Sluggish Hiring in Second Half

Despite recent economic news of “green shoots” in the economy and the slowing of GDP contraction, a recovery in the labor market appears to be nowhere in site. The number of organizations planning on trimming their labor force over the next 12 months has decreased substantially from earlier this year, which will help slow the increase in unemployment. However, organizations are not planning on increasing their hiring in the second half of the year. In a recent Roundtable quick poll we asked organizations how their hiring plans for the second half of 2009 compared to the first half of 2009. Over 70% of respondents indicated they planned on making no changes or decreasing hiring in the second half of 2009 compared to the first. Thus, while the number of workers entering unemployment shows signs of decreasing across the rest of the year, limited hiring will make it more difficult for the unemployed to find jobs, increasing the overall unemployment rate.

Finding the Right Employee Referrals in a Downturn

Despite their general effectiveness, it is easy to go wrong with employee referrals in a down economy. Most employees have friends and family who are looking for jobs, and they feel obligated to refer them even if they are unqualified for your positions. When this happens, recruiters lose valuable time providing a high-touch recruiting process for unqualified referrals, and the referring employees and referrals themselves are dissatisfied when a hire does not result.

Consider a two-pronged approach to getting the benefits back into your employee referral program:

• Target referrals for critical positions (for instance, promote referrals at appropriate business unit meetings among employees in critical positions)
• Dissuade unqualified referrals (for instance, explain the downsides of referring unqualified candidates in referral messaging to your employees)

Job Seekers Should Commiserate with Recruiting’s Pain

Job seekers are aplenty these days, and in their search for work, some may forget that many recruiting departments are knee-deep in applications. A recent article in the New York Times, quoting our latest Roundtable research (members only), speaks to the application volume pain that many of us in Recruiting are currently feeling. The article also offers helpful suggestions to job seekers on how they can go beyond merely applying online to stand out amongst other applicants.

Although for once popular media is commiserating with Recruiting, let’s make sure we do not forget that candidate care still matters, even in a “buyer’s market.”

Helping Recruiters Source Smarter

No matter how hard recruiting executives work at the strategic level to focus resources on more effective sourcing channels, in the end recruiters are ultimately the ones who are doing the sourcing.

Recruiters need to follow high-ROI sourcing practices to gain the cost and quality benefits to sourcing smarter. This includes having access to data that shows how positions have (truthfully) been filled in the past, as well as new trends and tools that could potentiall make sourcing easier in the future (e.g., new LinkedIn Recruiter tool). Do recruiters have insight into both the history and future of sourcing at your organization?

Migrating from Ineffective Sourcing Channels

Following up from yesterday’s post about sourcing channels, it sounds easy enough to identify sourcing channels that aren’t serving us well. The harder part is making the decision whether to migrate from the channel completely for a given position family. This is an especially timely decision given that attraction and sourcing activities take up more than a third of the overall Recruiting budget when cost efficiency is more important than ever.

In general, use two-part test to guide your decisions:

1. Is the channel performing at least at an average level on quality-, speed-, and cost-related measures?
2. Does the channel have potential for improvement across any of these measures?

If you answer “no” to both questions, discontinuing use of the sourcing channel may be a smart decision.

From Ineffective to Destructive

Most recruiting organizations find more than 25% of their sourcing channels to be less than effective. With the active labor market today even more aggressive, recruiters are saying that ineffective sourcing channels can easily become pain points for application overload.

The best sourcing channels in today’s labor market are those that allow you to target your outreach to the highest proportion of high-quality candidates in a cost-effective manner. To pinpoint ineffective channels, add a quality-, speed-, or cost-related sourcing channel metric to track in your scorecard. Alternatively, require vendors to provide results-oriented reporting; for example, see the new pricing model among some major job boards.

Unemployed Candidates Aren’t as Desperate as We Might Think

With news reports of unemployed candidates bombarding career fairs and ever increasing application volume it’s not surprising that many perceive today’s candidates as “desperate.” While there are definitely some desperate unemployed candidates, the vast majority are looking for a job that fits their job interests with comparable pay to their prior job. In fact, in our recent global labor market survey only one-third of the unemployed would take a job with a meager 5% pay decrease (from their prior job) and less than 10% would take a job that wasn’t aligned with their job interests. While the recession has shifted some power in the labor market from candidates to organizations, we would be remiss in assuming we can press our advantage with the labor market too much.

Economic Uncertainty Makes Recruiting Passive Talent Harder

Today’s passive talent is harder to dislodge than they were just three years ago. A huge hurdle for recruiting given the importance many organizations place on attracting passive talent. Job offers that used to pique their interest, like salary increases and better managers, are less appealing in today’s uncertain economic environment. In our recent global labor market survey we found that only a meager 21% of passive prospective candidates would be likely to accept a job that offered a 15% salary increase. This represents a decline of over 40% from 2006, when over 35% of passive prospective candidates would be likely to take a job with a significant increase in pay. Recruiters trying to attract passive talent will need a lot more than a small salary bump to get the attention of today’s passive talent pool. After all, no one wants to be the "last in-first out."

Impact of the Economy on the Labor Force Varies by Talent Segment

The recession has dramatically impacted the labor force as a whole, significantly increasing the overall unemployment rates and scaring employed potential candidates out of the job market. Despite increased unemployment, many organizations are still struggling to fill critical positions in large part because for many talent segments, regions, and industries unemployment still remains relatively low. For example, in the US the unemployment rate for participants with a bachelor’s degree or higher is only 4.7% and the unemployment rate in the Utilities industry is only 4.2%. The effect of the recession on labor force segments has been far from equal. Consequently, many critical positions still remain difficult to fill despite high unemployment.

Despite Weak Labor Markets Quality of Hire and Quality of Slate are Not Improving

Despite unemployment rates of 9.5% in the US and near 9.0% in the 27 nation EU, organizations are not hiring better candidates. Using the Roundtable’s ongoing survey of hiring managers, the Recruiting Effectiveness Dashboard (RED), we compare quality of hire and slate ratings between Q1 2008 and Q1 2009. The increase in talent availability is not translating into better quality- quality of slate increased a meager 3% and quality of hire remained statistically unchanged with an increase of only 0.1% year over year. Thus, despite the looser labor market we are failing to get better results.

Economic Uncertainty, and What it Means for Attracting Talent

As recent economic news from around the world suggests, there continues to be confusing signals to the market as to whether or not recovery is near. Nonetheless, this challenging economic context has reduced aggregate talent demand across the globe as evidenced by increasing unemployment rates and fewer job postings. Recruiting teams are feeling the pain acutely—lower budgets and smaller teams remain yet hiring still exists mainly for challenging, difficult-to-fill positions. With talent supply exceeding demand, does that mean it’s easier to attract talent than before?

The challenge of attracting critical talent in today’s uncertain economy is the focus of our recent research initiative, which we first blogged about last month. Across the next several weeks, we will introduce new insights every day from this latest research. Stay tuned, and visit the Recruiting Roundup often to get your daily dose of insights.

Rethinking Recruiting's Role: Succession Management

Our conversations with recruiting executives, supported by a recent Deloitte inquiry, indicate that the world's largest organizations are increasingly focused on developing strong leadership pipelines from within. This is not a huge surprise given the array of benefits this priority provides in the current economy.

Recruiting should play a strategic role in succession management—if not to decrease the risk of losing relevance in the eyes of the business, then to provide much-needed expertise to partners in talent management.

Too often, though, succession management is an unfamiliar topic for many recruiters. With this in mind, we’ve outlined four key opportunities for Recruiting to contribute to the success of succession efforts. To do this, we’ll use a frame created by the Corporate Leadership Council (a sister program of the Recruiting Roundtable), which provides a nice primer for succession management (members only)that we can use to pinpoint opportunities for Recruiting to play a larger role.

According to the Council, effective succession management achieves the following:

Safeguards Business-Critical Capabilities: Not all executives, nor all roles, are created equal. Succession management helps identify those capabilities most critical to business success and most scarce in the labor market, and prioritizes succession risks and interventions accordingly.

• What This Means for Recruiting: You provide a critical input with in-depth knowledge of the executive labor market. Too often, HR teams make faulty assumptions about the external abundance (or scarcity) of particular types of talent. In turn, our organizations under- or over-invest in internal development for these roles. Make sure your expertise and advice is heard.

Accelerates Executive Development: While organizations realize the importance of development, they often fail to act on development needs. Succession management helps identify and act on development areas, and it provides rising executives with diverse experiences to ensure successors are prepared to assume leadership roles.

• What This Means for Recruiting: For external hires, you are often the first to identify specific development needs and preferences. Make sure the information you gathered during the selection phase is carried into the development processes for executive hires. For internal hiring, make sure that you articulate the “developmental value” of placing a person into a specific job. Recruiting is uniquely positioned to ensure that placements are productive for the organization and development-focused for the individual.

Overcomes New Hire Derailers: While externally hired executives often bring new expertise and leadership to the organization, they also face a greater risk of failing. Through succession planning, you can understand new executives’ specific areas for development, provide feedback early and frequently, and ensure accountability for new hires’ success to prevent executive derailment.

• What This Means for Recruiting: This may be the area where your input is most significant. Continue your relationship with external executive hires well into their first few years with your organization. You can play a key role in making sure your hires are successful even after they start. Members, click here for our findings on the most powerful onboarding activities.

Deploys Talent Against Strategic Priorities: Succession management efforts are not discrete events, but rather part of an integrated system for managing talent in an organization. HR organizations should base succession decisions on the evolving needs of the company, and align talent capabilities and executive roles with strategic priorities.

• What This Means for Recruiting: Your recruiting efforts should reflect the evolving needs of the business. Meet with business leaders regularly to ensure your work provides forward-looking value to the succession plan. Challenge business leaders whether their recruitment efforts target the talent profiles needed in the future (rather than “cloning” the profiles of today’s leadership team).