Recruiting Technology Trends for 2003

With another year on the books and a new one staring us in the face, now is the usual time to evaluate the past and make predictions for the future. Predicting the future is always a tricky thing as it can quite often backfire on you if you are wrong. So for this article I will focus more on some specific trends that we have seen and discuss how they might impact the recruiting technology market in the coming year. 2002 was a year that brought major changes in the size and structure of recruiting departments in corporate America. For the most part recruiting departments were significantly reduced, if not completely decimated. As the economic recovery continues, the process of rebuilding will begin, which will definitely include the utilization of technology. The following three trends will play a critical role in the development and deployment of technology and tools to support the recruiting function. The Recruiting Model The recruiting model within companies will frequently change like a pendulum. Centralized recruiting functions often move toward decentralized models to provide more customer contact. Decentralized recruiting models move toward centralization to gain economies of scale. When and how the pendulum begins to swing depends greatly on what’s happening at each corporation, but for the most part the trend had been moving toward a decentralized model ó even as far as putting recruiting in the hands of the hiring manager. During the late 1990s recruiting departments grew in size, centralized, and in many cases became a separate entity from HR to address the tight labor market. During this peak, hiring managers were still screaming that they were not getting enough candidates to fill their positions. But in the last 18 months, with the change in economy, the pendulum has swung in the opposite direction. With the elimination of recruiters, many hiring managers have been asked to pick up the slack. During this time, while the number of recruiters has been drastically reduced, the volume of available candidates has exploded. This dynamic is creating a lot more work for fewer people to handle, and Hiring Managers are finding themselves inundated with resumes of un-screened candidates. This trend will clearly increase the demand for tools and technology that assist in the pre-screening and assessment process. I expect there to be more of this functionality added to core applicant tracking systems and for more integration opportunities to become available with niche vendors providing pre-screening and assessment services. But as the pendulum begins to swing back toward center, a focus on the recruiters and the value they can bring to an organization will resurface. As companies begin to hire more recruiters, there will be a greater emphasis on their ability to establish a network and cultivate relationships, and less emphasis on how well they can search the Internet. Hourly and Event-Based Recruiting The IT labor market shortage in the 1990s had less to do with a shrinking labor pool than it did with the number of college graduates in that particular field. As we go from Baby Boomers to Gen Xers and beyond, the real labor shortage will impact the firms that rely on hourly workers to deliver their products and services. Historically, the focus of recruitment technology has been on professional-level staffing and people with resumes. But within the last few years, many corporations are beginning to focus on ways to improve the method in which they acquire hourly workers. There are several issues that complicate hourly recruiting. In retail, the recruiting process is distributed out to the store level where the “help wanted” sign and walk-in traffic is the primary source of candidates. Many store locations are not equipped with technology and often fall outside the corporate networks. Companies often find candidates who are terminated or rejected from one location walking in and getting hired at another. In other industries, issues include the need to hire large quantities of workers for one or two profiles, such as staffing a call center, customer service operation, plant workers, or a new hotel. These require more of an event-based and candidate-centric recruiting process rather than one that is requisition based. In the last few years we have seen some new tools emerge that cater to some of these specific needs, primarily focused on the retail sector. However, it is becoming clear that larger enterprises are seeking a single solution to address all styles of recruiting, whether it is professional, profile-based, hourly, or college. Online application forms distributed through low-cost kiosks, basic and simplified assessment tools, collecting applicant data offline and synchronizing, and the ability to manage applicants by job category rather than by requisition are all features we expect to be developed further to address this growing need. The ERP Debate The discussion around major ERP vendors offering competitive applicant tracking and recruiting tools is not a new one. There has been plenty of speculation that one day the ERP players would dominate this space. It seems that every year the drum beat gets louder and louder, but still the “best in class” vendors continue to grow, prosper, and, yes, multiply! So will this prediction ever materialize? 2003 will be a pivotal year in this debate. Since the downturn in the market the influence for buying new technology has shifted back from the user to the IT department. In a recent article, I wrote about “the 800-pound gorilla” phenomenon, where in some cases the decisions about recruiting technology are being made by the CIO regardless of functionality or business requirements. I believe the reason for this is that since the CIO has already invested tens of millions of dollars into an ERP system, it is only natural for him or her to want to increase the value of that investment and add on the recruiting component. While the cost might be equal to or more than a “best in class” solution, when it is buried within the gargantuan budget of the ERP it is almost inconsequential. On the other hand, when the CIO looks at the prospect of buying a “best in class,” the costs are magnified and clearly incremental because it requires forming a relationship with a new vendor. There are several companies who have already decided to become early adopters and move ahead with the ERP recruiting tool set. Some are in the implementation process and others are simply waiting for better budget conditions. There are a few other companies who are moving ahead with “best in class” as a temporary solution until their ERP supplier can develop their tools a bit further. And of course, there are still an abundance of organizations fully committed to the “best in class” solution. How will this story end? Nobody knows. But one thing is for sure, it will greatly depend on how successful the ERP early adopters are this year. In 2002 there was great anticipation for a fall out and consolidation in the recruiting technology market, but at the end of the day there were really no major casualties. How is it that so many vendors can sustain themselves in a market this size? I personally believe that there is plenty of room because the industry has been growing into something much more than just applicant tracking systems. There is now such a broad spectrum of functionality to meet such a wide variance in business requirements that we are in an environment where the best product for one company may not be for another. The real driving force behind the survival of the vendors will be whether or not they pursue a business model that yields a profit. No matter what happens, 2003 is certainly shaping up to be an interesting year.

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Ed Newman, chief evangelist at Phenom People, is a well-known thought leader in the HR field. With more than 25 years of experience in the talent acquisition and management industry, Newman has worked with many Fortune 500 companies in the design, development, and implementation of highly effective talent strategies, processes, operating models and technology infrastructure. Newman previously founded The Newman Group, a consulting firm specializing in the delivery of talent management solutions.

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