Quick look: The labor market remains tight, with nearly two job openings for every unemployed person. To stand out and compete for the talent they require, many SMBs are increasing the money and energy they invest into their recruitment efforts—but this can take a toll on their finances and the mental health of their staff. Here’s how brokers can help clients hire the right people, boost cost-efficiency, and stress less by partnering with a PEO.
As small- and medium-sized businesses (SMBs) continue to compete for talent, many are ramping up their recruitment efforts. This increase in recruiting tactics comes at a cost, however, but brokers are uniquely positioned to help clients overcome this challenge. Let’s review the status of the labor market today, the measures SMBs are taking to stand out, and how brokers can help their clients reduce spending and combat burnout while still securing much-needed talent.
Ongoing labor market struggles
One of the many effects of the COVID-19 pandemic is the tight job market that it spurred. According to recent data from the Labor Department’s Job Openings and Labor Turnover Survey, the overall labor market remains tight despite job openings falling by the most in over two years in June. In fact, for every unemployed person, there are 1.8 job openings.
As businesses continue to try to win over talent, 80% of employers report that hiring has escalated from being a human resources (HR) priority to an overall business challenge, according to a new report from Lighthouse Research & Advisory titled, Hiring is More Critical Than Ever: How Employers and Candidates are Evolving in the Current Market. As such, business leaders report that they are:
- Hiring more recruiters
- Leveraging outside service providers and partners
- Adjusting their processes to be more candidate-friendly
- Updating compensation rates
- Using new hiring technology
The cost of boosting recruitment efforts
An increase in recruitment tactics doesn’t come without a price. Many SMBs who are upping their recruiting ante are experiencing increased budgets, the risk of employee burnout, and the financial implications of potentially losing candidates to other employers.
Many business leaders are finding they must increase their budget to gain a competitive hiring edge. The Lighthouse Research & Advisory report found that approximately 70% of companies are raising their functional budget, roughly 65% are growing their team’s headcount, over 70% are increasing their technology usage, and 60% are boosting their service partner budgets.
Businesses also face the cost of bringing on a new hire. Recent benchmarking data from the Society for Human Resource Management (SHRM) reveals that the average cost to hire a new employee is $4,700 and can total three to four times the position’s salary. An estimated 60% of this amount includes soft costs like the time hiring managers and department heads spend supporting the hiring process.
After two years of navigating an unexpectedly turbulent labor market, many HR professionals are feeling the weight of it all. Some are even experiencing burnout, which according to the World Health Organization (WHO), is characterized by:
- Feelings of energy depletion or exhaustion
- Increased mental distance from one’s job or feelings of negativity or cynicism tied to the job
- Reduced professional efficacy
Alarmingly, the latest What’s Keeping HR Up at Night survey from Human Resource Executive revealed that 86% of HR executives report an increase in stress during the last year, and 44% say their stress levels have increased dramatically.
Watching a competitor scoop up a high-quality job candidate is hard to watch, and unfortunately, it can be a common occurrence for SMB clients. Because smaller businesses are sometimes not prepared to move as quickly as large enterprises, they must fight harder to keep hold of top talent and ensure candidates don’t get hired by another employer in the meantime. Losing a candidate can deplete a team’s morale, set back internal timelines, and have financial consequences—imagine how much clients pay their staff to recruit candidates that begin working elsewhere?
What does success look like?
The ways SMBs measure their recruitment efforts are just as important as the steps they take to locate qualified candidates. And while the above Lighthouse Research & Advisory study found that over 40% of employer clients have measured the effectiveness of their hiring process in the last six months, the majority haven’t examined how successful their approach is in over half a year.
The research found that high-performing businesses’ most measured metric is quality of hire, and those organizations are over 60% more likely to consider candidate satisfaction a sign of success. Other key recruiting key performance indicators (KPIs) include:
- Average time to fill
- Offer acceptance rate
- Cost per hire
- Application completion rate
- Qualified candidates per opening
- First-year turnover rate
How brokers can ease the burden
As a broker, it can be difficult to watch your SMB clients struggle to locate and hire the talent they need. Many businesses must ramp up their recruitment efforts to stand out from their competition and secure quality candidates.
This is where a broker can make a big difference by connecting clients to a partnership with a professional employer organization (PEO). PEOs can provide a variety of recruiting services and allow clients to either outsource select recruiting initiatives as needed or completely outsource their HR.
Brokers can help stretch their clients’ dollars further by facilitating a partnership with a PEO like ExtensisHR that offers a full suite of recruiting services at no additional charge. These services include:
- Unlimited phone consultations with a recruiting specialist
- Full-cycle recruiting for most staff-level positions
- Job advertisement creation
- Salary surveys
- Skills and talent pool assessments
- Interview assistance
- Offer letter consultations
- And more
The right PEO partner can enable brokers to deepen their client relationships by providing much-needed assistance with recruitment efforts. Contact the professionals at ExtensisHR today to learn more and get started.