In the past year, the U.S. unemployment rate went from 5.3 percent to 4.9 percent—and the number of employed individuals rose by nearly 60 thousand (Bureau of Labor Statistics). Whenever we read news like this, we rejoice at the economic recovery the U.S. has made since the recession that erased nearly 9 million American jobs less than a decade ago. But as employers, we need to read between the lines of this data and understand what it means for our hiring practices.
According to the Bureau of Labor Statistics, the job market is tightening. The number of quits, or voluntary separations, is rising year-over-year. This increasing quit-rate level tells us that not only are employees leaving their existing jobs for better opportunities, but that as an employer, you must anticipate filling even more roles--some preemptively. In addition, the graphic below shows us that altogether, job openings are occurring even faster than people entering the workforce or quitting current jobs.Source: U.S. Bureau of Labor Statistics
This creates competition in the market, but a much different one from recent years. Rather than multiple candidates vying for positions because of limited availability, we now have a surplus of positions opening up and not enough candidates to fill them. This gives candidates much more flexibility in their job selection. It's also worth noting that the rising number of quits indicates a rising level of power and choice on the side of the candidate.
Another data set released by Bureau of Labor Statistics highlights differences in average real wages. In the past year, wages have increased by 1.5 percent for the last five years. As the labor market continues to tighten, companies are likely to feel more pressure to increase wages to compete for best talent.
The implications for this are straightforward and take on new meaning when held next to the hires and separations data. In essence, wages are remaining relatively static and there are more openings than candidates to fill them. This creates an imperative for talent acquisition professionals to act and requires a corresponding hiring strategy.
Let’s go back to some basic marketing principles. In a competitive market, companies can either choose to compete with cost or differentiation. In the consumer market, the cost option means lower prices than the competition. In an employment market, it means higher wages, better benefits etc. Then there is the differentiation route. Because cost changes can be a risky move, or unsustainable in the long term differentiation is often a better choice for most companies. Differentiation companies must define their employment brand. This can include tangible offerings for employees, but also intangible benefits such as culture and work/life balance.
With this power shift in the job market, it is imperative that organizations recognize the change and react in order to remain competitive. Ask yourself, “Why would a candidate want to work for me?” If your answer relies mostly on compensation or benefits, ask yourself again, “Are these offerings drastically different from those of my competitors?” Chances are, they’re relatively similar. This means that you need to find new, creative ways to appeal to your candidates in order to differentiate yourself.
At Recruiting.com, we use a system called People Brand to help clients narrow down their top two brand personality types. Once we go through this process, we translate these personality types into a compelling and customized career site that showcases their brand and provides a much improved candidate experience.
Here are a few ways you can retain your current employees and attract the best talent for your organization: