By the Sevenstep Team, July/August 2022

A market pulse-check with workforce insights

Change and uncertainty – these bywords shape the actions of nearly every talent decision maker today. Whether hiring permanent employees or engaging the flexible workforce, the issues that influence strategic talent decisions evolve constantly.

The following stories in our current market Roundup highlight the persistent and emerging challenges of today's changing workforce landscape. We are pleased to share our views on key issues based on our experience helping companies face challenging conditions and new opportunities every day.

Our stories:

1.  A slower hiring pace will not change the rules for hard-to-find talent.
2.  UK employers adjust to the high demand for technical skills and IT workers.
3.  Contingent and independent workers are a business priority.
4.  TA leaders are balancing tactical and strategic demands.
5.  Job requirements are 37% different than they were two years ago.
6. Hiring managers and recruiters have the power to remove roadblocks.
7.  In-person campus recruiting is alive and well.

Roundup Assets_Q3_Section 1 IconA SLOWER HIRING PACE WILL NOT CHANGE THE RULES FOR HARD-TO-FIND TALENT

Today's labor market is one marked by contradiction. As recently as April, US jobless claims dropped to a 54-year low, and hourly pay rose by an annual 5.6%, while the Canadian unemployment rate fell to 5.2%, a record low. UK unemployment fell to 3.8%, a figure below pre-pandemic levels. At the same time, a steady drumbeat of layoffs or slowdowns from companies like Peloton and Meta emphasized the increased scrutiny many companies are giving to their hiring plans.

These mixed signals point to a critical question for talent leaders: Will slower hiring reduce the pressure on TA to compete for the people an organization needs the most? For most companies, the answer will be no, and the reason is twofold:

  • Sustained hiring: First, organizations continue to hire. A recent Conference Board survey showed that while confidence among business leaders dropped sharply, most expect to expand their workforces, re-shoring or localizing their hiring rather than hitting the pause button.
  • High demand for critical talent: Second, we do not see an ease in demand for hard-to-find workers. Even in the face of layoffs, tech talent continues to be courted by companies across traditional industry boundaries. Likewise, healthcare, service and manufacturing industries must compete for a limited supply of workers in a relatively high-demand market.

Our View:

The marketplace changes weekly, but the competition for hard-to-fill talent remains constant. That means the competitive pressure to be your best as an employer will not change. At a high level, the following focus areas will continue to keep the leaders at the front of the pack.

Candidate experience is a priority.
A transparent, consumer-like experience remains the expectation among candidates you need. The technology stack, the application process, and recruiters and hiring managers all play a critical role in delivering on that expectation.

Data-driven intelligence boosts access to the workforce supply.
Guesswork on where to look for talent and how much to pay is no longer sustainable. The technology is available to deliver data that can inform targeted talent strategy decisions. Without a clear data-driven view, that hard-to-find worker will remain out of reach as market conditions change.

Employer brand makes the difference in securing talent.
Do prospective employees think of your organization as a great place to apply their skills, advance their careers and make a difference? In many cases, organizations not only need to address that question better, but they also need to ensure they are visible to the talent they seek.

Diversity, equity and inclusion (DEI) is more than an ideal.
More than a buzzword or an aspiration, a diverse workforce is an actual demand among workers of all backgrounds and skills. One study found that 42% of workers would reject a job offer if they felt the organization lacked a diverse workforce or diversity goals.

Roundup Assets_Q3_Section 2 Icon UK EMPLOYERS ADJUST TO THE HIGH DEMAND FOR TECHNICAL SKILLS AND IT WORKERS

In the EMEA region, many industries are experiencing slowdowns or taking a cautious approach to growth. However, according to a recent Sky News report, the UK's technology sector remains strong. In 2022, more than £12.4bn in venture capital funding was raised through May, more than India and China, making the UK second only to the US in start-up investment that year.

A strong market indicates that even if investing slows, the supply of tech talent and the presence of a significant employer base will create a dynamic market for workers in the country. An investment expert cited in the report indicated several notable characteristics in the current trend, including:

  • Geographic distribution: Many locations outside of the larger London market are gaining funding, including areas such as Bristol, Oxford and Cambridge.
  • A focus beyond fintech: The UK fintech sector is well-known as a strong investment center, but healthtech and climatetech are also significant, and deep tech (such as AI and quantum computing) has room to grow.
  • Depth of market: The breadth and depth of the tech ecosystem are likely to keep demand for workers high, even as a downturn in investment begins to take shape.

Our View

A strong tech sector influences the demand for IT talent across all industries. If you are a manufacturing or healthcare company in the UK, you may be competing for people with the same skills sought by recently funded tech start-ups. Several approaches can help strengthen a company's ability to secure the tech talent it needs.

Remove location limitations.
Investment is flowing to areas outside of London, and talent is also becoming more distributed. Remote work and targeted sourcing across locations beyond the traditional urban centers will ensure access to the largest available talent supply.

Get creative about job requirements.
Does a college degree or industry experience determine a programmer's ability to deliver results? Consider eliminating formal requirements and focus on skills-based qualifications instead.

Make upskilling an option.
Many workers have proven technical capabilities but lack the particular skill a company needs. We have found that one effective strategy is hiring such talent and providing specific training to bring them up to speed.

Cultivate talent pipelines.
If you start recruiting after the job req goes live, you are already behind the curve. Leading organizations are the ones that commit to continuous sourcing and relationship building, including talent pooling and cultivating talent communities.

Roundup Assets_Q3_Section 3 Icon CONTINGENT AND INDEPENDENT WORKERS ARE A BUSINESS PRIORITY

The last decade saw companies move toward more robust management of the extended workforce, including contingent workforce suppliers, freelancers and providers of Statement of Work (SOW) services. Following the initial disruption of the pandemic in 2020, the trend accelerated as organizations engaged non-employee workers to take on a growing portion of highly-skilled strategic roles.

Traditional Managed Services Provider (MSP) solutions play a primary role in helping companies manage the costs, data and compliance demands associated with the extended workforce. Today's MSPs also position companies to strategically use non-employee talent as an integral part of their workforce strategies. Research indicates several forces will shape an expanding focus on the extended workforce:

  • The Contingent Workforce has grown by half: Research by workforce intelligence innovator Brightfield reveals that the contingent workforce has expanded by 56% in the US since the beginning of the pandemic.
  • Highly skilled workers dominate: Gone are the days when non-employee work meant low-skilled temp labor. One study found that IT represented 31% percent of Managed Services Provider (MSP) coverage of the contingent workforce in the UK.
  • Flexibility drives success: Organizations of all sizes, including large- and medium-sized companies, relied on flexible workers as the pandemic progressed. Today there is high demand for solutions that bring all aspects of extended workforce strategy to the table, including direct sourcing and management of independent contractors and providers of SOW services.

Our View

Bringing the management of the many suppliers and sources of labor under one MSP program and structure yields a high level of flexibility for an enterprise. Still, certain priorities are crucial to setting the stage for maximum long-term value.

Expect more than cost control.
Extended workforce strategies driven by an MSP are great for correcting unusually high bill rates and out-of-sync processes. But cost savings and efficiency should not control the conversation. After the first two years of an MSP relationship, the lasting value of the solution emerges in the form of more agile workforce engagement and visibility into the talent supply.

Engage an MSP to fit your need.
Organizations that provide management of the extended workforce vary significantly in terms of size, the scope of services, and areas of specialty. A 2021 Everest Research analysis found that clients' high perceived value is distributed equally among smaller providers and prominent players. Bigger is not always better.

Expand your extended workforce reach.
Often, hiring managers depend on their limited supplier connections to provide the contingent workers they seek. Expanding their view of available talent through a more extensive supplier network improves their ability to find and engage the right people for the work.

Direct sourcing gives TA a path to flexible workers.
The term "flexible talent" is not limited to those workers brought in through supplier networks. Through direct sourcing, companies work with their RPO or MSP provider to reach out directly to the market and recruit non-employee workers. Over the past three years, this has become a compelling option for HR and procurement decision-makers.

Roundup Assets_Q3_Section 4 Icon TA LEADERS ARE BALANCING TACTICAL AND STRATEGIC DEMANDS

In the past, organizations have been able to rely on a tactical TA function. With some challenges, hiring managers secured the needed talent, prioritizing near-term hiring goals over longer-term vision.

Today, the market for workers is competitive, highly variable and nearly impossible to navigate with a purely tactical approach — and HR leaders are taking notice. The HRO Today Flash Report, "TA In Need of Help," explores HR leaders' views of their TA infrastructure and function. The report is based on a survey that found nearly two-thirds of organizations lacked a long-term approach to acquiring talent and addressing changing business demands. As a result, only 25% of respondents reported being "fully confident" in their infrastructure.

That low satisfaction means 75% of organizations recognize a need to adjust their talent function, expand their investments in technology and ensure their teams and resources are suitable for a long-term strategy. What adjustments are needed? The report reveals several pain points that indicate priorities for change, including:

  • Competitive intelligence: Only 32% gave a favorable view (good or excellent) of their competitive intelligence, and only 41% were satisfied with their data analytics.
  • Flexibility: Just 7% of leaders rate their ability to react to changing markets as "excellent." And slightly less than half of the respondents (48%) viewed their overall agility as positive.
  • Partnership and support: 50% rated a positive view of RPO as part of their TA infrastructure, and 52% had a favorable rating of the overall support their TA function received.

Our View

The HRO Today Flash Report findings underscore three ideas we believe are crucial in building a "future-proof" TA function.

Knowledge is power.
The need for competitive intelligence and data to support strategic decisions will continue to dominate discussions about TA technology and the recruiting process. Access to data is no longer enough; that data must lead to relevant and actionable information.

Scalable and flexible TA supports a long-term strategy.
Requirements change and hiring needs fluctuate over periods of weeks, not years. We see companies not only demand the ability to add or reduce recruiting resources but also to quickly secure specialized TA capabilities.

Take an ecosystem approach to RPO and support.
Companies look to RPO partners for an ecosystem of capabilities and resources, not just access to recruiters. These resources include the use of new technologies in the recruitment process, analytics and workforce intelligence, DEI strategy and employer brand support, to name just a few.

Roundup Assets_Q3_Section 5 Icon JOB REQUIREMENTS ARE 37% DIFFERENT THAN THEY WERE FIVE YEARS AGO

We often hear about the "changing world of work," with much talk of remote and hybrid set-ups, the gig economy and social awareness. But how much is the work itself changing? According to a recent report by Boston Consulting Group, the answer is quite a lot, and every hiring manager should take notice.

The report, "Shifting Skills, Moving Targets, and Remaking the Workforce," is based on an analysis of job postings between 2016 and 2021. It considers how and when new skills were added, how they changed in importance and how frequently they were listed for roles. The findings reveal significant changes in skills expected in jobs:

  • 37% of the top 20 skills requested for the average US job have changed since 2016.
  • One in five skills (22%) is entirely new.
  • Certain sectors — finance; design, media, and writing; business management and operations; HR; and IT — have changed faster than others.
  • In the top quartile of jobs, 76% of the top 20 requested skills have changed since 2016.

Our View

We often hear about the "changing world of work," with much talk of remote and hybrid set-ups, the gig economy and social awareness. But how much is the work itself changing? According to a recent report by Boston Consulting Group, the answer is quite a lot, and every hiring manager should take notice.

Organizations should view job requirements as a significant influence on their ability to secure the talent they need.

Prioritize the top needed skills.
Even on recently revised descriptions, it may be worthwhile to review and ensure the correct requirements are emphasized while others are dropped.

Reduce, do not add.
Even as new skills arise, smart employers are looking for ways to reduce the burden of the overall requirements.

Be relevant and future-ready.
The job requirements say a lot about the company. For example, is working knowledge of Excel a deal-breaker? Is it necessary to mention it in a programmer position? Probably not. When seeking hard-to-find talent, this can make a difference.

Roundup Assets_Q3_Section 6 Icon HIRING MANAGERS AND RECRUITERS HAVE THE POWER TO REMOVE ROADBLOCKS

A recent survey report by Talent Board and PHENOM revealed how collaboration challenges between recruiters and hiring managers could create roadblocks and cost a company valuable candidates. The report found several issues TA and HR professionals cited that often remain hidden. Notable concerns include:

  • Understanding priorities: When working with hiring managers, recruiters frequently cited challenges deciphering the "must-haves" versus the "nice to haves."
  • Speed of response: After sending candidate resumes for review, 67% of respondents say hiring managers take two or more working days to respond. After a panel interview, 39% take two to three days, and 35% take four or more working days.
  • Communication: 59% of recruiters say email remains the primary hiring manager communication channel, and 45% of recruiters do not have software that provides them or their hiring managers with real-time candidate feedback.

Our View

There is no single formula for building trust and collaboration between the hiring manager and the recruiter, but current practices and technology offer several paths to improvement. Consider the following:

Use data to influence action.
Simply asking a hiring manager to respond more quickly may not work. But, data may show that after an interview, candidates wait an average of four days for a response before moving on, while a particular manager may take an average of six days to make a hiring decision. The result is lost candidates and lagging vacancies. Those numbers can help influence a faster decision.

Build interaction into the process.
Formalizing the scheduled touch points between hiring managers and recruiters can help prevent a breakdown in communication. However, a dedicated process owner must commit to ensuring the cadence of interaction does not diminish over time.

Roundup Assets_Q3_Section 7 IconIN-PERSON CAMPUS RECRUITING IS ALIVE AND WELL

As COVID-19 restrictions lift and the competition for labor intensifies, companies are returning to campuses for their graduate recruiting. According to Aptitude Research, 82% of companies plan a mix of virtual and in-person events this year.

And they are not returning to just any campus. Companies use past candidate hiring data to determine where and if their events will occur. At the same time, organizations are not just discovering their early talent through recruiting events; the same report cited a significant increase in traditional internship and coop programs as a means to access talent. The findings make a solid case for a proactive graduate recruiting strategy:

  • 55% of companies are increasing the number of early talent hires.
  • 57% are increasing the number of campus events they will hold in-person.
  • 62% of companies stated that historical data is the most crucial factor in determining an events strategy.
  • 52% of companies looking to improve DEI this year are building relationships at the student level.

Our View

Effective onsite campus recruiting reflects several practices that are sound fundamentals for all aspects of TA. Those principles are often magnified because a campus recruiting event can put you physically in the same room with your competitors for the talent you seek:

Consider historical data, but do not depend only on "what worked last time."
Don't let past behavior dictate your current strategy. The playing field has changed dramatically, and winning requires an entirely new way of operating. Whether refining strategies for particular skills or sourcing diverse candidates, an advisor with an informed perspective can prove valuable in revealing potential new institutions to target.

Connect your audience and your employer brand.
Be intentional about assessing the values of the talent you seek and the values prospective candidates see in your organization. For example, if your company is known as a stable and steady career choice, but you are recruiting to a talent base that values risk-taking, knowing that gap can help refine your targeting, messaging, and offerings to candidates.

Looking Ahead Icon LOOKING AHEAD TO Q4

In our next Roundup, coming in Q4, look for more news and trends in the market, including changing technology demands, the evolving RPO marketplace, and diversity in the workforce, to name a few. We look forward to sharing insight on these issues and more. If you have questions or input, we would love to hear from you.

For Questions or Comments

Please contact us at: Roundup@Sevensteprpo.com

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