It’s important to understand the labour market.

We all know the economy affects unemployment rates. Back in October 2007, the economy was buoyant and unemployment was low. Today, however, unemployment has risen due to a challenging economy.

This may mean there are more candidates available on the labour market, but it doesn’t necessary mean they have the skills you require. Skill shortage remains a constant, especially for specialist jobs, and is not predicted to ease up.

What does this mean?

Major global skill shortages are widely anticipated by industry experts. Prior to the global recession, some predicted America would face a resource shortfall of around 10 million jobs by 2010.

The timeframe may be altered but in the not too distant future, this will affect the New Zealand labour market too. We’re likely to see more recruitment drives from offshore multinationals luring our talent to ‘greener fields’, leading to a greater ’brain drain’ and an increase in migration.

New Zealand’s workforce is also changing rapidly as Generation Y enters the workforce, and employee expectations change.

To combat these challenges, it is essential companies take back some ownership and develop stronger recruitment skills in-house to ensure their sustainability and growth.

Unless you know how to define your job requirement, who your target market is and how to reach out and communicate with them, you’ll be looking at very expensive alternatives.

In New Zealand, recruitment agency fees are typically 15 – 22% of the candidate’s first year basic salary. In comparison, several years ago it was typically 12 – 17%. Get ready for this to climb over the next few years as the cost increases for agencies to source candidates in a skill short market. It’s supply and demand 101!

Research tells us overseas recruitment agency placement fees are typically 20 – 30% – capped at 40%! We are bound to follow suit.

For some, this may be money well spent. But what if the incumbent leaves within 18 months? This is not uncommon in today’s workforce where employee loyalty (especially Gen Ys) is based on “what’s in it for me?” Will you be able to afford to recruit several roles a year?

In-house recruitment

Given the increasing challenges and costs, it seems prudent to invest in in-house recruitment practices. The time to build in-house recruitment knowledge, systems and processes may seem both time-consuming and expensive, and this is a major factor why recruitment is outsourced to agencies. We’ve heard the argument “It’s easier to just write the cheque and get someone else to do it.” It might be quicker and easier but it doesn’t necessarily mean you get the best the result. Instead, consider the ROI in-house recruitment practices can produce, such as decreased time and cost to hire; increased ability to attract and retain top performers; and increased staff productivity and performance.

Recruitment campaign activities are often reactively processed by Hiring Managers because of lack of recruitment skills and knowledge and lack of time. Many do not treat recruitment as a business project as it should be.

Recruitment is not just about filling your job vacancy. It involves spending time understanding why your position exists, defining clear job expectations, understanding and connecting with your target market, maximizing your compelling offer, managing a best practice candidate selection process, making the right hire decision, skillfully transitioning new hires into the business workplace and always understanding your employee needs and expectations.

3 basic steps to get you started:

1. Create and implement a consistent company-wide recruitment process.
2. Provide all Hiring Managers with basic recruitment training.
3. Unbundle your recruitment process and engage third party assistance only where you need it. This will slash your third party recruitment expenditure.

3 recruitment practices you can use in-house right now:

1. Do your own work history reference checks or engage an impartial service to do so for you
2. Implement an exit interview process to understand why all employees leave, especially performing staff so you can address and counteract this in the future
3. Implement an Induction programme to help retain the talent you have worked so hard to employ!

This article featured in Employment Today August 2009 issue written by Kirsten Clark, Founder, Chilli Factor. Chilli Factor’s DIY Recruitment Toolkit helps hiring managers recruit successfully, retain staff and save money!