Talent Shortage or Recruiter Lack?

Robert Reich, Bill Clinton’s Labor Secretary and author of The Work of Nations, was interviewed by the Wall Street Journal a few days ago about his views on the workforce and talent. I think this quote sums up his attitude and opinion about where competitive advantage comes from:

“The only unique asset that a business has for gaining a sustained competitive advantage over rivals is its workforce?the skills and dedication of its employees. There is no other sustainable competitive advantage in the modern, high-tech, global economy.”

While all recruiters that I know believe this is true and preach the value of defining and hiring the best people, it is hard to get hiring managers and executives to put budget dollars and actions in place to get that talent and keep it.

The first issue many recruiters face is their inability to offer an exciting wage. The talent shortage that many of us feel may be more a factor of non-competitive salaries and poor recruiting techniques than it is of an actual lack of skilled people.

A U.S. Census Bureau report issued last August states: “Nationally, 2005 marked the first year since 1999 in which real median household income showed an annual increase.”

This has been caused by steady, modest inflation and most organizations’ reluctance to raise salaries despite record corporate profits.

This is a fact that has been overlooked by many pundits writing about skill shortages, and recruiters have repeatedly told me that the salaries they can offer are perceived as low or barely adequate by candidates.

Obviously, this makes recruiters’ jobs more difficult. It also limits the desirability of many jobs and locations and makes organizations willing to pay a bit more (i.e., Google) to attract the best candidates.

While we can all see how logical it would be for organizations to raise wages, we know they are most likely not going to increase significantly. Candidates are not going to get easier to find. All indications are that they will continue to be scarce and fickle.

Given this scenario, you need a mind-set and a skill-set that are markedly different from the past. The most logical approach is to begin developing skills that will make you successful and help you overcome frustrations.

Learn to Influence and Sell

Most important and on top of the pyramid of skills is the ability to build a relationship with senior executives and hiring managers and use those relationships to influence and educate. A functional hiring manager or highly focused executive does not understand the talent issues we deal with on a daily basis.

To them, recruiting is running an ad and screening resumes. They assume everyone wants to work for their organization and they assume that the salary levels are adequate.

It is the human resources executive and the recruiter who have to make them understand and take action. Educate your hiring manager on the trends that are making it more difficult to find the best people. Perhaps you can work out a strategy with them to offer a more attractive overall compensation package or work much harder to jointly create a job and a work environment that is highly engaging and attractive to the type of candidate you seek.

It will take a mutual effort to be successful, and it will require creativity and your willingness to use whatever it takes to influence the manager.

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Know the Market

The competent recruiter is able to tell the hiring manager what the employment market looks like, what the supply of talent for a particular job is likely to be in her area, and how difficult it will be to find and close on candidates.

This knowledge has to be data-driven and can only be collected by vast reading, lots of discussion, the intelligent use of surveys/data tools, and by being aware.

As a part of this, you have to know how big and profitable the market is for the product or service your organization offers. Are competitors laying people off, which might open a fresh source of trained candidates for their firm? Is the market they are in growing, shrinking, or flat? This kind of information, combined with the ability to build relationships, can improve your candidate flow and build your reputation for in-depth knowledge and for being able to create a talent pipeline.

Your market knowledge will allow you and your hiring managers to focus your relationship-building on valuable candidates while spending less time on the commonly available candidates.

Demonstrate Value

Competent recruiters use metrics to put together business arguments for solutions they suggest, for programs they want to initiate, or for the systems they want to buy. They use facts, numbers, and results to get what they want. They have a core set of metrics that show how they have added value, raised quality, improved profits, or saved money. Ideally they show where programs should be expanded and where they should be shrunk or ended.

You need to have the facts at your fingertips. Managers want to know what has worked and what hasn’t. If you are as influential as I hope you will be, you will need to be able to anticipate and answer all questions. If you prepare well, focus your arguments, and have data to back up your claims, you will be far more successful.

We all know that there is a talent shortage and that it will get worse over the next decade. We can show that salaries and generational attitudes are making it more difficult to recruit the best people. Knowing this is only half of an equation.

The other half is learning how to compensate for these issues by changing our skill sets, working harder to help our clients understand, and getting them engaged with us in the hunt.

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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7 Comments on “Talent Shortage or Recruiter Lack?

  1. ‘We can’t come near his salary. We pay his ‘grade’ about 3/4s what he’s making!’

    Then why in the world did you ask me to source out of his particular company? This is like one of the only reasons telephone sourcing fails – when the company trying to garner results out of the sourced names has unrealistic expectations of what the market is demanding. It doesn’t happen a lot to me but it happens enough that I feel warranted in filing the complaint.

    Another thing I’d like to say: in my opine, and mind you it is ONLY my opine; the NUMBER ONE reason people sell their businesses is because they cannot stand, for one minute longer, their employees. Uh huh. It’s not because they’re not making money, it’s not any of the reasons the public suspects – it’s usually because they’re filled with resentments toward their workforce.

    Surprising? Maybe not when you take into consideration, and let’s say it folks, the niggardliness some companies have towards compensation. The first place many companies look to cut costs is in their workforce when their stock takes a nosedive. It seems to fly in the face of what Mr. Reich says about competitive advantage, doesn?t it? Truth be known, many companies wish, in the secret hearts of the closeted C class, that they could exist WITHOUT a workforce!

    I commend companies like Google who have the foresight to put their money where their mouths are regarding compensation. Not many do and those that do will lead in competitive advantage.

  2. The salary objection, one that I handle more often then most and this is primarily due to Hawaii’s Demographic. I constantly provide my client’s with market analysis not only for metro-Honolulu but for their mainland counterparts to answer the age old question of why Hawaii residents and top talent move to the mainland. I have never expected this to change overnight but I have always educated my client’s and hiring managers with the hope that a gradual process would take place. Then again we got our first Wal-mart a few years ago so maybe my expectations are too high! Aloha

  3. With almost forty years in the Staffing and Recruiting business the Talent Shortage is not as severe as the lack of Recruiting Experience.

    The entire focus is on the job boards, not on presenting quality openings to passive candidates.

    99% of all of our volume is Word of mouth to candidates that we have in our database.

  4. I do believe there in a natural lag but the key is the recruiter knowing the industry and like rates and companies. By explaining those differences, you can adjust their attitudes if they really want to make a change. You still must uncover their real reasons for change and if salary is the only item, they’ll move at the end of a market shift.

  5. Mr. Wheeler, I appreciate and respect your contributions to the recruiting community tremendously. Your articles are always thought provoking and well-received.

    However, from time to time, I don’t always agree with everything (probably nothing more than human logic). Let’s be honest: if you recruit for a company that has higher comp plans, you have it easier than someone who recruits for a company that doesn’t – that’s a widely-accepted fact in the recruiting world. Sure, some will come to the table and say that this is not an absolute, which I would agree with – for example, if your company offered a full telecommute package with a traveling masseuse, then of course you could get away with paying less than your competitors! It’s all about trade-offs.

    What recruiters need to understand is the very budgeting process itself. Some companies simply do not have the approved budgeting to hire top talent across the entire enterprise. If my current ROS (Return on Sales) is 11% (a crucial bottom-line metric), and I increase salaries to attract stronger talent, does that 11% increase or decrease? We must keep the bottom-line in mind – it’s 90% of the focus of upper management and the Board of Directors. (It may be higher than 90%, but we have a push for more social & environmental responsibility than in previous times).

    We’ve all seen organizations that pay their operations employees below market, while perhaps paying their sales & marketing resources above market. It all comes down to finding your sweet spot – that point in which you are creating value for your shareholders (or if you’re privately held, raising the valuation of the organization).

    If you want to increase your respectability as a recruiting professional, then increase your respect as a business professional first. Show those around you (particularly the business side) that you understand and embrace the issues that underly all key organizational decisions. There is a cost-benefit relationship that is evaluated in nearly all business decisions – come prepared with that information (not just ‘market rates’).

    As recruiting professionals, we must come to the table with a more holistic view of the enterprise or we will continue to be viewed as professionals that only understand what is perceived as our ‘silo’ – staffing & recruiting.

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