Welcome to the Talent Economy
March 7, 2012
Like many functions in the organization, the way in which companies identify and recruit talent has changed more in the past 10 years than it did in the last century. According to Jobvite, 89 percent of companies planned to use social media to recruit in 2011, a source of talent that didn’t even exist at the start of the century. This trend has big implications for both the recruitment profession and the ways companies compete and win overall. But what forces are driving this change, and what can we learn from the companies pioneering this age of recruiting?
Over the past 100 years, there has been a fundamental shift in the way companies compete. Historically, the market winners were those who had access to capital and financing. With capital, you could build the biggest plant, make the largest IT investments, or run the most impactful marketing campaign. Capital was important because size, not speed, was how companies won. Today the basis of competition has switched, as technology and the global economy both continue to accelerate the rate of change for businesses worldwide. While in the 1920s and 30s companies could expect to stay in the S&P 500 for 65 years, by the end of the 1990s this tenure dropped to 10 years.
In a world where speed wins, talent is the critical asset. A high performing workforce can see what is on the horizon, reacting and adapting to the environment before the competition. Even in a world of high unemployment, high quality talent has never been in such fierce demand.
At the same time, the tools and services available to professionals to help them take charge of their own careers have never been so prevalent, or so powerful. Professionals have flocked to online networks like LinkedIn, built their professional brands, connected to their peers and, critically, are updating their profiles even when not looking for a job. For the first time, recruiters have access to quality information on passive talent at scale. This has vastly increased the potential candidates available to recruiters beyond the minority who are active job seekers and, according to a recent LinkedIn study with Lou Adler, make up a mere 17 percent of all professionals.
These two trends have come together to change the face of recruitment, and are shifting the recruitment function within the organization. With talent as the critical factor, the best recruiters are becoming strategic assets to the business, and the leaders of talent acquisition close advisors to their executive team.
We recently announced that there are now more than 9,000 companies worldwide using LinkedIn Hiring Solutions: companies like Wal-Mart, which was able to source and on-board an entire senior team in Asia in two months, and companies like the communications provider Polycom, which saved $3.1 million in one year by recruiting through LinkedIn. These companies all offer some vital lessons on how to embrace these trends.
Passive candidates require an active recruitment approach
Recruitment has always been part sales and marketing, but the use of these techniques is becoming more pronounced. Marketers don’t wait for customers to come to them; they establish their brand and their proposition and court customers, establishing long term relationships. The most successful recruiters are now taking a proactive approach when it comes to using professional networks. It’s now possible to identify the best potential candidates, even if they’re not actively looking for a job, and to establish a pipeline of talent ready for when it’s needed, enabling a company to react faster to market forces.
Build the brand
Passive candidates don’t need a ‘job’, they already have one. Passive candidates need to be offered opportunities which will allow them to change the trajectory of their career. This raises the bar and makes employer branding more important than ever before. Companies are addressing this challenge in two main ways. Firstly, active targeting of messaging to specific member groups enables companies to take their employer brand to the sort of top talent that should be working at their company. Secondly, passive employer branding means creating places where candidates can discover your values, culture and learn more about what it’s like to work at your company from people in their network. Just take a look at some of the two million Company Pages on LinkedIn where companies are doing this today.
Every employee is a recruiter
For many companies, referrals have always been the best source of high quality candidates; smart people usually know smart people. But today, social media offers an entirely new way to tap into that hard-to-reach source of candidates. In February, the top 10 companies in the FTSE 100 shared just under one million LinkedIn profile views. That’s potential candidates visiting the LinkedIn profiles of their employees. Smart companies are beginning to realize that the people looking at their employees’ profiles often fit the same demographic as those they want to hire: they work in the right industry; they studied alongside their existing employees; and they work at competitors or suppliers. Since they already know someone at your firm, there is a human connection that makes them more open to a career discussion. Recruiters are putting in place recommendation and referral programs to make use of this huge increase in referral efficiency that online professional networks create.
These insights point to an opportunity for recruiting to elevate itself to a more strategic part of every company. When recruitment teams hire great talent, they can fundamentally impact the DNA of the organization on a level that no other function can.
By some measures, there are up to 640 million professionals worldwide and 3.3 billion people in the global workforce. Imagine if each professional were connected online via their own network of contacts, able to tap into connections of connections, uncover insights and opportunities which otherwise would never have revealed themselves. Increasing efficiency in the job market on this scale could positively impact economies, not just the companies operating within them. There would be no reason for a job to go unfilled, and there would be no reason for a professional to be unfulfilled in their career.
Already 150 million professionals have chosen to join LinkedIn, but we’re only getting started. Together we can transform the way people pilot their careers, the effectiveness with which companies acquire talent, and the competitiveness of industries. Welcome to the talent economy.