In 2019, the United States saw job gains end after 108 straight months, and the unemployment rate fell to a half-century low in what seemed like never-ending economic expansion. However, new economic signs in 2020, like a more volatile stock market and slowing global growth, point to economic downturn and maybe even a recession.
The timing and even occurrence of said slowdown, though, is up for debate, which can pose a unique problem for talent acquisition organizations and, more importantly, companies. Do organizations solve for the current problem of acquiring and keeping talent in a full employment market or begin to prepare for a potential slowdown? The answer, intuitively, seems to be a healthy mix of both as organizations build new sourcing capabilities, invest in their current employees, and leverage an alternative workforce to take advantage of the full employment market while proactively preparing for a decrease in hiring.
Building sourcing capabilities via technology and people
One fundamental problem many companies face in a full employment market is the lack of available qualified talent in the market. Publicly available sourcing pools have already been tapped, pipelines have run dry, and the best talent available is often off the market before organizations have time to react. To solve for these problems, organizations are investing in technologies to expand the high-quality talent pool. The full employment labor market has brought with it an onslaught of new technologies catered to help organizations rediscover old talent in their pipeline, automate talent research for demanding markets, and discover new passive candidate pools. Eightfold, a new player in the recruiting technology space, uses machine learning (artificial intelligence) to match employer skill sets, capabilities, and experiences to open job positions. An investment today in sourcing capabilities improves candidate relevance and increases speed to candidate interview, ultimately reducing total recruiting cost in the future.
The other, more traditional way companies are finding competitive talent in a full employment market is by increasing the people power spent proactively sourcing candidates. For challenging technical talent segments, the most efficient companies are moving further away from “transactional recruiting.” Instead, organizations are providing dedicated resources to seek out passive candidates and actively engage with senior leadership to improve their talent pipeline to avoid fishing in a pond that is way overfished.
Investing in employees via internal mobility
Another fundamental problem companies face in a full employment market is the record-high voluntary quit rate due to other available opportunities. Twenty-five percent of the US labor force changes jobs each year, and the quit rate, or rate at which employees voluntarily leave their jobs, is 2.3 percent. This is the highest it’s been in 15 years and puts an enormous stress on the recruiting function. What is the cause of this? Disengagement at work, combined with lots of outside opportunities, research shows. Recent Gallup research says that 67 percent of US employees are disengaged at work, and 47 percent say now is a good time to find a high-quality job. The full employment market allows employees to be choosy about their opportunities. It is therefore an organization’s responsibility to create attractive opportunities for existing employees. One way to tackle this is from an internal mobility perspective. High-impact talent acquisition functions recognize the value of existing employees and the cultural enablement of internal mobility. Furthermore, they encourage internal mobility by supporting upskilling, informal learning, and professional growth opportunities. The talent acquisition function can directly encourage this behavior by actively looking at existing employees for open positions, supporting the creation of a culture that enables internal mobility, and selling a culture of internal mobility to candidates. The result of an organization that supports internal mobility? Curbed attrition, decreased burden of the recruiting function, and increased employer brand value.
Leveraging an alternative workforce
Finally, companies can prepare for economic slowdown and, in turn, decreased hiring volume, by augmenting their recruiting function with an alternative workforce. For almost 10 years, the economy has been growing; intuitively, so have hiring volumes and, as a result, recruiting functions. How can a talent acquisition organization prepare to be more flexible when economic stability is appearing more and more uncertain? An effective solution is in what type of worker an organization chooses to engage in talent acquisition. As companies charge head-first toward the future of work, the alternative workforce is becoming more mainstream as organizations begin to take a strategic approach to workforce composition Using outsourced services, gig workers, and freelance or independent workers strategically gives recruiting functions the ability to scale up and down with relative ease while decreasing risk from both a brand and legal perspective. Engaging an alternative workforce is a proven solution to ambiguous hiring volumes, and therefore also to recruiting staff needs.
The US employment market, while strong today, faces some uncertainty in the future. Recruiting functions, therefore, should consider taking advantage of current labor markets while also preparing for a potential economic slowdown.
Peter Rumsey is a consultant in the Workforce Transformation practice of Deloitte Consulting LLP specializing in workforce and talent strategy. He has experience advising global organizations across various industries and leads the development of the firm’s point of view on talent acquisition value cases.
Cathy Gutierrez is a senior manager within Deloitte Consulting LLP’s Workforce Transformation practice who has proven results advising and delivering HR programs, from strategy to execution, for more than 17 years. She specializes in talent and has a unique mix of experience including both consulting for Fortune 500 clients and serving as an HR executive at several tech startups.