Seeking talent in the ‘new normal’ demands fundamental changes in how we gauge the labor pool.
By Russ Banham
Welcome to the new normal in recruiting. The last two years have drastically altered the paradigm of talent acquisition and even plain old hiring. Just look at the unemployment numbers—9.6 percent, 9.8 percent, 9.who knows? And that’s just one facet of the dynamic.
The American labor pool is wondering which end is up—and who can blame them? Few workers have received raises in years, and those who have are still shaking their heads at the numbers. Baby boomers are staying in the workplace longer, fingers crossed that a double-dip recession won’t capsize their already beleaguered retirement plans. Lots of workers are ticked off, commingling the perpetual malcontents with a new cohort of the justifiably disgruntled.
Now, go and try to hire the best and the brightest.
Leaders in the world of recruitment process outsourcing are better positioned than anyone to interpret the new normal and what it means to business. They agree things have changed in the last two years—certainly for the worse but maybe, just maybe, for the better.
Most of the interviewees had just returned from the RPO Summit in Las Vegas (see photos on page 44), where this thorny subject matter was discussed in seminars and lounges. Fortunately, what happened in Vegas didn’t stay in Vegas. As Rebecca Callahan, president of SourceRight Solutions, puts it, “This topic was on everyone’s mind, as it should be, and it needs to be talked about. A lot.”
As the New Year rings in, here is what our RPO friends are thinking about the new normal.
Michael Beygelman, President, RPO North America, Adecco
“You would think that with near-10 percent unemployment that companies wouldn’t have problems recruiting, and yet they continue to say they do. The problem is that they’re being incredibly selective finding ‘passive’ candidates. There is more interest in hiring people who are already working—getting them to leave their jobs and take new employment—than there is in people currently not working and looking for a job.
“I did an analysis of the top 22 companies to work for, and collectively they have more than 87,000 job openings. They will be filling these posts, of course, as they’ve been doing all along. So we have this weird situation where big companies are hiring thousands of people, and it isn’t making a dent in the unemployment situation. That says to me that someone is getting these jobs, and it’s the people who are already employed.
“Here’s another factor that would seem to argue for lower unemployment rates—RPO providers had a gangbuster year last year, with both deal flow and revenues up. You would think, given this robust business, that we’d just gone from 10 percent unemployment to 4 percent. And that’s not the case.
“Here’s what’s happening instead: A company earmarks $3 million for a big IT project and says to the hiring manager, ‘Get me the best talent you can.’ Are they going to hire someone who has been unemployed for a year or two? No, because they’re thinking the person was laid off because other people in his or her organization were better. The hunt is elsewhere.
“Not that it’s easy to draw talented people away from their employers. They may be disgruntled that they’re not getting any raises, but if someone comes to them and says they’ll pay more, what’s the likelihood of them leaving? Zero. As much as they hate their employer and working on Sundays, they know if they leave and hire on elsewhere and it doesn’t work out, the law says they can be bagged without severance within 90 days. So they stay with the devil they know.”
Rebecca Callahan, President, SourceRight Solutions
“Workers today are overburdened doing the job of two and three people, and organizations have gotten used to doing more with less. So there is a high level of frustration among workers, and my guess is they will be ripe for the picking in the coming year. Recruiters and specifically RPO providers are doing a lot of work around who these people are. They’re the ones still working, and those are the folks you want to target to upgrade.
“The reality is that among college-educated workers, the unemployment rate is 5.2 percent. Most of these people are obviously working. Consequently, an unemployment rate of 9.8 percent as of December doesn’t mean there are these pools of talent everywhere.
“One area that RPO could help organizations get their heads around, insofar as finding the best talent, is in the area of the growing contingent workforce. These are people taking control of their careers and going to work as professional contingent workers on advanced projects in IT and engineering, and then moving on. This is a pool of talent that organizations can access, and we are seeing RPO providers bringing the management of this contingent labor force into their practices. The next generation of talent management will involve more of these professional knowledge workers coming in as contractors.”
Patrick Beharelle, CEO, Seaton Corp., parent company of PeopleScout
“There are trends and nuances that are different with regard to professional-level positions and non-professional positions. With professional-level positions, companies are not particularly interested in the active and semi-active job seekers. They’re more interested in the passive and highly passive—the people who are currently working and are not necessarily looking for a job. If they are looking, you are not going to find them on a database somewhere, which requires a different recruiting strategy. This may involve going to social networking sites to find these folks or obtaining referrals or doing competitor mapping. The bottom line is you are going to need more sophisticated recruiting techniques than we’ve seen in the past.
“This might also drive up recruiting costs a bit. Why? Because even though there are candidates out there who are viable, clients are more selective. Before they might have said they had eight criteria for determining the hire; now they say they have eight criteria, but they also want a ‘wow’ factor on top of this.
“While buyers might have less volume than in the past, and this might seem to point for less of a need for RPO, there are other factors to consider. Because of the unpredictability of the hiring volume, you need more of a variable cost structure—you can’t have a large cost structure of recruiters when you don’t have the volume to support it. This leaves one to conclude you will need more of a variable cost structure, and RPO is cheaper than contingent recruiting.
“On the non-professional level side, you have more candidates to process and evaluate than ever before, because of the much larger candidate pool. These people are interested and qualified for a smaller number of positions, however. As a recruiting function, you need to address how to handle a higher volume of candidates for similar work in a lower number of positions.
“A very thoughtful process is critical, because you can get overwhelmed with volumes of candidates. You want to ensure that everyone is considered and treated fairly, and the best candidate is selected. This is where RPO comes in—where it can be extremely helpful to drive down costs, and at the same time ensure the best candidates ultimately are selected.”
Sue Marks, CEO, Pinstripe
“Organizations have downsized significantly and now realize that they can do well without more jobs. Many organizations have also downsized their HR departments and devastated their recruiting departments. All costs have been taken out.
“The jobs that do come back will come back differently as companies rebuild their internal capabilities. Job specs will be different, and jobs will come back in different geographies. Using third parties can help an organization scale up and down in these different skill areas and geographies, not to mention catch up on the newest stuff out there.
“Things are slippery and shifting. It will be harder than ever for companies, especially in their staff functions like HR, to keep up with how quickly things are changing. Recruiting is no longer ‘post and pray,’ and it isn’t about broadcasting or an online ad or a job board. It’s really about narrowcasting your message. There is a whole generation of job seekers who shop online now, and our employment practices have to mirror that.
Broadcasting doesn’t work anymore. Talent acquisition becomes more about market research and search engine optimization and analytics. Recruiting is now a high-end, high-tech research effort. And you have to have the right branding, too.
“I remember seeing a powerpoint presentation in August 2008 called ‘Rest in Peace: Good Times’ that was put out by one of the big venture capital firms. Right then, I started saying we would soon see a 10 percent unemployment rate. I recently heard President Obama say that he wanted to get the rate down to 5 percent, but that is really full employment. I think 8 percent, frankly, is the new normal. This will require re-skilling our workforce. For us in RPO, we must take responsibility for this—we cannot let this wealth of human capital remain unskilled to meet the needs of the global workplace.
“I believe that one of our greatest national security risks is having an educational system that says ‘average is okay.’ We have to continue to raise the bar and motivate our young people to strive more than we’ve asked of them in the last 10 years. If we lose entrepreneurialism, it is a big national security risk.”
Andrew Goldschmidt, Vice President, Customer Relationships, Kenexa Corp.
“I own customer relationships for our RPO practice, which has given me an opportunity to see across multiple RPO accounts. The first thing I’m seeing is that businesses are obviously returning to some state of normal, because hiring was up in 2010.
Nevertheless, things have changed. In the past, the concern was how quickly could you bring the right staff on cost-effectively. Now, the focus isn’t necessarily on speed-to-productivity. We’re seeing a change where companies are focusing more on the quality of the hire and are willing to brave higher compensation to get it.
“This, in turn, is changing RPO, which for a while was very transactional and driven by speed and cost. Take someone hired through RPO two years ago. Companies are now evaluating whether this person is indeed the better employee. Organizations are now in the catbird seat, feeling they have some options and are willing to make some changes.
“There is a question that is circulating about the stigma associated with talent with employment gaps in resumes. It bothers me, in that how could you go through a period of time like we just went through without good people being out of work, where you have some MBA finance talent working at Starbucks? Are we going to be that chastising?
Years ago, someone unemployed for eight months was a big red flag. But organizations have cut so deep that they have let go moderate-to-good performers just to survive. And now those people have stigmas because they have gaps in their resumes? We have to change the way we look at talent, and it goes back to how to assess the quality of the candidates.
“We have ways at our disposal to do this assessment. But, the first thing is to put all your predispositions to the side, like dismissing a candidate because he or she came through the Internet or is actively pursuing an opportunity or has a gap in the resume. You can’t hold that up as the first indicator of a quality hire, because too many people fit that model today. Instead, you need to assess them for fit in your culture and their skills. This requires you to build a robust talent assessment platform and just dig a lot deeper.
“The step we need to take in RPO is to do more research upfront about an organization’s culture and where that culture is headed, to determine the definition of success in that environment. This is what needs to be put at the front end of the recruitment process.”