How critical is it to have an unbeatable strategy for recruiting great employees in today’s business environment? It’s life or death. That’s how important it is.
If you have been paying attention to recruiting trends over the past couple of years, you understand that is not an overly dramatic statement. Those who are trying to attract top talent are finding more competition than ever before. The cause is a shrinking pool of skilled, educated, available labor. The result is those who possess unique abilities have all the leverage in negotiating the terms of their employment.
This shift is making business leaders rethink everything from their recruiting strategy to their employee value proposition. They recognize they can no longer take the same approach they did even two years ago and succeed in attracting the people they want.
To understand what a winning recruiting strategy should include, we must first understand how the current talent marketplace has been shaped and the forces that have created it.
The recruiting experience business leaders are having today is the result of three primary factors:
While each of these factors has a life and influence of its own, they are not unrelated. There are natural byproducts that emerge when significant changes occur in any one of those categories. For example, if we had a significant economic downturn, business would suffer and unemployment rates would increase. Similarly, if the right talent cannot be found, businesses will have difficulty meeting their growth goals. That can spur a slowdown in the economy, which in turn impacts employment levels. And so on.
However, given the importance of the issue at hand, let’s look at each of these factors in isolation so we can have a better idea of what created the talent recruiting environment that now exists.
Surging Economic Growth
In 2008, the United States plunged into the worst recession it had experienced since the Great Depression. You will recall that recovery from that economic downturn was slow, creating an extended time period when our nation’s GDP growth rate never passed two percent. Businesses reacted to those economic conditions by going into survival mode. The combination of actions our government and enterprises took created a kind of reverse virtuous cycle. Suppressed profits and revenues led to lower hiring. High unemployment resulted in lower consumer confidence. That, in turn, reduced business confidence.
The good that emerged from this period is that company leaders learned how to adapt and innovate—not just in product development but in all aspects of organizational development and management. They learned how to get more out of less. Far-sighted organizations anticipated a time when things would turn around and invested in processes and systems that would allow them to capitalize when it did.
Starting in 2017, changes in domestic tax and regulatory policy unleashed the pent-up business expansion that enterprises had been preparing for. Capital investment increased, foreign-held profits began to return and virtually all confidence indices improved. The result was accelerated improvement in a wide swath of the economy and GDP growth at levels that had not been seen in over 10 years.
Low Unemployment Rates
The natural cause and effect impact of a surging economy is more hiring. However, the innovation and organizational development businesses had been honing for several years resulted in growth breakthroughs that were exponential instead of incremental. Much of this was because of technology advances that made companies more efficient. They could market, sell and deliver their products faster and with a better customer experience. The other dimension of this kind of “exponentialism” is the emergence of new companies and industries that are creating the technology tools and devices businesses (and consumers) are using to accelerate their growth.
Some of that technology advancement has been in the development of cloud computing and its byproducts. Platforms of all types have been and continue to be developed that make it easier for companies to evaluate their results, make decisions and manage processes. Among those are online data and process management tools for talent recruiting. Employers have more means available than ever before to mine data about the employees they want to hire—and how to reach them. Technology has likewise improved and simplified the onboarding process of new hires for most businesses.
All these factors have led to an almost unprecedented resurgence in employment. Unprecedented, at least, in how quickly unemployment levels have shrunk and the range of industries within which that has occurred. The result is, as of this writing, there are over a million more jobs available in the United States than there are people to fill them.
Scarcity of Skilled, Educated, Experienced Talent
Given the resurgence of the economy and employment, it is easy to understand why there are more roles available for individuals of unique talent than there are people who actually have those distinctive abilities. When technology is advancing at an exponential rate, all of the systems required to meet the skills that are demanded by that kind of innovation take time to develop. For example, it takes time for universities to adapt their curriculum and teaching techniques to the changes that are occurring so rapidly in the business realm. Enterprises themselves become the actual places of training, learning and skill development. And those who learn faster and adapt to change easier emerge as strategic leaders. When change is exponential, a skills gap is inevitable.
To demonstrate the reality of this phenomenon and its impact on today’s business, consider just a few of the things research and surveys have revealed in recent years. Here are just few excerpts from publications that have reported on the shrinking skilled labor pool.
“One of the biggest headaches for CEOs is making sure that the organization has the right people to cope with what lies ahead. There’s the basic question of planning for the skills that are needed now and in the future: Which roles will be automated? What new roles will be needed to manage and run emerging technology? What skills should the company be looking for, and training their people for? Where will we find the people we need?
“But more importantly, CEOs need to be sure that the business is fit to react quickly to whatever the future may throw at it – and that means filling it with adaptable, creative people, working in a culture where energy fizzes and ideas spark into life. If they can’t be found, they must be created.” (PwC’s 18th Annual Global CEO Survey)
“A January 2018 survey of 1,000-plus C-suite executives found that attracting and retaining talent is their number-one concern, outranking anxiety over the threat of a global recession, trade war, and even competitive disruption.” (“Moneyball for Business,” Fast Company, September 2018, Austin Carr)
“Nearly 70% of business leaders participating in a new global survey said the current talent pool is shrinking. As a result, the competition for talent has increased, forcing employers to change their recruiting strategies.” (“Study: Shrinking Talent Pool Has Recruiters shifting Strategies,” HR Dive, October 5, 2018, Valerie Bolden-Barrett)
“By 2020, the worldwide shortage of highly skilled, college-educated workers could reach 38 to 40 million, or 13% of demand.” (Source: McKinsey Global Institute, 2014)
“The conversations overheard at every Chief Executive Group event this year undoubtedly echo the conversations you’re having with …the heads of every division in your organization: how to deal with the skills gap that has made it so difficult for companies throughout America to fill available jobs, increase often-stalled productivity, navigate change, and fuel the sort of disruptive activity that is essential for survival in this economy.” (Chief Executive Magazine, July 25, 2017)
So, now that you have some perspective about how we got here, what should you be doing about it? How should the factors that brought about the current talent environment influence your recruiting strategy now and in the future?
These questions are what the rest of this report will answer. In VisionLink’s work with hundreds of businesses across the country, we have observed organizations that are having success in recruiting top talent. These companies have acknowledged the present reality and responded with a proactive strategy for attracting the people they want. There are things they are doing that others are not that allow them to beat their competition and secure top talent. As a result, they have developed high performance cultures that are driving sustained success.
Here, the things we have observed about these companies are organized into five criteria for developing a winning recruiting strategy. They are as follows:
Only 20 percent of people say they understand how their employer determines pay, according to compensation research firm Payscale. But that doesn’t have to be the case, and it shouldn’t be. “Ten years ago, employers held all the cards. Now, employees can be much better armed with data,” said Tim Low, PayScale’s senior vice president of marketing. With sites such as PayScale and Salary.com, employees have a greater ability to research what their work is worth and a better opportunity to ensure they’re being paid fairly. (What Your Salary Says About You, Entrepreneur Magazine Online, November 17, 2015, Stacy Rapacon)A pay philosophy is a written statement that company owners and senior strategy leaders draft to spell out a value system and structure that guides how people will be paid in the company and why. It is written so it can be easily shared and referenced both when leadership makes decisions about specific pay strategies and when it communicates the nature of the organization’s pay system and its components to employees. It acts as a kind of compensation constitution for those charged with envisioning, creating and sustaining the rewards strategy of the company.
So, what should your “take away” be from what we’ve covered here? How should you view the recruiting process differently as a result of the things discussed in this report?
At a minimum, you should conclude that you will need to adopt a much more strategic approach to your recruiting effort than you have in the past if you expect to compete for top talent. The marketplace demands more of you than it did even a few years ago. To grow your business, you need a high-performance culture. To create a high-performance culture, you need top talent. To attract top talent, you need an irresistible value proposition. And to create an irresistible value proposition you need a compelling pay offer.
All these elements must combine to provide an employee experience so compelling that your organization becomes a magnet for premier performers. This is possible if you will acknowledge the business environment that now exists and address its implications for recruiting top talent.
Need Help with Your Pay Strategy?
If you lead a business and are struggling with developing an effective compensation approach, it might be the right time to have a conversation with a VisionLink consultant. To speak with one of our experts about the rewards issues you are facing, call us at 1-888-703-0080.
About the Author
Senior Vice President, The VisionLink Advisory Group
Ken has been consulting with middle-market private and public companies on executive compensation and benefits issues for over 30 years. In addition, he has authored numerous articles and white papers addressing compensation and rewards topics that modern businesses face. Ken also conducts a monthly webinar series on compensation best practices for business leaders throughout North America. His client work centers on the development of overall compensation strategies designed to enhance and improve shareholder value and workplace productivity. He is one of VisionLink’s six principals.
Business leaders continuously struggle with recruiting and retaining top talent as there is more competition than ever before. With a decreasing pool of the desired candidates, employers must have a compelling pay strategy that sets their business apart from the rest.
VisionLink’s report, What a Winning Employee Recruiting Strategy Looks Like, solves this dilemma by outlining the 5 characteristics of high engagement cultures.