I've been at a global bank up until recently, so like most companies in our industry, we had a significant hiring drop in volume for most of 2020. They were good about postponing all the layoffs until 2021. But that created some pressure.
So when the layoffs did happen this year, they were mostly in our higher cost locations like the US, Canada and then the UK. Then the pre-pandemic trend of continuing to hire in lower labor cost locations around the world resumed.
I've seen this big shift recently in terms of how everyone is focused on company values. It's not just younger talent, like you mentioned, it's very experienced professionals, who now feel like they have the option. Do you think that companies are seeing that shift too and that there's a stronger business case now for companies to really focus on values?
Again, from the perspective of banking, diversity has always been important. Particularly focused on women ever since the Me Too movement. The focus on people of color existed concurrently, but it's definitely picked up this year. So at my last employer, the CEO announced something called the 10 actions and that covers a wide range of initiatives related to people of color in terms of recruitment and retention and community funding, and has some very aggressive tangible goals. And I think the value piece of that resonates because there is strong public sentiment on that and people do expect that the place that they're going to go next reflects their values and they will turn down offers from companies that don't seem authentic.
When we asked sourcers how much time they were spending this year sourcing talent, 40% of them said that they were spending more than 15 hours each week.
We need to remember that sourcers generally are used for harder to fill roles. So if the natural candidate flow is sufficient then a recruiter isn't likely to invite a sourcer to the intake meeting in the first place.
So if you have sourcers focused on harder roles to start, and now you have these complications of choosier, candidates and the ability of companies to recruit from anywhere, then you're not going to be able to engage as high a percentage from your outreach, and you're going to face more competition while sourcing. So I'm sure they're spending more time doing it.
And you know, it goes hand in hand. It's getting harder to source and it's getting harder to get people to respond. Are you seeing response rates drop as well?
Yeah, well, I think the pressure that has resumed from the aggressive hiring goals that companies now face this year means that sourcers who could get away with just tapping their ATMs in their CRM alone to get candidates...that might have worked in 2020 — but it's not going to be enough for this year.
So if it's a role that requires partial or full on site presence, I think you have to be realistic that response rates are going to be lower. And particularly if it's a role that's outside of your core industry. So for us, you know, a financial services company still has to recruit FinTech people or others where technical background is required. So that's very challenging, because now we have to look for candidates who are getting pitched by companies that have much stronger tech brands or even FinTech brands. It's gonna be hard.
Yeah, I bet. And, you know, you mentioned as well that companies do have very aggressive hiring goals. And I'm sure there's a lot of pressure added on to sourcers and recruiters to get these response rates to find these candidates. Realistically, what is the best way for sourcers and recruiters to meet these hiring goals?
Well, I think the first piece is you need to have a good workforce planning function, that continuous sense of how many of a given type of role is going to be needed over the coming year. Ideally, you'd break it down by quarter so that the sourcers can start to build some pipelines for the things that are likely to be needed.
You know the unfortunate situation for a lot of companies, the sourcers get brought into the process too late. And so they've already had the req open for a few weeks or longer. And now that they're feeling the pain of not having enough qualified applicants, then they say, “Okay, sourcing team help us out?”
Well, that's the opposite. Right? The sourcing team should have been warned three weeks before the req was open, that you needed support on this so that we could have candidates ready at the time that you're desperate for them. So, yeah, you've got to be planning ahead much better. The other piece, of course, is around your employer brand. I think there's a lot of companies that do not spend enough effort in getting, for example, hiring managers to record short videos to talk about their open roles. There's a lot that you can do to prime the pump so that the talent market is already aware of your company even before the sorcerer does that first outreach. So it isn't truly a cold approach.
And I think I think you brought up a great point there about being prepared for the roles that you're going to start sourcing for. And I'm sure that this is extremely applicable to diversity hiring as well. 61% of our respondents said that their biggest obstacle to diversity hiring is a small talent pool. 40% of them said that it's a time consuming process.
Certainly in banking, we know the CEO of Wells Fargo had, there was an infamous May 2020 company memo where he basically said, “Yeah, it's a small, diverse talent pool.” And then he had to backpedal in his partial apology in September when that news got out. But I think really, it's pointing at several different factors.
So there is no diversity pool problem at entry level, right? You just need to reach out more. And many companies, frankly, don't have the infrastructure to do that. Well, you know, you might go to a handful of HBCUs and think you're doing a good job on diversity. And of course, that's not enough. We talked about the authentic story that you need to be able to tell and that's going to ring hollow if you don't have people of color at senior level in your organization, because candidates are rightly suspect about their career ladder progression if they can't see future mirrors of themselves at the company.
I would also say at higher job levels or for more specialized individual contributor roles, yes, talent pools naturally are smaller. So now if you're talking about a subset of that pool for diverse talent, then yeah, that is going to be a small pool of talent. But I think if you look at industries known for fewer senior people of color, in general, like finance and pharma and tech, it's gonna seem like the diverse talent pool is lacking at those higher levels. The problem there, I think, is that too many companies think someone who hasn't already done the exact same job as you seek to fill is going to be too risky a hire because the visibility and impact of a failed hire at those more senior levels is greater.
But until we solve that, and we start promoting diverse candidates at the same rate as we promote white males, those small talent pool complaints will continue.
But the better long term solution really is not recruiting. It's about expanding and building your management development programs geared to diverse employees. I would also say on the recruiting side, diverse candidates are disproportionately high in not self-identifying fully. So what I mean is if there's a question on the job application that says “I choose not to self identify for race, or disability, or sexual orientation, or veteran status” many candidates do select that. So now you're not able to count that candidate as diverse anymore, whereas during the pre applicant phase you could have, so this kills more diverse slates than I can count, it's, it's painful.
The other thing about the hireEZ survey where it said only 7% thought it was a talent pool issue – remember that for that, since that was last year's number, that's when hiring volume was lowered. So it's more likely that you had enough diverse candidates to fulfill your slate of hiring requirements back then. But now the heat is on.
And the other thing we haven't mentioned yet, is the Securities and Exchange Commission, which is the body that oversees all US publicly listed companies. So if you're on the stock market, you have to follow the rules that the SEC and they came out with something last year which goes into effect this year. It basically says human capital data must be transparently reported. So larger companies did that. To an extent you probably had a corporate social responsibility to report and in there, they probably talked about their diversity hiring. But now it's going to be much more at the forefront. And so if your company is deficient in their diversity, recruiting metrics and retention metrics, that's going to be much more obvious and painful. So you better figure that out.
I really want to dial in on what you said there about the infrastructure. A lot of companies don't have the infrastructure to really implement a full fledged diversity hiring program.
We found that enterprise respondents actually said that their biggest bottleneck to hiring diverse talent was a non-inclusive work culture. And compared to small and medium sized businesses, it was a very surprising difference where barely anyone had that as their top reason and their main challenges were very process focused problems.
Yeah, I find that's a very interesting finding that you got in the study, I think part of it is answered around unconscious bias, which we know exists among hiring managers at all sizes of companies and that can easily result in a non inclusive work culture. I found that larger companies tend to devote more resources to the inclusion side of D&I but maybe it's easier at a smaller company to feel included because you have to wear more hats and you're more likely to be involved with colleagues across various departments. Where at an enterprise company, it's easier to just be siloed in your role, and you don't interact as much. So maybe you feel like it's a less inclusive culture.
When we were talking to our respondents about sourcing, talent, diversity hiring, a lot of them turned immediately and said OK we need more technology, we need a bigger tech stack, we need to solve it with that. We did see that a lot of our respondents implemented AI technology tools like hireEZ into their tech stack. Then at the same time, there 35% of people were increasingly unsure on calculating the ROI on AI hiring technology, which is a very valid question. What do you have to say about that? The fact that a lot of people are unsure on how to calculate ROI, despite the fact that a lot of people are continuing to buy technology and tools like this.
Yeah, that number does not surprise me because I would say at least 35% of respondents don't even know how to use AI technology, let alone measure its impact. It's still pretty new to a lot of people and unfortunately, even sourcers who have been sourcing for a while, they use the newer tools the same way as they would use any Boolean search tool they've ever owned. And so they're really not digging enough behind the surface to leverage the full power that things like hireEZ offer. So they're not getting the results that they could.
But as far as the ROI, I mean, yeah, I'm concerned about the lack of connectivity between systems. I think it's hard to calculate
the ROI of any candidate source if your ATS doesn't communicate with your CRM and your job boards don't communicate
with your tracking pixels.
You can't necessarily know which of the many touch points that happened along a candidate journey was the most
impactful. There was actually a very good ATAP white paper conducted a few years ago, for those of you who don't
belong to that association, you can download the paper for free, where they talked about how you determine which
touch points get credited in a candidate journey. It's usually the last touch point and all the other things
that happen up to that point tend to be ignored, or they're not even trackable by your existing recruiting technology.
So the easiest thing I would say is to calculate the time spent in the sourcing phase today. So whatever you're AI hiring technology is most closely associated with, so for hireEZ it's probably as your sourcing. But I would say look at what time you're spending in that candidate phase to get to — if I were talking sourcing, I'd say how long does it take to get to the first submit accepted by the primary recruiter. So whatever that handoff point is from your source or to the next stage.
And if you can reduce the average time to first accepted submit across all your reqs, then your AI hiring technology probably was really valuable. And of course, not every sourcer may have access to the same tool so make sure you're doing apples to apples and looking at the sourcers who have licenses versus those who don't. And you should be able to assign a dollar value to the time amount that's saved even if it's just as simple as you know, sourcer salary divided by number of hours.
The problem with doing these calculations, though, is the further you go in the candidate journey, the more likely it is that other factors unrelated to sourcing or unrelated to the technology were at play in determining that average time in a candidate stage. So when you look at the KPI of, say average time to achieve a diverse slate — which by the way is very much worth calculating — if you can, that time is going to go up or down depending on factors related to your hiring manager, your HR business partner and lots of other things unrelated to sourcing. So let's not blame the sourcer or the technology necessarily.
Touching on what you said — don't put the blame on sourcers and technology — it really is a joint effort between companies and their talent teams. I'm curious to know, to get this future of work you described, I'm sure that companies will need to work together with talent teams, to kind of make sure that everything meets candidate expectations across the board. So how do you think this partnership will happen? What's the best way for companies to really keep employees happy and build that environment that attracts new talent so talent teams can do their part and bring those people in?
Yeah, I find that's a very interesting finding that you got in the study, I think part of it is answered around unconscious bias, which we know exists among hiring managers at all sizes of companies and that can easily result in a non inclusive work culture. I found that larger companies tend to devote more resources to the inclusion side of D&I but maybe it's easier at a smaller company to feel included because you have to wear more hats and you're more likely to be involved with colleagues across various departments. Where at an enterprise company, it's easier to just be siloed in your role, and you don't interact as much. So maybe you feel like it's a less inclusive culture.
Well, I've always felt the key to employee happiness and that virtuous cycle of retention and growth is you need to treat your employees with at least the same level of focus and resources that you would give to a customer or a shareholder. And if it's just lip service, and it's not authentic, then the employees and the candidates detect that you'll remain a revolving door of talent and you'll cringe every time you look at your Glassdoor ratings.
Companies do not do this enough, they do not formally connect each executive and mid level manager with a more junior diverse employee for mentoring and reverse mentoring because I think they can learn a lot from rank and file employees. And you've also got to build in the company resources that will support the project exposure opportunities that allow those candidates to be seen as management material, right.
And it's not enough to just have an online company university where you can take the self-paced online training courses. The only way they're really going to move up is that they get the exposure doing work that forces them to interact with other departments, senior leaders, and frankly, I would make that success of those junior people tied to the more senior mentors, bonus plan and performance goals, right. If you're not putting in the effort as the mentor, and that's not getting reflected in the employee, then, you know, let's have some skin in the game.
So until the sense of mutual support and inclusion is a natural part of the workplace, you're going to need those kinds of mentoring and professional development programs to foster the career progression and the internal mobility for employees. And as far as, you know, detecting that, right, recruiters and HR staff, you do play a part here, because you often get early notice that an employee hasn't moved up in a couple of years, or they're having some employee relations problem, or maybe they're even a flight risk, right.
So we need to push for opportunities to let those employees try something different, even if it's a lateral move — it does not have to be a promotion — just so that the employee can feel like their growth is being supported. Because most hiring managers frankly, do not want to lose their people if they're good. So unless they are incented otherwise, internal mobility is not necessarily being encouraged.
So if an employee starts to feel stuck in a rut and figures the grass is greener on the other side of the fence...you know what? They're probably right, because at my former big bank employer, we had our annual employee survey a few years ago and it pointed out very specifically, people commented saying it was actually easier to find a job outside the bank than within it. And that's what inspired the expansion of our internal mobility program and then created something called the talent marketplace.
A lot of companies are starting to do that now. But not all talent marketplaces are created equal. So if you don't have great matching technology that will accurately associate employee skills and their likely progression to the open jobs of the future, then the number of potential matches that you're going to make to facilitate internal mobility are just going to be drastically lower than the companies that have figured that out and do have the right technology and systems in place.
