Insights into the forces shaping our industry.

References, Job-hoppers and Talent Shortage


by Ted Konnerth

We’ve conducted roughly 70,000 interviews over the past 11+ years. We’ve successfully placed over 500 new employees and we’ve weathered two deep recessions, so we feel pretty good about our track record. Nationally, “WE” are facing a talent and hiring condition that has never been faced before. Despite the daily dirge of bad news about unemployment, let me give a few other statistics:

  • The average tenure of a new employee is 34 months (and that includes CEO’s)
  • The unemployment rate for college graduates is 3.8%
  • The predicted number of jobs for Gen Y employees is 8 jobs before they’re 40 years old
  • Reference recommendations correlate to performance at a value of 0.29 (which in statistic-speak means the predictability is less than 9%)
  • Over 35% of resumes are fraudulent, over 75% have mistakes or ‘little white lies’
  • The level of open job postings has hit a record high level

Most companies don’t believe there is a talent shortage. With 9.8% unemployment it’s easy to assume your next engineer, branch manager, marketing director or operations manager is sitting outside your door with his/her resume in hand and the desire to go to work on Monday at a 25% discount in compensation. If only it were true.

The talent pool is very thin right now. We only work in this industry so our view is limited to people who work and succeed in the electrical industry and we don’t recruit people out of automotive, healthcare or paper companies. The pool is additionally thinned by the housing market; relocations are very problematic for a household to move if their house is currently at a low equity or under water. The ability to sell the house and provide cash to buy into the new market, despite the lowered values is in many cases untenable. Job security for most companies has been seriously damaged by the deep recession and companies’ reactions to that through aggressive downsizing, so we’re at a unique confluence of competing challenges; employees are more open to leaving their current company, but they’re very limited in where they can go, geographically.

We’ve seen a significant increase in companies adding talent over the past 90-120 days. All of these positions are net-adds, not replacements. So the market has already shifted, the talent pool is poised to hearing options, but the creativity of those options will have to cater to the needs of the prospective new employee.

There is never a ‘perfect’ employee, just as there isn’t a perfect employer, yet employers are still functioning as if the talent pool is unlimited and they have the ability to design the perfect employee on an assembly line; complete with a life-time guarantee. That isn’t reality, the talent market right now is considering multiple offers, expecting significant flexibility in work/life balance and not anticipating finding their ‘last job’, but gaining experience and building a resume for the next challenge.

Hiring is now best perceived as an investment. Define the problem that needs to be solved, find the talent to solve that problem and ensure the return on investment is favorable; regardless of the tenure of employment, the compensation terms or the overall cultural ‘fit’. Hiring has become transactional, not relational.

Hiring processes have to adapt quickly as well. The days of 2-3 rounds of interviewing, reference checking, test regimens, credit checks, background checks and drug screens will leave most talented people feeling exploited and un-trusted. Every company will make occasional bad hires, but if the hiring process is viewed as an investment strategy, then the task will be to mitigate bad hires with quicker reviews and assessments of performance as part of the on-boarding process.

Reference checks are uniformly meritless, yet the habit persists due to legacy processing. Reference checks add legal and governmental risks, they inject opinions from people whose motivations we don’t know and they provide cursory information that is rarely predictive of future performance.

The next 5 years will be the onset of the War for Talent; as predicted in the early 90’s. Its arrival was predicted to occur as the Boomers begin to retire in ever increasing numbers, which begins this year and goes forward for 15 more years. Talent acquisition will strain relationships between senior management and human resource departments as headcount expense will grow disproportionately over the next several years. An investment model of talent acquisition will assuage most of that tension, if HR and IT can devise financial models of individual performance and impact on an earnings statement.

The next 5 years will bring significant growth, but only if the talent is available to support it. Employee retention programs should be implemented immediately and acquisition strategies should be refined to provide for faster decisions and less intrusion into the candidate’s life.