CEB, now Gartner’s research shows that the median time to fill a position increased by a staggering 30 business days between 2010 and 2017 – and that costs money.
Thomas Handcock is the Global HR practice leader for CEB, now Gartner, the world's leading research and advisory company. Thomas works with chief human resources officers, heads of recruiting and heads of HRIS to navigate through and adapt to the challenges and the opportunities in today's fast-changing, volatile, and increasingly digital business environment.
We sat down with Thomas to discuss why there are such significant talent shortages, how talent shortages are affecting businesses, and how your business can better compete for top talent in the digital age.
Why is there a talent shortage, or hiring slowdown?
The slowdown is essentially driven by two factors:
Demand is outstripping supply. That means there's a lot of competition for certain types of talent.
Lack of internal flexibility.
So hiring managers typically have a wish list of the skills and experiences they want, and recruiting struggles to get them to flex those requirements in order to access larger or different talent pools. What tends to happen is that the organisation only begins to flex once they've tried and failed to get talent that matches the original brief, perhaps multiple times.
The increasing digitalisation of business operations and go-to-market models also contributes to increased demand for talent.
CEB’s, analysis of job postings by the S&P 100 companies in 2016 showed that, while those companies were hiring for close to 900 different types of jobs, 39 percent of all of that job posting activity was focused on just 29 roles – and most of those roles required digital and analytics skills. They repeated that analysis with the FTSE 100 in the UK and saw a similar pattern.
The key finding here is that “companies across diverse sectors are converging on the same critical talent pools, and that of course creates a different kind of competitive dynamic and puts pressure on our attraction and branding strategies in new and more challenging ways.”
The penalty for being slow to hire is big: work is not getting done properly. So you may have sales territory going uncovered, customers that aren't being served, new product launches that are delayed, and so on.
That creates real pain for the business. CEB’s most conservative estimate is that businesses are losing over US$8.5 million per 1,000 vacancies by hiring too slowly.
What can organisations do to hire the right talent more quickly?
The most successful organisations are taking a more market-driven approach to recruiting. They understand that competition for critical talent is fierce, and that competition, as well as the behaviors and perceptions of talent, ultimately creates a market reality they need to understand and respond to if they’re going to effectively recruit.
The reality is that companies are increasingly hiring for the types of jobs they've not historically hired for and, therefore, they're not familiar with. So you may be the top insurance company that actuaries want to work for, but that means nothing when you're trying to hire software engineers and digital marketers.
So our brands, ultimately, need to work harder because they need to work in lots of different talent segments and also need to be able to differentiate against a wide range of companies, and that creates a unique set of pressures around our brands and attraction strategies.
Think about it this way: in the consumer space, if your product wasn't selling, you would do research to understand how the consumer is responding to it.
Three things that successful organisations do when they take a market-driven approach to hiring:
Analyse and understand their brand strengths and weaknesses by segment.
Collect and analyse labour market data to understand talent flows and availability.
Deep research to understand the talent they're going after. Not just their demographics or skills, but also what motivates them and how we can best engage with them.
Three things to discuss with your team:
Demand for talent is converging. You are competing with more and different types of companies for the same talent, and that talent has a lot of options and a lot of information.
Knowing what you need to hire and what you wants is insufficient. You need to root your hiring strategy within the market reality, and that's the supply, the behaviours, and perceptions of talent. “Working on the assumption that I know what I want and will be able to get it is increasingly naïve.”
You need to invest dedicated resources into research and monitoring labour market dynamics and target talent preferences. That investment is important because today you probably have a recruiting team that is stretched across many requisitions owning a lot of different activities, and they don't necessarily have the skill or, as a result of the role design, the capacity to do that analysis.