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    The Fragmenting Workforce – Part One

    In this article I will explain how and why workforces globally are radically changing. This takes some doing with quite a lot of data and references to look at so this article will be split over two posts.

    The way we work is changing. Across the world, there has been a shift in the way we are employed and a clear move towards a freelance/interim/contingent workforce. These structural changes are being driven by the following factors;

    1)      The weakened economy

    2)      How we want to work and how we consume work

    3)      The growth in the mobility of labour

    As Talent Futurologist Kevin Wheeler says, we are seeing two worlds colliding; the “traditionalist” wants security, a career path, predictability, income and camaraderie whilst the “free agent” wants choice, flexibility, opportunity and “pay per performance”. http://www.futureoftalent.org/

    In Kevin’s opinion, there are four key trends shaping ‘The Future of Work’ which will result in a rise in the contingent workforce. These are;

    –          The Rise of the Career Mosaic – “Everyone is an entrepreneur and Job Security is You… the new job security is alive and well and centred in you, not in a company.” – The New Job Security, Pam Lassiter http://www.huffingtonpost.com/pam-lassiter/

    –          Collaboration or Crowdsource – Work is more complex and it’s difficult to find and screen scarce talent. There’s great demand for innovation so should we share these scare resources?

    –          Health and Happiness – New concepts of prosperity and success change how we view and value work

    –          Beyond Words – The changing nature of communications means that how and where we work will change and the opportunity to be “independent” will be greater

    One of the messages in the KPMG’s 2012 survey report ‘Rethinking Human Resources in a Changing World’ , is that there is a “need to create more innovative, agile and globally responsive organisations”. This is not unsurprising. How they plan to do this; by “achieving an optimised workforce that has an appropriate mixture of employee types and employment policies”, is becoming increasingly feasible.

    Some key data from the report was that 72% of those surveyed maintained that their companies should increase the use of both virtual and flexible workers. This includes hiring former employees as contractors – an increasing trend highlighted by 41% of respondents.

    According to official data sources, (ONS Labour Market Survey – July-September 2012), the UK has 1.6m people; 6.4% of its workforce is engaged on a ‘temporary’ basis. Of these, just 20% state that they are engaged in this way through choice – down from 29% in the same period of 2008.

    There is, however, another significant pool of contingent workers contained within the 4.2m Self-Employed register. Research conducted on behalf of the PCG (Professional Contracting Group) estimated that, in 2011, there were 1.56m professional freelancers/ contractors residing within this pool.

    Of these, numerically, the dominant freelancing group is that of associate professional and technical occupations; some 630,000 people. More than half a million people work freelance in professional occupations and a further 350,000 work freelance in managerial occupations.

    Recent research commissioned by the PCG (Stephane Rapelli – European I-pros: a study) classifies these people as I-pros – “self-employed workers, without employees, who… engage in activities of an intellectual nature and/or which come under services sector.”

    The report notes that “the rise in (European) I-pro numbers between 2000 and 2011 was remarkable (+82%). Between 2008 and 2011 there was growth of 12.5% which was driven by four countries; Germany, France, Poland and the UK.” Within the same time period, the UK achieved double the European growth level, and UK I-pros now constitute 19% of the European total.

    With this clear transition of highly skilled professional workers to the contingency side of the market it is now ever more important for an organisaiton to consider whether the permanent employee really does offer the asset that organisations expect and believe they bring to the business. So here’s a question – with candidate numbers now potentially decreasing on the permanent side of the market where does the effort to find these candidates leave businesses who are desperate for skilled resources to deliver projects/sales/innovation/shareholder value? Dissapointed I would expect or frustrated at best – the amount of time and resources spent managing a unsuccessful rcruitment process is waste that eventually could be detrimental to the future of your business.

    In the second part of this blog post we will look in a bit more detail at the transition from both the hirers’ perspective and just as importantly from the candidates point of view.

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    Has Online Recruitment Reached Tipping Point?

    The UK online recruitment market has become increasingly diverse over the last 2-3 years. The job board sector has seen a dramatic rise in the number of vertical (or niche) job boards entering the market, while the use of social media sites such as LinkedIn, Facebook and Twitter have added a new dimension. The challenge now for employers is how to achieve greater hiring effectiveness in this mature online recruitment marketplace and stand out from the e-crowd in the electronic haystack.

    There has, it seems, been a marked shift in the balance of power between the various online channels. The sites which worked best in terms of attracting the right candidates 2-3 years ago may no longer do so, with the likes of Monster and TotalJobs, previously relatively unchallenged in their sectors, losing ground to sites such as CV-Library and Reed along with the rise in the number of niche job sites and job aggregators such as Indeed. Add social media to the equation and the options for employers become even greater. With so many options available, selecting between them can be confusing. But does this mean that job boards have had their day? Actually no, far from it.

    While the role of job boards as a prime medium for both job seekers and employers/recruiters alike has been the subject of much debate over the past 12 months, the simple fact remains that job boards continue to account for a high volume of new hires – second only to referrals, according to a CareerXRoad survey in 2012.

    And the reason for this is simple: job boards offer more traffic and more opportunities for your advert to be seen by the right people and at the right time. It’s where job seekers go and where your competition advertises. Yet this doesn’t absolve job boards of much criticism – some of which, it can be argued, is justified.

    One of the main reasons for this criticism is a matter of laziness: go online and see how some recruiters advertise their clients’ jobs and you will soon see why some (me included) suggest their days may be numbered. Terribly crafted job descriptions with evidently little or no thought or attention to detail, exaggerated positioning of their clients who all seem to be ‘the market leader’, bad grammar, typos and the abject lack of reply to online applications from many recruiters weaken response levels and cause employers to question their effectiveness as a recruitment tool. But effective they are, if used in the right way.

    Another fundamental reason is the overwhelming choice of job sites available for advertisers, with over 1,100 job boards in the UK alone it is hardly surprising that a degree of confusion exists. The critical success factor when it comes to marketing your vacancy online is choosing which candidate sources to use so that you allocate your marketing budget effectively. In response to this, specialist multi-posting and application management service providers have entered the market – some as partners for recruitment consultancies and others exclusively for employers looking to avoid third-party recruiters and manage their recruitment directly.

    Aside from recruiter failing and the plethora of choice for employers, a third cause for concern is in the way the job boards themselves operate. According to the International Association of Employment Web Sites (IAEWS), 60% of job boards surveyed do not know the traffic source of where their online applications come from. And some critics have suggested the sector has been guilty of possessing a silo mentality which precludes it from fully embracing and learning to co-exist with other online tools, such as social media.

    But there is another way. Job boards, quite rightly, will continue to play a key role in recruitment process. However, there remains a relatively untapped source of potential candidates that the current crop of job boards are unable reach: those who rarely, if ever, visit a job board.

    As the war on talent continues to escalate, competition between employers to get the right candidate for the job remains intense. These so-called ‘passive’ candidates will invariably be ‘in’ the market rather than ‘on’ the market – the difference between being pro-active or reactive job seeker – and as such present a significant challenge for employers in terms of how they can gain their attention.

    Short of hiring a headhunting or executive search firm, who typically bill you before they even start their search and charge up to 50% in commission fees, employers can appeal to potential candidates in other ways. One such approach is to engage your target market by talking to them in none-direct, none-salesy way.

    In other words, rather than running a series of recruitment adverts in the hope that the people you want to attract will apply, consider stripping back the ambiguous and cloak and dagger approach in favour of impartial direct sourcing technologies that allow passive job seekers access to employer branded job content rather than third party job adverts placed by recruiters. For example, increasing your PR activity and writing commentary pieces in the key media that your target candidates are likely to be reading not only positions you as a thought-leader and key influencer, it will also appeal to the very people you want to work for your organisation. They want to know what is happening in their sector and you want them to see that your organisation is at the forefront of their sector.

    While opinion may be divided, the reality is that job boards aren’t going anywhere (just yet). Employers will always have a need to post jobs, especially in niche areas, and social media will continue to act as a job search engine driving traffic to the job boards themselves.

    Direct recruitment models are another- and increasingly- preferred alternative option for employers. In short, these models, which are effectively direct candidate attraction processes, such as that offered by Elevate, have already demonstrated their ability to save organisations £000s each year off their recruitment budgets. According to our own findings, with the average cost per hire (contractor/freelancer), using systems based on the Elevate model, typically save employers around £720 per month per contractor (earning circa £300/day) than with a recruitment agency. Which, when taken on an annual basis, we find that employers hiring five contractors for 12 months could save around £44,000 in recruitment fees.  Add that to your bottom line and see you FD or CFO smile broadly.

    To counter the criticism they receive, job boards must improve their editorial standards to help advertisers get the most from their advertising. They need to remind themselves of how to demonstrate their value proposition in the face of competition from social media in much the same way as they did some twenty years ago when they disrupted the print channel.

    As for recruiters, they must take more responsibility and step away from the mindset that simply posting, anything, online is enough to generate response. It isn’t.

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    The Preferred Supplier List; A Good or Bad Thing?

    In the recruitment industry we have all come across the “power” of the purchasing or procurement function, whether you are in a recruitment consultancy and are faced with the constant “you’re not on our PSL” or in an Advertising/HR Communications Agency and are having to fill out a huge tender prior to even pitching for the account, which only seems to be interested in one thing, price. All of us in recruitment will have found ourselves in this position at some time.

    But I would like to pose a number of questions;

    1)       Does the Preferred Supplier List hold your organisation back from finding great talent?

    2)       Does it really deliver value for money?

    3)       Does the “widgitization” of Copywriting and Creativity lead to the best copy, creativity and brand development?

    4)       Is the PSL and 1990’s way of managing the excess of that era failing to take into account the technology led “marketplaces” of the 21st century?

    All of us in the recruitment Industry have – over the last 25 years – been increasingly driven by the PSL.  Large organisations with significant recruiting needs or those in the public sector with a statutory requirement have used their purchasing functions to do the following:

    – Control the number of recruiting firms an organisation works with.
    – Manage costs/fee structure from multiple suppliers.
    – Manage legal contracts.
    – Create structure.

    However, there is a growing number of recruiting firms for whom PSL’s are no longer a consideration. Indeed, many recruiters report that the somewhat arduous and significantly time consuming bidding process, which can take several days to complete given the wealth of information – legal and otherwise – required by the purchasing team, has led to some recruiters to abandon their PSL aspirations altogether. But might these firms have a great candidate?

    We have also seen the growth of the Vendor Managed Service which seek to provide a way of managing multiple suppliers, driving price down and creating efficiency. But yet again, many “smaller” recruiting firms will not bid for these contracts.

    There is another trend that is taking place in the UK recruitment industry that could also have an impact on the “use” of the PSL: the rapid growth of the In-House Recruiting Team. One of the mistakes many organisations have made is to allow the Line-Manager/Recruiting Manager to use any recruiting firm they want and I know of companies who have 100’s of suppliers.

    This becomes an obvious target for the In-House Recruiting Team and running the PSL is a simple way to reduce costs and “regain” control of the situation.

    So I pose the question: Is the job of the HR/Recruiting function to attract the right candidate irrespective of cost? And if, so does the PSL stop that?

    The answer has to be yes, because it restricts the access to the “talent”. But in the 21st century, with a much more open and transparent labour marketplace driven by technology, we are seeing new generation of internet based models that enable smart, quicker and cheaper ways to access talent.

    So is the PSL relevant? The answer should be yes. BUT don’t become a slave to it or the purchasing team. A new generation PSL needs flexibility and should take into account the new generated of technologies being developed that facilitate a more open and direct way to access talent, whether it be permanent or freelance.

     

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    The Drive for an Agile and Lean Recruitment Process

    The ‘war for talent’ demands a shift in the contractor recruitment industry. Both sides are losing out as a result of traditional third-party processes, which are time-consuming, ineffective and expensive in relation to other service industries. Employers pay huge fees to hire from fragmented, vendor-driven talent pools which often fail to meet their needs. Contractors lack access to the majority of open, relevant roles in the vacancies market while facing ever increasing amounts of recruitment ‘spam’. It’s no surprise that a fifth of all vacancies for professionals in the UK remain persistently unfilled1. Taking inspiration from the Agile and Lean mentality as applied to software development, we believe that the recruitment process can be improved, through automation and smart technology, to reduce reliance on third parties.

    The Traditional Recruitment Model and the War for Talent

    When you hear the terms ‘recruitment’, ‘recruiter’ or ‘in the recruitment process’, what words come to mind? Common responses include ‘slow’, ‘long-winded’, ‘unreliable’, ‘expensive’, ‘unavoidable but necessary’, and even ‘laborious’. All of these adjectives are in some way correct. Certainly the processes that surround traditional recruitment haven’t measurably changed for a long while, despite changing needs. As a result the industry has generated mixed feelings, many of which are not positive.

    The recruitment industry has given rise to a tangible war for talent, and the evidence suggests that the war is not going well. Existing strategies are failing both employers and candidates. Employers are paying huge fees while not getting a view of the whole market; instead they see a vendor-driven market and those candidates more likely to make the third party a good fee. Similarly, candidates do not get access to all – or even most – of the roles in the market at a particular point in time; they get a view dictated by agencies and other third parties.

    The impact of this market failure manifests itself in many ways. Talent leaves the UK market, while employers postpone or even cancel projects, relocating them to labour markets which can deliver the talent they need. A fifth of all vacancies for professionals and associate professionals in the UK remain persistently unfilled, an astonishing statistic revealed in the UK Commission for Employment and Skills Survey 2011 – one of the largest skills surveys in the world – alongside a wealth of compelling evidence of an increasingly hard-fought war for talent between UK organisations.

    New strategies are required that maximise the prospect of victory for both of the allies – employers and candidates – in this on-going war. It would be fair to say that in many cases employers and candidates would rather deal with their target audiences directly; that is, without reliance on third parties or recruiters. Yet the task of efficiently and securely connectly highly skilled talent with clients whose needs are pressing is a difficult one. So, can the recruitment process be streamlined to make it leaner and more direct? Can we create a visible improvement in process for this multi-billon, strategically significant yet, highly un-governed industry? We believe the answer to this question is a resounding yes – in fact, the change is already happening!

    Applying the ‘Agile and Lean’ Mentality

    In the software world, development cycles are becoming increasingly agile, as companies try to operate in a lean manner to minimise risk and to realise efficiency gains. ‘Lean and Agile’ in terms of technology and development broadly means ‘adaptive, lively, responsive and nimble’. Agile development is helping dynamic software teams to engage federatively and ultimately be more productive; our question is, can these trends be applied to recruitment, and if so, what is the outcome?

    So what is meant by a ‘Lean or Agile recruitment’ strategy, and how does it impact on the parties involved? Currently the industry is reactive and fairly stagnant. Employers list requirements and follow traditional routes to fill these them. What is required is a more pro-active and iterative approach, and this means nurturing and understanding the mentality around how users handle personal data and what technology we use in our daily lives as enablers.

    The recruitment industry is shifting and there is a visible desire for a more Agile and Lean recruitment process. This desire is primarily being driven by employers due to austere times in the global economies, but candidates are also clambering for alternatives to the current time-consuming and inefficient traditional models. The key third parties contributing to this step change are those fractions of the recruitment industry who understand a change is required, and seek to provide a viable service that is both sustainable and profitable.

    Every day we are using online services like Linked-In, Twitter, Facebook and other social and business tools for greater efficiency. Similarly we see a drive for recruitment and talent engagement to move further online, often using the same tools. Technology, and specifically software platforms and SaaS based tools, help both employers and candidates improve their recruitment through automation and by offering direct access to a wider online market-place and community.

    Significant problems remain, however, and although in much of our personal and professional lives we are used to taking the lead on our data and the way we interact with those offering services, recruitment stays very much ‘post and pray’ – employers post requirements on job-boards while contractors upload their CVs or respond to adverts, and a number of recruiters contact both parties and try to convince you that their particular offering or opportunity is better and more suitable than their competitors’! This process can be automated as long as the data exists in a structured, accessible format online, preferably in specific and closed, recruiter-free environments.

    Of course, there are some excellent recruiters out there who have built their businesses with partnership and effective delivery in mind; however the mainstay of recruiters and recruitment firms are driven by profit and the relatively simple business model they operate within. These are not strategically aligned drivers; if anything they fragment the market further as the market becomes dictated by those agencies and job-boards with the largest, most fluid and effectively mined pool of data.

    Direct Engagement through Online Services

    Introducing software and using cloud-based tools as part of the Agile and Lean mentality can decrease the dependency on biased third parties. Automation of the process can cut costs for employers dramatically as dependence on the human element depreciates; there are key elements in the process that can be completed and in fact enhanced by smart technology. Automation and an Agile/Lean approach to recruitment can deliver access to a wider market, and we have seen the first manifestation of this mindset through employers re-introducing direct sourcing teams onsite to increase control of third party suppliers and tools used to source relevant candidates.

    ‘Agile’ and ‘Lean’ can actually mean using less resource to achieve the same – if not better – results, and although introducing technology and intelligent software can massively assist both candidates and clients, the actual human mindset of those recruiting also has to change. Sustainable recruitment models, such as a corporate empowering their internal recruitment team to use tools that external agencies have historically owned, thereby effectively sourcing from the same – if not a wider – candidate pool, is a massive step forward. What is required now is for the tools that these on-site teams utilise to become more focused on specific niche pools frequented by closed pools of relevant people. Linked-In have realised that a recruiter not paying for access to their data and mining on behalf of multiple clients is much less powerful than a single corporate paying for no-holds-barred access and targeting candidates with their branded opportunities; of course, the later also provides a significant revenue stream!

    Professional networking sites were once hailed as the panacea for mapping clients’ needs onto available talent, directly linking organisational hirers with a pool of experts. But as a result of the law of unintended consequences, many networks have been hijacked, becoming slaves of process-driven ‘sausage factory’ volume recruitment. This has resulted in highly specialised candidates with the right profile keywords being bombarded with unsolicited recruitment spam.

    It is worth pointing out at this stage that there are clear differences when considering the contract and permanent marketplaces within this context. The contract market is more fluid by its very nature and much more defined by fixed candidate parameters such as rate, skills, availability and geography, as opposed to the permanent market place where a candidate’s personality and ‘softer’ skills are almost as important to an employer for longer-term, more strategic hires. As on-site recruitment teams take further control of all of their sourcing, they can utilise those tools that give them initial access to the candidate pool and then conduct the softer based screening in-house where necessary.

    The point is that the shift in the market is seeing recruiters being substituted by technology and Agile/Lean models. If a recruiter sends an employer ten CVs and attaches the average market fee of 18%-20%, while software can provide these CVs having used algorithms and social referencing to do the first stage qualifying and vetting just as effectively and at a much lower fee, then the choice is clear. Widely used existing models of recruitment, those that see agencies throwing large volumes of CVs at a client organisation in the hope that some stick, can no longer deliver the talent that clients require. Yet these processes persist as long as clients remain unaware there are fresh Agile/Lean models to adopt.

    It’s a reality that there will be less recruiters adding significant value as employers and candidates look to use technology to engage directly. Those recruitment firms that will survive will do so by become more niche and more specialist, to truly partner with their clients, rather than trying to fill as many roles as possible from as many different sources.

    Notes

    1 Based on the UK Commission for Employment and Skills Survey 2011, one of the largest skills surveys in the world.

    2 A term coined by McKinsey & Company in 1997. For more information, see their 2001 report, The War for Talent

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    Ensure an open dialogue in the recruitment process

    We are in recessionary times and here at Elevate, we can well understand an employer’s reluctance to commit to recruitment spend unless sure of making a return on investment. Why waste money if you don’t need to? However, it is disappointing to notice just how many employers engage with contractors on a purely speculative basis rather than with a clear road map to engagement.

    The reputational damage that this can do to a company is far greater than you can imagine. If an employer gets a reputation for being a tyre kicker when it comes to recruitment the word does go out across the contractor community. If you have spent time and money on your recruitment branding then don’t jeopardise that investment. Candidates are people who in turn tell their peers, friends and other networks about poor experiences they have with certain brands. Recruitment is no different. With the plethora of social networks instantly available these candidates can potentially reach a network of tens of thousands from their mobile phone the moment they feel frustated with your recruitment process.

    That said there is no harm in talking to contractors about a possible contract provided that it is made clear at the outset that there is a possibility that it will not materialise. If everyone enters negotiations with their eyes open then that is fair to all parties. Unfortunately this is rarely the case. For some reason many employers feel that they have to pretend that every job they are recruiting for is 100% certified and that they will fill it. Too often this is not the case, for example the employer may be sourcing a back up in case they fail to recruit a permanent person who is urgently needed. If they do manage to recruit the permanent employee, of course the need for a contractor disappears. Why not make this plain at the outset?

    Perhaps the employer feels that the contractor who hears that a role is more speculative than assured is likely to carry on looking elsewhere for his or her next project rather than pinning hopes on the role in question. I can let you into a little secret here: until a contractor has actually signed the agreement that commits them to a project they are always going to look at any opportunity which comes across their path.

    But if you want to make sure that contractors really don’t take you seriously then go on letting them down at the last minute, having led them a merry dance through the engagement process only to pull out before you get to the altar of contract signature.

    Remember you define the recruitment process, it’s yours, so be sure that candidate experience and reputational integrity are maintained at all times. Transparency in this area is less risky than the alternatives.