December 8, 2021

How Will The Recruiting Gold Rush End?

Hosts:

Episode Highlights

What Happens If Hiring Demand Keeps Going Up?

I
4:12

2 Lasting Impacts Of The Pandemic On Recruiting

I
8:23

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Perspective on the skyrocketing recruiting demand: average recruiter salaries go up 37% this year. And remote work among recruiters went from 50% to 95%. 

There’s probably not a “go back to normal” after this.

It’s not just “The Great Resignation.” VC firms have been pumping more and more money into ‘recession-proof’ tech industries. There’s no end in sight.

But it can’t stay this hot forever. What’s it going to look like when it tapers back? And what aspects of the recruiting field will be permanently changed?

Jeff Smith and James Hornick will break out their crystal balls in the next The 10 Minute Talent Rant, “How Will The Recruiting Gold Rush End?”

Episode Transcript

The 10 minute talent rant is live. I’m James Hornick joined by Jeff Smith and we are on the clock. The 10 minute talent rant is our ongoing series, where we break down things that are broken in the talent acquisition space, maybe even pitch a solution or two. Before we dig in, all of our content could be found on talentinsights.hirewell.com.

Here we go. This week’s topic: how will the recruiting gold rush end? This is a good one. All right. Well let me kind of lay this up a little bit. I’m gonna- I like to assume that everyone following us is very aware of kind of what’s happening in the market, but just in case, this is kind of our prediction show

even though we’re doing another show after this. We realize we’re kind of at that point of the year. All right. Every year, placing perm or contract recruiters at Hirewell at our clients internally is like our number two most frequently done placement. So right behind- so it’s software developers number one every year, recruiters number two. We know what we’re talking about, we do a ton of this.

It’s a huge area of business for us. We pulled some actual data, just to give you some context, like, I don’t want it to say “guys the demand for recruiting is insane” but let’s actually illustrate this. Salary inflation between Q1 and Q3 this year 37% increase for internal recruiters. So Q1 was the average starting salary, all levels, all locations, 86,000. That went to 102,000 Q2.

118,000 in Q3. That’s in two quarters, it made that big of an impact. Secondly, remote hiring. Now this is also key too because this means people just have more choices because the demand is so much higher. So back in Q2, like 50% of the placements we made for internal recruiters were remote. Q3 was 95%.

Like everyone has given up trying to find recruiters that work at a fixed location.

Yeah, I mean, it’s following right behind all of the other trends. We saw it happen really first with the software engineering on the IT sector and now it’s bled into everything else, but specifically for us recruiting. For me, the geospecificity of everything in regards to recruiting, like never really made sense to anyone with half a brain moving

like for the last 10 years, at least. The date- I’m old enough to remember my mentor saying that they literally mailed the resumes back and forth, like postage, you know? They put ads on newspapers and like that’s how small the world was. But like these days of rolodexes and mail and printing resumes out on fancy paper, it’s all over.

And I think the other thing too is like, well, I think firstly, it was always housed in corporate HR. So like everything really was brought down to the level of that, which was like, everybody’s gotta be on site five days a week. Just lots of like, pent-up resentment. Like what are we doing here?

And then the pandemic hits, everything changes. The market hit picks back up. There’s lots of recruiters who probably got dumped two to three months into this thing. And then, boom, they’re the hottest commodity in town. The same arms race that occurred with, like we said, all of these developers, it ramped up and is arguably faster.

And the fastest market on the town right now.

So what’s happening is like you’ve got your on-site recruiters are getting courted by Google, Facebook. They’re getting courted by everyone else in Silicon valley, like our friends over at Affirm and Stripe and places like that. They’ll pay top dollar.

They’ll allow anyone to work from anywhere. And maybe even bigger, more importantly, everyone they’re hiring, they’ll pay top dollar for, because that’s the other missing part- recruiters like a job that’s easy. That’s an easy, I don’t wanna say easy but that’s a very sellable pitch. And if everyone you’re trying to recruit for, you can pay out high salaries and recruit from anywhere,

that’s just a more appealing job to take on regardless of what you’re on comp is. So anyways, yeah.

So we see three ways this, this kind of all plays out, you know. So I guess it begs the question where do you think the chips fall James?

All right. So scenario one is just demand continues to skyrocket. Totally possible.

There are just aren’t enough recruiters to meet demand. There aren’t enough recruiters meet demand now. So I think this actually in this scenario, which is I- where we currently are, if this kind of continues one, the tech enablement, I think the biggest reason why recruiting technology has lagged so far behind,

technology and other sectors, is because there was never a critical need to actually innovate. You know? If you just wind the clock back a little bit, recruiters spun their wheels and everybody was okay with it. Everyone was fine with like- they were the least respected division in a lot of companies.

Their time was spent inefficiently. No one really cared. It’s just the classic “what is, what would you say it is that you do here?” kind of situation. Whatever people they got it done, because it was kind of just out of sight, out of mind. So it wasn’t where the tax men went.

I love office space, office space books.

Well look, you know, now the business is getting impacted like for real and apparently bottom lines matter, which job sit open for six months and like really the only way out of this, if you’re not going to go remote is to overpay. Those are the two main critical levers that people use to make decisions.

Third being like who their manager is going to be. At some point, companies are going to realize that they don’t need to lean on as many recruiters because technology invariably will take some of that time load off. We’re not saying that automation is going to replace the human element of recruiting, but if recruiters are spending less and less time on a spam platform like LinkedIn has become nowadays, you can get a hell of a lot more done and shameless plug time.

Like this is half of the thing that we’re trying to do with our business and build a technology component that’s gonna allow for some of that to happen.

Yeah. The other aspect of this too, is that just more like more remote, less borders, more offshoring? I think that like, as you kind of mentioned before, recruitment used to always be seen as an in-person thing.

There was a thought you had to be on site to be a good recruiter, to meet with the teams. There was also like that local element with like having your Rolodex cause you’re in a small tight-knit community. But I mean, there’s a reason why our placements this year in the internal recruitment space went from 50% to 95% remote. It’s

cause some companies suddenly realize it doesn’t matter. It’s like in, and while we’re remote we’re mostly looking at people kind of around the United States, but who’s to say it even stops kind of at our own internal borders, right? Any like able-bodied human with an internet connection, a computer or particular set of skills can do this job.

Another great movie reference. Yeah. So scenario two, like the demand tanks. This is the opposite of what we just discussed. We’re still in a pandemic after all. I honestly see a mass Exodus from this profession in general, like we’re now benchmarking at least internal salaries. Let’s keep it on the corporate side for one, like inventory is going to want 125, 130, 140K.

Once this market settles or in this case tanks, like, no, one’s going to go back to the 80 to 90K benchmarking, like recruiters are 100% going to take their talents elsewhere. They’re going to move to marketing, they’re going to move to customer success, like those transferable markets.

And then honestly, I do see a world where recruiting goes back to being the second class, you know, corporate citizens. I’ve been around long enough to see this kind of happen once, twice. And I’m not stupid enough to think that it can’t happen again. Yeah. And then finally, like the best recruiters are always going to come back to the external side.

I- you know, it’s where the money can be made and frankly, there’s a ton less headaches.

I think the, issue I have in that scenario, it’s totally plausible that demand tanks, but there’s too many lasting effects of all this that are permanent, right? So even if the demand does like completely take a nose dive, there’s certain things that aren’t really going to change.

Scenario three, which I think is the most plausible, demand incrementally decreases. So it doesn’t totally tank, but kind of reaches an equilibrium. At some point, I believe like the great resignation is going to shake out, right. And I don’t even think it’s, I don’t even think it’s kind of relevant to this, but people are gonna leave their company. That company they left,

they’re gonna have to backfill, that next company they left has to backfill so on and so on. But the issue is there is an ever increasing demand for devs, product types, marketers, sales. It’s just going to continue because if you look back at what’s happened in the last you know year or so, like more and more investment dollars, more and more VC money gets pumped into these kind of recession proof industries.

And they’re going after an increasing into skillsets that there’s already kind of a strain on which is causing the demand for kind of recruitment. So I think no matter what, the demand for recruitment’s going to be far higher than it was pre pandemic, even if things kind of taper back.

Yeah. And even in that scenario, like recruiters recruit. We don’t do swim charts. We don’t do hardcore project management. When volume inevitably decreases based on tech enablement or whatever, you get jumped, you get thrown right back into the slow burn corporate hell of trying to figure out what the heck do you do with these folks?

I have two conclusions come from this. First, I think there will never be a permanent sustained need for high quality, high paid internal recruiters at scale- specifically at scale is what I mean. So you need your course staff, but in those situations where it’s always gonna be a binge based industry. There’s always going to be a binge and there’s gonna be a taper back.

So spikes and slow periods. It’s why the entire external recruitment model exists, right? Secondly, I believe that because this ongoing demand is going to be permanently higher. There’s more fluidity in markets. People are going to change jobs more often now than they ever have before. It’s not going to go back to, I mean, if anything, 10 years are going to be shorter and shorter, people have more and more time to interview.

The classic HiFi contingent models are just gonna be too pricey and just unreliable to actually manage any of these spikes. You know, I think that ongoing successful external recruiting is going to have much more of a consultative approach where they actually can solve the entire problem, which is really what companies want, not just glorified sourcing and resume mills.

Yeah. I mean, it’s why our on demand practice is blowning up. It’s our way of entering the RPO market. We prefer to be with us, but anyone who’s like committed to this space has seen that explode. You know, I’m not going to name our competitors, but there’s plenty of us that have seen our business increase tenfold because of this exact plan.

Yeah. You bring up a good, what is the on-demand market? In case anyone has no idea because a lot of people aren’t even aware of this model. So it’s- I’ll break it down real simple. Internal recruiters get to work for an organization like Hirewell, who’s got a supply of cool ass clients that are always having spiking demand.

So they get to do internal work. They get to work like internal recruiters at the best of times, when they have the biggest kind of project loads and most kind of exciting things driving hiring. They don’t have to worry about the sales aspects of agency life, which is what turns a lot of people off to agency recruiting is the kind of that component.

You being prime example.They don’t have to worry about finding new contracts if they’re a contract recruiter, you know what I mean? It’s all kind of part of the job. It’s all kind of baked in. And then companies get- on the other side, companies get experienced people who can hit the ground running during spikes without having to roll the dice on trying to interview for and find contract recruiters, which can be very difficult to do.

Yeah. I mean there’s comfort in finding a great partner with anything, let alone recruiting services. So I think when customers know where to find quality service and the need that, like they buy it. So I just think that good recruiters love to work on projects that aren’t run of the mill. And it’s why, you know, we’re fortunate to be in a moment right now where we can kind of be a little choosy and we know that that will end, but I do think it’s allowed us to refine like the way that we sell to, to, to your point, show off that consultative side to just filling the jobs as well,

right? So the other thing too is good recruiters are always going to be able to make money on the external side. So I don’t want to say it’s the only reason we do this “recruiters” kinda is-

I mean, isn’t money the only reason why anybody does any job? To be honest.

So like in wages decreased for this market swing, which we touched on before. The money’s going to be back on this side.

So look customer, you don’t want to worry about Mary’s career development after the hiring surge? We’ll hire Mary.

Yeah. In short, that’s your future? Better recruitment tech, more remote, more dedicated service options, less contingent. It’s going to go bye-bye. And if demand really, really, really does tank, then everyone’s going to quit recruiting anyway.

There it is! I’d say we’re short on clock- we’re way over, but who cares? 📍 That’s a wrap for this week. Thanks for tuning into the 10 minute talent rant, part of the talent insight series, which is always available for replay on talentinsights.hirewell.com as well as YouTube, Apple podcast, Google podcast, Spotify and Amazon.

Jeff, thanks again as always. Everyone out there, see you soon.

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