The markets are at record highs while unemployment rates are consistently dropping. Does that mean we are in a candidate friendly market?
Listening to anecdotal information from recruiters, it certainly seems that way. But is there any additional data to support this argument?
As it happens, we recently conducted our annual Employment Screening Benchmark survey and found some interesting data points pertaining to this topic. While the report tends to focus on trends and best practices of background screening, the results also hint that we are, indeed, heading towards a candidate market.
We found that a sizeable majority of companies who responded (76%) plan to increase hiring in 2015. In fact, slightly more than a quarter of respondents expect to grow their workforce by 6% or more this year!
Survey respondents also indicated that most of this growth would come from new employees, rather than temps or contract workers suggests that employers are finally moving past the effects of the Great Recession.
Whether this will eventually sprout into a long-term employee bull market remains to be seen. However, job seekers can likely expect to find more employment opportunities in the near future. For employers, this has several, direct implications:
- Quality candidates will become increasingly difficult to source
This is a simple matter of supply vs. demand. The demand is increasing as more employers look to increase their operations while the supply of available labor is steadily decreasing. The end result is that recruiters have to fight harder for a smaller number of available candidates. Simply posting an opening on the career page may no longer suffice. Instead, employers should develop more proactive recruiting strategies, such as engaging with potential candidates long before the actual job opening exists. In effect, a smaller talent pool will likely force increased foresight and planning on the part of the employer.
- 10,000 fewer employees per day
Did I say smaller talent pool? It’s difficult to believe that just today, 10,000 baby boomers reached retirement age. And if that isn’t shocking enough, consider that this event will repeat itself every single day for the next 15 years! With them, they will also retire decades of accumulated work, managerial and leadership experience. Where does that leave employers? To fill their ranks, recruiters and hiring managers will need to leverage the new perspectives and fresh capabilities of the millennial generation.
- You’re spending more to hire
Nevermind the cost of simply recruiting a new employee, estimated to be between 1.5x to 3x their annual wage. Average wages themselves are also starting to grow somewhat, up 2.1% in 2014. For employers, this is a double-whammy. Not only does it cost more to hire new workers, but existing employees also have more incentive to look for fresh opportunities. Which leads us to the next point….
- You’ll likely experience increased employee churn soon
In such an atmosphere, even passive candidates – defined as those who are currently employed and not actively searching for a job – may take notice. If there are more job openings that offer higher pay, what should prevent them from evaluating their options? Indeed, the government’s monthly “Quits” report seems to suggest that more employees are seeking voluntary separation from their employers. (The Quits report is commonly accepted as a proxy measure of the workforce’s job prospect sentiments.)
- Candidates will judge you more earnestly
If workers have more employment opportunities, they will also become more discerning about their options. Such candidates will naturally judge their recruiting and interview experience with you more critically. This means that your organization probably can’t afford to offer a second-rate candidate experience. Especially if your competition is busy wowing their candidates. This means putting a human face on the recruiting experience, offering a mobile-friendly job search and application format, communicating about the status of the application, as well as simplifying and integrating the end-to-end application process (including the background screening aspects.) Unless, of course, you’re willing to settle for second-tier talent.
Given all of the above, it does not surprise us that our survey found that “finding, retaining and/or developing talent” was the number one business challenge cited by respondents.
In the rapidly approaching era of the talent shortage, employers will need to be prepared to ensure a great candidate experience if they expect to remain competitive.
Free Report: HireRight 2015 Employment Screening Benchmarking Report
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HireRight Employment Screening Benchmarking Report