September 8, 2016 – Within the executive, managerial and professional sector, hiring authorities are frequently making key mistakes that are hampering not only their ability to hire, but also their employer brand and retention rates, according to an employment landscape survey just completed by MRINetwork. The report reveals that lengthy hiring practices and misconceptions about what motivates top candidates to make a job move are causing companies to lose out on high performers in an already tight talent market.
According to the study, recruiters (86 percent) and employers (62 percent) feel the labor market is candidate-driven in their industry sectors. In this environment, candidates confidently reject undesirable job offers, with recruiters and employers listing “accepted another offer” as the primary reason for offer objections.
Candidate-Driven Job Market
The latest data from the U.S. Bureau of Labor Statistics report seems to support the notion that candidates do, in fact, remain firmly in control when it comes to hiring.
Employers added 151,000 jobs last month as the U.S. unemployment rate remained unchanged at 4.9 percent. Employment in food services continued to trend up during the month (+34.000). Over the year, the industry has added 312,000. The social assistance sector added 22,000 jobs over the month, with most of the growth in individual and family services (+17,000). Financial activities employment continued on an upward trend in August (+15,000), with a gain in securities, commodity contracts, and alternative investments (+6,000). Over the year, financial activities has added 167,000 jobs. And healthcare employment continued to trend up during the month (+14,000). In August, hospitals added 11,000 jobs, and employment in ambulatory healthcare services trended up (+13,000).
“The economy continues to power forward despite the uncertainty and geopolitical risks out there in the world,” said Chris Rupkey, chief financial economist at MUFG Union Bank. “The economy is moving forwards, not backwards.”
Don’t Be Blind to Red Flags
What all of this points to is this: Making the right hire is now more critical than ever. And talent acquisition leaders and executive recruiters are under intense pressure to “get it right” when luring professionals into open mandates. And according to the MRINetwork survey employers seem to be making two critical hiring mistakes:
- Not streamlining hiring practices to avoid losing the best candidates to another offer;
- Not fully understanding the target candidates’ most important priorities, thereby losing those candidates to more competitive offers.
“People with responsibility for hiring have a tendency to see what they’re looking for, especially when they are primed and ready to look for specific things,” said Nancy Halverson, vice president of global operations for MRINetwork. “Focusing too much on set criteria for the ideal candidate or being blind to red flags can lead to serious hiring mistakes, especially when everybody on the hiring team is looking at applicants through the same lens.”
Companies are frustrated with the lack of suitable talent, and 50 percent listed this is as their No. 1 challenge to hiring. While the skills shortage is real, recruiters complain that companies take too long to hire, even when their hiring teams meet ideal candidates. Employers are now extending offers between three to six weeks from the candidate’s first interview, a shift from one to four weeks that was observed in the second half of 2015.
Understanding what is attractive to job seekers is another area where companies are missing the mark. Compensation was the top pick among employers, while recruiters selected advancement opportunities most often. While compensation is important to candidates, recruiters say immediate and long-term advancement opportunities are what drive talent to join a new company, since improved compensation is implied with upward mobility. High performers are not just looking for evidence of current employees who advanced within the company, they also want to see that upward mobility is part of an organization’s culture.
As the hiring process lengthens, rejected job offers continue to rise, and companies are losing shortlisted candidates who decide to join other organizations. Over time, this relationship between the time to hire and the availability of skilled candidates is not only holding managers back from hiring, but also creating potentially long-term challenges with employer brand.
Interestingly enough, companies that participated in the MRINetwork survey indicated that employee engagement and employer branding were among their top priorities, in support of key strategic hires.
Additional Survey Highlights and Conclusions
- Employers and recruiters agree that newly created positions are still the primary reason for job openings followed by vacancies from resignations;
- Recruiters indicated vacancies from retirements are increasing, making this the third most selected reason for job openings (17 percent);
- In addition to accepting other offers and low compensation packages, employers listed counteroffers as a top reason for rejected offers.
Although the study results demonstrate the labor market is highly favorable toward top performers in the executive, managerial and professional space, recruitment and retention will continue to be challenging for overall hiring as the job market expands. Companies that want to attract and retain the best talent will need to revisit their interviewing and talent management approaches to create a strong employer brand.
A recent survey by Willis Towers Watson shared similar sentiment, with employers saying they will continue to reward their best performers with significantly larger pay raises as they look for ways to retain their top talent and strengthen their existing pay-for-performance cultures.
“Incentives tied to individual and company performance continue to play a greater role in an employee’s total rewards package,” said Sandra McLellan, North America practice leader, rewards, at Willis Towers. “During times when employees have greater opportunities to seek employment elsewhere, employers need to evaluate their total rewards strategies and programs to ensure their top employees don’t take their skills elsewhere.”
Contributed by Scott A. Scanlon, Editor-in-Chief, Hunt Scanlon Media