How Technology & a Reimagined Recruiting Process Can Make it a Reality
In 2008, we were reminded that being employed isn’t a right, but rather a luxury. While the US economy has made positive strides since the Great Recession, according to the Bureau of Labor Statistics, there are still 8 million Americans out of work today. Another reminder of how fortunate those of who hold steady employment really are.
With unemployment at an all-time low since the recession, another recent report raises a curious question. The report, from the Organization for Economic Cooperation and Development (OECD), compared the annual growth rates for labor productivity in 32 countries for two periods, 1995-2004 and 2004-2013. For the United States, productivity decreased from 2.2% to 1.0%.
Now you might say that the decrease in production can be attributed to the unusually high levels of unemployment present during that time period. After all, less workers in jobs naturally results in less productivity. And while it’s likely unemployment was a contributing factor, maybe the data illustrates another, more insidious threat to our economy and society at large: the misallocation of labor.
Causes of Misallocation
If you were one of the unfortunate ones without a job during the last recession you know exactly how difficult it is to find employment during a time of crisis. With scarce supply due to companies tightened their belts, and an overabundance of demand, folks were happy to take whatever jobs they could find.
In the short term, when bills need to be paid and families fed, the only thing that matters is that money is coming in. But what happens over times the economy climbs from the depths of recession and workers find themselves in jobs that they never would have been in otherwise? You guessed it: productivity suffers. And as economist Paul Krugman said, “Productivity isn't everything, but in the long run it is almost everything.”
So just how many people are in the wrong jobs today? A lot. More than half of workers in the US today are unsatisfied with their jobs. It doesn't take a complex equation to imagine a strong correlation between an unhappy worker and lackluster productivity for herself but also for everybody with whom she works. And while there are definitely multiple factors that lead to unhappiness in the workplace, being in the wrong job in the wrong company to begin with is a big one.
So now, with the economy in markedly better shape than it was seven years ago, workers should be empowered to find jobs that are better suited to their skills and desires, which in turn would have a positive impact on the economy, right? The problem is that while the recession may have exacerbated the problem, the root cause of misallocation is the fact that the recruiting industry has been lagging behind for a long time, restricting the ability for the right people to get into the right jobs.
People Feel Trapped
People may be feeling more optimistic about the economy than in years past, but you can guarantee they haven't forgotten how tough things got in 2008. As the old saying goes, “A bird in the hand is worth two in the bush.” If an unhappy employee recognizes that she is in the wrong job, finding the right one could lead to some very awkward circumstances and actually result in her losing their employment all together.
Employers Aren’t Helping
For entry-level employees, it costs an employer between 30-50% of the employee's annual salary to replace her/him. For mid-level employees the cost rises to 150%, and for for high-level or highly specialized employees, the cost to replace them soars to 400%. Rather than identify areas of displeasure or incorrect fits and work to rectify them, employers are more likely to try to boost morale and productivity through the allure of salary raises, bonuses and higher job titles. Ultimately, this does little more than stick a finger in the dike and leads to bigger problems down the road.
The Old Way Simply Isn’t Working
The recruiting system has changed little over time. Even with great advancements in technology, recruiters and employers are relying on antiquated ways to find talent. These ways of posting jobs to job boards or culling through LinkedIn profiles are more of a spray and pray technique, where you hope to attract as many qualified candidates and ultimately choose the “best one”. Another crucial point that we’ll take a look at later is the fact that the old model introduces something that often leads to a false positive: unconscious bias. If a candidate does not hold a degree from an august institution, or have a profile that checks off many preconceptions they often end up being overlooked.
Employers Need to Play Their Part
Employers will play a tremendous part in fixing the state of things. However, in order to do so, we must change the mental model from acquisition and retention to ensuring we always have the best fitting people in every role, all the time. Instead of being reactive and pushing for productivity with benefits and bonuses, employers should establish a regular checkup to discern whether or not their current employee base is optimized. As an example, Netflix’s philosophy on talent became famous when its deck, which encouraged employees to share if they’re looking at new opportunities outside the company, went viral.
Technology Can be a Game Changer
Data analytics is advanced enough today to solve some of our most complicated problems. We should be using software and other technologies in the recruiting space to get in front of the problem before it arises. This means using technology to ensure we are making the smartest matches possible. If you look at online dating, eHarmony drives close to 2% of all U.S. marriages a year. This is primarily because identifying and connecting two people from billions of potential combinations for long-term satisfaction is extremely difficult. Software can help.
Discretion + Anonymity + Data = Success
It’s important that we detach some of the misguided stigmas from passive job-seeking. Employers need to understand that if an employee is unhappy in their role, both sides would be better off parting ways. Still, it’s inevitable that some bosses will feel slighted and take a passively seeking employee as a slight on them. Thus, making information, which allows passive job-seekers to find better opportunities, discreet is imperative. Another way that discretion can be helpful is by injecting anonymity early on in the process. By anonymising job seekers and only using data that conveys their skills and likeliness to be effective in the job, we remove much of the unconscious bias that so often results in the wrong talent being placed in the wrong jobs. Anonymity is also a tremendous driver of diversity, something many companies are struggling with today.
We spend over 50% of our waking time at our jobs throughout our careers. That’s a lot of time to spend happy and even more time to spend miserable. With so many workers today concerned about their work-life balance, we may be missing a crucial point. If you are in a job you love, then balancing it with the rest of your life will not be as difficult.
Tremendous Cost Savings:
If the past several years did nothing else, it made employers extremely cost conscious. Aside from saving money needed to replace an employee, companies could yield tremendous profits through increased productivity if they allocated the right resources and attention to getting and keeping the right employees in the right jobs.
What if 75% of workers were happy in their current jobs? Think of the impact that would have on productivity and the overall economy. If 75% of employees improved their productivity by 10% as a result of being in better fitting jobs, the world GDP would grow by five trillion dollars.
If any of these stats are hard for you to wrap your head around, just think of your everyday life. Are you more likely to perform better when you are happy or when you are unhappy? It’s simple.
So here we are in 2015. Undoubtedly, we’re focused on important things like climate change, international conflict, and breakthrough technology. I’d submit that the biggest opportunity of all is ensuring that when we all go to work each day, we’re in the best fitting job for us all the time, doing our best work, and making the economy great again.