Will ‘Employment Churn’ Blindside Your Recovery Sourcing Efforts?

A small trickle of new jobs will cause a tidal wave of unexpected replacement hiring. Here’s why you need to get ready now. Hopefully, it’s not too late.

In a recent ERE article, I made the point that “employment churn” (fully employed people switching seats) will increase dramatically three to four months before any pickup in overall employment. This unplanned spike in voluntary turnover will leave many companies ill-equipped to handle the surge, since most are not considering replacement hires in their new hiring forecasts as a big item.

Based on some recent evidence, I believe that this spike will be more significant that anyone realizes. Worse, this could happen sooner than expected, blindsiding unprepared companies.

Here’s some of the evidence supporting this view.

Over the past few months I’ve been asking people who are fully employed these two questions:

  1. How satisfied are you with your current job?
  2. Are you looking now for something better?

Interestingly, more people said they were satisfied than unsatisfied, but even those who were dissatisfied most said they weren’t looking right now, probably because there isn’t much worth looking at. We created a formal survey to validate this result, since the impact of this effect on your current and future sourcing plans is huge (here’s the link to the two-minute survey).

Overall, 75% of the people said they would consider something if called, but only 20% of the most satisfied said they’d take the call. You’ll find the detailed results after you complete the survey, but here’s the chart showing job satisfaction vs. job hunting efforts.

Basically, the conclusions drawn from this survey (when validated by more participants) mean you should stop all of your active candidate sourcing programs immediately and aggressively ramp up your passive recruiting efforts.

What the survey results seem to indicate is that just having a job is far better than not having one, even if the job itself provides little personal satisfaction. Since there are so few good jobs out there, it’s not worth looking for something else right now.

As you can see by the chart, less than 10% of those unsatisfied and extremely unsatisfied with their current jobs are aggressively looking. And why would they? We’ve all read about low-ball offers, the number of applicants applying for each job, and the demeaning aspects of looking for a job in the current environment.

Given this situation, it’s unlikely many fully employed people would be looking, risking the jobs they already hold. You can observe a similar effect by tracking the use of the word “jobs” in a Google search.

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Last year, this number was about 3.5mm per day. It peaked in March/April at 7.6mm per day, and has been running at 7mm per day for the past three months.

While still a huge number, one could conclude that the steadiness is a result of people not finding anything new. I’d further conclude, based on the survey results, that most of the people looking for these jobs are either the unemployed or those just entering the workforce.

It’s also pretty easy to conclude that as soon as the economy recovers just a little, those least satisfied of the fully employed will leave first. This movement will then trigger the next rung of those slightly less satisfied to ramp up their job-hunting efforts.

This, in turn, will lead the next group to move up their efforts, and so on. Pretty soon, a minor increase in voluntary turnover will lead to a massive game of musical chairs being played out across the country. It will only take a little bit of new job creation to start this major movement.

This is not a far-fetched scenario, with the tea leaves pointing to something like this happening in the next three to four months. Surprisingly, very few companies are ready for this unexpected surge in replacement hiring.

If you think there is a possibility of this type of scenario impacting your company, here are four ideas you might want to ponder at your next recruiting staff meeting. (For more on this topic, check out my September 2 webinar called “How Job Satisfaction Drives the Job Hunting Process.”)

  1. If you have any open reqs for experienced hires, don’t expect to hire any good people who respond to your ads. You’ll need to enter into the passive candidate market aggressively to fill these slots or ramp up your employee referral program. Here are links to LinkedIn and Broadlook webinars with some advice on how to use these tools to identify and call these people.
  2. Call Jobs2Web, TalentSeekr, or First Advantage and ask them to create talent hubs for you for your most critical positions. There’s no OFCCP reporting required for these microsites as long as you’re just collecting prospects for broad categories of jobs. Here’s a link to a sample of how your CRM system can be designed to convert a prospect into a candidate using a series of auto-response emails without the recruiter even picking up the phone. We call this the “Virtual Recruiter”(sm). The talent hub with this type of drip marketing is the shape of things to come.
  3. Figure out how you’re going to attract strong, fully employed experienced people who currently consider their current job as far better than anything you have to offer. Consider that these passive candidates also represent 80% of the total candidate market, and it makes no sense to continue spending 80% of your resources on the other 20%.
  4. Become preventative. Figure out how to minimize the impact of voluntary turnover at your company. Minimize “disgruntled employee syndrome” in a period where jobs are going nowhere, salaries are being cut, comp increases are nonexistent, and benefits are declining. This is a tough challenge that needs to addressed, not ignored.

There’s a lot to chew on here, but if we’re moving through an inflection point right now, expect the ride to be comparable to a trip aboard the Enterprise through a black hole. Expect it to be much worse, if you decide to ride it out, without considering the consequences.

Lou Adler is the CEO and founder of The Adler Group – a training and search firm helping companies implement Performance-based Hiring℠. Adler is the author of the Amazon top-10 best-seller, Hire With Your Head (John Wiley & Sons, 3rd Edition, 2007). His most recent book has just been published, The Essential Guide for Hiring & Getting Hired (Workbench, 2013). He is also the author of the award-winning Nightingale-Conant audio program, Talent Rules! Using Performance-based Hiring to Build Great Teams (2007).


17 Comments on “Will ‘Employment Churn’ Blindside Your Recovery Sourcing Efforts?

  1. Sorry, but I think it is shortsighted to think there are no viable ‘active’ candidates (aka unemployed) on the market given the current environment. I agree that passive recruiting is important, but with unemployment approaching 10% you can’t tell me there are not some good future employees on the street. Balance is the key.

  2. I think this article is right on. Of course there are active candidates on the market now, as evidenced by the statistics reflected in those who “would talk if approached” or are “slightly looking” and those top tier unemployed candidates who go off the market at warp speed. What Lou is talking about is strategic and speaks to working smart by investing time and energy in areas that will result in the best ROI. So for now, act fast to snag the minute unemployed top talent, but work your passive recruting strategy like mad because,a small spark in the economy is going to cause a fire in the seat of the pants of those most talented, but passive candidates. I know because I’ve been talking to alot of them.

  3. I agree completely with Rob. The level of talent available among the unemployed right now is unprecedented, at least over the last 25 years. I think it is demeaning to thousands of people to say, “don’t expect to hire any good people who respond to your ads.”

  4. “There is no denying that many share the opinion that the best people don’t get laid off. To me, this is a narrow point of view as situations certainly exist, such as our current economic environment, that put even the best people at risk,” notes Jason Farr, vice president, global talent acquisition, Coca-Cola Enterprises.
    “I believe it’s important to not limit ourselves and to be open to all candidates.”

  5. Just to raise the noise level, I’d suggest that good unemployed people won’t respond to your ads.

    Of course, there are some great unemployed people in the market right now, but they’d have to be pretty dumb to respond to an ad for a boring job. The best of the unemployed network, send their resumes to functional department heads, or come up with ingenious ways of bypassing HR/recruiting.

    Regardless, any recruiting person who thinks their primary sourcing approach is to run boring ads to attract the unemployed is missing the boat. And defending this position seems like a short-sighted means to stop thinking about the tremendous alternatives that now exist.

  6. I strongly believe that the “employment churn” is going to happen – as soon as there is a slight uptick in hiring the floodgates will open for the people that have been forced to “carry the load” as staffs have been reduced, but workload has remained constant.

    I commented on a Mike Temkin’s blog about the increase in productivity that has been noted recently: http://community.ere.net/blogs/miketemkin/2009/08/us-worker-productivity-up-but-that-raises-some-que/

    My response:
    The question is industry increasing productivity but decreasing morale?

    A common theme I hear as a recruiter is “I’m doing twice the work for the same pay”. So there is an increase in productivity but at what future cost? These same folks will be the first to leave once the employment market turns the corner. We will then see the productivity numbers turn in the other direction as the best and the brightest leave for greener pastures or just to get out from under the burdens that have been placed upon them as their staffing levels were cut but the demand for their talent has not diminished but is being “taken advantage of” by their empolyers.

    I believe the current rise in productivity will have a steep cost in the near future as the cost of replacing exiting talent will be high. You will not only lose the individuals productivity but mentors and “company common knowledge” that will take more time to replace than just getting another person to do the job.

    You mention “loyalty” and I believe (as do most people I speak with) that there is no such thing in industry today, with few exceptions, and workers at all levels are just numbers for the annual report. Employees are on the expense line. Reduce employees = reduce expenses. Loyalty does not figure in to that equation, unfortunately.

    The other side of that coin is that there are many “A” players that have lost their jobs in the current market, entire plants have closed, entire departments eliminated, many people that were recently promoted but were “short term” in their current position were cut, and many managers I have spoken with have told me that they have cut the fat early but have recently been cutting into muscle and bone, so there are good active candidates out there but the numbers of good ones are dwindling quickly.

    In my opinion, if you thought the war for talent was stiff in 2007-2008 just wait till you see the difficulties you will experience in the next 12 to 18 months and beyond.

    Just my $0.02 – worth a penny after taxes

  7. Lou – your comment is not relevant to this issue. If I have a job description that is not boring, an strong unemployed candidate may respond. Whether he responds directly to that posting or networks his way to the manager, at least he responded. I’m not saying posting jobs is going to get you the right candidate every time and it is the only way to go, but in this market it isn’t a horrible choice.

    Also, in my passive recruiting efforts I have been referred to quite a few strong unemployed candidates lately.

  8. Rob – of course it’s relevant. There’s a huge market of people who are employed who are not looking. If you can find a stronger person in this passive market you owe it to your hiring manager client to find that person. Recruiters are not charged with filling seats with any good person, but the best person possible. Ignoring 80% of the market seems irrepsonsible to me.

    However, if you’re creatively going after the best of those unemployed and you find a top person, that’s great. But most companies are using boring ads and big boards to find these people. This, to me, is a non-starter.

    Your other points, while not totally relevant to the topic at hand, are right on!

  9. Lou: You are a gifted recruiter and a very valuable contributor of ideas to the recruiting community. You would be even more effective if you would avoid the use of generalities. Saying, “Of course, there are some great unemployed people in the market right now, but they’d have to be pretty dumb to respond to an ad for a boring job” assumes #1 that everyone has boring ads and #2 that no company has created a strong enough brand that how the job ad is written is more important than the company’s reputation for being a great employer with exciting, meaningful jobs, rewarding benefits and tremendous stability in a time of economic instability. You are absolutely right that the way we communicate our openings can be an important determinant in attracting the best talent. But it is not the only, nor the most important, determinant. This is why some very smart people respond to ads that aren’t always Pulitzer Prize material.

  10. Interesting article. Of course much is speculation, as it should be, as we really can’t assess completely the depth of recover or if in fact, the recovery will be slower than the general assumption. Nevertheless, as a background checking service, we hear from our clients that the “churn” is a concern. They have in their minds, come a recovery, they will be needing our services. In most cases it relates to plans to hire and rehire. But some are concerned with the loss of staff. That said,most clients I have spoken to about this can’t really determine who they may lose in an economic rebound, but they hardly rule out the possibility. They have an inkling, but that’s about it. So most take they attitude that since they cannot predict churn with any accuracy, their general policy is to wait and see.

  11. Be on the lookout for a soon-to-be-released study by RetentionInstitute.com and Execunet that says top managers are looking despite being highly engaged…and will look more when the economy improves. This squares with the very light drop-off in voluntary quits between high-flying 2007 and recession-driven 2008 of only 11%. And there is reason to believe only the good ones left because there was such strong competition for open jobs.

  12. Some points:

    1) The percentage of hires that major employers get through 3PRs was decreasing prior to the Great Recession. Why should this trend reverse itself in the long run, even with a churn-induced uptick? It seems like a shrinking market. Statistic: 90% of hired positions in this country are from the bottom 90% of candidates. They’ve got to be found and hired, too.

    2) IMHO, you should operate under the belief that you can find whoever you need trough direct sourcing, but only the best offers from the best closers will get interest/acceptance from the best candidates.

    3) The people who leave first may not be the ones that typically require major recruiting efforts to replace. For example: suppose the stimulus money causes an increase in the churn of janitors, who decide to retrain as green energy techs.

    4) After the Dot Bomb Recession, there was a fair amount of churn, but relatively few new jobs were created. As a result, many A- candidates were reluctant to leave “the tried and true” employers for more risky opportunities. The Great Recession is likely to have an even stronger psychic toll on people than the Dot Bomb Recession. I can see this playing out in at least two ways: as things start to improve, people (A players included) will be so grateful and desperate that they will jump at anything and will be extremely hard to budge for a long time to come. Another way will be that as a result of the corporate scandals and financial collapses, a very strong distrust of major corporations will breed a reluctance for many A-players to go back “working for ‘the Man'”.

    5) Finally, if you want to encourage churn (and I do- there’s job security in trying to fill a sieve) then you should advocate for universal health insurance coverage which isn’t tied to a specific employer- I strongly believe that there are millions of people who would quickly look for better opportunities if they didn’t have to worry about the loss of their medical benefits.


    Keith H

  13. I agree with the comments posted by Keith and Patti.

    No doubt a post-recession recovery will generate some churn. Many of the overworked, unappreciated gainfully employed passive candidates of today will morph into active candidates once viable opportunities present themselves. They will take the calls of TPRs, network with department heads and decision makers, as well as apply to boring jobs posted by stable companies with good reputations. The assumption that “no one good” will respond to ads or job postings is an outdated and faulty premise, a mantra chanted for years by some TPRs but not supported by corporate hiring metrics.

    I believe a by-product of the recession and near financial apocalypse will be a candidate pool, active and passive, that is more risk-adverse. Stable companies that weathered the storm will have a hiring advantage. There will be a good deal of reciprocal churn between these companies. as top talent considers “grass is greener” opportunities but not at the cost of stability.

    Another by-product will be destigmatizaton of the unemployed. In this recession, remaining gainfully employed has had as much to do with luck and being in the right place at the right time as performance, skill, or talent. The pool of top candidates for many vacancies will include the employed, unemployed, active, and passive. The advice to “Figure out how you’re going to attract strong, fully employed experienced people” as if these are the only candidates worth considering is limiting and shortsighted.

  14. S. Kaye – if you’re going to state stats as a means to validate your debating point please cite the source. I find none that would support your conclusion. However, I suspect the differences highlighted throughout this discussion are based more on semantics than reality.

    We have a survey now underway – http://budurl.com/survey2 – that clearly demonstrates that passive candidates won’t respond to ads. Furthermore, if you talk with 100 good candidates who are active – and no one is debating that there are good active candidates available – you’ll discover that 75% of those that got jobs DID NOT RESPOND TO A MAJOR JOB BOARD AD. We have done this. While they might have responded to a niche board ad, or call the hiring manager directly, or call an employee they knew at the company to get a referral or call an external recruiter, they did not get the job by applying through a major board.

    The point I was making in the article was that few good people who are active will use a traditional approach to finding a job. Somehow they’ll use some form of aggressive networking. Corporate recruiting should figure out how the best active candidates are finding jobs and then reverse engineer their own processes to capitalize upon this process, rather than rely on and continue to justify a flawed process of using big board ads.

  15. Lou: I don’t doubt the validity of your survey in that many talented people will take routes other than applying to major job boards. But in our experience and apparently in the experience of some other corporations, there are strong exceptions. Our company is so well-respected and so stable that we don’t have to use major job boards very much nor even have a large recruiting staff. By being transparent both on our website and in the recruiting process, we confirm our reputation as being a great place to work. We are fortunate to attract unbelievable talent each time we can make space for someone in our candidate pool. I realize not every company is like ours. But my point is that very talented people seem comfortable applying through our website.

  16. Very little of what I’ve said applies to companies that are magnets for top talent. These employers of choice we see little churn once the economy recovers except on the internal transfer side. They’ll also have the best of the active and passive candidates approach them first. For everyone else, getting candidates first using an early-bird sourcing approach is the key to hiring the best.

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