did not dampen innovation. Technology vendors continue to pour out new products all over the HR spectrum: job posting, mobile, CRM, career portals, on-boarding, assessments, ATS, internal mobility, dynamic scheduling, social media, predictive analysis, workforce planning, succession planning, performance management, learning management and competency management.
Very few companies have the expertise within HR to understand so much change, much less effectively manage it. Nor do they have the budget or management clout to insist on all the necessary upgrades. Layer this on top of the financial constraints imposed by the recession and we see a 2010 world of technology haves and have-nots.
Technology did not power the 20th century staffing model, although all of its early- stage developments grew up around and because of it. The result has been a relentless parade of spot solutions that grew and combined into ever more sophisticated solutions. The typical upgrade cycle was 6-9 months, while the typical corporate adoption cycle was 2-3 years. It was easy for the market to splinter. The result is now a marketplace filled with all sorts of products, some of them quite dated.
2009, with its endless debates over the recruiting value of social media, nicely illustrates the problem. Some companies already have several years of experience with it and are reporting success, while others haven’t even decided it’s a good idea. Meanwhile some vendors are selling early, stripped-down, standalone versions of the necessary software, while others are offering robust, third-generation, turnkey solutions accessed through the cloud.
The 21st century staffing model is grounded in technology. Every aspect from workforce modeling on the front end to video interviewing on the back end harnesses its power to identify staffing needs, and locate, engage and persuade the right talent to sign up. The clear message of this recession is that staffing technology is now a performance differentiator and must become a staffing priority.
|
