Expand Your Recruiting Business – Elevate Your Reputation (Part 1 of 3)
Job openings in the U.S. are at an all-time high and competition among recruiters to fill these jobs for clients is fierce even as recruiting firms scramble to fill their own recruiter ranks. In July 2021, there was a record number of more than 10.9 million job openings, and only 6.7 million hires were made. Although job openings will likely decrease over the coming months, with the full U.S. labor market recovery not forecasted for another year or more, there will be plenty of work for recruiters.
In this job market that so obviously favors workers, recruiters must move with the times to secure top talent — especially for in-demand jobs. With a 2.9% decline in median household incomes between 2019 and 2020¹, it’s no wonder candidates are taking advantage of the labor shortage to negotiate higher salaries.
This begs the question: How can you start recommending smart (and fair) salary offers that attract and retain high-quality talent?
It’s not always as simple as basing salaries on past employee pay. Instead, like any successful recruitment decision, the answer lies in using credible data adapted to the current market. Let’s explore this in more depth.
The Need for Accuracy to Grow Your Credibility
Recruiters, like any other brand, need to build a solid reputation stemming from accuracy and credibility. So, in the quest for more clients and successfully landing top talent for them, building this status should be your primary focus.
Whether you’re just starting out in the recruitment game or you’re a seasoned veteran, you’ll likely know that competitive pay and compensation offers in this era of rising wages generate lots of skeptical questions from clients.
To remain credible, you’ll need to justify exactly why particular talent requires a specific level of compensation, whether it’s for a warehouse position or an executive. Vague responses that aren’t backed up by credible sources won’t keep you in good standing with your clients.
As we’ve already hinted, compensation offers need to be based on more than past rates and budgets. The variables that contribute to smart salary offers are often complex and ever-changing — from diversity levels in your local area to graduation and university enrollment rates.
Needless to say, understanding the impact these factors have on competitive compensation rates and explaining this to clients in credible terms is imperative to establishing competitive pay that will enable you to fill the job opening with quality talent. Clients will want to know your decisions are informed and justified. So how do you do this?
Competitive Pay for High-Demand, Low-Supply Roles
Understanding the driving forces behind compensation levels is the first steppingstone to credibility. However, the demand for particular roles fluctuates widely and largely depends on the state of the economy. Because these factors change frequently, your justification for offering specific salary rates will vary, too.
Many jobs right now are high in demand but low in supply. Long-haul truck drivers and retail workers are two good examples. As a result, there’s an overwhelming need to fill the gap. Still, the pool of candidates in the pipeline simply isn’t large enough to mitigate the shortage.
In these conditions, the need for strategic hiring is even more integral — in fact, often, more candidates than you think are willing (and qualified) to take on high-demand, low-supply jobs. However, while the job location, working conditions and other considerations obviously matter, these aren’t the primary factor that encourages applicants to come forward.
Competitive pay is often the solution.
What constitutes “competitive pay” usually depends on local economic conditions — including these main factors:
- Geographic location
- Supply of qualified workers, based on education and experience
- Competitive demand for those workers
- Size and revenue of a company
To propose the right compensation offer for every job opening, you need to consider all the above factors. This means recruiters need to know their local markets inside out and back to front — from job growth, wage growth, unemployment rates and gross domestic product. Simply upping the rate without broader consideration isn’t enough.
The fact is: Unrealistic compensation offers will deter talented candidates from following through with their applications. Moreover, even if you manage to hire the talent you want, uninformed decisions concerning competitive pay often lead to lower retention rates.
The stats bear this out: As many as 64% of workers² would consider switching jobs if approached by another company. When you consider the current market, this is no surprise. Many positions, especially those held by hourly workers, still receive below-average salaries. These workers often report feeling underappreciated, facing inflexible, unrealistic hours and receiving inadequate benefits.
The Solution? Data.
Thankfully, there’s an easier way to stay ahead of the curve. Recruiters can benefit from advanced technology that provides precise compensation recommendations for every job opening based on relevant variables.
Software powered by AI, like LaborIQ®, provides validated data you can use to fuel compensation decisions, helping to eliminate inaccuracies and boost your credibility, reputation and success.
Compensation Answers enables recruiters to uniquely customize compensation packages according to each job title and its industry, company size and company revenue within a specific metro. All this information empowers you to provide a more precise compensation recommendation.
A cutting-edge, data-driven approach makes it much easier to ensure that exceptional candidates aren’t deterred from roles based on uncompetitive compensation offers.
Competitive salaries equal to (or more than) the industry average better enable recruiters to target the most appropriate candidates for a position and filter out those who lack the skillsets their clients are seeking.
Whether you’re displaying your proposed salary in your job description (or not), you’ll need to explain the factors that determine your rates. Understanding salary and supply forecasts, the state of the current labor market and the variables that influence employment rates in your area will better position you as a competitive leader in your industry who consistently brings in top candidates. Considering this stark reality, a data-informed approach is now one of the most important considerations for the modern recruiter.
Parts 2 and 3 are coming soon and will focus on other expansion ideas.