How to Get Ready for a Surge in Replacement Hiring

From ERE Net by Lou Adler Sep 4, 2009, 5:46 am ET

Over the past few months, I've been tracking employee satisfaction vs. job hunting activity. Here's the link so you can take the survey yourself, see the results, and forward it to others.

The idea here is that by tracking changes in satisfaction and the
job-hunting activity level for the fully employed, we'll have a leading
indicator of employment churn.

Fully employed people switching positions with other fully employed
people doesn't do much for the national employment rate, but it can
still keep a recruiting department extremely active. This employment
churn becomes a problem when a company is forced to find a bunch of new
hires to replace a significant number of tenured employees who have
left voluntarily. This becomes a really big problem when it's
unanticipated and when it's a company's best people. Replacing them is
then even more difficult.

The underlying cause of employee churn is similar to any financial
or real estate bubble - greed, or the feeling of not wanting to be left
behind. On the hiring side it's nothing more than a few people getting
better jobs, which leads to more people getting more active and finding
better jobs, which in turn leads to even more activity, and so on,
until you have a tidal wave or avalanche effect.

On the job-hunting side, it's obvious that once a few new jobs are
created, those who are fully employed, but most dissatisfied with their
current jobs, will jump ship first. As these people are replaced, it
will create a wave of job-hunting activity for those slightly less
dissatisfied, and as these positions are replaced, even more people
will start sensing the economy is recovering, and begin looking as well.

This churn will accelerate rapidly, as the pent-up demand for better jobs and salary increases is unleashed.

Based on our survey results,
this could happen sooner than expected. These surveys are starting to
indicate a decline in overall job satisfaction coupled with increased
job hunting activity. None of this job switching will affect the
overall employment rates, but this replacement activity will force
corporate recruiting departments to gear up their activity level at a
rapid rate. Things will be much worse if these replacement hires
haven't been forecasted.

The accompanying chart shows the decline in satisfaction over the six-week period from mid July to late August.

What's
most surprising is the decline is from the group of people who
indicated just a few weeks earlier that they were extremely satisfied
with their jobs. This has dropped from 21% to 13% in just a few weeks.

Those who indicated they were satisfied didn't change much, with the
biggest pickup in those who indicated they were neither satisfied nor
unsatisfied with their jobs. This increased from 11% to 21%.
Essentially, 40% of the group who were initially very satisfied with
their jobs no longer feel this way.

What happened in two to three short weeks to cause this decline?

It could very well be that as the economy has begun to recover and
opportunities have started reappearing, just having a job is no longer
good enough.

So people are getting itchy and are starting to do some preliminary searching.

While a hypothesis right now, we should be able to get confirmation
of this by conducting a cross-question analysis comparing job-hunting
activity by level of satisfaction. The results from this analysis are
still preliminary, but this trend is quite apparent and is shown in the
graph titled, "The Most Satisfied are Starting to Look."

As
part of the survey, we asked respondents to describe their current
job-hunting activity level. The choices ranged from not looking to
aggressively looking. In early August, 78% of the extremely satisfied
said they were absolutely not looking. This dropped to 57% by the end
of August.

A similar drop was noted for those who classified themselves as
being satisfied with their jobs, dropping from 51% who were absolutely
not looking to just 18%. As you can see by the graph, there was also a
major increase in both groups who indicated they would consider
something if called by a recruiter.

This drop in job satisfaction in combination with an increased level
of job-hunting activity is a strong indicator that employment churn is
about to increase dramatically in the next month or two. If this is the
case, you'd better get ready right away.

Here are some ideas to consider:

1. Rebuild your recruiting team. If you don't have
   enough recruiters to handle the load, you'll get behind long before the
   recovery really starts. Then you'll never be able to catch up.


2. Conduct your own internal satisfaction survey to validate these results and pinpoint your most vulnerable areas.
   While the survey results are reasonably statistically valid, they're
   not specific enough to uncover specific problem areas by industry or
   job function. Many companies are now aggressively launching internal
   satisfaction surveys to ensure they're not caught unaware. This way,
   they'll minimize the impact of any potential retention problems.


3. Accelerate your sourcing efforts for your most critical positions. You'll need to begin an aggressive recruitment advertising
   effort for those positions that seem most critical and where you are
   most vulnerable. If you're a corporate recruiting leader, you might
   want to use your employee referral program and get everyone to provide
   you the names of the best people they've ever worked with anywhere.
   Then contact these people and put them in your talent pool. (Here's a recorded webinar we did showing how you can use LinkedIn to accelerate this effort.)


4. Learn to use hiring ROI to justify to your CFO the cost of any new recruiting or sourcing program.
   If you're going to be hiring a bunch of new people before your
   company's hiring forecast is approved, you'll need a creative approach
   to justify any expenditures. I'm preparing a white paper on a new
   approach to calculate ROI by measuring the impact any new hiring
   initiative has on changing a company's overall talent mix. Email me if you'd like a sneak peak. Here's a recent article with some background on this important topic.

While it will be a rocky road to recovery, the replacement market is likely to heat up first, and soon.

If you get behind the power curve in these early next few months it
will be very difficult to ever catch up. New sourcing technologies
offer great new techniques to find the best, but don't forget: they've
never been tested in a hot market where the demand for talent exceeds
the supply. Some forward planning and some big contingency programs
will get you through the worst of it, if employment churn accelerates
faster than anticipated.