Firms struggle to bridge critical skills gaps in their workforce. Matthew Vowls, Vice President of Client Services at Sevenstep, explains why greater flexibility in their hiring plans could be the solution.
Employers face a hiring dilemma of near-historic proportions. The global economy threatens a downturn of uncertain severity and duration. Meanwhile, companies struggle to secure critical workers, and despite recent layoffs, the supply of high-value talent remains exceptionally tight.
These challenges are being felt around the world, as job vacancies remain well above pre-pandemic levels and unemployment remains low. For example, the UK is experiencing “entrenched labour shortages”, which could cost it up to £39 billion in GDP each year from 2024, according to the Recruitment and Employment Confederation. At the same time, 53 per cent of tech workers surveyed by the CWJobs pre-emptively applied for new positions due to fears of redundancy.
The European Union (EU), which is in a similar situation, has even named 2023 as the European Year of Skills in a bid to reduce labour shortages across the bloc. It points out that 77 per cent of companies in the region struggle to find workers with the requisite skills. In Germany alone – the EU’s biggest economy - this skills deficit costs an estimated €86 billion annually in lost output.
These conditions can create paralyzing uncertainty for employers. The large and unwieldy workforce plans of the past, based on long-term goals but difficult to change, are now untenable. Decision-makers struggle to commit budgets to add workers when they cannot predict what the next quarter holds — but work still needs to get done, and a wait-and-see approach is not an option. How do you move forward when high-value talent is difficult to find?
The good news is that a growing number of executives and hiring managers are not shying away from this question. Rather than freeze activity or make do with ad hoc workforce decisions, they navigate uncertainty with a decisive approach to hiring. And they do so by focusing on one key goal: improving agility.
In the world of recruiting – or “talent acquisition” (TA) as it is known in the industry — agility stems from fundamental priorities: flexible use of external recruiting resources, improved engagement of contractors and permanent hires, and access to broad TA capabilities. Thanks to advances in practices and technology, these priorities are within reach. Understanding and embracing each can make the difference in securing the talent you need to navigate an uncertain future.
The first priority for agile TA is the flexible use of external recruiting resources. This approach is best seen in the evolution of Recruitment Process Outsourcing (RPO). The RPO solution has long been a staple of large and mid-level organizations with challenging talent needs. The specialized recruiters, supporting technology and domain expertise of a quality RPO create a reliable approach to securing talent when internal teams do not have the capacity or specialization to deliver.
However, companies often need outsourced support when they can least afford to commit to multi-year enterprise RPO contracts. Fortunately, more advanced providers are stepping up their “project RPO” offerings, and employers benefit from this option.
Project RPO enables companies to engage a provider to address specific near-term talent demands. The employer may need to add recruiters to internal teams or outsource an entire TA operation to meet a hiring goal. In either case, a project RPO can scale up quickly and end once the goal is achieved.
Not all project RPOs are equal, however. The best providers will bring market analysis and an ability to assess and adjust the strategy, adding or reducing resources and capabilities on demand. After all, adjustments may be needed in an environment of constant change, even during a limited hiring project. The RPO must equip the employer to make those adjustments quickly and effectively.
The second priority for boosting agility is to improve engagement with the permanent employee and contingent workforce. To do so, companies are bringing both worker classes into one “Total Talent” approach to recruitment. This is a break from the silos of the past where HR oversaw permanent employee recruitment, and procurement managed the contingent workforce.
The total talent approach works particularly well today because it makes it easier for employers to follow workers on their career journey. More than ever, those workers can move easily between perm and flexible roles. For example, recently laid-off software engineer may take on project work while considering their next employment position. The total talent model builds on processes and technology that meets workers where they are in their careers, and it gives decision-makers a single view of all channels to available talent.
Total talent often replaces pre-determined employee- or contractor-only hiring goals with a mix of worker types to yield the best results in terms of cost and quality. For example, based on available data, an organization may set goals to include 25 per cent contractors and 75 per cent employees. In the process, they access more candidates, reduce timelines and ultimately convert many contractors into the permanent roles the organization sought to fill.
These results are not theory. They reflect the experience of a Sevenstep client with total talent in the healthcare industry. It is a telling example of an organization facing challenging hiring needs and talent shortages, and we see similar value for organizations focused on talent across all industries. Once again, a partner with the technology to manage data and guide the change management is essential to bringing the model to life.
Finally, a third path to agility is to expand access to specialized recruiting resources, expertise and technology. As conditions change, a company may need to recruit new skill sets or work in different locations than initially planned. It may need to boost sourcing, research and identification of potential candidates in the market. Or it may require support for recruiting diverse candidates or refining the employer brand, supporting the company’s reputation and ability to attract the talent it needs.
Of all capabilities, one remains elusive for many organizations: the ability to turn data into actionable intelligence. To do this, a technology must aggregate data from all internal and external systems and sources, interpret that data with predictive analytics, provide a single field of view for all information and deliver detailed answers to the most difficult questions. What should you pay for talent? Where is the hidden roadblock in the recruiting process? What resources to you need to achieve your future hiring goal? These questions should not be answered with guesses. Our Sevayo Insights platform shows that technology can do these things today, and it is an essential part of a truly agile talent acquisition function.
Access to all capabilities, technologies and resources give employers the readiness to navigate change. Most employers do not maintain every TA capability they need in-house, but a talent solutions provider should have them available. When an employer can approach the market with a change-ready stance, it stands the best chance of adjusting to talent demands with the speed and cost-control needed to keep the business moving.
Together, these paths to agility add up to a business-friendly alternative to the inflexible structures of the past. Organizations may have varying appetites for each approach, but the agility they bring is now essential for survival in today’s business climate. For the executive who steers the entire enterprise or the hiring manager who simply needs to secure the right people for the job at hand, the move toward flexible workforce strategies will position them to succeed, both now and in the future.
