Understanding the Landscape: By the Numbers
By Rishon Blumberg
We are living through an historic shift in job market dynamics. While employers once dictated the ebbs and flows of the market, the script has flipped entirely. Today, after a wild year and a half defined by the pandemic, employees have much more leverage.
What does it all mean for employers?
For HR managers, business leaders, and founders, winning during the “talent exodus” is a matter of embracing new strategies. New circumstances call for new solutions. In this article, we will cover one procurement strategy that really moves the needle. It’s called, Hire Slow, Rent Fast.
Before getting into the Hire Slow, Rent Fast model, let’s briefly review the backdrop of today’s job market. How did we get here in the first place?
Understanding the Landscape: By the Numbers
As of August 2021, job openings surpassed 10M in the United States, which marks the first time this number has been reached in history.
This chart shows the 5 year history of job openings in the US, with a clear pandemic dip (remember all the layoffs and furloughs), followed by a dramatic rise all the way to 10.1M in present day openings.
The thing is, there aren’t even 10M unemployed workers in the US at the moment. In fact, there’s not even 9M. The 8.6M unemployed marks a 1.5M surplus in job openings that simply cannot be filled. There aren’t enough employees to go around! On a macro level, this begins to explain why employees have gained so much power – it’s simple supply and demand.
To drill down further, the pandemic entirely restructured people’s values, priorities, and desires in ways that mostly favored employees. The result is record levels of churn – a trend that only further weakens the power position of today’s employers.
Employees have options, and to stay competitive, employers are being forced to offer rich compensation packages to land and retain top talent. If they fail to do so, employees are hitting the road with little hesitation.
The Employer Conundrum
For employers, today’s landscape might feel like a rock and a hard place. You can either drain your resources and appease top candidates or refuse to take that route and inevitably lose your best employees. Both scenarios present a win-lose.
But some wise companies are saying, “not so fast.” With the Hire Slow, Rent Fast model, companies set themselves up to both optimize resource preservation and successful hiring.
What Is Hire Slow, Rent Fast?
The Hire Slow, Rent Fast model represents a modern approach to hiring full-time talent. The premise is simple: “Rent” expert contract talent to fill key roles while searching for the perfect full-time hires.
The reality is that hiring takes a long time, especially in this job market. Landing the perfect candidate takes patience, and for some companies it might even take a reshifting of the landscape. That is, some companies simply don’t have the resources to compete for top talent in this market. But with a Hire Slow, Rent Fast approach, that’s okay.
By renting contract talent to fill openings at your company, you’re buying time to find that perfect-fit candidate – without sacrificing work that needs to get done in the short term.
Instead of getting tangled up in the rat race of attracting talent in today’s market, this approach offers ease, flexibility, and speed for hiring managers willing to think outside the box with their hiring efforts.
Mitigating Risk with Hire Slow, Rent Fast
We’ve written before about this concept and discussed some of the risks that come with rushing the full-time hiring process. Among these risks are debilitating financial and cultural costs if you make the wrong hire.
As a real world case study, look no further than Zappos estimating that bad hires have cost the company upwards of $100M. These costs too often fly under the radar, or at least remain underestimated by companies that would prefer not to face the ugly truth.
Renting talent, on other hand, buys you time to find the right full-time resource. For those responsible for hiring, this strategy often requires a shift in mindset. As an example, consider the following hypothetical:
You are considerably understaffed for a major development project. The product team has asked for a deliverable in 2 months. As Director of Engineering, you must devise a strategy for ramping up to deliver exceptional work.
Strategy 1: Outdated Hiring Approach
“We need to accelerate our search for those 3 full-time software engineers. Let’s start to schedule more interviews even though the talent pool is a bit weak at our budget. We need immediate help so we will take what we can get.”
Strategy 2: Modern Hiring Approach (Hire Slow, Rent Fast)
“This is not a buyer’s market for hiring full-time software engineers. Finding 3 great SWEs will take months, not weeks. Let’s plug in some expert contract engineers to ramp up our output and meet this deadline. We can continue our full-time search in the meantime without rushing to any decisions.”
Strategy 1 is much like trying to fit a square peg in a round hole. You could force it, but it’s not the right solution. In Strategy 2, risk is mitigated at little cost to the team or company. The contract talent will help get the project over the finish line, and there is no pressure to make great hires on short notice – something that is often impossible.
Renting as a Safeguard to Manage Record-Breaking Churn
Finally, in addition to the financial and cultural risks of making the wrong hire, churn should now be considered a third major staffing risk in 2021 and 2022.
Just because you landed a great full-time hire does not mean they will be staying for the long haul. With upwards of 40% of the global workforce actively considering leaving their jobs, it seems that the longevity of that full-time hire is at risk.
Training, then losing an employee can be devastating for a business, as some estimate the cost to be around 200% of the employee’s annual salary. Just hired an awesome programmer making $250k? Great, but you need to do all in your power to ensure that person stays, otherwise you’re back to square one.
Now, hopefully your company has the retention tools in place to keep your best employees around for the long haul. But we see churn as yet another reason to employ the Hire Slow, Rent Fast methodology.
Closing Thoughts on Renting Talent
The job market is constantly shifting, which means the current landscape likely will not last forever. For employers, this means that perhaps the future holds a more favorable outlook for attracting and retaining full-time talent.
At the same time, much of what the pandemic introduced is here to stay: Remote work, flex time, better work-life balance, heightened awareness around company core values, and a blended workforce of full-time and contract talent. Some of these things permanently removed power from the side of the employer.
If you’re hoping for things to go back to the way they were, you’re likely to be disappointed. It’s time to shift perspective. Successfully navigating this job market as an employer truly requires new, different, and even innovative strategies – all the more reason to consider Hire Slow, Rent Fast.
This article was originally published on TealFeed.