As 2015 draws to a close, many companies are facing the same challenges that were in place when this year began: recruiters are pressed for time, desperate for qualified candidates and using every tool they can to find qualified workers.
So what does that mean for recruiting in 2016? Here are eight trends that will likely impact your company's ability to recruit good workers.
1. Longer Time to Fill Positions
For starters, get ready for talent acquisition to take longer. The average duration of a job vacancy reached an all-time high of 29 days this year, according to DHI Hiring Indicators' metrics. And that's a fairly conservative number compared to the 68 days reported by CEB. STEM positions could take twice as long as other jobs. With an increase in the number of skilled jobs available and more Baby Boomer exits, competition will become even more fierce and the search much more difficult.
2. Pay to Play
A combination of escalating recruiting costs, longer search times and pressure to increase wages will require bigger investments in sourcing, recruiting, compensation and benefits. The CEB report above estimates the average vacancy cost equates to $500 a day per open position. The cost to fill an open position will likely increase — it saw a 7 percent jump from 2013 to 2014 — and wages are projected to increase by nearly 3 percent in 2016.
3. Faster Adoption of Technology Tools
Until recently, applicant tracking software (ATS) was available only to large organizations with big budgets. But today, one might call an ATS a "recruitment success platform" for companies of all sizes. Costs have plummeted and ease of use has simplified. To lighten the burden of increased workloads and staffing cutbacks, an ATS relieves recruiters and HR of tedious and repetitive administrative tasks (posting jobs and screening out applicants who don't meet even the most basic qualifications) and frees them up to identify new sourcing channels and interview high potential candidates quickly.
4. Go Mobile
According to the Pew Research Center, 79 percent of Americans who have looked for work in the last two years have utilized online resources in their job search. Twenty-six percent of all adults (and 53 percent of 18- to 29-year-olds) used a smartphone to begin the search and half of these "smartphone job seekers" used their phone to fill out a job application. And yet, nearly half of these job seekers have had problems accessing job-related content because it wasn't displaying or working properly.
5. Extensive Social Media Outreach
The Pew study also found that 65 percent of American job seekers use social media platforms. One in three jobseekers uses social media to look for a job or inform friends of an available job. As the number of popular social media platforms grows, so too will the number of social pages that companies turn to for wider exposure. The utilization of social media to reach, attract and engage a younger and more diverse labor market will continue to grow.
6. Recruiting Function Goes In-House
With employment branding and the candidate experience ruling success or failure in talent acquisition, many businesses will bring recruiting back in-house. Staffing agencies often can't represent your company unless the agency agrees to enter into an exclusive agreement (which is often cost-prohibitive). Otherwise, the agency is recruiting for you and your competitors simultaneously. Building an in-house recruiting team allows your company to maximize its brand and focus on building a steady pipeline of good talent.
7. Extraordinary Candidate Experience
Attracting applicants is one thing. Getting top talent to come on board is another. Businesses will need to improve the candidate experience significantly. The application process must be friendly, engaging and highly responsive (see trend #4). It's essential to clearly communicate company perks, describe what it's like to work at your company and offer a glimpse into the corporate culture.
8. Millennials Change the Recruiting Game
Millennials are a force to be reckoned with. They have vastly different views on the workplace and now make up the largest single working age demographic at 34 percent of the workforce. They want exciting and purposeful work, valuable mentors and coworkers they like. While the recruiting world continues to learn as much as it can about this group, managers will need to appeal to this generation's need for transparency, regular feedback and fairness, if they expect to retain them.
The year 2016 is one step closer to a world of work that is changing dramatically at an accelerating pace. These trends are just destinations on a long journey, and people management must adapt accordingly. How prepared is your company?
Photo: Creative Commons
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A New Poseidon Adventure: Flipping Succession Planning Upside Down
Organizations make significant investments in efforts to hire the right candidates – the people who have the right experience and cultural fit. By carefully managing the performance and potential of these people over time, the organization can grow its leadership pipeline, keep a steady inventory of needed skills and competencies and remain nimble in the face of change (which we have plenty of all around us these day) – all of which can have serious impact on the bottom line. However, much of this pie-in-the-sky stuff relies on being able to locate and cultivate high-potential and high-performing talent across the board. Without an integrated succession management solution, recognizing and developing talent can be an ever-elusive process. The questions we are seeing asked today include: does the traditional top-down approach to succession management still make enough of a difference? Does managing succession for a slim strata of senior executives take full advantage of the kinds of talent data we now have at our fingertips? It doesn’t have to be so. Succession management can be an interactive process between senior leadership, managers and employees at all levels of the organization. And, if we trust them, we can actually let employees become active participants in their own career development. (Shudder.) Career Management (Succession Planning Flipped Upside Down) This "bottom-up" approach is gaining momentum because who better to tell us about employee career path preferences than employees themselves. Organizations actually have talent management and other HR systems in place that allow for collecting and analyzing a whole slew of data around: Career history Career preferences Mobility preferences Professional and special skills Education achieved Competency ratings Performance scores Goal achievement Training and certifications Etc. In short, pretty much everything we’d want to know to make well-informed succession planning and talent pooling decisions. For some, the leap is simply putting some power into the employee’s hands. The talent management system of 2011 is capable of displaying a clear internal career path for employees and then, on the basis of all that data bulleted out above, showing a "Readiness Gap" – what do you need to do to make the step to the next level? And if your talent management environment comes armed with a real Learning Management System, you can take it to the next level with a dynamically generated development plan that gets the employee on the right path to actually closing those gaps. Faster development, faster mobility. Organizations that seriously favor internal mobility don’t just make employees stick on pre-defined career paths – they can search for ANY job in the company and check their Readiness levels. I might be in accounting today, but what I really want to do is move to marketing. Giving employees the chance to explore various career avenues within the organization helps assure that "water finds its level" – that is, that the right people with the right skills and the right levels of motivation and engagement find the right job roles internally. Employee participation is key, but make no mistake – managers play an important role in this interactive process. They must be prepared to provide career coaching, identify development opportunities and recommend employees for job openings. The candid discussions require that employees have open access to information so they can best understand the criteria necessary to move to the next level. A Two-Way Street Employee-driven career management is just one tool. The more traditional top-down approach to succession management remains indispensable. But organizations that value talent mobility and the ability to be able to shift and mobilize talent resources quickly will find that attention to career pathing can be vital. For employees, of course, the impacts are immediate and include boosted levels of engagement, higher retention, increased productivity and more.
The Hidden Costs of Ignoring Your Talent Management Strategy
Building and maintaining a successful company hinges on having the right people to execute projects and drive results. People, we hear time and again, are your company's most valuable asset. But their success — and HR's ability to recruit, engage and retain them — depends on HR pros who are strategic decision-makers, armed with the proper tools to let them excel at their jobs. Modern HR professionals manage much more than payroll and benefits. But their technology tools, in many cases, haven't evolved past basic productivity software like email or Microsoft Word. HR simply can't be strategic with old-school tools that reduce people to statistics and give little insight into what the numbers mean. Emails and spreadsheets were not designed to deliver meaningful insights into people's performance, suggest when employees should be promoted or highlight skills gaps in a company. For that, HR needs a broader, more strategic set of talent management tools, which lets professionals manage every aspect of the workforce, from training and performance reviews to collaboration and succession planning. Yet, research shows that less than 25% of companies use a unified, holistic approach to their talent management. The Real Costs of "Doing Nothing" As a Talent Management Strategy The critical relationship between business strategy and HR strategy too often gets overlooked by senior leadership. While it may seem like the company is saving money by managing recruiting, training, performance and succession via manual and paper-based processes, in reality it’s costing your business more than you know. For example: Without a talent management strategy, a company with 2,000 employees is losing almost $2 million every year in preventable turnover alone. Businesses that don’t invest in learning suffer from decreased employee performance and engagement to such a degree that they can expect to realize less than half the median revenue per employee. That’s a direct impact on the business. In employee performance management, organizations without a focused strategy waste up to 34 days each year managing underperformers and realize lower net income. To learn more about the business impact of talent management and how to start building out your strategy, check out the eBook Why Your Nonexistent Talent Management Strategy is Costing You Money (And How to Fix It) and register for the March 19th webinar, Building the Business Case for Talent Management.
The Return of the Moderate Merit Budget – Wreaking Havoc on Pay for Performance
With the economy now on steadier ground, most organizations have returned to administering a merit budget to the pre-recession levels of 3 to 3.5%. In the years immediately following the economic downturn, many merit budgets were eliminated entirely or were reduced significantly and reserved for a select segment of the employee population. Pay for performance has become a necessity for many organizations that are expected to accomplish more with fewer resources. I often get asked: "How can I truly award my top performers with such a limited budget? Should I do so at the expense of my ’Meets Expectations’ performers? What if I need to retain my ’Meets Expectations’ performers and giving them 0% to 2% increase puts me at great risk for turnover? But if I don’t recognize my top performers, don’t I risk losing them...?" These are difficult questions to answer, however you can determine the best solution for your organization by considering the following: Are your employees paid at market pay levels? Is your organization’s performance management process mature? Does your organization have other compensation programs in place to reward top performers (e.g. variable pay)? Market Pay If turnover is a concern, and your organization needs to maintain ’bench strength’ in order to achieve its strategic objectives, your biggest priority should be to ensure that you are paying your employees at market pay levels. Why? Historically, as the labor market strengthens, organizations become vulnerable in terms of losing people. Hiring and onboarding replacement talent is not only costly to the organization, but can also cause dissension among existing employees since new hires may be getting paid more. Be sure to stay abreast of market pay levels and trends, and use the merit budget to correct disparities. Performance Management Process Organizations vary significantly in terms of the maturity of their performance management process. Closely examine your organization’s process and look for ways to improve it. If there is a perception that one management team is an ’easier grader’ than the others, the process is inherently flawed and any pay for performance program will not be viewed as credible and fair by employees. A good place to start is to get a calibration process in place and communicate broad guidelines on expected distribution ratings. Variable Pay Programs Variable pay programs (e.g. bonuses) have become increasingly more popular across all industries and career levels. These programs provide the opportunity for employees to share in the organization’s success while not adding to fixed payroll costs. Some plans have an individual performance component which can be a very effective means to recognize top performers. However, in order for this type of program to be successful, individual goals and targets must be well documented and communicated. Again, this is largely based on the maturity of the organization’s performance management process which takes time to evolve. What are the best steps to avoid wreaking havoc on your pay for performance process? First ensure your pay levels are keeping pace with the market Continue to evolve your performance programs with calibration among managers and a rigorous goal setting process Promote variable pay plans to reward high performers without adding to fixed pay roll costs It’s not always an easy journey but, in the end, it’s best to use a measured approach that is based on business needs and a realistic assessment of your current programs and processes.