'Employers have to realize that they don't have the upper hand': academic on Canada's recruitment challenges
Canadian employers are increasingly hiring “underqualified” staff, according to a new report by recruiter Robert Walters, and they are suffering costly consequences.
Almost half (48%) of employers say that budget cuts are the main reason for recruiting challenges. But the problem goes far beyond that of finance, says Jean-Nicolas Reyt, associate professor of organizational behaviour at McGill University.
“Cheap becomes expensive,” he says. “Sometimes having an unqualified person doing a complex job can be so much more expensive than just the little money you saved by not hiring somebody competent.”
The decreasing average tenures of employees is also leading to attrition and constant turnover, Reyt says, “Now you need to onboard people every two years, instead of doing it every four years or every five years. Now you're constantly onboarding people … the people go and they leave with their knowledge and with their skills.”
Top performing employees, task complexity and productivity
A common issue that leads to recruitment problems is the productivity gap which arises when employers hire unsuitable or underqualified employees, Reyt explains.
The productivity that is lost when top employees leave an organisation is costly, even more so now that simpler and more mundane tasks are being outsourced to technology at higher rates, he says. This places crucial importance on hiring right, because more complex work requiring creative thinking and innovation is becoming more vital to an organization’s survival.
“All of these very, very simple tasks, they're the ones that are automated. They're the ones that are outsourced. Now all that's left are the difficult ones, and there is a massive productivity gap,” says Reyt.
“This is why there is such a race to get the really best of the best, because the top five percent, they can make the entire difference between success and failure.”
Organizations have a tendency to underestimate the cost of turnover, Reyt says, meaning they consider the financial costs of acquisition, but they do not consider the cost to morale. “Who wants to be in a place where 40% of people change every year? Nobody wants to be in that place. That's a cost, it’s just nowhere on an Excel sheet.”
Negotiation by quitting: the importance of conflict management
Reyt explains that conflict management is a serious management issue that leads to recruitment challenges, as employees may see quitting as their only avenue for advancement.
“For a lot of employees and employers, if an employee is unsatisfied with the way the employer is treating them, their only way to solve this is to quit and to go somewhere else,” he says. Often when employees do ask for raises, employers counter by requesting a competing offer, further alienating employees who have one foot out the door already.
More often than not, Reyt adds, the employees who are jumping ship for better offers are an organization’s top performers.
“If you have poor management practices, you can't retain people, and so they just quit. The ones who are going to quit, they're not going to be randomly picked, they're always going to be the best ones,” Reyt says. “The reason they quit is because the package is not competitive. That's why they quit.”
The Robert Walter report stated that 71 per cent of employers said they have hired underqualified staff due to budgeting issues, and as many know that their compensation packages aren’t competitive.
Only 37 per cent of employers said they are willing to invest in training new hires to meet the ideal qualifications of their roles.
“The issue is that because you're refusing to negotiate as an employer with your current employees, you're pushing them out, and the new ones, they already know you're not going to be open to negotiating, so what they do is they're very aggressive, and they want to have the best package,” Reyt says.
Employers must realize they don’t have the upper hand
When employers are in the job market competing for talent, it’s an even game, says Reyt – counter to what many employers believe, which is that they are entitled to lowball candidates.
In this environment, this mindset of employers is a losing tactic, he says.
“The top, the cream of the cream, the people who only have successes, if you're lucky enough to have one in an interview, they're going to want to have top salary. They're going to want to have the best benefits. You're not going to get them for cheap,” he says. “Employers have to realize that they don't have the upper hand. It's equal, and you're actually competing with a lot of other employers.”
This power imbalance at the hiring stage can lead to short tenures, Reyt explains. The trick is to discover what a potential employee values highly, and to offer them that as part of their compensation package, he says; “Are you making your offers attractive, or are you just trying to fill the spots with whoever is applying?”
For example, if the candidate has a family or is a caregiver for an older parent, perhaps four-day work weeks and appropriate benefits are valuable. Or, if they want to work remotely, let them, Reyt says.
“The idea that just because we have budget constraints, we can't get talent, that's not the full truth. The reality is, you can still get talent, but you have to be creative. You have to be good at understanding what people really want.”
As a final point, Reyt adds that how they are using recruitment firms is an important point for HR to consider, as the further distance there is from the actual management of a new hire, the more likely it is that they may not be an ideal fit the role.
“At the end of the day, the person who's doing the management should be involved in the recruitment, because they're the ones who know what the job is going to be, but also what it takes to be successful in that job, which is very, very difficult for an HR specialist to do.”
