The Coming Tough Times & Recruiting Inefficiencies
The Information has been reporting the increasing number of layoffs in the tech industry. Start-ups and early-stage firms seem to be the first to cut staff, primarily to conserve cash as easy-to-got funding dries up.
While the number of open jobs remains at record levels and unemployment is also low, it does not mean that recruiting in other sectors will be unaffected. Inflation and worry over a potential recession are causing CEOs to relook at their support and non-critical staff. And, yes, most put recruiting in those categories.
Even the big firms: Apple, Meta, Microsoft, and Amazon, are slowing or freezing their recruiting and hiring as they anticipate a slower economy. Stripe, Lyft, OpenDoor, Gem, and many more have also announced significant layoffs. They admit to having overhired during the pandemic in response to consumer demand which is now receding.
Hundreds of recruiters, especially in the technology sector, have been laid off or had their contracts canceled or not renewed in response to this and a deeper sense that the market is slowing. Stripe emphasized that recruiting would be disproportionately impacted. Google is laying off 100 recruiters. And the team at interviewing.io estimated that companies eliminated 50% of their recruiters and 48% of their HR staffers when conducting layoffs this year.
Over the past few years, firms beefed up their recruiting departments to meet demand because of the inefficiencies within recruiting functions. They needed more recruiters because productivity per recruiter has not changed in decades. Rather than use technology or streamline their processes, most recruiting functions hired more people. This is like hiring more people to dig holes rather than using a bulldozer.
Recruiting is an expensive business. Last year firms spent over $28 billion US dollars on recruiting from RPOs and agencies. It’s impossible to find out what organizations spent internally, but it may be higher than what they spent externally. These costs are not sustainable in a contracting economy.
Need for Efficiency & Automation
This underlines the need to use automation to streamline the entire recruiting process. It is impossible to continue spending on more recruiters without any productivity improvement. We have no choice but to make what we do more efficient and cost-effective or be outsourced and downsized.
Okay, you say, what do I do?
First of all, look at what you are currently doing. Take your recruiting process and flowchart it. When we do this with our clients, they are often amazed at all the processing steps and side activities that consume resources and dollars and, in many cases, could be eliminated or streamlined. Just committing to paper everything you do to hire a person will dramatically illustrate where your energy, people, and money are going. Now, attach costs to each of these steps. What does it cost to source a person, screen them, and so on? And you should include ALL expenses here, including the hidden overhead costs we often overlook. The outcome of this is the starting point for improvements and for becoming business-focused.
The next step is to assign teams of people (if you are at a large company) or divide the work among your smaller staff for each process step. Their charter is to examine the process step, recommend improvements or elimination, and find ways to reduce costs while boosting speed. There is no need to set a target or goal at this stage; look for low-hanging fruit – things you can do right away to be more business-focused. In every company I have done this with, there were large immediate savings of time and money. You can make several passes through this over time, making more improvements.
The third step is to begin looking at how you can recruit in an entirely different way. Use technology to reduce the time spent on administrative activities like posting jobs and countless hours of scheduling and interviewing. Focus on creating targeted marketing and sourcing, which help you quickly put the right person in the right job. Achieving this goal happens when you have good relationships with hiring managers and candidates, well-defined minimum job requirements, and clear communication channels with candidates.
Making this stage work well will require investing time and energy in technology. Recruiters have historically been slow adopters of technology and have not appreciated what it can do for them. Applicant tracking software, while a necessary “chassis” for the backend of recruiting, is only a tiny part of the solution. You will also need technology for branding and communicating with candidates, tools for screening them and for assessment, and tools that maintain relationships with those you do not have immediate openings for.
You also need to use technology to help you understand the supply and demand side of what you do. Talent intelligence tools can help you put together an objective look at your internal candidate pool and the wider external talent community.
The fourth step is to move more and more of the responsibility for hiring to the managers. While many have said this, few organizations act upon it. Managers have learned how to purchase raw materials, have responsibility for quality, and make buying decisions independently because of software that guides them and provides them with the Information they need to make the best choices. Given the proper tools, they can do the same with recruiting. Some tools can give them feedback on the quality of job descriptions. Others can recommend where the jobs should be advertised or posted. And there are tools that can help them design interview questions. By asking them to do what they should already be doing, you will reduce the need for many recruiters and lower your costs.
The fifth step is to embrace a broader charter. Again, sign up for the broader responsibility of helping with the firm’s overall talent strategy. Offer to outplace and coach those leaving and work hard to place internal candidates in open positions. In the end, show that you directly contribute to the bottom line, are focused on process improvement, and are willing to embrace new technologies that lead to efficiency and lower costs.
Doing things the way you are now doing them will only lead to the unemployment line.
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