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THE IMPENDING LABOR WARS
As available labor supplies dwindle, recruiters are getting more aggressive.
ESTIMATING YOUR COST PER HIRE
Use these simple rules of thumb to determine your approximate cost per hire.
BEFORE YOU BUY
An evaluation checklist for new HR systems.
COVER LETTERS
What recruiters really think.
Last year, there was nothing but good news in the economy. Hiring was up,
unemployment was very low, and there was virtually no inflation.
For 1998, while demand will continue to be high and unemployment will reamin
low, these factors are more likely to cause consternation rather than celebration.
Why? While the demand continues, the labor supply problem will go from bad
to worse. According to new information released by the Department of Labor,
the jobless rate among college-degreed professionals is only 1.9% and less
than 4$ for those who have completed high school. Those few who are unemployed
today are unlikely to possess the skills needed most by employers, putting
continued economic expansion at risk.
In the Washington metro area, employers report job vacancies totalling nearly
17% of the work force.
Productivity cannot increase without more skilled workers, and it will be
difficult to hold inflation in check while both salaries and training costs
rise in an increasingly competitive labor market.
Effective recruiting and timely staffing are rapidly becoming critical to
survival for many businesses. Many employers are taking off the gloves and
becoming more aggressive in their recruitment efforts. Increasingly, employers
are resorting to higher bounties to encourage both employees and non-employees
to refer friends and coworkers. Even more alarming are the tactics some companies
are using to penetrate and decimate other companies formerly considered to
be off-limits for recruitment purposes.
Many employers erroneously believe the solution to the labor shortage is to
hire more recruiters. The demand for experienced recruiters is equalled only
by the demand for high tech workers. However, there is clearly under-supply
of seasoned recruiters, further limiting the ability of many companies to
remain competitive in the labor market.
Finally, there is evidence that companies, governments and academicians realize
the severity of the problem and are beginning to lauch new programs to subsidize
training programs to prepare workers with the skills in demand today. Although
it will not be a quick fix, it promises some eventual relief.
Until then, the labor wars will most assuredly intensify.
The Employment Management Association has conducted a cost per hire survey
for the last fourteen years. Over this period of time, despite the ups and
downs of the economy, it has become obvious that there are some simple rules
of thunb that we can use to estimate our recruiting expenses and average costs
per hire.
In the category of Exempt employment, the average cost per hire has consistently
shown itself to be in the range of 18 to 20 % of the average starting salary.
Similarly, the average cost per hire of a Non-Exempt employee as a percentage
of the average starting slary has generally been in the range of 11 to 14%.
Another rule which may prove to be useful for budget planning is that the
total recruitment dollars spent are generally equally divided between recruitment
office expenses - 30%, direct fees, e.g. ads, agency fees, etc. - 30%, relocation
costs - 30%, with applicant costs such as travel, testing, etc. accounting
for the remaining 10%. When relocation is not a factor, then a 45-45-10 split
may apply.
Here are some tips to keep you on course and out of trouble when picking and
purchasing new HR software and technology:
NEEDS ASSESSMENT
1. GOALS. Before all else, you must decide what iti is that you want the system
to do for you. Usually this means you will have to fully understand your current
processes, what's wrong with them, where the bottlenecks are, and what improvements
you hope to accomplish.
2. TECHNOLOGY. It is also important to have a systems professional assigned
to your team to help you understand how systems work, when and how various
systems can be integrated, and to avoid unnecessary delays in implementation
because of technical over-sights during the selection process.
SELECTION
3. RESEARCH. Talk with your peers. Find out which vendors they considered.
Research directories such as Data Source.
4. RFP. Ask each potential vendor to give you detailed answers to your required
functions, not just yes and no responses.
5. SITE VISITS. Visit other companies who are using the system similar to
the way you intend to use it. Ask lots of questions.
6. BUDGET. Meet with your CFO to understand the full cost implications of
the new system.
7. PRIORITIZE. Determine which functions need to be up and running first.
Some complex systems may take years to launch.
8. COMMUNICATE. Change is never easy. Inform everyone involved about what
to expect, when to expect it, and, most importantly, how it will make life
easier for them.
In our February Issue of the Month column, we asked our readers to tell us
what they like and dislike about the cover letters they often receive with
applicants' resumes. It comes as no surprise that there are opinions ranging
from love to hate, and from I-read-every-one-of-them to I-throw-them-all-away.
Clearly, it is a matter of preference. However, it is also enlighteniing to
look at the issue from both perspectives. Here is what we heard:
The pros:
Many recruiters depend upon the cover letter to identify the recruitment source
and the specific job for which the applicant is applying.
Sometimes applicants will include their salary histories or expectations or
other pertinent job requirements in the cover letter, thus allowing the reader
or recruiter to determine the appropriateness of further consideration.
Some recruiters value the cover letter as an indicator of the applicant's
writing abilities. Typos and bad grammar are often easy knockout factors.
The cons:
Many find the free form of the cover letter makes it too difficult and time-
consuming to find the valuable information.
Others complain that these letters are often too general and often simply
summarize what is already presented in the resume.
Many say they will only read the cover letter after reading the resume and
they have determined they are interested in the applicant.
The best cover letters are the ones which tell the reader what he/she wants
to hear. That is, a succinct indication of the job applied for and the source
of referral followed by a straight-forward delineation of the requirements
and qualifications presented in corresponding columns on a single page (usually
about five bullets each). This approach makes it easier for the person who
has to read hundreds of resumes and cover letters to quickly sort the few
hits from the many misses.