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.

What Got us Here

The recruiting experience business leaders are having today is the result of three primary factors:

  • Surging economic growth.
  • Low unemployment rates.
  • A scarcity of skilled, educated, experienced talent.

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)

The 5 Criteria

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:

  1. Identify Clear Roles
    Organizations who attract great talent know what roles the need fulfilled to make their business model and strategy operate at a peak level. They have taken the time to lay out a clear vision for the future of the business. They know what drives revenue and profits and how those factors can be leveraged. They have identified the roles that need to be performed for the targeted outcomes in those areas to be achieved and the skills needed to perform those roles. They have assessed their current workforce and identified those who have the qualifications to assume those roles. This allows them to see what gaps exist and identify the qualities and qualifications that will be needed by the people they hire to fill those positions. This process gives them the ability to prioritize their recruiting efforts and identify the talent “audience(s)” they need to reach.

  2. Define Success
    Beyond identifying what roles need to be performed for their business vision to be realized, winning companies are very good at defining what success looks like for those positions. This allows them to paint a clear picture of the outcomes the company will want those they are trying recuit to “own.” Defining success also instills a sense of stewardship in the individuals being recruited to those roles. To achieve this kind of ownership mindset, you should be able to complete the following two sentences for every role you are looking to fill:

    • In this role, success will be determined by…
    • The candidate must be able to demonstrate…

    Too often, leaders of organizations become frustrated when their people don’t seem to perform at the level they want. You will hear them comment about certain individuals who “just don’t seem to get it” or “doen’t have what it takes.” In some cases, they may be right. But just as often, those leaders have not identified clear success criteria for the roles they want their people to fulfill. You will not attract top talent if you are not able to clearly explain the outcomes you want those individuals to drive for your business. And you won’t know if they’ve achieved those results if you haven’t defined what they are.

  3. Know Your Audience
    When developing a recruiting approach, you should think about it like you would a marketing strategy. And the first step in that process is to clearly define the audience you are trying to attract. This will likely be unique for each role category (for example, the profile of the person you want heading sales will be different than the person running finance). But you should identify everything about them you can. What age group do they fall in? Are they married or single, have children or not? What should their business experience be? What kind of social circles do they run in? You get the idea.

    All these factors (should) inform the elements you include in your recruiting strategy. Some people may want their spouse to see the facility they will be working in and meet the key players involved with the company; and you may want to meet the spouse as well. Certain individuals, based on their profile, may need to have a flex schedule or the ability to work remotely, while others want a collaborative environment. If you haven’t thought these things through ahead of time, you will miss the market when trying to attract them to your company.

    All these factors (should) inform the elements you include in your recruiting strategy. Some people may want their spouse to see the facility they will be working in and meet the key players involved with the company; and you may want to meet the spouse as well. Certain individuals, based on their profile, may need to have a flex schedule or the ability to work remotely, while others want a collaborative environment. If you haven’t thought these things through ahead of time, you will miss the market when trying to attract them to your company.

  4. Identify Your Methodology
    With both a recruiting and a marketing strategy, there are three components to which you need to pay close attention: Content, context and channel. This is a natural extension of the audience defining just discussed. People have different preferences about the kind and volume of information they want to receive (content), what they need it to answer for them and at what point in the process they want to receive it (context), and the means by which it is delivered (channel). For example, some people you are recruiting will want be able to find lots of information about your company on social media—what people are saying about your business, how engaged you are online with your customers or the public at large, etc. Others will want detailed written information about their role, where they will fit in your business strategy, etc. Some people prefer to read written narratives while others like bullet points in a PowerPoint presentation.

    To determine how this should play itself out for the people (or groups of people) you are trying to recruit, you should follow this analysis sequence as you develop your methodology—and the content, context and channels you employ:

    Become: What do I want this person to become within my organization? Do I want them to become a steward of all the entire technology strategy and process we want to implement? Further, do I want them to help us to become the technology leader in our industry? Do I want them to be a key strategist on our executive team? And so on.

    Do: What will this person need to do in order to become what I just described? Using the example offered, will they need to be able to demonstrate a superior understanding of certain technology platforms or applications while also being a good leader? What kind of people will they need to be able to recruit and motivate? Will they need to be able to both create and manage that recruiting effort? Etc.

    Believe: What will the person you are trying to recruit need to believe before they’ll be willing to do what you want them to do? For example, they will certainly have to believe investing enough in technology to allow them to perform the way you’re expecting them to perform. (If you have a reputation for promising these kinds of investments and then not following through, that word will get out and you will provide the resources they’ll need to recruit a great team. They will need to believe you are committed to affect your ability to recruit the talent you most want.) Each role will carry with it certain requirements you will need to meet if you want to gain credibility that you will be a good growth partner in the development of those you are trying to attract. If they don’t sense that, they will not join your organization.

    Know: What will those you are trying to attract need to know before they’ll believe? Hopefully, you are getting the cascading approach being suggested here. Keeping with our example, if people need to believe the resources will be provided that are necessary for recruiting the right team, you will want to show them how you have similarly built other departments or units within the organization; and that you have track record of success in doing so. You will have them talk to others that have experienced that support already and can affirm what your recruits need to hear.

    These four analysis factors should drive the content, context and channel for your recruiting strategy. And those should help you identify the best methodology for reaching and “convincing” the audience you’re trying to attract.

  5. Offer an Irresistible Value Proposition
    This will be much easier to achieve if you’ve met the first four criteria. And, frankly, it will be impossible to achieve if you haven’t paid attention to those factors.

    Your value proposition is essentially the promise you make to the person you are trying to recruit of the employee experience they will have if they join your company. And in today’s environment, your value offer must stand out. Much could be said about your offering in this regard, but the primary thing you want to ensure is that you adopt a total rewards approach to the experience you promise. This involves four areas of focus:

    Compelling Future
    All business leaders think their companies are going to do great things in the future. And they should. But for that vision to be compelling to the talent you are trying to recruit, you will need to personalize it more. You must be able to to paint a vivid picture of the purpose the company serves, and why that matters. Premier talent, in particular, wants to know what the future company will look like if the growth goals you have in mind are achieved. More important, they want to know where they fit in that future business. They will be compelled if you can articulate why their role is crucial to the fulfillment of the vision you have and why they are uniquely equipped to fill it.

    Strategic Impact
    People that have distinctive talent want to know that they can have a hand in the strategic direction the company adopts. This happens best when organizations recognize the unique abilities of each individual and put them in positions where they can be put to best use. Groups of individuals working within the realm of their distinct abilities create unique teams. This is where your organization begins developing a high-performance culture; because every person in the organization is thriving in their role and stimulated by the contribution they are able to make. To use a baseball analogy, you are not hiring relief pitchers then asking them to play first base or the outfield. Likewise, you’re not asking your short stop to pitch. Each is playing the strategic role for which they are best suited.

    Personal and Professional Development
    In addition to wanting to ensure that they will be working within the realm of their unique abilities, top talents seeks to get better; to improve. As a result, they want to know that their association with your company will accelerate their ability to develop themselves personally and professionally. In other words, they need to be able to envision why their opportunities for growth will be greater within your organization than others. They will have questions about the kind of culture you are trying to nourish, the resources that will be available to them, the people they will be working with, the kind of projects they will lead and the financial commitment that will be made to ensure their success. If people are not experiencing personal and professional growth within a company, they will leave. As they do, word will spread that employees feel there is not an organizational growth mindset at work; therefore, employees feel stifled in their ability experience fulfillment. Their reasons for working extend beyond a paycheck and those purposes need to be fulfilled for them before they will become fully engaged and committed. And unless that occurs, they will not be advocates for your employer brand.

    A Financial Partnership
    Of critical importance to the development of an irresistible value proposition is a complete and compelling pay offer. This is something you must approach with as much strategic attention as you devote to any other aspects of your business.

    The starting point in developing a strong pay offer is a clear pay philosophy. An article that appeared in Entrepreneur Magazine’s online edition in late 2015 made the following observation about compensation:

    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.

    A good compensation philosophy statement will define and articulate the following:

    1. How owners define value creation. This means establishing and communicating the threshold at which owners feel that business performance is attributable to the people at work in the business and not just the shareholder capital (already) at work.
    2. How and with whom owners believe value should be shared. This addresses what happens with the value that is created through the productivity and performance of individuals and teams in the organization. Will the company share equity? If so, under what circumstances? If not equity, how will value be shared? And so on. (See also #5.)
    3. How increased earnings opportunities can be attained. Organizational leaders need to decide, for example, whether they want high earnings to be achieved by moving up through salary grades or whether value sharing will be the primary means of increasing one’s compensation. This means that, philosophically, leadership needs to spell out the extent to which pay levels will be driven primarily by performance factors—be they individual, team/department or company.
    4. The balance the business wants to maintain between guaranteed and variable compensation. This a further refinement of #3 that defines how the company will address its pay construct in real life terms and on what basis. For example, where does the company want to be relative to market pay for salaries? What about for total compensation? If it believes it should be at the 80th percentile for salaries, what will this mean for how much emphasis will be placed on value sharing opportunities? Will the balance between salary and variable pay differ for each pay grade or tier? (Probably.) And, why does the company believe this is the right balance to strike?
    5. The rewards emphasis the company wants to put on short versus long-term value creation. This is really a decision about whether the company will be focused more on immediate or on sustained results. Business leaders need to determine whether they want employees focused on performance “sprints” (of say 12 months or less) or longer-term outcomes. Again, will this vary by tier or other employee classification? If so, what is the right balance at each level?
    6. How the company will finance its value sharing plans. This is easily determined if company owners have been clear in their value creation definition as described in #1. For example, a business might say that value sharing must be “self-financing”—meaning benefits will only be earned when sufficient value has been created—and will be paid solely out of a productivity profit. A business’s productivity profit is the net operating income that remains after accounting for a capital “charge” (from operating income) to protect the return shareholders expect on their capital contribution.
    7. How the company will address merit versus cost of living increases. If an organization has clearly defined what value creation means, and is committed to the concept of a productivity profit, the philosophical framework is in place to define what it intends for merit pay. When the other six factors listed here are addressed properly, cost of living increases will likely only apply to limited positions within the organization. All increases will be merit-based. In conjunction with #4, leadership just needs to determine how much weight it will place on guaranteed compensation versus incentives and on the former, what performance criteria will drive the salary increases for which employees can become eligible.

    When companies take the time to develop a clear pay philosophy, it is much easier to create a compelling pay offer. It enables business leaders to communicate a the kind of financial partnership they want to have with their employees; one that allows them to participate in the wealth multiple they help create. It also acts as a kind of filter for determining whether an individual is suitable for the organization. If the person being recruited doesn’t relate to your compensation philosophy, they are probably not a good fit for the company.

    As for top talent, their interest is in a pay package that includes two essential elements:

    1. A Value-Sharing Methodology. They want to know that if they create value for the organization—both short and long-term—there will be a means provided for them to share in it. In this sense, they want their financial opportunity to mirror that of owners.
    2. Uncapped Earnings. Top producers don’t like the idea of limitations when it comes to their income potential. If the company’s profit potential isn’t capped, then they don’t think their earnings should be. (And they are right for thinking that way.)

    These are the things that resonate with people in today’s talent market. While you may think in terms of salary, group medical plans, bonuses and such, those are not the things that make you stand out to the people you most want to recruit. They already anticipate everyone will have a benefits plan and pay a “fair” salary. They are interested in a philosophy and strategy that ensures they will have a stake in the business growth they help develop.

In Conclusion

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

Ken GibsonKen Gibson
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.

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WHAT A WINNING EMPLOYEE RECRUITING STRATEGY LOOKS LIKEBusiness 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.