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Study Reveals Challenges and a Tight Hiring Market Ahead

Given the unemployment statistics and other challenges in the current U.S. economic downturn, are companies’ efforts to find and capture job candidates getting easier? A survey conducted by recruitment process outsourcing (RPO) firm Hyrian from December 2007 to January 2008 among HR executives in Fortune 500, small, and mid-size companies in the 25 largest states revealed that a large majority of respondents expect recruitment activities to be the same or more difficult than last year (except for entry-level positions).

“The findings of the survey correlate to what we see in the candidate sourcing that we do for our clients; we find them, but it has not become substantially easier to identify high-quality candidates,” says Daniel Solomons, CEO and president of Hyrian.

He points out that the job losses in manufacturing, construction, government, and various professional and business services mask an ongoing need for employees in other areas such as healthcare, IT, finance, engineering, sales, and marketing. In those areas of need, it’s more important than ever to move fast when dealing with candidates because it’s not unusual for them to have other opportunities, with some also offering a salary increase.

Workforce movement trend creates need for continual recruitment

Statistics reveal that a lot of people these days don’t really try to hold on to the jobs they have — even in a tough economy, Solomons explains. “People have a much higher degree of confidence nowadays than ever before about their ability to have a soft landing and their ability to move around freely. They feel they have more control over their career than ever before.”

That attitude is due in large part to the Internet, which makes it much easier and a lot faster for people to promote themselves in the marketplace and to network with other people to find out what’s available. “The Web gives people a kind of power because of the access to information, and it transforms their sense of their ability to manage their career options,” he states.

There is also an attitude change among the generation of recent grads known as the Millennials. Staying at one job is not their main concern for stability, he reports. A feeling of happiness is more important to them, and stability more often represents a good work/life balance, feeling fulfilled, and feeling they are learning something and growing. “Since the Internet makes it easier for them to move around, there is a constant search for growth and development,” says Solomons.

The respondents in the Hyrian survey agree that the freedom of movement is now a factor impacting their business. The survey revealed that retention is the most pressing issue in 2008 for 78 percent of them.

Solomons predicts the movement from job to job will not decrease when the economy improves. “If anything, it will just get worse. If it’s challenging when we’re in a contracting environment, an expanding environment will exacerbate the problem because the demand will even further outstretch the supply of candidates.”

Almost three-quarters of the survey respondents stated they believe their companies will need to more proactively recruit talent in 2008 compared to the level of recruiting in the last five years, and more than two-thirds believe they will need to actively recruit all or most of the time in 2008.

“Companies will have to keep recruiting because the days when they could hire people and think they would stay there for five years are gone,” says Solomons. “There is going to be a lot more movement from now on, so the need for recruitment capabilities has become more acute. Companies will always need to be in a position where they have the knowledge and resources to attract and hire the right kinds of people.”

Unfortunately, it’s getting more difficult to do that. Most companies cannot financially justify having the right amount of in-house resources, skills, and knowledge across many disciplines to do effective recruiting all the time.

Finding quality candidates is a time-consuming process, and most HR personnel must deal with a host of other issues. “When you handle the kind of volume that we handle in finding candidates (about 20,000 positions a year), you know the shortest distance between two points,” says the Los Angeles, California-headquartered RPO firm’s CEO.

Expertise in finding the right-fit candidates

At Bag Borrow or Steal, Inc., where people can rent designer handbags, jewelry and sunglasses, CFO Diane Renihan says “the difference before and after working with Hyrian is night and day.”

Quickly becoming known through its prominent ads in connection with the May 2008 debut of the Sex and the City movie, Bag, Borrow or Steal is a young, small, but quickly growing company. “A lot of people came here from big companies, but it’s difficult to attract people like that to our small company that is three years old and thus unstable. We need people with entrepreneurial spirit but also with lots of depth in their field,” Renihan explains.

In a small company (40 employees), employee fit is particularly important. Renihan says it’s a “very tight-knit group with strong values” and people who are not the right personality fit could negatively change the company culture.

Prior to outsourcing the end-to-end recruitment process to Hyrian, they posted jobs on job boards and hiring managers used their networks or headhunters. “Sometimes we got a good candidate, but it wasn’t worth the hoops we had to go through,” says Renihan.

Bag, Borrow or Steal’s recruitment needs span many different disciplines: product managers, revenue accountants, Web designers, marketing, and merchandising, for instance. As the CFO explains, not only did the company lack the time and financial resources to post job openings in the right places and to screen candidates, but it also lacked recruiting talent that spanned all the disciplines.

“I’ve been surprised at how good and resourceful Hyrian is at finding the harder-to-find people. And we’re very picky,” states Renihan. “They even brought us a business analyst. The position had been open for nine months, and Hyrian filled in it just a few weeks.”

Hyrian spent time up front understanding who the company is and what it’s about. It does the same thing with hiring managers about each open position to ensure they find candidates who are the right technical and personality fit.

Expertise in recruiting for hard-to-fill positions

AIR-serv, which owns, maintains, and services coin-operated equipment for air inflation of car tires and vacuums at gas stations and convenience stores, has also achieved outstanding success with Hyrian. AIR-serv services customers in 41 of the United States, Canada, the UK, and other European countries. When Mary Ellen Moe, director of HR, joined the company, her first priority was to improve its recruiting process. The field management’s level of satisfaction for recruiting/hiring route technicians was low because they were not getting the quality of person they sought and “it took an extraordinarily long time to fill the positions.”

Route techs comprise approximately 300 of AIR-serv’s 475 employees. Moe says back in the days before the company outsourced its recruitment process to Hyrian the company “usually had 10-15 route tech openings at a time and some remained open for extremely long periods of time, which created hardships for other employees.” The route tech positions can be difficult to fill because the positions are located in very remote areas.

At the time, AIR-serv’s HR staff consisted of one HR manager and one full-time payroll administrator. HR placed ads for route tech jobs on and/or in local newspapers and forwarded resumes to the field locations for screening. Hiring managers had to travel sometimes 200 miles or more to the field locations to conduct candidate interviews. “We also didn’t have a good process in place for ‘selling’ our positions and closing the candidates,” she adds.

The recruiting picture has changed dramatically at AIR-serv since the relationship with Hyrian went live in July 2007. Now the company is hiring the quality of candidates it desires and recruiting and hiring candidates on a timely basis,, Now the process is consistent across the company’s locations. In addition, Moe reports that the retention rate for the past nine months is high. Only one of 45 route techs recruited by Hyrian did not fulfill the company’s job performance expectations.

Flexibility: an important component of a recruiting strategy

“I always say to companies that regardless of what’s going on in the economy, they need to understand that their people are their most important assets. The quality of their people dictates their success, and they need to be in a position with resources to hire the best people for their needs,” says Solomons.

When Hyrian provides those resources, clients have an option as to the service model. In addition to its enterprise services model, Hyrian also provides an OnDemand model for companies with 100-500 employees. That size company usually hires between 20-100+ employees per year for jobs spread across different categories. Thus, they don’t have the kind of traction that larger corporations have. The model is not a pilot. It provides an opportunity to access Hyrian’s resources on demand without making a commitment. “It helps them dip their little toe in and get used to partnering,” says Solomons.

How do companies need to view and plan for their recruiting needs in an economic downturn? “Because you’re reading in the newspaper that there’s a recession and people are being laid off and things are contracting, don’t allow yourself to believe that your company doesn’t have to be flexible if you want the right people,” warns Solomons.

In such an economy companies tend to think they are in the driver’s seat and don’t need to be as responsive to candidates or care as much about candidates’ salary demands, etc. “I think that would be a foolish response to what’s going on right now,” says Solomons. “High-quality candidates are in the driver’s seat.”

Lessons from Outsourcing Journal:

  • People have more control over their careers than ever before because of access to information on the Internet. As a result, they feel confident in moving around quite easily from job to job, and retention is a pressing issue now impacting businesses.
  • Because of the retention challenge and because demand now exceeds supply of quality job candidates, most companies need to actively recruit all or most of the time. However, most cannot financially justify the necessary amount of in-house resources, skills, and knowledge across many disciplines to do effective recruiting all the time.
  • Recruiting process outsourcing (RPO) firms have the expertise and handle a very high volume of recruiting and thus can find the “right-fit” candidate faster and also are skilled in “selling” candidates on the company with the available position.

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