Candidate Glut

By Aug 1, 2003
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HR Magazine, August 2003Swimming in a sea of resumes, HR stays afloat by tweaking recruiting and hiring practices

A few months ago, Mark Matthews, employee relations manager at Associated Grocers Inc. (AG) in Seattle, ran an employment ad for a generalist computer operator with basic skills and a small amount of experience. The ad generated more than 700 applications, and Matthews had to hire a temp just to log the resumes. “It was overwhelming,” he marvels. “Just a couple of years ago you could barely find candidates for a job like this—and when you did, they wanted huge salaries and stock options.”

How things have changed. In the past two years, the talent market has gone from famine to feast, with staffing specialists working to match a flood of applicants to fewer positions. In this transformed climate, many HR departments are amending their recruiting and screening processes to find the best hire among hoards of out-of-work applicants.

Matthews reports that his company, which supplies grocery and retail services to independent retailers in the Northwest, Alaska, Hawaii and the Pacific Rim, receives 150 to 160 responses a week to its general job postings, in addition to more than 100 “walk-ins” each month.

His experience tracks with employment figures showing a 6 percent jobless rate. The Conference Board’s Help-Wanted Index continues to fall, and currently stands at 36, down from 44 a year ago. The index tracks help-wanted advertising volume in 51 major newspapers across the country every month, providing a gauge of change in the local, regional and national supply of jobs. Higher rates reflect more open positions.

Melissa Ackerman, a recruiter with the State Teachers Retirement System of Ohio in Columbus, has seen firsthand the unbalanced ratio of applicants to positions. “There is a good percentage of applicants who are applying for anything of interest without doing research on the company beforehand. But who can blame them? The market has been tough, and, unlike the past, where candidates would take their time to research a company, its growth potential and benefits package, candidates are now trying to get a foot in the door.”

Higher volumes of employment ad responses and unsolicited resumes are the most visible symptom—and the biggest HR headache—of this so-called employers’ market.

Good recruiters are revamping their screening processes to find the gems in the stack of unqualified or overqualified job seekers. The best recruiters will already have these processes in place.

Mixed Blessing

The candidate glut is a mixed blessing: A down economy generates more unqualified applicants to sift through, but the higher volume of resumes means there could be more qualified people in the batch as well.

“In some aspects, the change in the market has made things better,” says Kenda Bayer, a recruiting specialist at Linweld Inc., a retail/manufacturing company headquartered in Lincoln, Neb., that produces welding supplies and gases. “I’ve been able to find applicants at a reasonable ‘price’ since this may be their only option.” But on the other hand, “It can be like picking through a basket of bad apples to see if any are salvageable.”

But Bayer knows she can’t count on the swelling ranks of laid-off local workers and unemployed college graduates to form a crop of talent, because even in today’s market, she notes, “The best are snapped up almost immediately. Nothing’s really changed there.”

Because of that, smart companies have learned they can’t rest on their laurels. “One change we’ve made is to be quicker on the initial resume screen,” Matthews says, “because we know there’s likely to be someone in there for us if we get to them quickly enough.” And he knows that candidate may have contacted his company’s competitors as well.

Yet many employers seem to think the candidate-rich climate offers an excuse to drag their heels. “The sense of urgency we saw a few years ago is gone,” says Steve Callisher, who leads an executive search and staffing solutions practice for international accounting and consulting firm RSM McGladrey’s Schaumburg, Ill., office. “Hiring companies seem to think because it’s an employer’s market, they have the luxury of spending more time qualifying or filtering candidates—or even waiting for a better prospect to come along.”

Sometimes the hiring process stalls out completely as managers belatedly attempt to justify their staffing needs to higher-ups. “I am definitely seeing more of that now,” Callisher reports.

Tweaking and Enhancing Practices

HR should carefully review its recruiting and hiring practices to buoy the good ones and tweak the poorer ones in response to the change in labor market demand. But experts do not recommend wholesale changes.

“I think there are some best practices that recruiters should follow no matter what the labor market may be like, the most important being the responsibility he or she has to find the most qualified candidate for a position,” Ackerman says. “That means taking the time to truly evaluate the skill level of each candidate of interest.”

Don’t cut corners on screening, especially now, she cautions. “I think at one time or another we’ve all made a wrong decision on a candidate and wondered if we should have kept looking. That’s not to say that as recruiters we can’t consider new methods of reviewing resumes and weeding out those of no interest; anytime you have a large number of resumes to review, you have to make some adjustments to make sure each resume gets its due.” Ackerman’s company purchased a resume database system. “Now when resumes come in, they are scanned into this database, and we can do searches for qualified candidates. It has allowed us to be much more productive as well as provide quicker service to our hiring managers.”

But even with fast screening technologies, Ackerman believes recruiters are still duty-bound to spend a certain amount of time with each resume before scanning and to do a final review of each qualified applicant before elimination. “This ensures you will be confident in who you presented because you took the time, even if it was only a minute or less, to consider each individual.”

In fact, she says, recruiters with fewer positions to fill may find they have more time to concentrate on assessment.

Matthews has opted to conserve his department’s time and resources by using third-party contractors for initial applicant assessments. “If I am going to run an ad, which is rare these days, I will ask an agency to screen down to only those candidates who are 80 percent qualified or above. That’s certainly something new for us.”

To cut down on unqualified applicants, many recruiters are adjusting their job marketing strategies to reach narrower candidate audiences with a highly specific mix of skills and experience. Ackerman reports that rather than posting on multiple job boards, she targets candidates on position- or industry-specific boards. “But we only advertise if we are struggling to find the right candidate,” she says.

Matthews has stopped paying for job postings online and in print altogether, relying instead on the company’s web site, and occasionally, listing openings with local community organizations that post job openings free of charge. He also finds that he can generate better candidates through pure networking. “People who are qualified in this select industry know to look to us. In the local grocery wholesale industry, there are only about five players. Word-of-mouth does tremendous work for us; we’re relying on it much more now than 18 months ago.”

Some companies aren’t making major changes to their recruitment practices in anticipation of a tight labor market just around the corner. “This upside-down supply and demand situation is only temporary as we near the huge exodus of retiring baby boomers,” says Susan Custard, director of employment at Bonneville Power Administration in Portland, Ore. “With that in mind, our organization hasn’t changed candidate sourcing or screening methods. Instead, our approach is to write much more explicit descriptions about qualifications and other requirements into our position announcement.”

This technique distinguishes truly qualified and interested candidates “from the desperate folks whose unemployment benefits are running out and [who] feel they have nothing to lose by applying for everything,” Custard says.

Qualification Temptations

But being more explicit about qualifications doesn’t mean inflating them—something many hiring managers might be tempted to do.

“Some companies have begun asking for very specific skill sets, to the point of being absurd,” says Callisher. “It’s a big mistake for companies to think they can advertise for highly specific credentials just because there are more candidates out there. Upping the requirements for a position may enable you to shorten that hire’s training curve by a few months, but it still boils down to a potential fit. A candidate who doesn’t match the company’s culture and values isn’t going to be a good hire; that is never going to change.”

A typical hire for Linweld is an entry-level applicant who has the potential to move into sales, “and usually doesn’t mind driving a route truck to sell and deliver product,” says Bayer. But she has noticed a dramatic increase in the number of overqualified applicants vying for these entry-level positions. “I find myself interviewing all sorts of people because they meet a certain experience level, but they aren’t necessarily the type of candidate I’m looking for.”

Companies faced with a wealth of overendowed applicants may be tempted to hire a star to fill a lower-level position, but that could be a costly mistake. Matthews learned that when he was hiring an entry-level employee relations specialist for his department. “We had applicants with HR director and manager experience willing to work at a lower-level job at a lower salary.”

The offer was enticing, but short-lived, since overqualified hires tend to keep their resumes in circulation. “Our first hire turned over after six days. The second lasted just one day,” Matthews recalls. He now strongly cautions his hiring managers not to make the same blunder.

Get Ready for 2004

Economists have predicted a moderate economic recovery for the latter half of this year and into the next. The Washington, D.C.-based National Association for Business Economics, a panel of U.S. economists, continues to forecast 3.5 percent growth for the U.S. economy in the third quarter, and 3.9 percent in the final three months of the year.

For 2004, the panel predicts continued strength with an annual gross domestic product increase of 3.6 percent—potentially the best growth rate since a 3.8 percent rate in 2000, the year before the economy toppled into its first recession in a decade.

Companies will likely respond to positive indicators by filling the staffing gaps created by austere hiring budgets in the past year, boosting competition for the best candidates.

Matthews says his company will prepare for the eventual uptick in the economy by resolutely focusing on retention. “Right now our turnover rate is very, very low: In one year it has dropped from 24.5 percent to about 13 percent. What I am trying to do is to upgrade our policies and procedures to keep these numbers low.” When the job market loosens up and employees start to look around for something better, he adds, “We want to make sure that our people are valuing AG as a company. We are looking at changes to our internal processes and infrastructure that will encourage them to stay.”

Meanwhile, don’t slack off on your networking efforts, Callisher adds. Maintain contact with interesting applicants you may want to attract down the line. “Keep the lines of communication open and sustain relationships with candidates and former employees who have gone elsewhere. A strong network will take you a long way in the better times ahead.”

Martha Frase-Blunt is a freelance writer based in Shepherdstown, W.Va.
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