Throughout the economic boom, every organization in every industry was spending unprecedented time, energy, and money recruiting talent. Sweetened deals, including higher-than-usual starting salaries, accelerated raises and promotions, and even retention bonuses were becoming commonplace. It seemed that no perk was off the table.
Now that the boom times are over (for now), companies have been downsizing in record numbers and unemployment has edged up considerably. Does that mean that you should stop your recruiting efforts dead in their tracks and wait for the next boom before you resume? According to recruitment professionals like Barry Siegel, President of Recruitment Enhancement Services (RES), a division of the Bernard Hodes Group, the answer is no.
The talent wars continue
ìThereís a media myth out there that the talent wars ended with the economic boom of the mid to late 90s. If you look at the realities of the labor market, however, there are several indicators showing that the shortage of skilled workers hasnít gone away; in fact, itís going to get worse for the foreseeable future,î Siegel said.
Still hovering near its ìrecessionî peak, unemployment is nonetheless relatively low in historical terms. Among those with college degrees, unemployment remains below 3%; and for those with critical technical skills, unemployment remains below 2%. While many talented people are lying low during the downturn, the best people always have plenty of career options; therefore, they are difficult to recruit and retain in any economy.
But the real skill crunch is still yet to come. By 2006 two workers will exit the workforce for every one entering. Workforce growth will decelerate, while demand for skilled talent will grow, each year from now until 2020. And experienced prime-age workers, those in the 25- to 44-year-old age group, will decline by 15% over the next 15 years.
ìWithdrawing from the recruiting marketplace during a downturn is a huge mistake,î Siegel said, ìjust as itís a mistake during a boom for employers to hire in droves and promise the world.î
It seems many companies are taking that advice to heart. According to Towers Perrin, 73% of companies downsizing are hiring at the same time.
But, Siegel warns, ìRecruiting isnít just about filling a box on an organizational chart as soon as itís empty, or staffing up to meet the demands of a new service or product or marketplace; it should be a long-term strategic approach that keeps the talent pipeline full, regardless of whether you happen to be cutting or creating jobs in the short-term.î
Best practice: Strategic staffing war rooms for talent supply management
The answer is to seize control of your talent supply chain, just as you do with other critical resources. ìYou need to examine your recruitment process, and streamline it with web-based systems so that you can keep the talent pipeline full even when youíre not hiring,î Siegel said. ìThese systems should include applicant response management/tracking and employee referral/internal mobility programs.î
Siegel suggests building a high-level team of staffing professionals who can partner with every hiring manager to get the right new hire in the right place at the right time. ìHow does your organization handle the new-hire requisition process? Candidate sourcing? Selection? On-boarding? Who is in charge of your employer brand? These are some of the strategic questions you need to ask,î Siegel said.
The best way to handle these accountabilities is to centralize the recruiting and hiring process and manage the process online. Leaving the recruitment process solely to the hiring managers is patently inefficient, and, in the long run, ineffective.
ìHiring managers typically wait until thereís a vacancy to fill to begin the recruitment process; this is way too late,î Siegel explained. ìThey should be continually building and communicating with a pool of pre-screened applicants.î
And even when a hiring manager finally builds up a large enough pool of candidates, these candidates arenít shared with other hiring managers in order to fill other vacancies, leaving each hiring manager to reinvent the wheel over and over again. And without a centralized recruiting team, employer branding becomes inconsistent at best, nonexistent at worst. Web-based management ties it all together and puts everyone on the same page in real-time.
Siegel points to his Houston-based company as a model for building a first-rate hiring process (see sidebar). ìWhat you need are first-rate staffing professionals and cutting edge technology to streamline all aspects of your hiring process,î Siegel said.
Itís evident that staffingís changing landscape must include effective online support systems and marketing strategies to be competitive in todayís Internet Age.
Talent Managers have more accountability today, and a highly strategic role that can only be supported with an efficient streamlined process that is web-based. The Internet is becoming the standard for the job search, and e-mail and online are the preferred method for candidates to apply. Hiring management systems are desired by most staffing functions, but then yet confusion in selecting the right system and reluctance to change are key factors in limiting many companies from streamlining their staffing process with online systems and marketing strategies.
Some statistics show the average direct cost of hiring exempt employees is $10,000, while the e-recruiting cost is only $2,000 (Source: Saratoga Institute and Socererís Apprentice).
Case study in outsourced hiring: Kellogg Company success story
In 1998, Kellogg Company had a vision to reengineer its hiring process. They wanted to manage the fluctuations in their hiring volume, employ recruiting specialists with niche areas of expertise, improve reporting capabilities, reduce overall hiring costs, and improve the efficiency, timeliness, quality, and diversity of hiring.
At the time, Kelloggís hiring managers were using 80 different agencies around the country to fill open positions. Paper requisitions were still being used, and often were not even completed until after the hiring process was over. Reporting data was incomplete, which made it difficult to deliver consistent metrics and measurements. Meanwhile, most of Kelloggís recruiting professionals had been eliminated in a headcount reduction.
Kellogg determined quickly that they could not achieve their ambitious goals by rebuilding their recruiting capability internally. Instead, they decided to outsource their entire hiring process to RES.
RES put in place a team of support staff and relationship coordinators to serve as liaisons between Kelloggís hiring managers and RESís strategic staffing war room. RES integrated candidate flow from all sources through their proprietary internet-based applicant-management technology, ROAM. The integrated system handles requisitions, internal and external job postings, web-based sourcing, candidate screening, applicant tracking, and reporting of key metrics. The system also provides Kellogg with a growing proprietary talent database as it captures, sorts, and files internal and external applicants. In addition, the applicant pool is expanded with web-based Employee Referral and Internal Mobility systems, also custom designed by RES.
In the early stages of the relationship, Kellogg and RES leaders implemented key change-management measures such as a hands-on training program to teach the hiring managers how to maximize the RES team and technology.
With the combination of the alliance with RES, the staffing solution experts, and the web-based technology (ROAM), average time-to-hire had gone from 67 days to just 39 days. And the average cost per hire was reduced by over 60 percent. Satisfaction with new hires now ranges from 85 to 95 percent. Kelloggís leaders can monitor these successes online in real time through the 25 different reports RES makes available.
Recruitment is the cornerstone of human capital management
ìHuman capital is an investment,î Siegel said. ìAs with any other asset, you want to get the most for your money, and then capitalize on it, so that you get a good return on that investment. This means that you need to keep track of the metrics. Too many companies only look at turnover and cost-per-hire figures and donít measure the quality of the hires, or manager satisfaction with new hires.î
Streamlining the hiring process also reduces time-to-hire, which is important for reducing hidden cost-per-hire, such as lost productivity and business. ìJust as companies invest in new technology to increase productivity, they should be investing in productive hiring methods to find productive people,î Siegel said. ìWhat good is the latest iteration of software, hardware, or online marketing strategies and an online system to manage the process, if you donít have skilled, efficient people employing it?î
Build a First-Rate Hiring Process
How does your organization get the right person in the right place at the right time? We spoke with Barry Siegel, President of Recruitment Enhancement Services (RES), a division of the Bernard Hodes Group, to find out. Whether you build a recruitment team internally or you look for an outside vendor, these are the key steps he recommends for a first-rate hiring process:
Step one: Build a powerhouse employer brand. You need a killer employer message that answers the question, ìWhatís the deal?î With that message, you can create a widespread impression about your organization through effective marketing. For example, Bernard Hodes Group works with clients to turn their workplace culture into a brand and sell that brand through print, electronic, and interactive advertising. The focal point is a candidate-friendly career website. All marketing efforts drive traffic to this website, which facilitates candidate processing and relationship marketing.
Step two: Create an alliance between staffing professionals and hiring managers. RES provides its clients with relationship coordinators to work with hiring managers, technical specialists to manage integrated technology systems, cybrarians to perform web-based talent searches, recruiters to network via telephone and email, and support staff to tie it all together. The team is available around the clock to facilitate candidate convenience.
Step three: Create a user-friendly requisition process. In the RES system, hiring managers complete new-hire requisitions through an easy-to-use online process. RES receives the requisition and an RES staffing professional immediately contacts the hiring manager to clarify the hiring need. Once the need and the corresponding requirements are crystal clear, the RES staffing professional and the hiring manager agree on a tentative timetable and RES goes to work.
Step four: Tap multiple sources of talent. RES maintains a proprietary talent database for each of its clients and begins every search there. The proprietary talent database may include former job applicants, internal job searchers, candidates from employee referrals, and former employees who departed on good terms. If the internal search does not yield a sufficient number of qualified applicants, RES cybrarians begin mining web-based sources for available qualified applicants. Meanwhile, RES recruiters start working their own talent networks through telephone and email contacts. When it makes sense, RES will market positions through print, electronic, and interactive media. RES then directs responses to their streamlined online and telephone applicant-management system. This system feeds a single proprietary database and allows RES recruiters to engage applicants immediately in a dialogue.
Step five: Select the best and close the deal. RES prescreens candidates until a sufficient number are available for hiring managers to consider. RES recruiters sell the opportunity to these candidates and work with hiring managers to schedule interviews, facilitate the hiring and on-boarding process, and generate metrics to evaluate the process for each new hire.
Recession Recruiting Strategies
by Bruce Tulgan