Q U.S. Hiring Trends Report

Transcription

1 Q U.S. Hiring Trends Report Talent Shortage Calls for Smarter Hiring Strategies

2 Build it or buy it? Like other software firms, we at icims face this classic product development question every day of the week. Whatever their industry, whatever the nature of their products, all our customers face this question too whether they realize it or not. Every employer faces the question of whether to buy or build its incoming talent. They might not think of it that way, because so much of the time buy is the most obvious choice: traditionally, there is a ready pool of labor to dip into, and the employer s lure of money, work environment, and professional opportunity provides a well-established package for reeling in the talent. A host of forces now conspire to complicate that formerly tidy model. As most HR professionals are aware, new technologies are changing the way workers engage with potential employers, empowering them to search for both jobs and employee reviews more widely and with a tighter focus. As economists have widely noted, five years of job growth have tightened the U.S. labor market to the point where hiring may be downshifting to a rate consistent with labor force expansion. And for several years now, policymakers and the business press have been bemoaning how secular shifts seem to have reduced the degree of turnover in the labor market, perhaps due to workers lacking confidence about prospects for finding a new job. Finally, there has been much debate about the possibility that skills gaps have been opening up as the workplace changes faster than the education sector. This state of affairs is particularly trying for small businesses, who often lack the resources to support staff specialized in the increasingly complex area of recruiting. Also, they lack the brand-name recognition that drives much of job seekers online search activity. Many seekers may ask themselves why they should take a chance on a lesser-known firm when there is so much information they can gather about larger firms, and when it is so easy to apply for positions with them. The toll this takes on small businesses is clear to see. The National Federation of Independent Business (NFIB) survey indicates that unfilled openings at small businesses are mounting, along with concerns about a lack of qualified candidates. icims system data indicate small businesses are taking longer than others to fill their positions and have seen a decline in applicants per open position. While these problems might be particularly acute among small businesses, to varying degrees these challenges are common across U.S. employers. In this environment, buy is no longer the obvious choice. Employers who can t readily find what they need will have to give more serious consideration to building their own talent pipelines. How can they do this? They can use referral programs to draw in more candidates and ensure that those they bring in are more promising, they can cultivate passive candidate pools for just-in-time hiring, and they can grow their next crop of talent by expanding their internship programs. Unsurprisingly, small businesses appear to have some room for improvement in this area. More surprisingly, our data suggest that some of icims largest customers may have room for improvement here as well. That said, in a tighter labor market, all employers need to take a careful look at their operations and search for opportunities to cultivate their own pools of talent. Josh Wright icims Chief Economist 2

3 Table of Contents Section 1: The Challenge for Employers: Scarce Candidates and Scarcer Skills 4 Section 2: Feeling the Squeeze: Which Companies Are Most Affected (It s Not Necessarily Who You Think) 6 Section 3: Talent Pipeline Rehab 7 About Us 11 3

4 Section 1: The Challenge for Employers: Scarce Candidates and Scarcer Skills While strong job growth is a good sign for the U.S. economy as a whole, it presents certain challenges for employers and HR professionals. Reports by the Bureau of Labor Statistics (BLS) indicate that, despite a deceleration in job growth, the U.S. was still adding an average of nearly 150,000 jobs each month of the second quarter by most estimates, more than enough to absorb new workers entering the labor force. Months ago, net vacancies surpassed hires in the monthly Job Openings and Labor Turnover Survey (JOLTS), implying employers are now having difficulty attracting suitable candidates. Part of the problem stems from low turnover in the job market: the quit rate has remained below its pre-recession peak, suggesting workers have limited confidence in their ability to find another job. This evidence points to a tightening labor market, and employers in the U.S. are finding that jobs are harder to fill, requiring more time and money to hire best-fit talent. Figure 1: Job Openings & Hires (SA) Figure 2: U.S. Quit Rate (SA) Millions (3-month average) Percent Openings Hires Quit Rate Pre-Recession Peak *Shading indicates recession Source: BLS 4

5 Why are employers having such difficulty filling positions and attracting talent? The lack of available or qualified candidates could be pointing to a skills gap. By 2020, around the world, there is likely to be a shortage of approximately 40 million high- skilled workers and 45 million medium-skill workers. Against that will be a surplus of 95 million low-skilled workers. 1 Calculating the impact of this problem on either the economy as a whole or individual employers is difficult, but few doubt that unfilled positions come at a steep cost. When the right talent can t be found, lost profit and revenue can be as high as $23,000 per unfilled position, according to the U.S. Chamber of Commerce Foundation.² A 2015 survey of employers conducted by the Manpower Group³ said that talent shortages also result in: Reduced competitiveness and productivity 41% Increased employee turnover 32% Reduced employee engagement and morale 32% Higher compensation costs 32% 1 Hiring Insight s 2 Manpower Group, 2015, Talent Shortage Survey. 5

6 Section 2: Feeling the Squeeze: Which Companies Are Most Affected (It s Not Necessarily Who You Think) According to our analysis of icims system data, small businesses appear to be struggling the most to compete for talent in the tight labor market. The talent supply and demand ratio, or the average number of applicants per open position, dropped for small businesses in the second quarter of this year. Additionally, the average time-to-fill metric for small businesses is much longer than for larger-sized business segments. Figure 3: Small Businesses See Fewer Applications per Positions Figure 4: Small Businesses Take Longer to Fill Jobs Talent Supply/Demand Ratio Time to Fill (Calendar Days) Small Medium Large Enterprise Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q2 Small Medium Large Enterprise The above categories are representative of icims market segments and will be reflected throughout this report. Small: Less than 100 employees Medium: employees Large: 1,000 4,999 employees Enterprise: More than 5,000 employees According to a report from the National Federation of Independent Business, 3 in June 2016, 48 percent of small businesses reported a shortage of qualified workers to fill job openings. Additionally, the share of small business owners reporting unfilled job openings rose to a post-recession high of 29 percent. 6 3 NFIB, June 2016, Small Business Economic Trends Survey.

7 Section 3: Talent Pipeline Rehab Companies struggling to fill positions quickly with qualified candidates need to invest in their talent pipelines and build relationships with potential candidates. Below are four ways employers can build talent pipelines for future hiring needs. 1 Grow Your Company from the Intern Up Many companies recognize internships as one of the most effective recruiting tools because they provide a relatively secure source of entry-level hires. Interns have already demonstrated their skill, dedication, and ability to fit into the company culture; furthermore they have received some level of grooming or at least exposure to the work of the company. According to a study by the National Association of Colleges and Employers, 4 approximately 71 percent of employers plan to transition interns into full-time employees, and 63 percent of companies would like to hire interns for entry-level positions. Other stepping stones can be useful too: a 2016 survey of recruiting professionals commissioned by icims showed that 97 percent said they have offered entry-level employees temporary full-time, paid internships, or contractor positions with the potential to receive permanent job offers and 86 percent said this is a frequent practice for their company. 5 Figure 5: Internships Provide a Larger Proportion of Hiring at Medium and Large Businesses Hires: Interns/Total Small 2.7% Medium 4.4% Large 3.7% Enterprise 2.3% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% Source: icims System Data, NACE, 2015, Job Outlook Report. 5 icims, 2016, The Class of 2016 Report.

8 Unsurprisingly, small businesses use of internships lags behind medium and large companies, in terms of both the average time it takes to fill a position (see Figure 4) and the size of the internship program relative to overall hiring (see Figure 5). Medium and large businesses appear to be doing a better job at building talent pipelines for internship programs: their internship programs are larger relative to their overall hiring programs. More surprisingly, the relative size of the largest enterprise companies internship programs more closely resembles that of small businesses. The relative composition of their total hiring may play a role here, as well, but some enterprise companies may be at risk for coasting on their brand names. Which Industries Are Investing in their Internship Programs? Figure 6: The Top Three Industries with the Fastest Growth in Intern Hiring, from the First Half of 2015 to the First Half of % +36% +20% 1. Leisure & Hospitality 2. Education & Health Services 3. Retail Trade 2 Don t Forget Passive Candidates Strong talent pools of passive candidates ensure that a company always has a pipeline of talented and qualified candidates to select from when a job becomes available. Passive candidates are the people that are willing to entertain a job offer but aren t actively seeking a new position. According to a 2015 icims survey, 78 percent of respondents would be open to a new career opportunity if contacted by a recruiter with a relevant opportunity, even if they weren t actively seeking a new job. 8

9 In order to get the most out of talent pools, recruiters must group candidates together based on similarities and continue to communicate with these connections through personalized content that s tailored to their interests. Sending automated personalized, branded communications based on what talent pool they belong to makes passive candidates more likely to think of that organization when ready to apply to a job. Automating this process with a recruitment marketing automation tool enables employers to maintain a constant pool of warm candidates, reducing cost per hire and time to fill. 3 Diversify Your Recruitment Marketing Tools One of the most important parts of building a talent pipeline is expanding candidate reach. In order to make an organization more visible, employers should regularly leverage multiple channels to discover which sources are most effective. Employers can make open positions easy to discover by advertising where candidates are looking. This includes job boards, social media, and ensuring that open jobs ranked favorably on search engines like Google. Utilize Job Posting Channels Strategically Job Boards and Job Aggregators Post to multiple job boards, including niche websites, and track metrics to find what works best. Social Job Distribution Promote open positions and employment brand through more than 300+ available social networks including LinkedIn, Twitter, and Facebook. Search Engines Optimize URL addresses for jobs with search engine optimization (SEO) to produce higher rankings in search engines such as Google and Bing. Dedicated talent acquisition technology helps companies more effectively build candidate pipelines with automation and ease. Companies of all sizes can explore and test candidate outreach channels to attract more candidates and reduce their time to fill. Employers should partner with a technology provider that allows for a seamless flow of information from multiple vendors into a single talent acquisition system of record. 9

10 4 Increase Your Odds Encourage Employee Referrals According to a 2015 survey by icims, 6 on average, 24 percent of new hires originate from a referral, but some companies see rates of nearly 40 percent. Larger companies with 1,000 employees or more tend to hire more referred employees (27 percent) compared to smaller companies (14 percent). This divergence is likely due to the fact that 69 percent of large companies have a documented referral process compared to 46 percent of smaller companies. % of New Hires Originating from Referrals 0% 25% 50% 75% 100% Source: icims, percent of new hires originate from a referral, but some companies see rates of nearly 40 percent Part of the reason employee referrals are considered so successful by employers is due to the fact that they are effective at bringing talent that easily fits into a company s existing culture. By capitalizing on employee networks, companies can enhance their ability to compete for talent icims, 2015, The Impact of Successful Employee Programs.

11 About Us HIRING INSIGHTS About icims System Data This report presents trends over the course of over two years from January 2014 through June 2016 in a sample drawn from icims customer base of more than 3,200 contracted customers. The data is generated by user interactions with icims software, which processes over 1.8 million jobs a year and 149 million resumes. icims worked with a third-party data analyst firm, Hanover Research, to arrive at the data conclusions reflected within. About icims Hiring Insights icims Hiring Insights is an online resource for labor market insights and hiring trends. Our team of researchers and writers uses icims exclusive data, as well as proprietary and secondary research, to create reports and articles that cover the most recent developments in the workforce. Featuring icims Chief Economist, Josh Wright, icims Hiring Insights helps its readers stay well-informed about the latest in recruiting, technology, and the labor market. To learn more visit: About icims Chief Economist: Josh Wright is Chief Economist at icims and oversees the organization s proprietary research. Prior to joining icims, Josh served as a U.S. economist with Bloomberg L.P., where he analyzed current macroeconomic trends and was a frequent guest contributor on Bloomberg Radio and Bloomberg TV. As Chief Economist at icims, Josh is responsible for analyzing proprietary data in order to produce fresh insights on emerging trends in the U.S. labor market. He contributes to the publishing of quarterly trends reports, as well as semi-annual reports and blog posts on ad hoc labor topics. In addition, Josh supports in the development of software that allows clients to analyze their own performance relative to industry benchmarks by collaborating with data scientists, software developers, and marketing executives. A former Federal Reserve staffer, Josh helped build the Fed s mortgage-backed securities (MBS) portfolio of more than $1 trillion, among other responses to the global financial crisis. As a researcher, he has published on labor and housing markets, as well as U.S. monetary policy, and advised policymakers across the legislative and executive branches of government. 11