Stagployment: What Slow Job Growth Means

It seems that we are going to remain in a slowly growing talent market for some time. The unemployment rate has hovered around 5.5%, give or take a tenth of a point or two, for almost a year. Pundits have predicted that job growth would return to robust levels for months, but there is almost no evidence of that happening. The reason employers haven’t hired more people is because productivity levels are amazingly high. People are working smarter and harder, and technology is finally being applied where it counts. People are also opting to be their own bosses more frequently than ever. Free agents make up about a third of the workforce. The self-employed, using technology and the Internet, are able to generate revenue without employees or much capital. We won’t see massive increases in hiring demand until some new technology breakthroughs occur (such as what happened when the semiconductor and the Internet were invented) or until the baby boomer retirements start in earnest. What we will see instead is a gradual ramp up ó as well a closer look on the economics and value of having an internal corporate recruiting function. Many organizations will move the function outside the organization unless internal recruiters understand some basic facts about this marketplace and the times we live in. Fact #1: The market is a ruthless judge of value. Many organizations are now seeing value (less cost, more quality) in moving services outside. The growth in employment revenues is moving to recruitment process outsourcing firms and strategic employment agencies. The most successful of these leverage technology and have built processes that are fast, efficient, and cheap to execute. All the big players in business process outsourcing, including EDS, IBM, Accenture, and others, have growing recruitment process outsourcing functions. They promise to find people faster and cheaper than internal recruiters can. Corporate recruiters lag behind and need to figure out how they can re-engineer their functions and apply technology so they can execute as fast, as cheaply, and at a higher level of quality. If they can’t or don’t, their services will outsourced. Fact #2: The Internet changes everything. Successful recruiting has always relied on two factors: knowledge about where talented people are located and the ability to screen and sell that talent. Getting to know candidates used to require lots of legwork, hours on the telephone, attendance at meetings, shows, and professional organizations, and a big network of friends and colleagues who would refer people to you. Screening required interviewing skills and intimate knowledge of the organization’s needs. And the really good recruiters were excellent salespeople. They could convince candidates on the merits of jobs and hiring managers on the merits of candidates. The Internet makes finding candidates fairly painless. Most recruiters have at least rudimentary skills when it comes to sourcing. Some are downright expert. Monster and other job boards have educated candidates about how to become known to recruiters and most candidates have an online presence of some sort. Corporate websites, while woefully inadequate for the most part, at least exist and periodically gather thousands of prospective candidates. They need to be more focused on marketing and on educating candidates on the benefits the organization offers. They should also become the conduit for screening and assessment and for all candidate communication. The Internet makes it possible to apply technology to most aspects of the recruiting cycle and is truly the hub of all efficient recruiting processes. Fact #3: Corporate recruiters have the same access to potential candidates as agencies. I think we can all agree that potential access to candidates via technology is uniformly the same to everyone these days. The differentiators are the recruiter’s skill at using the Internet and at establishing electronic relationships with candidates. Corporate recruiters are actually at an advantage because they can create relationships with candidates who have sought them out and are interested in their particular company or product/service area. By using email, instant messaging, blogs, employee referrals, and a host of other emerging technologies, recruiters can initiate and nurture great candidate relationships over time and space. Fact #4: Corporate recruiting is more about the inside than the outside. While most recruiters focus on candidate relationships and sourcing, which are indeed important functions, they neglect the internal issues companies face. Corporate recruiters have to intimately understand the inside of their organizations. What makes the place tick? What are the key business strategies? Where is the organization heading over the next three to five years? What kinds of talent are critical and hard to find? This in-depth knowledge, combined with taking time to build strong relationships with hiring managers and employees, will pay off with increased credibility and the consequential success that will ensue. Candidates you submit will be respected because they have come through you. Your opinion will count and be listened to. By spending too much time looking out, you erode the critical and fragile relationships that differentiate you from the agency recruiter. With smoldering demand and a corporate focus on efficiency, you will have to offer everything an outside source can offer, and more. You will have to leverage internal relationships, build your personal credibility, apply technology, and make sure you process for recruiting is as simple and cost effective as it can be.

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Kevin Wheeler is a globally known speaker, author, futurist, and consultant in talent management, human capital acquisition and learning & development. He has founded a number of organizations including the Future of Talent Institute, Global Learning Resources, Inc. and the Australasian Talent Conference, Ltd. He hosts Future of Talent Retreats in the U.S., Europe, and Australia. He writes frequently on LinkedIn, is a columnist for ERE.net, keynotes, and speaks at conferences and events globally, and advises firms on talent strategy. He has authored two books and hundreds of articles and white papers. He has a new book on recruiting that will be out in late summer of 2016. Prior to his current work, he had a 20+year corporate career in several San Francisco area tech and financial service firms. He has also been on the faculty of San Francisco State University and the University of San Francisco. He can be reached at kwheeler@futureoftalent.org.

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2 Comments on “Stagployment: What Slow Job Growth Means

  1. Hello Kevin,
    Good article. I must however take up one point with you. It is true that companies are now working better with less staff because they are squeezing more out of their current workforce. This is a result of relentless capitalism. Profit is king and everything is now reduced to $ value (‘the price of everything and the value of nothing’).

    I have yet to see a good article on this site about corporate responsibility and the social implications of reducing the workforce and increasing the productivity from the existing employees.

    I may be overly simplistic but if you employ more people, it increases the spending power of the population as a whole, therefore more people have money to spend on goods and services. The same goods and services you are selling. Therefore, employ more people and as a result more of the population have the disposable income to spend on your product / service.

    If you always strive for greater profits at the cost of reducing employees you therefore reduce the market of people who can afford your product / service. (sounds like catch 22) It’s a case of the rich geting richer on the backs of overworked and over stressed employees.

    There needs to be more of a discussion here on the social responsibilities of corporations in terms of what they give back or add to the comunity. If you always try to employ less peole in the hopes of adding to your bottom line, in essence you reduce the proportion of the population who can buy your goods or service. Where is the balance? Don’t forget there is a finite amount of money in the market. The only thing that ever changes is how it is distributed. It is a zero sum game.

    In terms of recruitment, I believe that more discussion about corporate responsibility is necessary. The more you hire the greater the market you create for yourself. this is a win-win situation. At the same time no company can exist without break-even or profit, so in essence recruitment becomes even more important as you have to insure you recruit the right people to strike a balance betwee social reponsibility and corporate reality. Is there a happy medium?

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  2. I must take issue with your statement regarding money. You say there is a finite amount of it. That is incorrect…in a free economy the pie is always expanding. Economic growth is exponential. Picture a two-dimensional line on a graph. Upward growth is depicted by the line moving upward. Now, picture growth of depth and circumference of the line as well. That is how the economy grows, especially when companies respond to competition. What you describe seems logical until one gains a higher understanding of economics. There is a book I highly recommend: ‘Basic Economics…A Citizen’s Guide to the Economy’, by Thomas Sowell. Anyone taking the time to give this some study will come away with a new perspective and understanding of our society and the world, their finances, their career, and even, their vote.

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