By almost every account, the job market has returned to growth mode. The signs are all around us: unemployment stands at 5.5%, up from 5.4% in April due in part to people reentering the labor market; the U6 rate which measures the number of unemployed, part-time workers and those that consider themselves underemployed is down to 10.8%, from a reading of 12.1% just 12 months earlier. Additionally, the number of monthly “quits” – a barometer of professionals that have voluntarily left their job, presumably for another position – was up by 11 % between April 2014 and April 2015.
At the same time, profitability across privately held, tech and non-tech businesses has been expanding on a consistent basis, empowering CEOs with a level of confidence not seen since 2006. In fact, while earnings are expected to decline over 4% in the S&P year over year, private companies’ sales have grown 9.2% year over year, the fastest pace since 2012.
Net profit margins among private companies are at their highest level in five years, hitting nearly 9% YTD, compared to 6% in the comparable period last year!
With this return to growth mode, CEOs and hiring managers have accelerated their hiring. The economy added 280,000 jobs in May and an average of 217,000 jobs/month year to date, while the number of job openings hit an all-time high in April, dating back to 2000 when tracking first began. This increase in demand is also evident within the executive recruiting industry, where 2014 marked a record year for North American and global revenues, hitting $11.7b. On a micro level, our firm is in the middle of its 3rd consecutive record year, on track to more than double our revenues since 2013, and similar trends are evident among our peers. Consistent with past hiring trends following a recession, it is the private, more agile firms that are responsible for the majority of this growth (private companies are responsible for 65% of new job creation).
77% of the world’s former winners of the EY Entrepreneur of the Year award expect to increase their workforce this year while only 29% of large global, public and private companies plan to increase their staff.
– EY 2015 Global Job Creation and Youth Entrepreneurship Survey and the EY Annual Capital Confidence Barometer Survey
Yet, even with this seemingly undisputable upward trend in hiring, and candidates’ greater receptivity to changing jobs, many employers have resisted making the necessary adjustments to their hiring process. During recessionary periods, companies are rewarded for their patience and willingness to diligently sift through hundreds of resumes to identify the few candidates that are qualified for their open positions. It is during these years that companies are in the driver’s seat, weighing a myriad of hiring options, expecting to get 100% of their candidate “wish list” and saving money thanks to falling or stagnant wages. However, as the job market heats up, the pendulum swinging in favor of candidates once again, these “best practices” become limitations, preventing hiring managers from making successful, timely hires.
With the war for talent re-emerging – particularly in functions such as software development, engineering, IT, science and analytics – businesses must now emphasize their employee brand, opportunities for career advancement, and the adherence to a “values-based” mission that connects their employees with the greater good. While “A Players” and skilled professionals have the confidence and drive to change jobs more regularly, they will only do so when their values, business philosophy, and career aspirations are aligned with their potential new employer.
“93% of CEOs say they need to change their talent acquisition and employee retention strategies, but 61% don’t know where to start”
– PwC’s 17th Annual Global CEO Survey