Competition for Talent Causing Major Shifts in Corporate Strategy
A new report by Cielo reveals that companies are dramatically shifting strategies to compete for talent, while business function leaders struggle to agree on priorities. Let’s go inside the latest findings and find ways to improve the quality of new hires.
by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Andrew W. Mitchell, Managing Editor – Hunt Scanlon Media
As unemployment remains at record lows, a new study by global RPO provider Cielo finds that competition for talent is causing major shifts in corporate strategy. As a result, business function leaders are having significant disagreements about their companies’ approaches to finding, recruiting, interviewing and hiring new employees.
Nearly 70 percent of business leaders surveyed worldwide believe the existing talent pool is shrinking while the competition for talent is increasing, according to the “2018 Talent Acquisition 360” report. Fifty-four percent, however, said their company has more open positions than ever before.
“Although leaders in all of the business functions we surveyed now agree that retaining talent is a core business driver, they disagree on talent acquisition priorities, effectiveness, metrics for success and the role of technology and outsourced services to help them compete for talent,” said Sue Marks, founder and CEO of Cielo.
The Cielo study included more than 1,100 responses from C-level executives, HR leaders, procurement leaders, business leaders in North America, Europe, Latin America, the Middle East and APAC.
Over 70 percent of C-suite leaders told Cielo they want to play a role in talent acquisition decisions, a clear indication of increasing pressure to align talent acquisition and retention strategies with business goals. “There is a tremendous opportunity to improve outcomes through better collaboration and communication across the enterprise,” said Ms. Marks.
Cielo’s study revealed that nearly 30 percent of companies are now hiring contingent labor across all job levels, including 24 percent of senior roles, 28 percent of manager level roles, 32 percent of individual contributors and 41 percent of entry-level talent. This contingent labor includes temporary employees, independent contractors, consultants, interim executives and gig workers. The proportion of contingent labor in the total workforce is significantly higher in Asia Pacific, Latin America and the Middle East than in the U.S., Canada and Europe.
“There appears to be a rapidly growing trend as 65 percent of companies we surveyed said they expect flexible workers, contingent workers and project-based workers will take over a significant amount of the work currently being done by full-time employees,” said Marissa Geist, executive vice president and managing director of the Americas for Cielo. “We’re seeing more and more companies embrace a ‘total talent’ approach that incorporates the recruiting, hiring, and retaining functions of all their employees into a single strategy. This shift introduces important challenges, specifically around who owns that single strategy for the organization.”
“Total talent acquisition” is a consistent and comprehensive approach to recruiting and hiring both full-time and contingent labor, including temporary staff and independent contractors. In a rapid shift in business strategy, the study showed that 90 percent of companies view total talent acquisition as a top priority, especially those in the healthcare, retail, consumer goods and automotive industries. This is in stark contrast to Cielo’s 2015 study, in which total talent acquisition was merely a future goal that companies were not yet prioritizing. “Even more impressive, every business leader surveyed in 2018 in the U.S. said total talent acquisition is a top priority,” said the Cielo report.
How to Improve Quality Hires
Cielo shared six common levers that lead to stronger hiring results, improved workforce performance and better quality of hire:
1. Employee Value Proposition. Your employee value proposition (EVP) is the primary message candidates receive about your company aside from your public brand, and is key to achieving better quality of hire. Smart EVPs will attract the candidates you want while turning away those who would not make a good fit. Think of it as your organization taking a side in the classic “the Beatles or the Rolling Stones” debate – one side appeals to some individuals more than the other. You want to communicate that you are this type of company, not that type of company.
The right message will create an emotional connection with your target audience and highlight points of difference that encourage them to work for your business instead of another. You need to monitor and update your EVP periodically, but it is one of the few tools you can implement that will bolster your recruitment efforts while you sleep.
2. Workforce Planning. Workforce planning and retention metrics include the cost of turnover, workforce stability, workforce capacity, turnover rate and reason, voluntary termination by top performers and key position turnover rates. To further develop a picture of your workforce quality, consider collecting data on new business growth, physical work location, offshoring, economic trends, retirees and the transfer of knowledge.
A variety of tools are available to help track these metrics, including services such as human capital forecasting and retention diagnostics. Understanding this data will help you predict your future talent needs.
3. Hiring Manager Experience. Your organization’s hiring managers define recruitment quality, which makes this arguably makes their opinions the most important. But there is often a disconnect between HR and hiring managers. Cielo’s Talent Acquisition 360 research shows a significant gap between the expectations of hiring managers and talent acquisition’s ability to meet them.
According to a study performed by the Corporate Executive Board Recruiting Roundtable, the majority of recruiters (57 percent) feel that hiring managers do not understand recruiting, while an even larger majority (63 percent) of hiring managers feel that recruiters fail to understand the jobs they are trying to fill. Something is clearly broken between talent acquisition and hiring managers, so you must find the root of this disconnect and bridge the gap to truly deliver quality talent.
4. Talent Management. While traditional talent management focuses on hiring and turnover, today’s talent management must be more integrated into the business. It must link business priorities and critical workforce issues, and drive results through organizational enhancements. Effective talent management improves an organization through strong succession planning, bench strength assessments, human capital metrics year over year, current and future organization charts, special emphasis areas, employee profiles and action plans. These are strategic measures and data points that are becoming even more important for properly analyzing the quality of your hires. Without them, you are essentially crossing your fingers and hoping everything works out for the best.
5. Employee Orientation. A case study from Texas Instruments showed that employees who complete orientation reach full productivity 60 days faster than employees who do not. Corning found that 69 percent more employees remained at the same company after three years if they completed orientation compared to those who did not. Seeing as the value of talent increases over time, the importance of having employees complete orientation should be self-evident. Make sure you have a robust onboarding program to convert candidates into employees and keep your quality hires in place.
6. Cost-Per-Hire. First-year turnover is often considered a telling indicator of quality. According to PwC Saratoga, “The average cost of turnover for new hires is equivalent to one and a half times the annual pay of the departing employee.” So, while it might be tempting to spend less per hire to reduce costs, it actually becomes more expensive over time. According to Bersin by Deloitte, doubling spending per hire results in 40 percent less new hire attrition and 20 percent faster time to fill. Finding the right mix for your organization can have a substantial impact on your Quality of Hire.
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