Hourly Hiring – The Harsh Reality

Finding and hiring hourly talent is one of the most challenging and labor intensive tasks for talent acquisition teams throughout the United States. As labor markets continue to tighten across the country, companies of all sizes are trying to keep up with the never-ending cycle of hourly recruiting. The reality is that companies today face high turnover rates, rising wage demands and a lack of experienced or skilled candidates. As a result, there is a constant struggle to get candidates through the door for these jobs, or even for an interview.

So, what can be done and where do you start?

Here is a quick look at the numbers:

    • According to the US Department of Labor (As of Sept. 2017) the unemployment rate is at 4.2%
    • Average Hourly Earnings are up $0.12
    • Employment Cost Index is up 2.5% over the last 12 months


These numbers tell us that the hourly job market is more competitive than ever and the costs of hiring new talent continues to rise. In many cases, employees are leaving their current jobs for higher pay.

You may be thinking, “I can’t continue to increase my wages, so how can I limit my losses with high turnover? What actionable steps can I take to stay in front of these hiring challenges?”

Analyze the Data Available to You

It’s no secret that turnover is expensive, but calculating the actual cost of turnover is much more complex than most think. That’s because the math is not black & white. Turnover cost is more than just recruiting spend, background screening fees, onboarding time, and training. According to the Harvard Business Review, the average cost of replacing a worker is 1.5 – 2.5 times the cost of their annual earnings. At first glance, most people assume that estimation is grossly exaggerated. However, those numbers could be even higher depending on the role, industry, and market.

Having a job vacancy puts additional stress on existing employees who have to work longer hours to cover the additional work and, in most cases, overtime pay will be required.

Employees become more valuable over time which is often forgotten in calculations. Therefore, they are appreciating assets and it takes time for them to reach peak productivity. Often times there is a noticeable increase in business errors when employees leave, which leads to negative experiences for existing and new customers. This will have an even greater impact on the business. With high turnover, companies suffer a loss of engagement from other employees, deferred productivity in order to train new employees, and an overall negative impact on culture.

What costs can you measure today?

      • Cost of Hiring (Total Sourcing Spend / # of Hires Made)
      • Cost of Onboarding
      • Cost of Training
      • Cost of a Job Vacancy

 
Annual Cost of Turnover
Cut Costs Where You Can
Many of the challenges and savings opportunities fall under the Cost of Hiring. According to Jobalign, 80% of companies admit that they don’t believe they are getting maximum value out of their job sourcing spend. When you are spending a lot of money already and are not getting the expected volume of applicants, the last thing you want to do is throw a ton of money at more Craigslist ads. The question you should be asking is: how can we be more efficient and optimize our spend on job boards?

When you post your open positions on a job board, you expect to get applications fast. The reality is that the average click-to-apply ratio, according to Appcast, is roughly 8%. Furthermore, the average application completion rate across all Applicant Tracking System (ATS) platforms is 10%. You may be asking: why are 90% of applicants abandoning the apply process?

The answer may be more simple than you think. Put yourself in the shoes of an hourly worker. Searching for jobs is extremely stressful and time consuming. It’s not easy to apply for multiple jobs from your phone when that’s the only online device to which you have access. In most cases, ATS platforms still require candidates to create an account, provide their personal information, upload a resume or cover letter (90% of hourly applicants can’t upload a resume from their phone) and then fill out a long application that may not be mobile friendly.

The point is, it’s extremely cumbersome and that’s why companies can’t get candidates in the door!

We live in a world where the overwhelming majority of hourly workers have a phone. So why do we make it so challenging for them to search for, find, and apply for jobs from a cell phone? Give your candidates the ability to apply from any device via text message, Facebook, or whichever avenue is easiest for them.

By improving the apply process you can see an instant increase in job board efficiency. By increasing that application conversion rate, you can easily double the number of applications you receive for an hourly position. Or, get the same number of applications as you do today, but for half the cost you typically spend.

Now that you have a strategy to decrease costs around sourcing and attract hourly talent more efficiently, you can begin to look at other internal processes and aim to reduce those costs incrementally.