The Talent Crunch – Don’t Get Crushed

Much has been written about the predicted war for talent since McKinsey Consulting first coined the term many years ago.  With the arrival of the long-anticipated era of baby boomer retirement finally upon us (some estimates claim 5,000 every week), the fact is that a "talent crunch" is already here.  It's likely that many of you are already feeling that pressure.

After years of paying it lip service, organizational leadership now genuinely sees human capital, along with its acquisition and development, as its most valuable resource and among its few most pressing issues.  Given the increased investment in acquisition and development of talent, executive boards are now demanding ROI.  They’re asking to see the strategic plan for dealing with knowledge transfer, recruitment and selection in an effort to avoid the crunch causing them to be crushed.

Three major factors are driving the talent crunch that companies are experiencing today:  changing workforce demographics, emerging global economies, and the evolving 21^st century worker.  The effects of the shift in worker demographics are already being felt in some industries.  For example, a full 50% of the federal civilian workforce will be eligible for retirement within a couple of years, and companies ranging from energy to health care to manufacturing are all facing the specter of worker shortages.

Compounding the demographics problem is the increased demand for workers brought about by the emergence of economies around the globe.  The last few years have seen strong economic growth across Asia, Latin America, Africa, parts of Europe and China.  Countries such as the Czech Republic and Poland have also experienced strong, sustained growth over the last several years making the war for talent a global issue.

The talent crunch is also being fueled by the challenge of attracting a new type of worker.  Today’s younger workers, the Internet Generation, are the most educated in history, with the percentage of both high school and bachelor degrees at an all-time high.  In addition, younger workers have been coached to act like entrepreneurs in managing their careers.  This combination of education and the ability to rapidly network and develop job leads will likely mean that the Internet Generation will expect greater compensation and benefits.  And none of these forces are expected to abate anytime soon.

This trend data overwhelmingly demonstrates an increasingly critical dearth of both hourly and professional talent – a reality that will extend beyond the next decade.  We have seen this acute talent shortage already begin to grip our clients, taking many of them into uncharted recruiting territory.  In fact, it’s been suggested that the current recruiting landscape is unprecedented in our nation’s history.  In a recent news release, Randall Stephenson, CEO of AT&T, articulates his frustration over not being able to find suitable hourly-level workers for call centers in the United States.  These social and economic meta-trends that are impacting hiring today will likely have an even greater impact on finding and retaining top performers in the years to come.

So, what can you do to avoid feeling the pressure of the talent crunch?  A first step is recognizing that successful talent acquisition is no longer the reaction to monthly and yearly hiring needs, but instead is the process of building long-term talent acquisition strategies.  And although the hiring landscape is challenging, there are strategic, proactive measures available to reduce, and in some cases, eliminate the potential adverse effects of the emerging talent shortage.  One strategy is to implement or enhance your organization’s succession planning process.  You should have a comprehensive, competency-based process to help identify, develop and retain top performers, increasing bench strength and ensuring adequate knowledge transfer for the next generation of workers.

If you don’t have a succession program in place, it should be a top priority.  If you already have a program (kudos!), make sure you’re collecting objective data to make apples to apples comparisons of candidates.  Following are a few best practices to consider for a comprehensive approach to succession planning:

• Objectively assess potential and perceived performance

• Aggregate the data for decision making

• Avoid being biased by halo, similar to me, or other judgment errors

• Benchmark against similar executives/candidates outside the company

• Focus on retention as well as development so you aren’t just developing talent for the competition

• Identify potential derailers and other developmental areas

• Possibly supplement the process with objective assessments of cognitive abilities, critical thinking skills, interests, and potential and consider adding narrative or automated 360 data to give a complete picture.

Having a comprehensive succession planning process is an important step in meeting the challenges associated with the rapidly evolving talent crunch.  But developing a complete talent acquisition strategy is the best way to avoid getting crushed.  For a complimentary review of your succession planning process or for more information on building a long-term talent acquisition strategy, contact Select International at 1-800-786-8595, or info@selectintl.com.

New Benchmark Report Examines RPO

There exists significant confusion in the market over what Recruitment Process Outsourcing (RPO) is and includes.  This prompted the Aberdeen Group to take a close look at the trend, gathering facts, figures, and results from a variety of organizations.  The analyst group surveyed and interviewed HR professionals and business line managers in more than 200 organizations worldwide to study their RPO practices.

The benchmark report that outlines their findings, “RPO: The Ins and Outs of Recruitment Process Outsourcing,” identifies how Best-in-Class organizations establish the necessary internal foundation to support and subsequently manager RPO to achieve measurable gains.  The report also provides a roadmap of best-practices for companies engaging in RPO for the first time and those looking to improve the effectiveness of their current RPO initiative.  A few key excerpts have been highlighted below, or Download the full report here.

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Organizations that seek to compensate for insufficient internal HR resources and focus more on core business competencies to become more competitive in the global talent war are increasingly outsourcing all or part of the recruitment process.  Of the organizations involved in the study, 24% define RPO as outsourcing of the entire recruiting / hiring process for either all or select employee types, and 73% define RPO as a selective model - one that outsources specific elements of the recruiting / hiring process.

Irrespective of which definition a company subscribes to, the top pressures driving all organizations to pursue RPO are the same.  These pertain to the lack of internal HR resources required to provide and / or support expected levels of recruiting quality and efficiencies, as well as the need to control recruiting costs.

Top Pressures Driving All Organizations to Outsource All or Parts of the Recruitment Process

Source: Aberdeen Group, March 2008

Best-in-Class Performance:  To distinguish the Best-in-Class organizations (those that most effectively manage the RPO process) from all other organizations, Aberdeen used year-over-year performance in three Key Performance Indicators (KPIs).  Of Best-in-Class organizations, Aberdeen found:

• 100% increased the satisfaction of the hiring manager

• 97% improved the quality of candidates

• 92% enhanced the candidate's experience in the recruiting process

As a result of their RPO initiatives, Best-in-Class organizations experienced an average increase in quality of hire that is 4x greater than Industry Average organizations.

Competitive Maturity Assessment:  Survey results show that organizations that enjoy Best-in-Class performance with RPO share several common characteristics:

• 74% define recruitment process pain points that need to be addressed

• 73% assess the performance of the RPO provider as needed or at least once per quarter

• 54% involve business line managers in defining the RPO requirements and provider selection criteria

Required Actions:  The report provides specific recommendations to achieve Best-in-Class performance, but also offers these three core suggestions:

• Gain corporate management buy-in the pursue RPO

• Define metrics to assess RPO performance and put in place processes that support those metrics

• Assign a dedicated resource to manage the RPO provider relationship

Five Compelling Facts from the Research:

1. Best-in-Class companies have achieved an average of 43% increase in hiring manager satisfaction

2. Best-in-Class companies have achieved an average of 41% improvement in the quality of candidates sourced

3. Best-in-Class companies have achieved an average of 35% improvement in candidate satisfaction with the recruitment process

4. Best-in-Class companies are eight times as likely as laggard organizations to improve the diversity of their candidate pool

5. Best-in-Class companies are almost two times as likely as laggard organizations to reduce cost per hire

A-la-carte or soup-to-nuts?

Despite experiencing the same pressures to outsource all or parts of the recruitment / hiring process, those that view RPO as outsourcing the entire process are 50% more likely to cite “cost” as one of the top two pressures driving their decision to utilize RPO, while those that view RPO as outsourcing select elements of the process are 50% more likely to cite “lack of HR resources” as top two reasons they utilize RPO.  This shows that organizations that view RPO as outsourcing the entire recruitment / hiring process are more included in do so in order to achieve greater efficiencies in the process whereas those that view RPO as outsourcing only select elements of the process are compelled to do so in order to fill seasonal staffing needs, or to fill voids and/or strengthen deficiencies in the overall process.

Summary

In a highly competitive labor market, reaching and recruiting talent that best meets your company’s needs becomes more difficult, yet more imperative.  As Aberdeen’s Best-in-Class organizations have shown, properly employing and managing all or parts of the recruitment process can lead to demonstrable business improvement.

If this is your organization’s first entrée into RPO, don’t hesitate to take baby steps by outsourcing only specific elements of the process or by outsourcing the entire process but with a small “control group” of employees.  What will be critical is

• the identification of the business metrics RPO will impact

• the frequency of process and RPO provider review

• the "fit" between the organization and its RPO provider, and

• the discipline to report and communicate the challenges and successes, and adjust where needed

This is just a small piece of the comprehensive analysis and results provided in the full benchmark report, and we invite you to Download a free copy here.  Please contact us if you have any questions or subscribe to the A+ RPO eNewsletter, which discusses how to improve the recruiting and hiring processes within your organization.

IN BRIEF