PART 1: The 6 reasons why recruiting is broken in 2017

The landscape

Recruiting is a funny old thing right?

It has been around since civilisation itself - in ancient Egypt and China those who built 2 of the 7 ancient wonders of the world were handpicked for what would ultimately be their life’s work. The Great Wall and Great Pyramids.

Fast forward today and recruiting is beginning to move into the world of A.I. i.e. Without human involvement.

But has anything really changed? As the hunt for the perfect candidate - the stars of tomorrow, as well as the diligent busy bees and workhorses of our organisation still rages.

Recruitment is big business. $626 billion USD globally, to be precise.

In this 2-part blog series from Rebounty - we’re going to first be providing an overview of recruitment - where it’s problems lay; and then in the 2nd part explore what is on the roadmap for recruitment over the next several years.

Let’s go.

 

Trends on recruiting satisfaction: Companies

The recruiting process for companies is broken into internal and external recruiting.

Internal recruitment is exactly what it sounds like: recruitment that happens within a company.

To be more specific, it’s the recruitment of current (or former!) employees to fill other vacancies in the company.

This includes (but is not limited to):

  • Transfers across the company
  • Internal promotions
  • Re-employment of ex-employees

Generally, internal recruitment ensures that candidates are readily available for an organization. It also means a faster hiring process because the company does not have to spend time searching for a candidate on the job market.

Internal recruitment also offers various incentives for employees, motivating them to work harder to receive a promotion or transfer.

However, not every need can be met internally, and companies sometimes need fresh perspectives. That’s where external recruitment comes in.

External recruitment is the face of the recruitment industry and where some problems lie. This is when companies have to recruit from outside of their own ranks.

Some sources of labor in this section of the recruitment industry include:

  • Job advertisements
  • Employment agencies
  • Educational institutions
  • Referrals and recommendations
  • Labor contractors

Recruiting externally is a major source of frustration for many companies for a number of reasons. Labor is not readily available, it takes a long time to find a qualified candidate, and it is hard to bring someone new into an organization.

Here are the general trends that cause recruiters and companies headaches when looking for candidates outside of their organization.

 

Not enough qualified candidates

Finding qualified candidates is increasingly hard for companies to do.

In fact, 65% of recruiters claimed that a talent shortage was the biggest challenge in hiring in a 2016 Jobvite Survey. This sentiment is backed by the 2016 LinkedIn Global Recruiting Report, which found that the inability to find suitable candidates was the largest obstacle that companies faced in their search to fill a position.

Why is it so hard?

One reason is the fact that global unemployment is lower now than it has been since pre-crash 2007. In 2015, the total global unemployment was 197.1 million people, which was 27 million higher than it was in 2007.

Unemployment, total (% of total labor force)

Courtesy of the World Bank

The smaller supply of candidates makes the demand for quality ones even higher. The more experienced individuals are likely already employed!

This theory helps explain the next general trend: across the board, recruiters are noticing a lack of the necessary qualifications among applicants, according to the  Society for Human Resource Management (SHRM).

This trend applies to both hard and soft skills. 59% of hiring managers reported a level of basic skills deficit in their job applicants, some of which include:

  • Writing in English
  • Basic computer skills
  • Speaking English
  • Reading comprehension
  • Mathematics

84% of recruiters reported a deficit in certain applied skills, including (but not limited to):

  • Critical thinking
  • Professionalism and work ethic
  • Leadership
  • Communication abilities
  • Teamwork

It may be possible that those with the necessary skills are already employed in different companies across the field while those who have yet to develop the skills are applying for these jobs.

Many companies are finding that their local markets simply aren’t producing candidates that meet the defined criteria. As Jennifer Schramm, manager of workforce trends at SHRM stated:

“Another factor that many HR professionals noted was that their local markets were simply not producing enough qualified candidates. This factor alone could be behind many of the reasons HR professionals think it is a more difficult recruiting environment.”

While a number of factors influence companies’ abilities to find qualified candidates, it is by no means the only limiting factor that makes the recruiting process painful.

 

Recruiting is time consuming

The SHRM’s 2016 Human Capital Report found that on average it takes an average of 42 days to fill a position in a company.

That is an extremely long time to spend hiring someone! That is 6 weeks of time lost trying to find someone to fit a job, and 6 weeks utilizing HR manpower to find the person to fill it.

No wonder it’s frustrating to hire!

While finding qualified talent is hard enough, another reason that the hiring process has become more time consuming is a longer interview process across the world.

Slower Interview Processes Putting Brakes on Hiring

Courtesy of Glassdoor

That same Jobvite report mentioned above found that 60% of recruiters felt that culture fit was of the highest importance when deciding whether to hire someone or not. As work culture fit has become a major hiring factor, the interview process has drawn out so candidates can be vetted in many different ways.  

Candidates are often brought in for multiple rounds of interviews with many different people in the company to understand how they would fit into the workplace culture. It’s common for candidates to have entire days spent interviewing with the same company.

MRI Network found that it takes an average of three interviews over the course of four to six weeks to get hired, a dramatic increase from the one to four weeks it took to get hired in the second half of 2015!

 

Recruiting is expensive

This longer recruitment process means that companies pay a small fortune simply to find the right candidate.

Between advertising jobs, active recruiting of individuals, and the interviewing process, the average company spends over $4,000 finding and hiring a new employee, according to a the SHRM’s 2016 report.

Society for Human Resource Management’s 2016 Human Capital Report

Courtesy of the Society for Human Resource Management’s 2016 Human Capital Report

This is a draining amount to spend trying to hire someone!

This figure is only worsened when you factor in the cost of employee turnover. Frequent turnover has a huge impact not only monetarily in that position, but also in terms of employee morale and productivity.

While it’s hard to fully measure the economic impact of replacing an employee, a CAP study in 2012 found that it varies from 16% of the annual salary for lower paying jobs (those making under $30,000 per year) to 213% the annual salary for high-level executive positions.

What goes into the cost of replacing an employee or hiring a new one? As Christina Merhar writes for Zane Benefits, the costs include:

  • Cost of advertising, interviewing, and hiring a new employee
  • Cost of training and onboarding of a new employee
  • Lost productivity time
  • Lost engagement
  • Customer service errors
  • Training costs
  • Cultural impact of the loss of an employee or the arrival of a new one

This number adds up quickly, and it can be a major barrier for smaller companies trying to expand.

 

What can companies do to make recruitment easier?

Starting from the beginning, companies should focus on employee retention rather than recruitment. Keeping employees happy will help decrease the need for recruitment altogether and help create a work culture that is unique to your company.

If possible, companies should try to recruit internally as much as possible, especially for higher-level executive roles that are expensive to fill. Not only does internal recruitment give employees something to work towards, but it also helps your company culture as the highest executives understand what it is like working at the lower levels.

However, external recruitment is inevitable. Your company cannot survive on internal recruitment alone.

When recruiting externally, it is most cost-effective to recruit for entry level positions then give employees on-site training. Not only will it help reduce costs of finding executive-level employees, but it will also help overcome the hurdle of not finding sufficient talent.

Additionally, utilize the networks that you already have. Studies are showing that employee referrals are one of the best ways to source new hires. Any employee referral is more likely to qualified, faster to hire, cheaper to hire, and also more likely to stay with the company longer.

Investing in employee referral programs will help reduce the costs and stress of your hiring process. Your current employees will eliminate the endless search by supplying their friends and will receive a benefit in return.

With Rebounty, we do it for free.

Companies need to think smart and effectively about their hiring practices and cut the parts of the process that are superfluous.

Particularly with the interviewing process, analyze whether your candidate truly needs to formally interview with six different people in addition to online surveys that determine their aptitude. Particularly if they are networking their way into the company, this process can be grueling for everyone involved. In many ways less might be more in the interviewing process.

 

Trends on recruiting satisfaction: Candidates

Despite the fact that candidates control the market right now, it can still be an infuriating process to apply for jobs. General satisfaction in the recruiting process is also low among this group, so bad that almost 60% of job seekers report having a poor candidate experience.  

 

Applying to jobs is personal.

It also requires more time than other types of searches

As Josh Bersin wrote for Forbes, job searching is very different from other kinds of internet searches:

“Unlike other searches on the internet, a job search is a very personal thing. You are looking for a position that fits your needs, a job with a company that fits your personality and lifestyle, and an employer that is physically close enough that you can commute or relocate without impacting your family and daily life. All these search ‘criteria’ are important, and almost none of this information is embedded in the job description.”

There are many things that a candidate has to think about and understand about a company, all of which have to be found in various places online beyond the job description.

What makes the biggest impact in your impression of a job

Courtesy of Jobvite

Interviews, online research, initial contact with the company, and conversations with others/the company reputation are four of the leading sources of  are the most important processes of forming an opinion of a job or company.

From networking to online research, candidates spend a fair amount of time trying to understand who is posting this job and what they do. According to the Glassdoor report, the average job seeker reads at least six reviews of company in the process of forming their opinion about it and doing research.

 

Longer hiring times are frustrating for candidates

In addition to doing the research to find the right job to apply to, the longer hiring time can lead to further dissatisfaction with the process.

The same reasons that companies hate hiring new people are the same reasons that candidates hate applying for jobs: it can take forever to do and can feel like a full-time position in itself.  

Candidates can spend hours over the course of four to six weeks researching companies, networking with employees, writing cover letters, applying for positions, filling out surveys, and interviewing with multiple different people before being told that they don’t have the right experience for the position.

That would infuriate anyone.

It can be disheartening after months spent chasing a company to be rejected due to a lack of experience, and can discourage many people from applying in the first place.

It can be overwhelming, and to many job seekers applying to jobs can feel like a full-time position in itself. For many people who are applying to more than one job at a time, while maintaining a full-time position, it can be nearly impossible to manage.

With 51% of the workforce satisfied with their job but open to a move in 2016, a process that is time consuming is not going to attract high talent. Instead, it is simply going to turn them away. If they are already satisfied with their position, they will not be bothered with a laborious process.

Satisfaction with job

Source: Jobvite

The application process can feel inhumane.  

Many people don’t even make it that far into the process though. Often they get stopped after the researching, cover letter writing, and applying parts of the pipeline only to never hear back from a company.

This is not only frustrating, but it can be disheartening and give candidates a bad taste for a company. For the vast majority of applicants, their return on the time invested in the recruiting process is low.

Technology has a hand in this.

As the hiring process has become more automated

75% of hiring and talent managers use applicant tracking or recruiting software to improve their hiring process. This means that the majority of resumes submitted are never even seen by a human before they are discarded.

Use of recruiting or applicant tracking software during the hiring process

Courtesy of Capterra

Resumes now have to be meticulously keyworded to stand out among Applicant Tracking Systems which discard applications without the proper signages.

Even employee referrals are not immune to this black hole. In 2015, Google was tackling a low employee referral rate and understood that their employees would make referrals based on their satisfaction with the company. As Max Nisen wrote for Quartz:

“[T]he company simply tried making the process more pleasant. Instead of feeling as though their referrals were sent off into a black hole, employees who referred candidates got weekly updates on the status of the people whose named [sic] they had passed along. Referred candidates got a call within 48 hours—and, as the hiring process progressed, they would face fewer interviews than is standard for candidates without an employee referral.”

While this ultimately didn’t increase their number of referrals, it did increase happiness among employees and their referrals. That’s important for a brand’s image and for people’s willingness to apply to a company.

 

Overall satisfaction is low for both companies and candidates

The general trend regarding recruitment satisfaction is one of dissatisfaction. Both employers and candidates struggled with the recruiting process in 2016, and the trend is continuing in 2017.

The recruiting system is breaking. Recruiters need to understand the frustrations from both sides to try to improve the process for candidates and themselves!