Is now the right time to hire? from the Redfish Build Your Top Team Newsletter, April 2010
Hiring Projections 2010
According to a survey by CareerBuilders, twenty percent of employers anticipate increasing fulltime, permanent employers, which is up 14% over 2009. Positive economic indicators include the decrease in the jobs lost each month over the last several months. The main industries to be effected by the planned hiring increase are information technology, manufacturing, health care, transportation, financial services, professional and business services, and sales. While companies continue to watch their expenses, there are salary increases planned for existing staff according to the survey. However, the 2010 Salary Guide by Robert Half reports a small decline in the base compensation for many IT positions is slightly declining by an average of 1.3 percent next year.
Employee Turnover and (Dis)Satisfaction
Make sure your current staff satisfaction is healthy. In terms of retention as well as productivity, you want to maximize your current human capital. Employers have had to cut costs and react to the economic downturn however the results have been frustration and loss of engagement of the workforce. Employee turnover is on the rise: sixty percent of employees intend to leave and another 25% are networking and updating their resumes according to a survey by Right Management. According to a survey by CareerBuilders.com, nearly ¼ of workers are dissatisfied with their work/life balance and with the training and learning opportunities provided by their current employers.
The health, happiness and productivity of your workforce certainly applies to your management team as well. Current management needs to be cared for, and they need to care for the workforce under them. According to the same survey by CareerBuilders.com, nearly ¼ of workers rate their corporate leaders negatively. Managers need to bolster morale, maintain corporate vision and mission, provide opportunities for employee growth in order to maintain employee satisfaction and productivity.
The Training/Professional Development Payoff
Training and professional development doesn’t cost, it pays. Customer satisfaction can only be maximized with satisfied and engaged employees. Now is the time to make sure that you are investing in training and professional development as well as in strengthening your staff’s understanding of their contribution to the financial health of the company. According to the article “Preparing for the Upswing”, companies like Siemens are preparing for the recovery by investing in training. “When the flow of incoming orders slows, sales staff has the time to participate in training programs, Mr. Doenz explains. The company expects to recover current outlays for training through improved sales performance when the recovery takes hold, he says. Providing resources and addressing company values and training will strengthen workforce satisfaction, reinforce the company mission and vision, and will result in higher productivity.
Selective Hiring
Strategically minded companies are making sure they are poised for recovery, but they are not planning exorbitant investments. Many firms are employing very targeted recruiting strategies for new talent as well as ensuring that essential roles are adequately filled and not overtaxed.
Many companies see an opportunity to improve the quality of their own workforce now, as the number of highly skilled and motivated workers in the labor market rises. “We’re using [the downturn] as an opportunity to strengthen our existing teams,” explains Steve Marzo, CFO of Noble Group, a supply-chain management firm based in Hong Kong. “We’re also hiring people in new areas where we can add significant capabilities and improve our bench strength.” [1]
Selective hiring is more important than ever, companies that invest in the upfront costs of the search and interview process avoid making costly hiring mistakes. Due to the low morale and cutbacks due to the recession, there is more competition in the job market. This is advantageous in terms of attracting talent and expertise, but does pose some issues in terms of a lengthy and time-consuming selection process and the opportunity cost of not having the right person in place producing results now.
The Costs of Recruiting
A survey by Robert Half International and CareerBuilder.com found that it takes firms more than nine weeks on average to hire someone for a management-level position. And according to Bliss & Associates, it can cost approximately 150 percent of a person’s salary to replace an employee if the process is handled internally. This reflects the expense for recruitment, relocation, training, and interim productivity losses.
A bad hiring decision can be terribly expensive: the cost of the recruitment, training costs, severance pay, and loss of productivity, impact on morale and the cost of re-hiring. A failed hire can cost the company be double the salary of even low-level positions; at executive levels, the cost can be six times the salary.
Recruiting Opportunities
Even in a downturn, the most talented people have opportunities; recruiting companies know how to find these valuable individuals. A recruiter utilizes their extensive specialized networks to identify the best talent; they sort the resumes, screen the candidates, qualify the expectations and cultural fit of the candidate and recommend the best people for the position. Attracting and securing the highest quality candidates with the industry-specific experience and know-how, the recruiter will get the right person faster and more efficiently. A non-specialized firm will cost more in missed accuracy and have a smaller network to draw from; even if generalists offer lower cost up front, this lengthens the search and adds to the overall human resources cost.
Related articles:
“Do you have the right employees to take advantage of the coming boom?” By Barry Shamis, President of Selecting Winners
“Because It’s the Right Thing to Do” By Edward Teach – CFO Magazine
“Preparing for the Upswing” By AMEX and CFO Research Services
[1] “Preparing for the Upswing”