The latest statistics on hiring are very encouraging for recruiters on both the direct hire and contract side of the business. But there is one recent statistic that is not good for anyone in the employment arena. The time-to-fill open positions has reached an average of 25.1 days, the longest period since that statistic first began being tracked in 2001, according to the Washington Post. When the recovery first began in July 2009, that number was at 15.3 days.
This record was hit even though there are 9.5 million unemployed individuals available to fill approximately 4.6 million open jobs. Not to mention all of the currently employed people who are actively looking for new jobs, a number that is growing as the economy improves. So what is behind these hiring decision delays?
Many experts and recruiters point to a mismatch between the skills that available workers have and those that are needed. This is definitely true for certain positions and industries. However, as Catherine Rampell notes in the Washington Post, if a skills mismatch were a widespread problem, we would see an overall increase in wages as companies compete for the small number of qualified individuals. That is not happening. Additionally, when the four regional branches of the Federal Reserve and former chairman Ben Bernacke looked into the issue, they could not verify that there was a bonafide skills crisis, stating that “current skills mismatches are limited,” Inc.com reported.
It appears that there are a number of other potential factors causing hiring decision delays:
- Economic uncertainty - The economy is getting better, but it’s still not out of the woods. A number of issues, including political disputes, the expected turnover in Congress due to the November Elections, and the unknown impact of the Affordable Care Act (ACA or Obamacare) are leaving employers less than confident about hiring, especially with the recession and its massive layoffs still fresh in their minds.
- Increased employment regulation – In addition to the ACA, employment legislation has increased on the federal, state, and even local level. A prime example: A number of states and localities are passing paid sick leave laws. Employers have to determine whether they must comply with these laws, how to administer and track the leave, and how to cover the costs. The regulatory burden weighs on employers’ minds every time they consider adding to their staff.
- Reluctance to hire long-term unemployed – The “unemployed mindset,” in which employers assume there is something wrong with a candidate who is not actively employed, is alive and well. This is especially true when it comes to the 3 million people considered to be “long-term” unemployed, meaning they have been out of work for 27 weeks or more. Citing data from an Evolv study, Bloomberg reported that callbacks for those with 8 months of unemployment is 45% lower than those out of work only a month.
- Search for the “perfect” candidate - When they have to hire, companies seem to be seeking the proverbial “purple squirrel.” According to Inc.com, 67% of hiring managers said they “don’t feel like they have to settle for a candidate without the perfect qualifications.” They are disqualifying candidates for things as simple as not having the exact years of experience requested or missing certain “buzzwords” from their resume. It is not uncommon for candidates to go on several interviews and still not be hired. Recruiters have also reported that clients are continually asking for more options even after quality candidates have been presented.
This failure to act can cause more problems than it solves. As a recruiter, you know that quality candidates start to drop out of the hiring process the longer it goes. Also, failing to hire hampers the growth of the company. Finally, the shortage of help can put undue stress on existing employees, which can impact productivity and retention.
You can help clients avoid these problems by offering candidates on a contract basis. This can help in a number of ways. If they are concerned about the cost and administrative burden tied to employees, they can instead utilize contractors, who are the legal employees of a third party (you as the recruiter or an outside contract staffing back-office service that you utilize). The third party then assumes the responsibility for legal compliance. If they are uncertain of the economy, they can use the person on a contract basis and convert them to a direct hire when they feel more secure.
Contract-to-direct arrangements can also help clients ensure a good fit in the absence of the purple squirrel. They can evaluate the workers’ performance and work ethic during the contract period and then decide whether or not to extend the direct hire offer. Some recruiters we work with actually have clients who are utilizing the contract-to-direct option to evaluate most of their new hires.
Dragging out the hiring process is not good for you, your clients, or your candidates. You can help reduce the time-to-hire by offering clients another option that helps everyone – contract staffing.