I’m a bit of a nerd. I went to computer camp as a youngster and I build software, I love a good political discussion, and I also geek out on economics, dairy farming (OK, mild digression), and data. So bear with me, as I catapult myself further into nerd-dom and explain a concept that I think may be materially valuable to many organizations who are struggling to find candidates now, or for those who will have a long list of reqs to fill in 2021.
What is recruitonomics?
Recruitonomics is the analysis of candidate supply and demand, jobs supply and demand, and competition for talent, as it relates to a hiring organization’s ability to recruit qualified candidates for open roles, and the price the market dictates they must pay to do so, at any given time.
If you’ve ever taken an economics class, you’ve likely seen a graph like this:
If you think about candidates and jobs in terms of supply and demand, perfect equilibrium exists when the number of candidates looking for work is equal to the number of jobs available in the market. However, of course, that’s never the case because the market in which these exist is fluid, and there are an infinite number of variables that impact supply and demand of both jobs and candidates: the economy (on a micro or macro level), passive candidates vs. active candidates, and any other host of events that can expand or contract various industries, causing ripple effects in consumer demand and supply (not trying to be obtuse here but a global pandemic is one such example).
So where can we see a real example of this?
If we compare and contrast the war for talent in 2019 versus the war for talent in 2020, we see how this plays out.
In 2019, the hardest jobs to recruit for were for tech talent in large urban centers where competition was rampant and VC-backed companies were throwing huge amounts of money at finding the candidates who exist in rarified air to satisfy their most specialized tech roles. In other words, the demand for tech talent was enormous and the supply of candidates lagged far behind. Layer on top of that, many of these companies were hiring in cities like San Francisco, New York City, Chicago or Atlanta, and you realize that competition was stiff. What did this mean for recruiters? If you needed to fill these roles, it was expensive to do so.
Fast forward to the year no one could have predicted — 2020 — and we see complete makeover on the war for talent. This year’s war for talent is all about the e-commerce supply chain. If you are recruiting for warehouse, delivery, trucking or retail roles, you know what I’m talking about. The impact that COVID-19 had was that it changed consumer habits and behavior, but it also changed the demand for candidates in these roles and the supply of candidates needed hasn’t necessarily matched up. This is because of competition but it’s also because of a host of other factors, such as health and safety concerns and public policy decisions, that have changed job seeker behavior and motivation. In fact, if you look at the numbers, there has been a 300% increase in demand for these roles and there is 40% less supply of candidates to fill those roles.
The takeaway from this example is that we, as recruiting and talent professionals, have no control over recruitonomics, we can only control how we react and pivot to these shifting conditions. The other point of note is just that — the ‘recruitonomy’, if you will, is never stagnant. It is a dynamic and changing marketplace and we have to build recruiting strategies and tactics that enable us to be agile in our recruiting strategy.
Why does it matter?
Understanding this concept of how “the market” impacts your ability to get candidates is the first step in building a plan that will stand up to the market and fortify your ability to compete for talent at any given moment.
How does it actually translate into your recruiting strategy though? Well, let me ask you this: How many of you (or your Head of TA or CRO) asked why it’s been so difficult to find candidates, despite a surge in unemployment? Fast-forward to being a student of recuitonomics, and you would be able to explain that even though there has been an increase in the supply of candidates in the market, the demand for candidates has been concentrated in a subsection of certain lower-wage roles, and industries. Secondarily, all of the “available candidates” in the market are not necessarily the right candidates for those roles in which there is increased demand.
So, high demand, high competition, and in concentrated geographic markets (going back to my earlier points on e-comm supply chains, many of the largest players have warehouses near the country’s largest airports). What’s the bottom line? Not only is it hard to get candidates — you have to pay more for them.
At Appcast, we are in the business of recruitment advertising so we are intimately familiar with what the market determines is the “right price” for a candidate, depending on the job or location, or other numbers of factors. And really, the price you pay for a job ad is really a metaphor for candidate supply and demand when in fact the prices are set by a marketplace and that’s what “pay for performance” job ads are all about.
How does recruitonomics fit into my talent acquisition strategy?
So, if you buy (pun intended) that prices are indeed going up to ensure you get people to apply to your jobs, particularly in a high-volume recruiting environment, this means you REALLY need to get a handle on your funnel math. Or, MArTH.
As I mentioned earlier, there are many variables in recruiting that you absolutely cannot control; however, there are also many that you can. If you think about your recruiting funnel in terms of costs and conversions, this is really where you can flex some muscle.
In a competitive labor market, you have two options for changing the results (in other words, finding candidates) you get from your recruitment advertising:
- Spend more on advertising your open positions. Posting jobs on more sites and bidding higher for those postings allows you to reach further and compete harder for the candidates you need. (Side note: You can accomplish this easily and efficiently with a job ad exchange).
- Make changes to your apply process to improve your conversion rate.
For a quick primer on what CPC, CPA, or apply rates are, check out our guide to recruiting terms and definitions.
You may need to put more coins in the top of the machine, to generate results at the bottom. And, if ever you needed to build a case for more budget to fill your open roles, this is the math-fueled, data-driven way to do it.
However, as mentioned above, you can also make improvements to your apply process that will ultimately increase your apply rate (in other words, you get more bang for your buck — for every candidate that clicks on your job, an increased apply rate means more of those people actually apply). Note that this is also illustrated in the equations above — the apply rate decreases from Year 1 to Year 2 — notice how that impacts overall cost.
The single most transformative action you can take today to increase your apply rate is to shorten your apply flow. How transformative? 385% more.
How do you accomplish this?
- Absolute, step 1: Apply for one of your own jobs and time it.
- Only ask the questions you need to ask, when you need to ask them.
- Stick to first name, last name, email address, mobile phone number, and a few knock-out questions.
- If they make it beyond that? Then send a follow-on set of questions.
- Optimize your process for mobile devices.
There are of course other ways you can improve your job ad content and thus, improve your apply rate but at the very least, start with your application time.
The role of data and technology in recruiting performance
Finally, before I finish geeking out on the economics and math and science (oh my!) of recruiting, you’re likely thinking, this is overwhelming and not scalable for all of the roles that I have.
This is where data and technology come into play. We’ve been talking a lot about agile recruiting over the past few months and one of the main tenets of that approach to recruiting is the use of data and technology to both power, scale, and optimize everything that I’ve just talked about. There is an abundance of new tools and tech emerging in the talent acquisition space to help you perform better, engage the right candidates, and be more efficient in your process and strategy.
Data and technology can help you to weather changes in real-time market data, labor shifts in geographic markets, or sudden surges in your hiring needs. At Appcast, we help our clients continue to get candidates in these conditions, with the use of programmatic recruiting technology. If you’re interested in learning more about how we can help you to tackle our current and emerging recruitonomics situation, or you need help digging into your funnel math, or you’d just like to geek out with us over some data, let us know.