Changing Dynamics in Workforce Management
Article contributed by Jerome Gerber, Regional Vice President, Volt Services Group
Featured in the
CU Quarterly, first quarter 2008
It is not news that one of today’s biggest challenges for businesses across every industry is the ability to recruit and retain top talent. With the national unemployment rate below 5 percent and significantly lower in many areas, organizations need to re-think their recruiting and staffing strategies to remain competitive in the talent marketplace.
Source: Bureau of Labor Statistics
Recruiting Challenges
The increasing demand for and diminishing supply of certain skill sets continue to haunt corporate recruiters, as high job growth is projected within business and financial, professional, information technology and service-related occupations.
1 The tightening labor market makes life difficult for those tasked with retaining and maintaining a stable workforce, but it is not the only factor. Recruiters also cite internal issues, such as cumbersome processes, lack of agility and unresponsive hiring managers as key contributors to their recruiting challenges. For example, a survey of corporate recruiters showed that 83 percent were responsible for the full recruiting life cycle, from developing the position requisition with the hiring manager and sourcing qualified candidates to scheduling interviews and on boarding the new hire. Also, as in any position, recruiters are rarely equally skilled in all phases of the hiring process; the unrealistic expectation that they are equally skilled is in itself a stressor. With responsibility for every step in the process, from administrative tasks to managing the employment brand, recruiters feel overwhelmed and have little to no time to focus on key organizational initiatives.
2
Streamlining with Technology
To help streamline and better manage the recruiting process, some organizations are implementing applicant-tracking systems. This may seem a wise choice; however, automating an inefficient process will not necessarily improve the recruiting results. Additionally, obtaining the full benefit of such a system requires its full utilization. Surprisingly, about one in three organizations is not taking advantage of the complete functionality of its automated applicant tracking system.
3
Growing Contingent Worker Program Management
The challenges associated with recruiting for internal positions are not the only ones faced by HR managers. Their contingent worker programs increasingly require more attention. According to a survey of contingent staffing buyers conducted by Staffing Industry Analysts
4, half the respondents now use the services of 15 or more staffing vendors, up from 10 vendors in 2005; and more vendors mean more staff time to manage them. Accordingly, 44 percent of survey respondents spend over 50 percent of their time on contingent worker program issues, up from 16 percent who spent more than half of each workday on staffing vendor issues in 2003. This translates into less time spent on higher-value, strategic initiatives.
Shifting Responsibilities to Procurement
Besides taking more time for the human resources team to oversee staffing vendors and contingent employees, it is becoming common to centralize the vendor selection and management process, typically within procurement. About one-third of surveyed organizations in 2005 had consolidated this responsibility in procurement; in 2007, 55 percent now involve procurement.
5 A formal, centralized program may save companies an average of 7 percent on their annual contingent worker spend across all skill sets, including professional and information technology positions; best-in-class organizations experience up to 13 percent savings.
6
With procurement facilitating the selection and management of staffing vendors or systems, human resources and hiring managers are not out of the picture. They still play a key role in the initial program implementation and the day-to-day supervision of contingent employees.
Continuing Labor Shortage
Employers continue to depend on contingent employees as one short-term solution to the labor crunch, citing the opportunity to “try before you buy” as a key reason for heading down the contingent staffing route. Besides lowering the hiring risk, contingent employees provide employers with flexibility needed to manage variable and unpredictable workloads and rapid growth.
7
The long-term perspective, however, is that job growth will continue while the supply of qualified workers may not keep pace. The Bureau of Labor Statistics projects 13 percent increase in the number of jobs between 2004 and 2014, which equals 18.9 million new jobs. During this same period, the overall workforce is expected to increase by only 10 percent or 14.7 million workers.
8 Responses to the Staffing Industry Analysts survey reflect this projected growth – more than half expect to increase their workforces over the next two years at a median rate of 10 percent.
Alternative Staffing Solutions
With the current difficulty finding quality workers, where and how will employers obtain 10-13 percent more employees in the shrinking labor market? How will they manage this workforce growth when internal recruiters already feel overwhelmed and aren’t fully using the technology that should make their lives easier? How will companies effectively manage contingent worker programs that involve more staff and time overall? These questions hint at the need for organizations to re-think their current staffing models and develop new business strategies. Three alternative options currently gaining footholds are the development of mature worker programs, the outsourcing of the talent acquisition process and the outsourcing of business functions.
Mature Worker Programs
The share of older workers, defined as age 55 and older, will grow 49 percent by 2014.
9 Organizations focused on hiring entry-level trainees as their current workforce ages may need to concentrate on retaining veteran employees who are both willing and able to perform current or expanded duties well beyond age 65. Rather than lose mature workers at a predetermined age, organizations may want to offer these employees favorable alternatives to retirement.
Source: Corporate Voices for Working Families, 2006
Such strategies do not, and should not, discourage the on boarding of new talent vital to achieving long-range objectives. Instead, these alternatives smooth the transition of power through the systematic transfer of the older workers’ knowledge base to their younger co-workers. Mature worker programs provide employers with a dependable source of qualified individuals and allow companies to retain their critical reserves of experience.
Recruitment Process Outsourcing
The top two pain points for corporate recruiters are the sourcing and screening of candidates.
10 Shifting the responsibility for talent acquisition to a recruitment process outsourcing (RPO) vendor leads the way for human resources to re-focus its energies on broader issues and other strategic initiatives.
Many companies, both large and small, have already taken initial steps toward RPO with the outsourcing of background checks and drug testing. In fact, most RPO vendors offer a flexible program that allows for the outsourcing of individual components within the overall recruiting process, such as requisition management, sourcing, screening, interview logistics, offer process and on boarding. This flexibility extends to using the RPO provider’s software or the applicant tracking software and other related technology in which the customer has already invested. Companies may outsource hiring for a specific project or program, the transactional or administrative processes, or the entire talent acquisition lifecycle.
Whatever RPO approach taken, a true return on investment begins with benchmarking and analysis of current processes, followed by the design of RPO program components to maximize workforce and business objectives. Outsourcing of ineffective recruiting processes, like the automation of poor recruiting processes, will not improve the quality of hire. This requires a focus on continuous improvement through process engineering, metrics and analytics.
Business Process Outsourcing
Transferring a business process or function to a third party may not seem like the answer to the growing shortage of qualified workers or increasing demands on human resources. However, a growing number of companies are finding that they need to re-think their overall business model to remain competitive. Adding more people to the payroll, whether direct hire or contingent employees, does not always provide the capabilities, agility, profitability or advantages required to be a contender in the global marketplace. Business process outsourcing (BPO) can provide real-time, critical operational functions for an organization when:
- A rapid, short-term turnaround and delivery are required
- In-house development and maintenance is cost-prohibitive
- Needed facilities, equipment and resources are limited
- Too many enterprise-wide projects already exist
- The function is outside the organization’s core competency or expertise
The success of an outsourcing arrangement increases when it involves discrete, transactional functions with explicit business rules
11,
such as with recruitment or call center services. Even software development and technology services may be successfully outsourced when clearly stated deliverables and service level agreements guide the program performance and BPO partner relationship.
While organizations can address strategic business challenges by outsourcing non-core functions, they can also solve the associated tactical challenge of finding and retaining workers for the outsourced process. Without this responsibility, human resources can focus on delivering top quality candidates in support of core business initiatives while potentially improving time to hire, hiring manager satisfaction and overall employee productivity.
1 Bureau of Labor Statistics. 2005. BLS releases 2004-14 employment projections.
2 Millick, SPHR, Sally. 2007. Sourcing and recruiting: trends, challenges and insights. The Newman Group.
3 Ibid.
4 Staffing Industry Analysts, Inc. 2007. 2007 staffing buyers survey: insights into staffing clients’ actions, plans and key decision drivers.
5 Ibid.
6 Aberdeen Group. 2007. Contract labor and professional services – the right people, at the right time, at the right place.
7 Staffing Industry Analysts, Inc. 2007. 2007 staffing buyers survey: insights into staffing clients’ actions, plans and key decision drivers.
8 Bureau of Labor Statistics. 2005. BLS releases 2004-14 employment projections.
9 Ibid.
10 Millick, SPHR, Sally. 2007. Sourcing and recruiting: trends, challenges and insights. The Newman Group.
11 Overby, Stephanie. 2007. ABC: an introduction to outsourcing. www.cio.com.