Finding the right talent is difficult, time consuming and doesn’t always lead to successful hires. To make matters worse, a bad hire will cost you dearly: two and a half times the employee’s salary. For SMBs that’s a steep price to pay, especially when we know that the average time to hire for SMBs has risen to 68 days, twice as long as 6 years ago.
Unfortunately, bad hires happen all too often and current recruitment practices aren’t cutting the mustard. Even job boards are finally admitting that placing a job ad is not an effective way to hire someone. Indeed and CareerOne, for example, are testing a new ‘agency service’ business model to help businesses get better outcomes.
But what’s right for SMBs? How can Australia’s employers find the right people, with the right fit, and cultivate employees’ loyalty?
Empowered by technology and made affordable by marketplace economics, SMBs can now benefit from a new generation of recruiters, who were previously accessible only to large companies.
The job ads model is coming to an end
While job boards (e.g. Seek, Monster, Indeed) brought some dynamism to the recruitment industry in the past 10 years, these models have proven their limits and don’t seem to help SMBs recruit better or retain talent.
The job board model entails that the employer pays for a service irrespectively whether or not a candidate gets hired. With an increased competition to recruit the best talent, most job ads don’t result in a hire, making this model ineffective for a lot of small and medium businesses who need to use their HR budgets wisely.
LinkedIn also played an important role towards the evolution of the online recruitment marketplace. However, like job ads, it’s also a paid model that doesn’t provide any guarantee of filling roles, or that you’ll find the best person for the job.
According to recruitment expert Mark Murphy, an alarming 46% of hires fail within the first 18 months, especially for senior positions.
Organisations are faced with a double challenge: not only do they need to find new ways of recruiting, but they also need to get better at making the right hire.
The changing workforce has made recruiting even more difficult for SMBs
Recruiting has become increasingly difficult as Gen Y and Millennial generations are more mobile and always lookout for new job opportunities. A common reason today’s younger workforce gives is employers not meeting their expectations for career aspirations or advancement.
Gone are the days of employer loyalty. Recruitment specialists have labelled these millennials as “continuous candidates,” hungry for the next big gig to develop their leadership skills.
For SMBs to attract and retain talent, they now need to prioritise intangible and non-traditional metrics alongside salary and benefits. Company values, cultural fit, CSR initiatives and flexible working opportunities are a few of the components employees consider before taking a job.
However, those considerations cannot be manufactured overnight. An employer brand is only effective if it permeates throughout your company, and if you’re not walking the walk and keeping values congruent with your behaviour employees won’t join, and they definitely won’t stay.
Since SMBs don’t have the budgets to build Google-sized cultures, they should consider leveraging employer branding tools and use the help of external third parties such as recruiters, who know the market, what competitors are doing, and what candidates expect, to build compelling branding strategies.
Getting better at promoting their values on social media, encourage employees – the best ambassadors to an employer brand – to share their work experience, and promote values that will appeal to new generations of workers is the best – and cheapest way – for SMBs to ensure a strong candidate pipeline and long term recruitment strategy.
Business services marketplaces will revolutionise how SMBs hire
The value added by recruiters is undeniable. However the way recruiters operate today doesn’t entirely fit with the SMB model and can be seen as a costly investment. Not anymore!
A new breed of online companies dubbed “Business Services Marketplaces” is already helping SMBs work smarter. Freelancer, UpWork and Leverage, for example, provide SMBs access to thousands of skilled temporary workers, transforming daily business operations for the better.
Marketplace models make services more affordable by providing access to more choices for the SMB customer and by building smart tools to make the supplier on the other side more efficient.
A new breed of recruiters
Empowered by technology, the recruiters of tomorrow will not only provide more affordable services, they will also be able to develop a wide range of new services that will truly add value to businesses.
By using analytics and automation tools embedded into online business marketplaces, recruiters will be able to spend less time sourcing candidates and clients, to focus on their core skills: consultancy.
In the next few years, SMBs should consider using recruiters’ services as for example they’ll be able to tap into passive candidates pools by using predictive analytics to flag when candidates might be ready for the next steps in their careers, identify profiles that might match a role that the employer will create next year, and strongly advise organisations on their employer branding and communications strategies.
SMBs and start-up won’t need extravagant HR budgets to afford the best recruitment skills, and benefit from tailored recommendations and long-term strategies to hire and retain talent.
With millennials so quick to change employers, it’s increasingly important to stay agile in such a competitive and evolving market for talent. With the recruiter remaining involved throughout the process, SMBs can take advantage of trained experts who will aid in nurturing the process from suggesting candidates, briefing them prior to interview and ultimately closing the job. The end result? Huge cost savings, employee retention and fewer headaches for SMBs.
Ben Hutt is the CEO of of Aussie recruitment services marketplace start-up Search Party – which recently listed on the ASX.