Future Focus: Hiring the Replacements

Many new job openings will come from a need to replace retiring employees.

By Jennifer Schramm Apr 1, 2013

0413cover.gifEconomists at the U.S. Bureau of Labor Statistics (BLS) project that most new U.S. job openings in the coming decade will not stem from newly created jobs but rather from a need to replace workers exiting from existing jobs. For HR and staffing managers, the main focus in recruiting in the coming yea​rs will be finding "the replacements."

Analysis by BLS economists Eleanor Choi and James R. Spletzer shows that the average size of U.S. establishments that employ individuals rose during the 1990s economic expansion and fell during the recessions of 2001 and 2007-09. Throughout the rest of the 2000s, the average establishment size has been essentially flat.

The economists conclude that since the early 2000s, new businesses and other organizations have been starting smaller and staying smaller. They believe that "new modes of production that place a greater emphasis on technology and a lesser emphasis on labor" are behind this trend.

Many economists say this shift toward technology is why the job market has been slow to pick up in the aftermath of the Great Recession, even as other economic indicators show greater strength. Job openings from replacement needs usually outnumber openings from the creation of new jobs. But with new establishments starting and staying smaller, even fewer completely new jobs are likely to be created.

BLS economists C. Brett Lockard and Michael Wolf project that of the 54.8 million total job openings expected from 2010 to 2020, 61.5 percent will be from replacement needs compared with 38.5 percent from job creation.

In some ways, the emphasis on replacement hiring will make HR professionals' role of filling vacancies somewhat easier. Newly created jobs often can be more challenging to fill because the hiring manager needs to determine what skills and experience a new hire will need to perform well.

Candidates can be more hesitant to take on newly created jobs, especially if the parameters of the position are still taking shape. Finding the right compensation and benefits package to attract qualified candidates also may be a work in progress.

But filling replacement jobs involves its own challenges. Preconceived ideas of the skills and experience job candidates need can be a problem. Hiring managers could, for example, miss opportunities to rethink the jobs or upgrade the requirements.

Members of the Millennial generation will be the largest source of potential new hires to replace retiring Baby Boomers. They simply will not have the same number of years of on-the-job experience as the workers they will be replacing.

As a result, recruiters and hiring managers may need to consider candidates with the right education and skills but not as much experience. Or they may need to invest in training and education for new hires to move their performance up to the level of the exiting employees.

In the meantime, HR professionals will need to prepare by analyzing their own future hiring needs to determine the likely balance of new and replacement jobs in their organizations.

The author is manager of the Workplace Trends and Forecasting program at SHRM.

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