In uncertain times, managers are searching for a sure thing. To bring on a new hire two years ago, bosses interviewed three candidates before making an appointment, according to recruiter Hays. Now it’s about seven. Others say it can go well above 10.
“Confidence in the market is just not there,” said Dirk Hahn, Hays’ chief executive. “Clients are more selective and if they want to hire, they want to find exactly the right person. The process is taking much longer.”
In short, there has been a shift in the balance of power in the labour market back towards the bosses, and not just in the UK.
This contrasts with the hiring frenzy that occurred as the world emerged from the pandemic when employers rushed to fulfil every demand of potential recruits. A London salary while based in eastern Europe? Fine. Working compressed hours? If you must. Extra holiday time? Sure.
Office perks proliferated, staff wellbeing was prioritised, while working from home became normalised.
But cost pressures took hold over the past year as the post-Covid revival abated. Major corporations fired thousands of white-collar workers while impending global elections curtailed public sector hiring.
Some companies have reduced graduate recruitment, something managers normally say they like to maintain even in tough times. Likewise, there have been significant cuts to internship programmes at companies such as Goldman Sachs and JPMorgan.
Labour market churn just isn’t there in the same way as last year. In the UK the share prices of major recruiters have taken a knock, companies are not advertising as many new jobs and unemployment – while low compared with historic levels – is rising.
The jobless rate is also higher in the US, where workers have stopped quitting as they had been doing. Even as lay-off rates have slowed, hiring has too.
Where companies are looking for new recruits, they are taking a tough stance and putting candidates through more hoops, including drawn-out interview processes and labour-intensive assessments – from psychometric testing to preparing elaborate presentations.
In the current market, employers “have the upper hand”, said Lucas Shaw, who advises companies on how to improve their hiring practices. He had recently heard of a 43-stage process for a chief technology officer for a major corporation. Making the wrong hire is costly and time-consuming, so “they all want to reduce risk”, he added.
Shaw himself recently had five interviews for a job at a management consultancy that included delivering a strategy report. The company ended up hiring another candidate for a lower salary while taking his ideas for free. Being burnt in this way is also why he says candidates are nervous and some are so disgruntled that they are pulling out of these processes midway.
LinkedIn is awash with stories about the “homework” – or quite frankly unpaid labour – that potential hires are expected to do for companies. “It’s sold as a way to gauge skills, but let’s call it what it is: exploitation,” said Ives Tay, a Singapore-based consultant specialising in adult education.
The extra work and time needed to complete these assessments is less attractive when the bumper pay raises of a few years ago, at the height of the “great resignation” period of 2022, are much diminished. A 20 per cent increase is worth getting out of bed for, but is 5 per cent when you know in today’s market if you’re the last in, you’re probably the first out if a company’s fortunes turn?
Job-hopping sounds good in theory, but for most people, re-evaluating life goals and curating the ideal career trajectory pales in comparison with being able to pay the bills.
Something else to consider is that how companies access skills is changing and many are turning to bolt-on workers who they hire “on-demand” and on shorter-term contracts, said Sunny Ackerman, at executive search company Heidrick & Struggles. These include independent consultants, executives, project managers and subject matter experts. This way companies can assess if the role or the work is something they need longer term while also testing if candidates are a good fit.
Perhaps hiring is reverting to more usual trends after the Covid-related upsurge in recruiting and the inevitable retreat. But one thing is clear – after a period of workers calling the shots, power dynamics now favour their overlords once again. - Copyright The Financial Times Limited 2024
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