The news has been hard to miss: we’re currently in a bit of a rough patch, economically. The war in Ukraine, rising inflation and oil prices, the crypto crash, and fears of a recession are fueling many uncertainties. We’ve seen many companies either lay off substantial amounts of staff, or put a hiring freeze in place.
This means that the red-hot War for Talent that has dominated the recruitment space for years is cooling down a bit, at least temporarily. However, do we really believe that this will continue, and within a year we’ll have developers in front of your office with signs saying “Will code for food?”. Absolutely not. The labor market will simply go from “extremely tight” to “tight”.
Staff shortages are so widespread that an economic slowdown might even be beneficial to your business. Compare this with the housing market – having 100 viewers for one house is a very inefficient business model.
In this article, we wanted to look at why Candidate Experience is more important than ever, especially in an economic downturn, and explain how that relates to what we do here at Starred: Help companies measure and optimize Candidate Experience.
The War for Talent
In the past few years, we’ve seen the War for Talent intensify exponentially, and it has led to the labor market turning into a “candidate’s market”, where companies were often fighting over valuable candidates. This has had a huge impact on companies’ hiring velocity, resulting in billions of dollars in missed revenue. As a result, many companies have come around to seeing their recruitment departments as integral to the business.
This is in stark contrast to the decades-old model of a service department that simply exchanged cash for employees. Finding candidates used to never be a problem, especially at companies with a high average tenure and low turnover. Most companies often had a wealth of talent to pick from, at least since the last financial crisis, and didn’t struggle to attract talent.
That changed once the tech boom rolled around. Hypergrowth scale-up models became more commonplace and were hiring at scale, especially in tech. Many other industries also experienced significant growth and increased demand for many positions, like developers and sales, but also teachers, healthcare workers, service workers, and those in the hospitality industry. These trends were also accelerated by the COVID-19 pandemic.
In light of this, leaders were grappling with optimizing their recruitment process after having neglected it for so long. Recruitment became the most important department of them all, and leadership was blindsided by the lack of two crucial elements: relevant metrics, and feedback from candidates. All of this was just intensified by The Great Resignation and the War on Talent.
Here at Starred, we’ve been thriving on this hunger for insights and analytics. We’ve experienced our own growth and partnered with companies like Coca-Cola, Dropbox, Twilio, Danone, Deloitte, PwC, Gorillas, Elastic, and many others, all of whom care deeply about gathering data-driven insights into their Candidate Experience.
The Current State of the Market
Naturally, we’ve also been concerned with what’s happening in the market, and have asked ourselves that one hard question: “Are we still relevant?”.
I recently discussed the relevance of Candidate Experience with Mat Connot, Twilio’s VP of Global Talent Acquisition, during a main stage event at Greenhouse Open 2022. You can watch a short clip of this question here:
As the Founder of a software company, I get bombarded with blog posts about the current state of the market, and tips on how to survive what’s coming. For example, I received this presentation by Sequoia Capital through multiple channels.
At Starred, we analyzed this deck and made changes to ensure we’re healthy for the long-term and can stay afloat. One thing that really stood out to me was the following remark:
Three reasons why people buy regardless of market conditions (and why everything else is fluffy)
- Solutions that drive growth
- Solutions that save money (real, hard ROI)
- Solutions that reduce risk
We strongly believe that recruitment is a strategic function. More than ever before, the new hires have to be right, and you can’t risk making a bad hire. For that to happen, your Candidate Experience has to be top-notch. You can’t hire successfully when the roof is leaking. A strong Candidate Experience solution is therefore crucial. It drives growth, saves money and reduces risk.
Let me explain:
Solutions That Drive Growth
You always want to hire A-players. Even during a downturn, these people will instantly notice when your process is terrible and will withdraw their application. The best talent often has a number of offers to choose from, and great Candidate Experience is a good way to stand out from the crowd and make yourself memorable.
There is still an extreme shortage of talent. This will definitely cool off a bit, but don’t expect the highly-skilled roles to become easier to fill. The market will go from extremely tight to tight. This is the time to hire for these extremely hard roles. However, you will only come out on top if you provide the best Candidate Experience. Being able to hire the people you want and need helps drive sustainable growth for your business, even in times of trouble.
If you’re recruiting to backfill attrition (which is often the case in retail or hospitality), you have an ongoing challenge. Talent is hard to find, and a strong reputation will set you apart. Failing to fill these vacancies will directly harm the business and lead to lost revenue and growth.
Solutions That Save Money
Having solid insights into Candidate Experience will help make your recruitment processes far more effective and far more efficient. They can help optimize your ‘time to hire’, increase acceptance rates, can lead to far more referrals, and will make sure fewer candidates abandon your recruitment funnel. It also ensures that you’re not losing potential customers, directly saving revenue.
Candidate Experience analytics let you discover where the ‘roof is leaking’ and allow you to deploy resources for effective improvements. The mere fact that you’re measuring Candidate Experience will have an immediate effect on your recruitment staff. They’ll up their game, as they’re aware feedback from candidates will be gauged, and recruiters will be exposed to candidates’ feedback which will lead to instant improvement.
Satisfied hiring managers are also a reflection of an optimized hiring process, and speak volumes about the caliber of talent that you’re bringing into your organization. Understanding how they feel will help supplement your understanding of how your talent acquisition is functioning. Among our customer base we see an average NPS of 52 for hiring manager satisfaction – a very healthy metric.
One of the biggest benefits of using Starred is that it helps you identify what can, and should, be improved in your recruiting processes. It also benchmarks your performance against your industry standards, and automatically identifies potential areas for improvement.
“One of the great things about Starred is the ability to see how we are doing against our industry”Mathias Connot, VP of Global Talent Acquisition | Twilio
“You’ve seen how much our Candidate Experience has improved across all candidates. If we connect these results to the data of the Virgin Media case, we can determine that we saved €117,000 ($142,000) in 3.5 months’ time”Marco Leijenhorst, Senior Manager Talent Resourcing | VodafoneZiggo
Solutions That Reduce Risk
During an economic downturn or during uncertain times, company management usually wants to have far more control. Recruitment is often a black box, and management will be hungry for hard metrics and insights into recruitment.
Imagine this: You have worked hard to get your Employer Brand to a certain level, and you don’t want to spoil it by ignoring Candidate Experience. When your candidate is also your client, the bottom-line impact on your revenue can be severe (and is exactly what you don’t want during difficult times). You can’t afford to have your carefully-built Glassdoor ratings go to waste.
Since it identifies both your strengths and weaknesses, tracking Candidate Experience is a great way of making sure that you can hire with minimal risk to your brand. Many of our customers use our solution to mitigate possible problems, and prevent lost revenue.
“We measure at all stages, […] it helps us to highlight if there are any issues, and we need to coach and guide hiring managers, or they may be issues within our own TA team. By breaking it down like that, it helps us understand where the issues could be”.Shaun Rudden, Operations Talent Acquisition Lead | Wolt
The risk of a bad hire is higher in challenging times. You make less hires, so the quality of hire rate should be better. The time and costs involved with a bad hire are unbearable, and maintaining a positive Candidate Experience will help you secure the best talent possible.
There will definitely be companies out there that will start to ignore candidates again during these trying times. This will obviously be a very short-sided approach, and will have an impact:
Now is the time to deliver the best Candidate Experience. Better talent will enter the market, but those A-players who you should be pursuing are still allergic to inefficient, ineffective and inhuman interview processes.
“I think, more than ever, how important Candidate Experience is is the one thing that is not going to change. You know, compensation pressure might change, but scarcity is not going to change. Candidate Experience is going to stay front and center”.Mathias Connot, VP of Global Talent Acquisition | Twilio
To end, I’ll quote Steve Jobs:
“You have to be ruthless if you want to build a team of A players. It’s too easy, as a team grows, to put up with a few B players, and they then attract a few more B players, and soon you will even have some C players. […] The Macintosh experience taught me that A players like to work only with other A players, which means you can’t indulge B players.”