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Tom Erb: Hey, everybody. Thanks for joining and welcome around the world wherever you are, whether it's a Good morning. Good afternoon. Good evening. I think most of you probably are in North America. Today's North America day, but welcome from wherever you are. So, I'm excited to talk about it. The session, just a little bit of a background with me.
Tom Erb: My name is Tom erb. I own the company, Talent Resources. We do consulting and training for the staffing and recruiting industry. I've been in the industry for about 28 years now. And what we're going to talk about today is what everybody's dealing with basically is this talent drought that we have, and also really about how this is a transformational time.
Tom Erb: Not just in our industry, not just in the economy, but really in the world. We're going to look back at this or future generations will look back at this and say, this was a pivotal time when the way that people work changed. And so it's going to be an interesting time. It already is an interesting time, but I really equate it.
Tom Erb: To the different revolutions that the world went through in earlier generations. And it's that transformational, I believe. And we're going to give some details about that, to talk about, you know, just why it's transforming and what we can do about it and how we can actually capitalize.
Tom Erb: You know, I hear the term a lot about being ghosted. We all hear that we're being ghosted. It used to be a dating term, and then it turned into a recruiting term. Most companies think they're being ghosted for a variety of reasons, but all of those are relatively short term or they're not really looking at the big picture.
Tom Erb: I've heard this many times. In fact, I saw it on a news show just the other day that government stimulus checks and unemployment incentives. So they're still having incentives to stay home. And there may be a little bit of truth to that, but it's really not the large part of why we're being ghosted.
Tom Erb: The pandemic has created barriers to work. That is absolutely true. There are people that are staying home because they don't have childcare because of a variety of different reasons. They're afraid to go to work. They just don't want to go back into an office or a work environment, remote interviewing and communication reduces the commitment.
Tom Erb: I think we've gotten over that in the last couple of years. Certainly there may be. Some of that candidates are unmotivated, unreliable, and disrespectful. I said earlier, I've been in the industry for 28 years, 28 years ago, we were saying the same exact thing. People are no less motivated. They're no less reliable.
Tom Erb: They're no less respectful. They may communicate differently. They may have different expectations of what communication is, and they may not feel the need to reply to us all the time. But then again, we've been ghosting candidates in our industry for decades as well. So, it's a little bit of just getting back at it.
Tom Erb: So these are some of the reasons maybe why we're being ghosts a little bit, but the real reasons are different. The number one reason is there's just not enough people to go around and there's not going to be. And I'm going to show you some data here in a little bit. The number two reason is they don't like us and it's not that they dislike us.
Tom Erb: It's not that they hate us. It's that we usually don't do a good job in general of giving candidates. A reason to like us, So they're indifferent about us. It's not that they dislike us. They're just indifferent about it. So we'll talk about that. And then lastly, we tend to be too slow. We know that we have to move fast and yet we don't tend to move fast enough and we're not efficient enough in different steps in the process.
Tom Erb: So we lost people throughout and that was okay. 10 years ago, maybe even five or six years ago when we had enough candidates that when we had fallen off, we didn't notice it as much. Now, every single person that we lose is really critical. And so we've got to be faster and we've got to be more efficient.
Tom Erb: This idea that I'm going to get my fair share, which people don't necessarily say that out loud or say it in those terms, but we act like that. And I see it over and over again. When they are on TV, they interview somebody who owns a restaurant and they say, well, I put out an ad. And I got candidates, but they didn't show up or they didn't take my job.
Tom Erb: And I just can't find anybody there. Nobody wants to work. That's a fair share mentality. And in staffing, we tend to have that fair share mentality as well, where we're going. You know what, if I throw an ad out onto Indeed or CareerBuilder or Monster, wherever I'll get these applicants to come in, I will process them at my convenience and I will have my fair share.
Tom Erb: And we need to realize there is no fair share. There's not enough people and there's not going to be enough people. If you're thinking about this as a temporary issue, that we will eventually get relief from this, then you are approaching it wrong from a strategy standpoint. And I'm going to show some specific information about this.
Tom Erb: A lot of the blame for what we're going through. This talent shortage has been placed on the pandemic and it certainly has had a major effect on it, but not in the way that we think about. If we look back at pre pre-crisis in the United States, I know not everybody on this is from the United States, but if we look at it from the US.
Tom Erb: Prior to the pandemic, to the crisis, we had 4% unemployment. So if you look up at the top here, there's 4% unemployment. And about 9% of the workforce was actively looking for a job. So they were in a job, but they were out there actively looking and they were applying to jobs regularly. They had their resume out on job boards.
Tom Erb: They were active. And then we had 25% that were semi-active. These are the window shoppers. These are the ones that are kind of thinking about it, but they haven't dipped their toe in the water. We have another 37% that are your more traditional passive candidates. So they are not looking for a job, but if the right opportunity came along, if something piqued their interest, they would listen.
Tom Erb: That may make them more active and then it didn't give them time. Back then 25%. We're not moving. We also have 1.4 million more jobs than job seekers. At that time we had over 7 million open jobs and we had 19 states that were at historic low unemployment. So heading into the pandemic, we were already at a talent shortage and it was getting worse.
Tom Erb: The pandemic, no pun intended masked that because what it did, maybe a little pun. It masked the fact that we were going through this crisis, this talent shortage, because we had layoffs. We had people that couldn't get to work. We had all this disruption of the economy, but then as we started to get used to it, got our arms around it, then we saw that we were having that we were back to this talent shortage.
Tom Erb: So let's take a look at it today. It looks very similar. In fact, it's worse. We still have 4% unemployment. We have more people that are active. There are studies there. We talked a little bit about the great resignation. There are studies out there that are saying as much as 40% of people are planning to change jobs.
Tom Erb: This quarter is what one of the studies back in December said we had record numbers of people in the last couple of months and last quarter that resigned from the job many without having another job as well. But for the most part, this pie chart looks pretty much the same. Our unemployment rate is now down to 3.9% in the US. There are 7.4 million people that are unemployed in the US right now.
Tom Erb: And there are 10.75 million employers, which means there is no fair share if every single employer and most employers I know are hiring. If every single employer just wanted one person, there would be over 3 million employers that wouldn't get. That's if they just want one person. And as we know, many employers are hiring hundreds, even thousands of people.
Tom Erb: So let's take another look at this. If you look at this chart, this is from the federal reserve. It is the job openings chart, and I went back to the end of the great recession. So the end of 2009, beginning of 2010. We had a little bit over 2 million open jobs that have steadily been increasing for the last 10, 12 years.
Tom Erb: And you can see now we are up to about 10.75 million open jobs, and that has stabilized a little bit over the last few months. And there are several reasons for that. But I think that what we're going to see is probably just a bit of a plateau before we start to go back up again. So.
Tom Erb: This is something that has been going on for a long time. And it's going to continue because of this chart. And if you take nothing away from this session no, this chart and be able to talk about it. This is what the replacement rate is. This is the US fertility rate. And so, and by the way, for those of you that aren't in the United States this.
Tom Erb: In many different countries, we're starting to see the same numbers. Now it may be lagging behind, not starting in the early seventies, like in the US it did, but we are seeing that replacement rates levels are falling or excuse me, fertility rate levels are falling below replacement rate in many countries around the world.
Tom Erb: But in the US back in the 1950s and 1960s is when the baby boomers were born. And you can see that this number shows that baby boomers were being born at a high level. It was well above this line, which is the replacement rate. What replacement rate level is the number of children. Each couple needs to have in order to replace themselves.
Tom Erb: And that replacement rate by almost all economists has been established at 2.1. So 2.1 per couple, you can see that the baby boomers were at almost four, but shortly after that we had what we know is the baby bust. So we've gone well below replacement level. Now for 50 years, we've kind of hit the top of it a little bit.
Tom Erb: Look where we're going right now. In 2018, we were down to 1.6. This continues to drop for a couple reasons. One is people are having less children and two people are waiting to later in life to have children rather than having children. When they're 18, 19, 20 years old. They're now having children when they're 32, 33, 35 years old.
Tom Erb: And that makes a big difference because that spreads it out a further. And it also impacts fertility rates. So for 50 years we've been having less people. Coming into the workforce we still will have that problem. And so on the other side of that, the issue that we have is that the baby boomers are now reaching retirement age and have been for awhile.
Tom Erb: And so it's kind of this perfect storm of all of these societal and demographic issues. And MC has a great report called the demographic drought EMSI. You can Google it. It's. You can download it for free and it's really a great overview of what's going on and it gives some great information on that.
Tom Erb: But at a high level, here are some of the things that we're seeing. The first is that baby boomers are not only retiring and leaving the workforce, but they're actually retiring at a more rapid pace and they're doing it earlier. And so as baby boomers started to retire, we saw them retire at about a pace of 2 million year.
Tom Erb: In 2020, we saw 3 million retire. So a 50% increase doing large parts of the pandemic. Last year, they're estimating, haven't seen the final numbers, but they're estimating that number could be closer to three and a half million. You also are starting to see gen X-ers who are now in their mid fifties, starting to early retire or semi-retire the birth rate continues below replacement level.
Tom Erb: We just talked about that. So we've got these two things. They are working against each other. It's a double whammy there. Newer generations are also in general, working less. And studies show that newer generations on average aren't working as much as 14%, less than previous generations. And that's by choice.
Tom Erb: And also the employees out there are leaving the workforce in record numbers due to all sorts of different ways. It's just, there are more ways to make money non-traditionally and so they're doing it through entrepreneurship. They're starting their own businesses. They're doing it through gig work, like Uber and door dash and all these different types of gig jobs.
Tom Erb: They're looking more at part-time work. They don't need a full-time job or don't believe they need a full-time job. Instead. It's like, I'm going to have two or three part-time jobs and then maybe I'll pick up a gig here. Maybe I'll do some entrepreneurial stuff. It can be a combination of all of these three.
Tom Erb: And then lastly, they're not working at all. We have a large number of people in the United States. That isn't working at all, or they're not working enough to actually show up in the workforce. In fact, 38% right now of people that are eligible of working age are not working frequently enough to be counted in the workforce.
Tom Erb: That's a huge number and it's one of the highest numbers we've had in decades. So all of this stuff is where we're at. This is why we're having the issues. We're having this. And it also shows that this is not temporary. This is going to last, whether you are in your fifties or sixties, or whether you're in your twenties, this is going to last pretty much your whole career.
Tom Erb: And so we need to accept it, but we also have opportunities to capitalize on it. One of the things I think is that this is a huge opportunity for the staffing industry. We're seeing companies come to us like never before, companies that didn't want to use us in the past or didn't feel they needed to, or they didn't need to.
Tom Erb: Now they are coming to us and asking for our help. We are going to be an even more essential part of the economy as this continues. So what do we need to do well in order for us to attract talent? Well, first we need to be more attractive to our candidates. We need to be more attractive to them than we currently are, and we need to be more attractive.
Tom Erb: Our competitors for that talent need to be more aggressive than our talent competitors. We need to be more purposeful in our recruiting approach. It can't just be this scattergun. I'm just going to see what I hit. We need to think about it, we need to have a strategy. We need to have multiple areas that we can go out and recruit.
Tom Erb: We don't just limit it to one area like job boards can be part of that strategy and should be, but they're not the only piece. And we need to be more committed to retaining our employees. So we'll talk about that in a second, because it often gets really overlooked.
Tom Erb: So let's talk about this first piece that they don't already, I guess the second piece they don't like us. And again, it's not that they dislike us, but what we need to ask ourselves is, am I recruiting or am I just processing. And the difference is that when I'm recruiting, I'm trying to attract somebody to us.
Tom Erb: I am trying to sell to them the value of them working with us, the value of them working on assignments with our clients, where the value of the opportunity. If we're working on a search with one of our clients, what is the opportunity with them? What are the selling points of that position? We need to be recruiting, not just processing.
Tom Erb: And I sit in a lot of offices of staffing companies, and I can tell you, in most cases it looks like we're just processing people as if they're coming in and getting their license renewed. We want to be recruiting so my job posting is appealing. And that's really important. And we're going to talk about that.
Tom Erb: This is one of the easiest things we can do to improve our applicant flow and to attract people that we really want to attract. How do they feel after our initial call? How do they feel after every conversation that we have with them? Why would they want to work with us instead of another company? You know, your average person who applies to a staffing company posting is applying to multiple positions.
Tom Erb: They're not just stopping with yours. In fact, in any job that they apply to. If they're applying to a job posting on a job board, they're applying in mass in many cases and job boards actually encourage that here. You like this job while you may like these 10 others. Here's how you can quickly apply to all of them.
Tom Erb: And how do we keep them feeling engaged in value valued during the entire process, from initial engagement to selection, to onboarding, to retention of all of those different areas, how do we keep them engaged and valued? And the way that we do it is likable. And I know that sounds simple and it's meant to be simple.
Tom Erb: It's meant to be simplified, but some of the things that we can do are. Improve all of our messaging from just being, Hey, I saw you applied. We'd like to talk to you. Hey, we're thrilled that you applied. Thank you so much for applying. We cannot wait to talk to you. It's a subtle difference, but it's an important difference and are there things that we can do in our messaging?
Tom Erb: Just emailing and texting. Our phone calls and our voicemails, all of those things, we can greet them with enthusiasm. We greet them with respect. We treat everybody like they have an a that's what, one of presidents of the old staffing company I worked for used to talk about. Everybody starts with an, a, they got to prove themselves to not keep that A.
Tom Erb: Instead we at best act as if they have a C and we need to actually treat them as if they're going to be our next star employee. Because they just might be. And we want to make every single interaction positive and memorable. One of the things you can do is say, okay, when I hang up with them and somebody else is in the room, their spouse, their significant other, their kids, their parents, their hoop, their friends, whoever.
Tom Erb: And they go, who was that? What is their response? Is it positive? Is it negative? Is it indifferent in most cases? My guess is indifferent. Oh gosh. I don't know. That was a staffing company. One of the jobs I applied to. We don't want that to be the case. We want them to go. That was actually an ABC staffing company.
Tom Erb: And I really liked them. I could have an appointment with them later this afternoon. I'm excited to talk to them. So tell me if you need it. This place. This is an advertisement for a restaurant. ABC cafe is looking for customers that will spend their money to eat food at our restaurant. At ABC cafe, you will read a menu and select items for. Eat your meal within a reasonable amount of time, review and pay the bill. The ideal customer must possess the following, a friendly and positive attitude towards all the staff. I won't read it all. You kind of get the idea that customers that meet the above criteria can expect to receive a chair, a table to eat on a menu with items, for purchase a full range of utensils and complimentary water with their meal.
Tom Erb: It sounds ridiculous. Doesn't it? Absolutely ridiculous that a restaurant would advertise this way. It's all about the restaurant. The ideal customer must possess the following. It's ridiculous. And yet that's exactly what we do with our ads, with our job postings. It's all about us. It's all about our clients.
Tom Erb: It's all these requirements that our candidates have to meet. As if all of a sudden we've got 300 people applying to jobs, right? And now what we need to do is really screen out candidates. At this point. We need to bring everybody in. And so it looks like this is a good approach and this is how to go on indeed.
Tom Erb: And take a look, look at your own job postings. Look at everybody. Else's job postings, and you'll see they're all written this way, almost all of them. And if you're not writing them this way, you are well ahead of the curve, because I can tell you that when you go on, Indeed, go through and take a look at 20 of them.
Tom Erb: I'll bet you 18 of them, at least. Are written this way and quite possibly all 20 of them. The only reason I say 18 now is because people are starting to get it because there has been such a shortage that there's been more emphasis on this. So we're starting to see people write better job postings. So.
Tom Erb: This brings us to just what I see over and over again, as the most common job posting mistakes. The first thing is that we post job descriptions. We don't post them as marketing pieces. We post them as here you go, you have the privilege of applying now. We act like candidates don't have any choices, and if we did.
Tom Erb: Packed like where they had choices. We wouldn't write the job posting. So we did, we made everything about what we want or what our client wants and needs. We write job postings that try to screen out unqualified candidates. Right now we should not be screening people out because what we're doing is we're causing people to self-select out that maybe would actually work for that position or would work for another position we have.
Tom Erb: And I have been in the industry long enough to where there were times when we would get 500 people that would apply to a job posting and we had to screen people out. You don't have to screen people out right now. I've talked to my clients all the time, where they'll post a job for 30 days and they'll get three people to apply.
Tom Erb: So there's no need to be screening people out. Assuming the job postings are meant for active job seekers. Here's what happens on job postings. If your unemployed people go onto Indeed or CareerBuilder or Monster, and they just start applying. And in many cases, they're getting emails from those job boards that are saying, you may be interested in this job and they go, oh, sure.
Tom Erb: Okay. They're not even looking at them. They're applying to everything. Those aren't the people that we're actually steering or that we're writing these job postings for. It's the ones that are the, remember the summing act. The window shoppers, the ones that are just starting to think about looking for a job.
Tom Erb: These are the ones that are starting to go out there and they'll look at job after job and not apply to any of them, unless something catches their attention. Those are the people we want. And nowadays, when we talk about the great resignation and we talk about how people are quitting their jobs en masse without having other jobs.
Tom Erb: People are now more open than ever of taking a chance and leaving a full-time job to go into even a contract position. And this is what we've been hoping for decades. As long as I've been working here, and it's here now. And so you've got those people that are starting to window shop, and they're only applying to the jobs that really catch their attention.
Tom Erb: And then lastly, exclamation marks do not make a job more exciting. And so I see it over and over again where we talk about, oh, you must have this and you must do this. And this is, these are all the different things that you're going to do in the job. And I'm going to add exclamation marks as if that's going to make it more exciting.
Tom Erb: So it all comes down to employer versus candidate centric postings, the overwhelming majority of jobs that are out there are employer centric, Jobs, job postings. And here is the difference, the sum of those phrases. So on the employer centric side, you have things like, and you see it all the time and you probably have posted jobs like this.
Tom Erb: And I've been guilty of this too. The ideal candidate must possess the following skills. We are looking for candidates that can do this. Are you hardworking? Independable by the way, have you ever met somebody that did not think they were hardworking and dependable that admitted they were. No, they are unlucky, misunderstood, not treated fairly, but they're never not hardworking and dependable.
Tom Erb: So who are we really rolling out when we say don't apply? If you're not hardworking and dependable, there's really nobody who's doing that. And must be able to pass a drug screen. Now we may have that down at the bottom. That's that it may be very well, might be a requirement, but we don't have it in the beginning.
Tom Erb: We don't have it in bold. So those are employer centric jobs. On the candidate centric side, it's more about asking them a question. Are you looking for the next stage in your career? There's plenty of time for your personal life. Have you always wanted to do this? You are the type of person that enjoys doing this.
Tom Erb: We're trying to paint a picture of what their life would look like in our position or in our client's position in a lot of cases. Right. And so it's kind of like when you go and you buy a house, And the realtor takes you in there and they look around and they say, can you see having Thanksgiving dinner over by the fireplace here with your family?
Tom Erb: Can you think of these different things they're trying to paint a picture of. Can you picture yourself here? Because then you create an emotional response and an emotional attachment. We're trying to create an emotional attachment. And it doesn't have to be a lot. It just has to be enough that it gets their interests.
Tom Erb: And then we can start to talk to them. We can start to engage them
Tom Erb: Just to give you an example of a posting that we did a while ago for a client, they wanted a Business Development Representative. So they wanted a sales rep that was really fairly entry-level and didn't have to have a whole lot of experience. What we were really looking for is somebody who wants to do sales, who is enthusiastic, who is likable, who's credible, who's coachable, and who is willing to do the work that needs to be done to be successful in sales.
Tom Erb: So, what we did was we created a marketing piece for a job posting rather than talking about whether the candidate must possess all of these things. The ideal candidate will have this. These are the requirements we flip that. We talk about that stuff at the end of the. But in the beginning, we're trying to reel them in.
Tom Erb: We're trying to get an emotional response. We're trying to show them this is a really good opportunity for you. So we said, what is the opportunity rather than job posting or job requirements? What is the opportunity have you always wanted to sell a cutting edge service in an industry with limitless growth, potential?
Tom Erb: Are you looking for a hundred percent virtual sales position where you were rewarded financially and profession? For your individual performance or asking them questions. Does this sound like you? Is this something you want to do? If the answer is no, then I don't want you to apply anyways. That's okay.
Tom Erb: If the answer is yes, then you are the person that we want to apply to. What makes this job so awesome? Not job requirements. Not must have. But what makes this job so awesome? And we talk about, we have everything you need to be successful. We are trying to attract entry level salespeople. In many cases, this may be their first job.
Tom Erb: So what does an entry-level sales person want? They want support. They want an environment where they can be successful. They want new technology. They want to have a structured process where they don't have to reinvent everything. They don't want to be thrown out. To just sink or swim. And so that's what we talked about and we were able to get much better response to this because it was something that those particularly semi-active candidates look for, or in some cases, it's somebody else out there looking and they see it and they refer to their friend or their relative or whoever that is, who may not even be actively looking and say, I just ran across a job that really looks interesting.
Tom Erb: That's what we want. That's what we want to do.
Tom Erb: The next piece is you're too slow. And I'm not trying to insult anybody. I'm this is a general thing. So don't go say, and Tom was telling me that I'm not likable and I'm too slow, but we are too slow usually. So we need to ask ourselves how long are my candidates available? I talked to staffing companies all the time.
Tom Erb: And I say, how long are your candidates available from the time that they apply to a job or the time that they go onto a job board? And most people say somewhere between minutes to a couple hours to maybe 24 hours. And then my next question is, okay, how long does it take for you to reach out to them?
Tom Erb: And the most common response I get is 24 to 48hrs. So you just told me that it takes there, they're available for minutes to hours, right? Which by the way, the data shows that in most cases, an active job seeker really is only available for a couple of hours once they start applying, because again, they don't apply to your job and then wait, two days, they apply to your job and to 20 others and the feeding frenzy starts.
Tom Erb: And the companies that get to them within the first hour or two are most likely the ones that are going to work with. So we've got this disconnect between what we know is our timeline and what we have is our timeline. And so we have to be, we have to get those two things aligned. What percentage of my applicants apply during non traditional business hours?
Tom Erb: And I've had some clients that have said 40%. I've had some clients say 70 to 80% and yet very few of them have. Processes in place for getting to those candidates quickly. In many cases, what happens is somebody applies over the weekend and then Monday morning after you've done your check-ins and after you've troubleshooted, anything you have to do.
Tom Erb: And after all of the things that you have to do on a Monday morning, around 10 or 11 o'clock, we may reach out to them. That's what everybody's doing. What about that company that called them Sunday afternoon, or texted them or email them. And already have them coming into their office Monday morning so that they're interviewing with that company while everybody else is trying to call them to set up an appointment who is truly responsible in my organization for responding rapidly to all applicants.
Tom Erb: The answer cannot be everybody. Everybody means nobody. When it is everybody's responsibility to do something, it is nobody's responsibility. When it is three people's responsibility to do something it's nobody's responsibility because it's oh, I thought you were going to do that. Oh, I thought you were getting to it.
Tom Erb: Oh, I didn't realize it was my time to get to it. So we need to have specific people that are responsible for it. Is responsible for every single Facebook posting so-and-so is responsible for every single response on Indeed or a niche site or LinkedIn or whatever that might be. So the strategy is how do we get there first?
Tom Erb: How do we get there faster than everybody else does because speed matters. So what we do is we assign responsibility within the organization. We eliminate our unnecessary steps, cause it's not just about speed too from the time they apply, that's just one piece of the equation. And I'll talk about that in a second.
Tom Erb: It's making speed of priority and it's having metrics where we're tracking it and we're able to say, where can we improve work? Can we get faster? Where can we get more efficient? And by the way, this all improves the candidate experience with us the fast they want fast. They want what they call a frictionless application process.
Tom Erb: They want it to be as smooth and easy and fast as possible. They're trying to get a job that brings us to all these candidate and employee follow-up points. And you can't see it real well in the back, but in the back and the picture. It's somebody trying to catch water with their hands. And we've all done this before, where we caught water in our hands and we try and take it over somewhere.
Tom Erb: By the time we get it over there, most, if not, all of it is gone, that's what we do in our application. Selection, onboarding and retention process is in every part, every step of that process, we're losing people. And the longer we spread that out, the more people we lose. So how do we go through all of these different areas and say, what am I going to do to get more efficient or do I even need this process anymore?
Tom Erb: And we've gotta be very specific about what you're looking at and you need to be ruthless about it. Do I really need to do this or am I just doing it because we've always done it. Why am I doing this? Why am I really doing this in a great way to do it? Is if you have somebody that you've hired recently that is not in the staffing industry, ask them why they think we're doing it because they don't have all the biases that we have because we've been doing it for so long.
Tom Erb: But if we take a look at the different areas, we've got candidate sourcing, I talked about the application process. The lag between the application and the interview, all of these different steps in the process, we have the potential to lose people. So how do we speed them up? How do we make it frictionless?
Tom Erb: Let's switch over to retention. Retention is critical, you know, work with many staffing companies out there that have seen their average length of assignment drop in half. In the last couple of years, if you think of that a different way, that means that just to stay at the same level, we have to do twice as much work.
Tom Erb: We have to place twice as many people just to stay at the same level. I mean, we're really not staying at the same level because we've got recruiting costs for those people. So we're actually making less than if we had the same person just stay out longer. And so, you know, there's a quote that says you can choose to focus proactively on employee retention, or you can react to employees.
Tom Erb: That's your choice. And when a lot of us are reacting to employee turnover on a regular basis, here's the thing that I have come to the realization of in the last couple of years. And it's kind of embarrassing that it's taken me 28 years to do this, but we have been looking at the wrong part of the equation for decades in our industry.
Tom Erb: Like I said, I've been doing this for 28 years. I can tell you that I was taught. And I managed to look at markup and gross profit percentage. When we look at profitability, we're always talking, markup, always talking about gross profit percentage, but what if you take a look at what this equation is?
Tom Erb: We've got paid times, markup times gross profit times hours worked minus our recruiting costs per for that person that went on assignment. That is our contract employee return on investment. I have highlighted markup and gross profit. What we really need to be focusing on is hours worked. And here's the reason why we are seeing on average in the US that recruiting cost per hire for somebody to actually start.
Tom Erb: Is anywhere between 250 to $500 and it's a wide range, but there's a lot of variables that go into it. The type of position there is just the market that you're in the cost of your internal staff, how much you're spending on recruiting, how effective your different recruiting avenues are.
Tom Erb: All of that plays into recruiting costs. So let's just say 250 to $500 per hire. Okay. It doesn't matter what markup I have. If somebody only works four hours, it doesn't matter what gross profit percentage that I have. If they only worked four hours, I could have somebody that works a thousand hours that has a much lower market, but much lower, gross profit.
Tom Erb: And I'm not saying that we take a look at lowering those. What I'm saying is that our focus has traditionally been in the industry, being focused on marketing and gross profit. When we talk about profitability. But what we really need to talk about is hours of work. How do we maximize our relationship with our contract employees to keep them as long as we can?
Tom Erb: We also don't tend to focus on retention as much in the industry because we're so focused on front end recurting. We're so focused on bringing people in and getting them jobs. And there's not nearly as much focus on recruiting. If you go onto LinkedIn, there are tens of thousands of people with the job title of recruiter on LinkedIn in the US there are less than 500 that have the title of.
Tom Erb: So the focus is on the recruiting, not on the retention piece and it's not on these hours of work. How do we maximize that relationship?
Tom Erb: Well, let's take a look at what it is driving retention and it's also driving attraction as well. They're the same things. And if we go back and take a look, there've been studies that have been. That these are just the top three for each of these years back in 2000, the top three retention drivers were career growth, learning and development, challenging and exciting work and meaningful work in 2010, it was a learning and development opportunity.
Tom Erb: Challenging or inspiring work. So it changed a little bit from exciting work to inspiring work and making a contribution or difference, which if you think about it sounds similar to meaningful work, but it's actually a little bit different in 2010, it was about, I want my voice to be heard. I want to be a contributor to the organization.
Tom Erb: Meaningful work is I want to do something that has meaning right fast forward to today, the top three drivers that we're seeing and this. This has come to the forefront pretty quickly. You've all seen competitive compensation. Number one. Now you would think that is always number one, but what we've seen in these studies in 2000, 2010, they actually ranked the top 10 competitive compensation.
Tom Erb: Didn't show up in the top 10 in 2000 or 2010, but it has risen up to the top. Now it is an essential, it is a given that has to be competitive compensation. The number two is flexible work arrangements. It's not even work-life balance, although that's part of it. It is about having the flexibility for a setting in many cases, setting their own hours, having flexible hours, being able to scale up and scale up down hours.
Tom Erb: And the other piece is working from home either. Part-time, full-time, we're seeing that more and more. And then the last one is purpose-driven work. So we're kind of back to that meaning. But it has become much more important now than ever before this purpose, this idea of purpose driven work. And so those are the retention drivers that we're seeing nowadays.
Tom Erb: So what are some strategies for retaining employees? I'll give you three and the first one is, can we break up the 40 hour week? Can we talk to our clients and say, listen, I know you need X number of people out here, X number of hours a week. Can we have more flexibility around making sure you get those numbers?
Tom Erb: But it's not going to be the same person Monday through Friday. Now, in some cases that's not possible. If you've got somebody that needs to, you know, you've gotta a software developer that is working on a project, you probably can't have four different software developers, split shifts. So, but in many cases we do have the ability to do that, especially if we can get them.
Tom Erb: To take multiple shifts. We're not talking about, Hey, you're going to get a different person every single day. We're only talking about can only do Tuesdays and Fridays. They can also do Thursdays for four hours. Do you want them or not? Yes. Okay. Then let's put that in there. We can utilize scheduling technology.
Tom Erb: This is not unusual. This is done for any of you that are in healthcare or that do retail, or have done retail in the past or call centers or a variety of different industries and professions. This has been commonplace for a long time. It has just not been commonplace in a lot of the positions that we fill within the staffing industry, but it needs to be, if we can figure this out, then all of a sudden we have access to tens of millions of people that are looking for this flexible work.
Tom Erb: Remember earlier, people are looking for gig work. They're looking for part-time jobs. They're looking for flex work. So if we can work with our clients and just start with the ones that are the most open to doing this and give it a try and make it work, then you all of a sudden have a competitive advantage in the market.
Tom Erb: The next one is to go remote. There was just a 60 minutes session, just a couple of weeks ago, that was interviewing the head of economics for LinkedIn. And she was talking about the fact that candidates are two and a half times more likely to apply to a remote job than a normal job. Prior to the pandemic, one in 67 jobs were virtual and today that number is one in seven.
Tom Erb: It at least has partial virtual. Now I know there are people on the call that have many positions that can't be virtual, right? You can't be on an assembly line virtually. There are just certain types of positions that you can't. But I would argue that there are an awful lot of jobs that you can, or you can have more flexibility to it.
Tom Erb: And that is what candidates are craving this. Isn't Tom Erb saying, Hey, you should change this. This is the way I think this is the way the candidates are right now. And if you want to truly be competitive then you need to take a look at how we can do that? Can we do it for our own internal team? And can we also do it because we have the ability to be flexible with our clients, which our clients are open to doing because they're going to be the winners, go back, consult with your clients and say, do you really want to fill all these positions?
Tom Erb: Here's our strategy. We gotta break up the 40 hour work week and we're gonna, we're gonna give them more flexibility to be remote if possible. The last thing is to take a close look at your benefits. We don't want to keep people for 90 days and then lose them. And our industry for the last few decades has been a 90 day temp to hire kind of thing, or six months temp to hire if it's a higher professional or it's 13 week assignments, if it's healthcare or it's we think in shorter term, Durations.
Tom Erb: We need to be thinking about years, even decades. Now that we have relationships with people where we are truly their employer, or at least one of their consistent employers. And one of the ways to do that is to take a look and get really serious about benefit programs. And obviously I'm not talking about you eating the cost of benefit programs.
Tom Erb: What I'm talking about is identifying what the cost of that is, and then revising. Re revising your pricing when needed to adjust for that. It's just the reality of the situation out there. Also take a look at benefit programs for part-time workers. What can we offer people part-time if somebody wants to have three different jobs, that's okay.
Tom Erb: If we're one of those three, and if we provide benefits that creates an extra level of stickiness where they will stay with us longer. And then lastly, consider incentive programs that reward employees for working more hours. Uber does this. Uber has all sorts of contests and incentive programs where they are providing.
Tom Erb: Different, you know, cash bonuses, different things. If they work a certain number of hours or in their case, if they picked up a certain number of rides. And so, that's something that we can start to look at doing. If you're not already doing it, how can we create incentives? We've talked with many of our clients about creating different levels.
Tom Erb: Of employment, having platinum levels and gold levels or having a special employee club that they hit, if they hit a certain number of hours working with us, and then they can get extra types of incentives the, you additional paid time off, they can go online and they can pick certain things that they want as rewards.
Tom Erb: They can have cash incentives, there's all sorts of different things that we can do. But the goal is that we want to keep people. Working with us as long as possible, because the longer they work for us, the farther away our upfront recruiting costs are. We cover those ones and then those people are more valuable to us later on.
Tom Erb: So lots of benefits to that. The last thing I want to talk about, and then I'll open it up. We'll have a few minutes for questions. Here is the importance of online reviews and these are online reviews for you. For your clients. You want to make sure that those online reviews are positive. And the reason is because more than ever, people are using those to determine whether or not they want to work with a company.
Tom Erb: It's the number one most important content for job seekers when researching an employer and one in three workers have declined an offer based on online reviews. We've seen it ourselves many times with our clients. In fact, we do a review of their online review before we even take on new customers now, because it just doesn't make sense.
Tom Erb: If somebody got a 1.8 out of 5 on Google, you're going to have a lot of candidates that aren't going to be interested in going there. 92% consider online reviews important in deciding to apply for a job. So how do we optimize online reviews? That's the big five, Google Yelp, indeed. Facebook and Glassdoor. I would say, start with Google.
Tom Erb: Indeed is probably the number two, one maybe Facebook. But we certainly want to take a look at those first. We respond quickly and positively to every review, even if it's a negative review, we respond positively and we ask them to take it offline and have further discussion make reviews part of your onboarding process.
Tom Erb: So if somebody comes through as a positive experience with you ask him, do you have a good experience? Yeah, absolutely. Would you be willing to fill out a review? Absolutely. Get them while they're positive and interested in, and in many cases right there in your office. And then I asked for employee referrals as part of your ongoing process as well.
Tom Erb: So I've covered a lot. I'm going to open it up to questions in the chat. There's me and the last time I wore the tie and let's see by the way, if anybody wants a copy of this presentation, just shoot me an email here or connect with me on LinkedIn and I'll be happy to get it to you. I'm not sure if it's available.
Tom Erb: I uploaded it, but I'm not sure if it's available through. World Staffing Summit. So I will see if there's some questions here. Got to put my glasses on, so, okay. Okay, Laurie.
Tom Erb: Laurie's got a question. Just about newly created roles internally retention specialists. That's awesome. From an outcome management standpoint, I'm going to add hours worked as a metric for this role.
Tom Erb: What else do you recommend for key outcomes for retention roles?
Tom Erb: I'll tell you the big one we're doing right now is net promoters. And I think net promoter score, I have yet to see a downside to really following that, whether you do like best to staffing or another net promoter score company, or you do it on your own, it's a really critical piece because what it does is if you have net promoter score and for those of you not familiar with what that is, a net promoter score is you're asking them, would they recommend you to others?
Tom Erb: And it's on a scale of 1 to 10 and anything that's a 9 or a 10 is a promoter. Anything that is, I think 6,7 below a is considered a detractor. And then you take the net promoter score of that. And that gives you an idea of how satisfied your candidates are.
Tom Erb: Your employees and your clients, you can do it for everybody, but I think that's a really big one that I would take a look at. Yeah. The other thing that I would look at Laurie is just you know, number of outreaches. I would take a look at retention. Yeah. Number of days on assignment, if that's improving that, that would be a number that I would definitely take a look at as well.
Tom Erb: Another question, see here usually experienced candidates who spent three years in staffing, a client tend to resign and move out what could be the retention strategy or suggestions. So, Client deputation, I'm not sure what that is. Tend to resign and move out. Somebody who's been in three years, I, you know, I would say if you're just talking about how do we keep longterm people, it goes back to how do we change our mindset and our approach with people from being a temporary staffing company to being a long-term employer.
Tom Erb: Know, and I'm not sure you know where everybody's from, but oh, know, tech systems in India is where it's from. So I don't know about it in India, but in the US the average length of a or the average Retention in the whole US is only about three years and actually that number is dropping now.
Tom Erb: I don't think we can even keep up, it's probably closer to two years now. So three years isn't a bad run. But I would say, just take a look at I would just take a look at how we can be considered more of a long-term employer and that's. Benefits and time off and you know, just making them feel as if they're part of your company community.
Tom Erb: It's a lot of the feedback we get from people who leave their job is that they never felt like they were an employee of the staffing company because the staffing company placed them and then kind of forgot about them.
Tom Erb: Yeah. Okay. Other questions we've got a couple of more minutes. Anybody else?
Tom Erb: Another question, I think sending active candidates could change the hiring scenario in any specific way to attract those candidates. Yeah. You know, some active candidates are gold. They're the, I mean, they're the ones that are, they're getting ready to look. They are the ones that are going to be active candidates pretty soon.
Tom Erb: And so the way we do it, first of all, we have to have, and this is a bigger discussion and a whole different session. We have to have a candidate engagement strategy. That is reaching out to people across their entire talent lifecycle. So if you think of that pie chart as the life cycle for talents, we need to be reaching out to people and keeping engaged and providing them information when they're not actively looking.
Tom Erb: And so that when they do get to that semi-active level, they come back to us or they associate that Hey Listen. ABC staffing has been keeping in touch with me on a regular basis. They give me great content. I feel like I'm part of their community. And it's just a natural assumption that they're going to come back to ABC staffing and see what they have.
Tom Erb: And Hey, listen, I'm starting to think about my job search. So with semi-active candidates, we want to have content out there that would appeal to them. If you think about what a semi-active candidate is, it's somebody who maybe has been in a job for a while. Not actually looking a little bit unsure what to do, not sure about the interview process.
Tom Erb: Maybe I haven't done it for a while. Maybe I am nervous about looking for a job while still having a job. So we want to provide content that. Is going to be a value to them. So things would be like how to conduct a confidential job search while you're still working, how to nail that first interview, how, you know, all of these different things that would be of interest to them, or even just here's the latest on the market.
Tom Erb: Here's what's going on out there with the market or this particular industry or this particular profession, you've got to be considered an expert in their eyes, and then they'll be much more likely to come back to you.
Tom Erb: Another question here and we got a couple more minutes: can upscale and cross-skilling and making employees work across different verticals for different projects by way of proactive planning and suggestions, help reduce attrition. Okay. I gotta read that again. Upskill and cross scale. So I think, yeah, once you're saying we're basically talking about job enrichments, right?
Tom Erb: We're talking about how we absolutely will help with attrition and improve retention as many of our employees and our candidates are looking for ways that they can continue to develop either through promotions. But a lot of times, it's through this job enrichment it's through just having new experiences, learning new things, being able to do different things.
Tom Erb: And so doing cross skills, having them learn how to do all sorts of different areas of the company, whether you're talking about your own internal positions, cause we've got a turnover issue and an attraction issue within the staffing industry. Now just like every Industry. Yeah, whether it's doing it there or it's helping our clients have those types of job enrichment programs absolutely will lead to greater retention.
Tom Erb: Absolutely. I hope I answered that. Right. I answered it the way I took it. Okay. Thanks. Let's see. Any other questions here? I'm going to go look back here. Let's see here.
Tom Erb: Any other questions? I'm just, I'm trying to look through here real quick. I think. I think I got it. Thanks everybody. I appreciate your time. I hope this was valuable. Have a great rest of the conference. I'll let you guys go a couple minutes early, so you can go to the next session. Thanks so much. If you have any questions, need anything.
Tom Erb: If you want the presentation, reach out to me and enjoy the rest of the summit. Thank you very much.
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