With unemployment levels at nearly a 50-year low—at 3.5% in December 2019, according to the United States Bureau of Labor Statistics—there are less active job seekers. That means employers must compete to find, identify, and recruit top talent. A competitive labor market also creates job openings due to increased turnover as passive candidates leave their current roles to pursue readily available opportunities that they may perceive to be a better fit.
The Current Job Market
According to a 2019 report by “Harvard Business Review” (HBR), census data shows that the majority of people who took a new job in 2018 weren’t searching for one—they were approached to apply. Other notable insights illustrating how competitive the job market is include:
- December 2019 Census and BLS data shows 95% of hiring is done to fill existing positions. Most vacancies are caused by voluntary turnover.
- Hiring talent remains the number one internal concern for CEOs, according to the 2019 Conference Board Annual Survey. It’s also the top concern of the entire executive suite.
- PwC’s 20th CEO Survey reports CEOs view the unavailability of talent and skills as the biggest threat to their business.
Employers spend an average of $4,425 per job in the United States in hiring costs, according to Society for Human Resources Management estimates, and much more than that amount to fill upper-level roles. Use this guide to save money when hiring and to hire talented employees who are more likely to stay at your company.
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What Is a Competitive Job Market?
A competitive job market is one in which many employers are searching for employees, but the amount of available talented employees is not enough to fill the total demand. During competitive job markets, job-seekers have more choosing power, and employers need to strategize to attract quality hires.
Factors that increase competitiveness in the job market for employers include:
- Economic growth and low unemployment rate
- Demographic trends that increase retirement numbers
- Technological developments that create new jobs
- International trade policies that increase sales of domestic products and services
- Immigration policies, which may create new job openings and limit the availability of talent inflow from other countries
A competitive job market means job seekers have access to apply for more open positions than they would in a stagnant job market. Job seekers gain more leverage in negotiating salary and benefits, as well as job selection, since more employers need to fill open positions.
How to Hire in a Competitive Job Market
To hire in a competitive job market, companies must stand out to talented candidates. They first must get noticed by being in the right places job seekers are looking, whether that’s an online job board or on a niche interest site. The job description must capture attention and inspire the candidate to fill out the application. The application process must be simple and straightforward, so that the candidate remains engaged. During the interview process, business representatives must effectively convey company culture and show how it aligns with the candidate.
Here are the steps to an effective hiring process in a competitive job market.
1. Measure and Track Current Employees
A company must understand their successes and failures with past hires. Businesses should analyze employee data to determine their most successful past job candidates. Questions to ask might include:
- Were they active job seekers or passive candidates?
- How has the quality of hire varied by source?
- How successful have internal promotions and transfers been for your business?
Track and measure current hiring results so they can apply tactics that worked to future hiring strategies. Look at retention and absenteeism, performance appraisals, and supervisor feedback on employees to discover what has worked and what hasn’t.
2. Create an Effective Job Description
You’ll gain a wider talent pool if you are realistic about how you frame a job description. Posting 50 “must-have” requirements may discourage and deter the exact candidates you’re looking for.
Ask for someone with direct experience in that role (a current employee or manager) for input on job descriptions. You might survey employees about what they do or how they view their roles before open positions are even available, so you have that information to inform future job descriptions.
You might consider working with a professional job description copywriter to create job descriptions for you. Someone with experience about what resonates with job seekers today can create job descriptions that grab attention, are keyword-optimized and keep candidates engaged.
HBR says one benefit to working with professional recruiters is that recruiters who specialize in finding and identifying the best talent can communicate to businesses whether or not their hiring requirements and proposed salary are realistic. You might want to consult with recruitment services to see if your job description is one that will attract the right kind of talent.
3. Simplify the Application Process
Make the application process easy and straightforward, or you’ll likely frustrate candidates. For example, a Jobvite recruiting report found 26% of millennials said the time it takes to complete an application is the factor they care most about when applying for jobs.
Some ways to improve your application process include:
- Make the application process mobile-friendly
- Use resume parsing so information from uploaded resumes is automatically pulled out and won’t have to be re-entered
- Post jobs on LinkedIn, so candidates can apply within the site and connect their profiles
You also want to keep candidates engaged after they’ve applied. Communicate timelines clearly to candidates. Let them know what next steps they should expect and when so they don’t drop off or look elsewhere.
4. Source Internally
Your loyal customers, employees and friends and family are great sources to find talented candidates. A 2018 report by Indeed found 57% of small businesses find talent through word of mouth and recommendations. Create an internal job database, so employees can see open positions. This way, they can refer candidates for jobs, and apply themselves, as well.
Speaking of which, your business can save money and time in recruiting and interviewing by promoting from within. There are several benefits to this. Employees see a tangible way to advance their careers at your company, which can lead to increased retention. You save money on onboarding and training, since the employee is already familiar with company operations.
Post jobs company-wide to give more people at your business the chance to apply. That way, you can learn more about the employee talent you currently have and may be able to make a better promotion choice, compared to selecting one person for a promotion with no applicant process.
5. Expand Candidate Outreach
If you have an open job, you might know to post it on your website and LinkedIn and other popular job sites. But there are other ways to find quality candidates besides the well-known job boards.
If you’re conducting personalized candidate outreach, make sure to tie the candidate’s experience or why you’re reaching out to them to the job and your company. Make the candidate feel like you’ve researched their talent and believe they’re a good fit for your company because of specific reasons.
6. Be a Company Candidates Want to Work For
Even if you’ve followed recruitment best practices, talented candidates will only want to work for you if you offer them a positive work environment. Offer benefits and incentives like flexible hours, flexible work locations, advancement and mobility, and generous vacation policies to attract candidates. Communicate these benefits everywhere you have an online presence, from your company website to your LinkedIn business page to every job description you post.
Also, get clear about your company’s vision and values. A 2018 LinkedIn workplace culture trends report found 86% of millennials would consider taking a pay cut to work at a company whose mission and values align with their own. Communicate your mission and values in the same places where you talk about company benefits and incentives.
Benefits, incentives, mission, and values should also be highlighted in the candidate interview. Make it clear what your company stands for and why you’re a company that prioritizes its employees.
What to Avoid When Hiring in a Competitive Job Market
In addition to hiring best practices, you should avoid these pitfalls when hiring in a competitive job market.
1. Setting Unrealistic Expectations
In addition to setting too many demands for skills and duties required for a single position, companies need to avoid lowballing candidates with salary offers. Sites like PayScale and the Occupational Outlook Handbook make average salary info publicly available. If you’re offering lower-than-average salaries, candidates may lose interest.
In some cases, you may not be able to compete with the wages other businesses can offer for similar positions. If that’s the case, focus on the positive offerings you can highlight, like benefits.
Don’t lowball candidates just because you want to save. Make the wages you can offer reasonable for the position and quality of candidate you’re looking for.
2. Only Considering Passive Candidates
You may think that passive job seekers are better because they’re currently employed. That’s not always the case.
Active job seekers may have left a position for a number of valid reasons, from experiencing burnout or harassment, to discovering that their previous company’s values, products or services no longer aligned with their career goals.
According to HBR, a significant difference between active and passive job seekers is that the number one motivator for passive job seekers to change jobs is more money. For active job seekers, it’s better work and career opportunities.
Active job seekers are more likely than passive candidates to state they want to improve their skills and show passion for their work. They’re interested in moving because they’re ambitious, not because they want higher pay.
Employers need to seriously consider active job seekers for open positions. Active job seekers can possibly save companies money, since they’re less motivated by higher salaries to fill a job. They may also produce better work than passive candidates.
3. Not Focusing on What You Can Control
One of the easiest ways to improve the hiring process at your business is to analyze and learn from your data. Look at employee exit interviews to glean insights on what needs to be improved at your company. Make sure you’re communicating improvements in those issues to candidates.
Also, you can get a better grasp on your hiring and retention by improving career advancement opportunities for your own employees. HBR reports that the most common reason employees consider a new position somewhere else is career advancement. That’s often correlated with employers not promoting within to fill vacancies, but rather, looking outside the company to do so.
By working to improve the conditions your current employees want improved, like career advancement opportunities and the situations mentioned in exit interviews, you can retain your top talent and increase your referrals for open positions, as well.
Get Assistance for Hiring in a Competitive Job Market
Hiring great candidates in any type of job market is challenging. You want the process to be efficient and effective and result in hiring great candidates that stay with your company.
TERRA Staffing Group can help. With specialties including administrative, accounting, industrial, technical and professional recruitment, we can help you attract the best candidates to your open positions. Request more information today.