Without employees in post, companies will face a reduction in productivity, which could disrupt everything from production to staff morale, or even getting your latest innovation to market. There is a competitive market for talent; how do you make the best use of your third-party contracts to enhance your attractiveness as an employer and win the war for talent?
The talent market is having a topsy-turvy time of late. On the one hand, there are still the effects from the Great Resignation, where employees were leaving in droves – and on the other, major brand name companies are in the press for workforce cutbacks.
And yet many organizations are still struggling to recruit staff. In the UK, the Office of National Statistics noted 1.2m vacancies between August and October 2022. In the US, the Bureau of Labor Statistics noted 10.7m vacancies, and 4.1m voluntarily left their roles in September 2022. Recruitment and retention remain front-and-center issues for the C-suite.
Facing a recession, it’s tempting to put in a recruitment freeze as a cash-saving measure. But is that really a saving, especially if you have fixed costs in in-house recruitment teams and/or recruitment process outsourcing (RPO) contracts with inflexible commitment levels? A recruitment freeze could also overload your staff who pick up the work that would have been done had those vacancies been filled, and exacerbate a retention issue from employee burnout. Organizations can face reductions in productivity from unfilled vacancies, which may mean delays in getting innovations to market or projects completed.
It’s time to recognize that there is a cost to unfilled vacancies.
Depending on the method you choose, it can be an easy calculation to make, on the premise that an organization would hire people based on their ability to be more productive than what they cost. Do you know how long your vacancies are open before they are filled? Reductions in the time to hire can therefore be counted as a productivity gain.
So how do you know if your organization is facing hidden costs, and what can you do about it?
- First, know your data. Identify the areas where you have a lengthy time to hire, and talk to your recruiters to understand the reasons why. If you are only looking at the average time to fill, you may be blind to the locations or skill sets where you are struggling to recruit. Look for the outliers.
- Obtain relevant market benchmarks for those skill sets by location. Look for market benchmark information from a variety of sources. What are your competitors doing? What are your recruiters (internal and external) saying? What information can you glean from advertisements? And are you using pay benchmarking sources?
- Calculate the size of the opportunity. There are several ways you can do this, so agree your methodology internally. One way is to multiply the number of days outstanding for a requisition by the fully loaded cost per day of the role had it been filled – this measures the value of the work that would have been done had the person been in post. Alternatively, you could measure the lost profit opportunity by multiplying the profit per employee per day by the number of days outstanding for a requisition. Most importantly, whichever method you choose, communicate that cost of unfilled vacancies is upwards. Senior decision-makers will need that cost visibility to then support the right interventions.
- Target recruitment strategies for those skill sets in those locations. Referral bonuses, alumni programs, direct sourcing, apprenticeships to grow your own talent – everything is on the table in the quest to recruit faster. Employer brand marketing can also be tailored to showcase the employer’s value proposition.
- Take an agile approach to your user journeys to identify and reduce bottlenecks. How long are your hiring managers taking to interview and return feedback on candidates? How long does background screening take?
- Be flexible. Do you need to have talent in that particular location, or can the work be done from home? Think about repackaging the role. Could it be done on a part-time basis, or a job share? Or should you outsource the work on an outcome basis Statement of Work (SOW)?
Your third-party contracts should be giving you the data and analytics to help you make the right decisions and support you in your next steps. Remain agile and flexible as this sort of analysis is not a “one and done;” it needs to be reviewed regularly to ensure the right interventions are in place (but watch out for initiative fatigue, too).
And as always, if you need help with finding the right suppliers or changing the way you contract for your recruitment needs, get in touch with us today.