Mid-Year Perspective on 2002

July is nearly over, and we are now on the down side of 2002. How is the year shaping up for the industry? Are companies hiring again? What’s the buzz in the technology area? Is the search industry back on the upswing? How are companies approaching their recruiting? While the industry hasn’t jumped back as quickly as we all would have hoped, I do believe that 2002 is shaping up to be a year of positive change. Based on the companies and recruiters I’ve spoken with, the general trend seems to be that companies are focusing on evaluating the past in an effort to make positive changes for the future. Sorting through the mess of the past is not easy. As frustrating as it may seem today, the ultimate result will be better for all. Specifically here is a summary of the top five trends I’ve recently observed: 1. Companies are taking a step back in an effort to move forward. While companies have not ramped up their recruiting efforts to the levels we all would have hoped (particularly the underemployed), it does seem that many companies are making a concerted effort to recruit smarter. Looking back on their practices of 1998 through 2000, many companies now realize that hundreds of thousands of dollars were virtually wasted on hasty spending decisions. In 2002, though, companies are doing more workforce planning, building in stronger accountability measures, evaluating metrics more sensibly, and strategizing on ways of improving each step of the recruiting process. I am confident that once the hiring picks up again, measurable efficiencies will be realized. Of course there will always be those companies that will never get it right. They will never figure out the right mix of spending, or how to most effective work with their internal clients or even how to write a decent job ad. For some, the more things change, the more they will stay the same. 2. Realization that technology is a tool, not a recruiter. At last, technology is being recognized for its true capabilities and not as the be-all and end-all solution to recruiting woes. Over the past five years we have observed companies implement technology because they felt they needed to, without really thinking through the best ways to maximize the benefit to their organizations. This phenomenon seems to be changing. Companies are now taking a more serious look at how to use the technology to truly improve efficiencies. They don’t seem to be as jaded about thinking that the technology will do their recruiting for them but are beginning to realize that when used correctly they create opportunities for recruiters to make better use of their time. But it is important to recognize that, just as with other software products we use, such as Word or Outlook or even Quicken, only a small percentage of users will ever realize the benefits of all the software features. With the current sophistication of many recruiting products, there will always be opportunities for users to improve their effectiveness. 3. Pre-screening tools are taking center stage. It’s not new news that companies are struggling with the dramatic increase in resumes that they receive for each open position. Overwhelmed by the need to look at every response in an effort to find the perfect candidate hidden among the hundreds of submissions, recruiters are looking for ways to quickly streamline this step in the recruiting process. The technology winners are those companies that are offering the “intelligent” screening tools. Basically, companies have adapted the artificial intelligence, collaborative filtering, and predictive matching tools used for other industries to the needs of the recruiting industry. Companies like Burning Glass Technologies, Engenium, and iXMatch are beginning to build strong market niches within the recruiting industry. While the jury is still out on whether these products do an optimal job at ranking candidates most effectively, they do seem to help quickly narrow the field to a manageable number. When a recruiter receives over 500 resumes for each opening, these tools are very helpful at filtering out the bottom 75%. It is highly unlikely that these products will generate perfect results any time soon. Some great candidates will get passed over in the process but most likely fewer than are being missed right now. The pundits need take into account the reality that not many recruiters ever generate perfect results with every search. 4. Recognition of internal talent. There seems to be a more collaborative effort between the organizational development and recruiting departments within corporations to understand the skills and career aspirations of current employees. Historically, the OD departments were the keepers of the career-planning tools, providing limited access to the recruiting departments. Now, with the help of more sophisticated applicant tracking technology, companies are beginning to include current employee profiles in their candidate databases. Rather than wait for an employee to “bid” on an internal opportunity, recruiters are now actively pursuing internal candidates. When a search brings up a current employee, there is more effort to introduce them to internal opportunities and more willingness for managers to let them move on. Territorialism will always exist and employees will always be passed over for an external candidate. The optimistic news here is that companies are taking a big step in the retention direction. 5. Outsourcing is becoming a major consideration. Three trends are taking place that are leading companies to consider outsourcing significant pieces of the recruiting process. First, the recruiting headcount simply no longer exists. Recruiters were laid off, and even though hiring may be ramping back-up, the recruiting departments are not getting back their headcount. Second, the pressure to keep search firm fees minimized is still very high. Finally, companies are beginning to look more strategically at the recruiter’s role in the organization and are seeking ways to make the most effective use of their time. The result is a bigger push toward outsourcing the front end of the process. Companies are beginning to realize that with the right outsourcing partner in place, they can effectively streamline processes. Recruiters now need to work only with the most qualified and interested candidates. The outsourcing teams will post the job ads, manage the responses, perform all the advanced internet searching techniques, direct source candidates, mine resume databases and provide detailed pre-screens. Rather than spending their day leaving voicemail messages and sorting through lots of unqualified paper, recruiters have more time to do what they do best?? recruit. Both the hiring managers and the most promising candidates are getting more attention. While outsourcing services are not cheap, the result is generally significant cost savings over previous strategies and a more satisfying experience for the candidates and hiring managers. What It Means What does this mean for the recruiting industry in general? For vendors, the money may not be flowing in the door in 2002 as quickly as you had anticipated. If you deliver a top quality product, provide excellent customer service, have a strong lead list, and can keep your investors placated for a bit longer, you will prevail. In the short term, the key is maintaining sufficient cash flow. In the long term, I do believe that business will pick up to “normal” levels. Unfortunately, if your products or services are not top notch, you probably will continue to struggle. Companies are being much more selective about how they spend their money. If the deliverables are not there, the business won’t be there either. The corporations that are committed to building recruiting departments whose business practices mirror the sophistication of any other business unit in the organization will realize significant cost savings, lower cycle times and increased retention rates. The trend seems to be moving in this direction, albeit slowly. Don’t let the naysayers diminish the progress being made by visionaries that see recruiting as a business process akin to any other supply chain process but with an added ingredient of significant personal touch.

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Karen Osofsky (karen.o@tiburongroup.com) is a co-founder of TiburonGroup.com, an e-recruiting consulting firm that provides outsourced recruiting solutions to rapidly growing companies and new ventures. The firm provides a broad range of recruiting consulting, sourcing, screening, and strategy development services to help companies manage the front-end recruiting process. Tiburon Group is a Certified AIRS Solutions Partner.

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