We talk with Cadient CEO Jim Buchanan about the needs of high-volume employers, the labor market in industries such as retail, restaurants, hospitality and healthcare, and the impact of Covid-19 on hiring efforts throughout the economy.
Hopefully, we’re coming out of the pandemic. How has talent acquisition been changed by Covid, and where do you think the business will go from here?
The pandemic definitely left a bruise on talent acquisition. We’re still working our way out of a situation where the labor supply is out of equilibrium with economic demand. The workforce shrunk dramatically while the economy, fueled by stimulus money, grew at a good clip in 2021. As of now, our economy has around 11 million job openings with less than 6 million people unemployed. The labor participation rate is inching upward, increasing 0.3 percentage points in January 2022 and up 0.1 percentage points in February. But a 0.1 percentage point increase equates to only about 160,000 people. To fill one of the 11 million job openings, employers likely have to find someone willing to quit a job to take their job. We know that employee quit rates are at historic highs and may stay at that level for a while..@CadientTalent CEO Jim Buchanan: Today's labor market shouldn't cripple your talent acquisition program, but it does require adjustments. #HR #HRTech Click To Tweet
Of course, quality hiring is a critical component of any company’s success, but it has always been hard. The best companies have historically recruited candidates with an investment in their brand, attractive wages, a great work environment and excellent candidate experience. They still have to do every bit of that. But they now also must supplement the process with sign-on bonuses, even higher pay, flexible scheduling and job perks. Competition for talent has increased dramatically, and it doesn’t appear that will change anytime soon. The candidates have settled into the front seat and have a pretty firm grip on the steering wheel.
How about your business? Certainly, your customers and their workforces must have seen a change in dynamics.
Many of our clients employ a large contingent of hourly workers. As you may know, about 60% of the U.S. workforce is paid on an hourly basis. Despite being in the majority, many people, including myself, believe the hourly workforce is kind of a forgotten group. But during the pandemic, this group has been on center stage because they were often deemed essential workers. If you’re an hourly worker in the retail, restaurant, healthcare or other certain industries, remote work is not generally an option for you. So, the environment for our clients was challenging on a number of fronts. How do we retain our workforce when regulations are preventing us from fully opening? How can we create a safe work environment for our employees? How are vaccine mandates going to affect our workforce? How do we balance work/life issues such as having children attend school virtually from home, when we need Mom or Dad to be at our work location? It became extremely chaotic.
These factors caused many workers to reassess their objectives and reevaluate life goals. Many changed industries; some sought more flexible positions and, probably to a lesser extent, some became self-employed. Many people sought life changes and became more selective in the kinds of employment opportunities they found acceptable. The confluence of all these factors has made a difficult talent acquisition process even harder.
What are the most important trends or developments impacting your customers right now, and how will you help address them?
Most of our clients – and employers, in general – have seen a drop in the number of people applying for their jobs. Looking at our clients and comparing the pre-pandemic environment to what’s happening in early 2022, the applicant-to-hire ratio for hourly workers has dropped by 20% to 40%. Restaurants are down 40%, supermarkets are down 33%, business services are down 32%, retail is down 24% and healthcare is down 21%. Having an applicant pipeline bursting at the seams is sometimes seen as a panacea for a lot of talent acquisition professionals. When the talent pipeline shrinks, it sets off alarms. Something I frequently hear from clients and prospects is, “We hire everyone who applies.” Most often, this is not reality, but the reduction in the applicant-to-hire ratio nevertheless feels painful. This trend should not cripple your talent acquisition program, but it does require adjustments. The critical adjustments are two-fold:
- You can’t rely entirely on your historical hiring decision criteria. Your normal standard requirements and screening techniques may not work anymore for this workforce. Furthermore, do you really know if your standard requirements and screening factors made a difference in the hiring decision anyway? Maybe some other factor was even more important in making a quality hire. Employers won’t really know unless they perform a scientific analysis of their candidate and employee data to determine which qualities and characteristics of candidates really make a difference in job performance. There is a way to do that fairly easily using AI and machine learning.
- Equally important is that you act with speed. As Mickey said to Rocky Balboa, “What we need is speed … greasy, lightning-fast speed!” Your number of applicants is down. Couple that with the fact that it’s very easy for candidates to apply to multiple jobs at the same time. They may apply for 10, 12 or even more jobs in one session. And they’re not just applying for jobs in your industry. Who’s going to win that game? Whoever engages with the candidate first stands the best chance.
To sum it up, the new world in talent acquisition is about superior intel and lightning speed. Competition for candidates is fierce. It looks likely to remain that way for the foreseeable future. Decisions on how to prioritize candidates have to be made very quickly. This is what machine learning algorithms are designed to accomplish. If your system can analyze new candidate data against existing proven employees and do it automatically and instantly, you have a huge leg up on the competition. A decision support system allows you to take action quicker, and first responders are going to win in this environment.
You recently launched a new solution, HireNow. How does it work, and how do you see it evolving down the road?
Since necessity is the mother of invention, we felt compelled to do something to help our clients move through the hiring process more quickly. Especially in this environment, the best candidate experience is a short one. Everyone is in competition to attract, identify and hire the best talent in a job market that is more competitive than ever. Since candidates apply for multiple jobs simultaneously, it’s essential that hiring managers quickly identify the best prospects and make them an offer before another company does.
Cadient HireNow streamlines the hiring process for both the applicant and the hiring manager. HireNow quickly prequalifies candidates and notifies the hiring managers. This allows the hiring manager to send a conditional offer letter right away. The bottom line is that it’s a simple application, a simple process and it provides the ability to quickly make an offer.
We see this solution evolving in a number of ways. The objective is to keep improving the quality of decisions without sacrificing speed. The hiring process generates a lot of data. Some of that data is strategic, and some of it is not. The trick is to help our clients understand what data elements are strategic to their hiring decision. For example, the source of the applicant may be a very strategic bit of data. Did the applicant come through a public job board, were they referred by a current employee or did they apply through your company career site? As we consult with our clients, we introduce machine learning algorithms to see if that particular variable correlates highly with long tenure and good job performance. It usually does have a high correlation. To let you in on a secret, employee referrals almost always have a high correlation with good performance, while public job boards usually have a high correlation with poor performance. Despite this, companies still spend a lot to advertise positions on public job boards, but that’s a conversation for another time.
Over the past several years, our company has processed about 400 million job applications and onboarded almost 7 million hires. The vast majority of those applications and hires were for hourly positions. So, we have a ton of data in various industries and job positions and have created industry candidate data models that can accurately predict a new candidate’s performance. When we initially engage with a client, candidate data will normally be evaluated against our industry models. Over time, we sometimes move to increase the sophistication of the machine learning models to customize for company-specific data. In many cases, this use of company-specific data will increase the model’s accuracy even more. Finally, we can offer more fulsome talent acquisition services such as account management, DE&I analysis, WOTC optimization, adverse impact reporting and other services.
Cadient’s vision statement is to revolutionize the way the world makes hiring decisions. The pandemic may have permanently changed the labor force, but we believe that we have the tools, experience, and know-how to overcome any post-pandemic obstacles that remain. We’re more determined than ever to serve our clients by making sure they achieve value through hiring the very best employees and serve job seekers by helping them to find the right match for a rewarding and fulfilling job.
Listen to our earlier podcast conversation with Cadient’s Jim Buchanan here.
Cadient Talent’s software is designed to meet the needs high-volume, hourly industries like retail, restaurants, hospitality and healthcare. Learn more by clicking here.