This is a further article expanding upon the insight that I presented at the LEAP TA Life Sciences conference in Boston a few weeks ago where I was proud to present alongside many Talent Acquisition (TA) leaders within the pharmaceutical and life sciences sector. The big reveal in that presentation was the new research that we have conducted in AMS demonstrating that the US Life Sciences sector will see over 1 in 3 jobs vacant by 2030 unless we start to take bold new approaches to hiring and retaining talent. You can read more on that topic here.
As I shared in my last article, the key driver behind our ongoing talent shortages is the high rate of staff turnover impacting all sectors and all geographies. We all know that attrition was particularly high in 2021, few will dispute the reality of the Great Resignation even if they are sick of the term, but evidence shows that attrition has been rising year on year for the last two decades. And that shouldn’t be a surprised given that the notion of a ‘job for life’ seems to be hugely outdated. With inflation now rampant and workers seeking increased salaries to offset the increased cost of living it’s clear that staff turnover will continue to be high for some time to come.
So we need to do a much better job of retaining our existing and highly valuable talent. And in order to do that we need to develop and progress our talent within our organizations. New research just published by LinkedIn (see the link at the bottom of this article) shows that employees who have moved internally (through a promotion or lateral change) have a 64% chance of remaining with an organization after three years compared to 45% for those who have not moved internally.
So how are companies faring when it comes to internal hiring? And given the tough labor market that we’re all facing, are we seeing an increase in internal hiring this year compared to last?
Within AMS we will support our enterprise RPO clients to make more than 240,000 permanent hires this year, across 7 key sectors and in more than 90 countries around the world. That level of hiring activity gives us rich data and real insight in to key hiring trends at a sector and regional level.
The chart below demonstrates how internal hiring, measured as a % of all hires made, has changed from 2021 to this year (January through July 2022):
Given that most sectors and geographies are facing significant talent shortages I’m sure many will be surprised that internal hiring has reduced over prior year. I would suggest that there are a couple of key factors driving this reduction.
Firstly, as I have written about before, most organizations are failing to make it easy for employees to find new internal roles. Only 40% of employees believe it’s easy to find internal opportunities and only 17% felt that their organization encouraged them to move internally. And the key statistic – only a third of employees who searched for a new opportunity in the past 12 months searched internally first.
Secondly, employee and candidate priorities are changing. According to the same LinkedIn report I referenced before, workers confidence to improve their financial situation is declining and, on top of that, remuneration and benefits are the top priorities for candidates. With high inflation and cost of living, it’s little surprise that talent is moving towards roles that offer the greater reward and, unfortunately, it’s often the case that external roles will offer a greater increase than internal ones.
So how does internal hiring differ by sector? As the chart below demonstrates, there are significant variances in internal hiring levels between both sectors and regions.
Please bear in mind that the average internal hiring rate shown above will be influenced by the mix of hiring that AMS performs for clients within regions and sectors. However the data provides some fascinating insights. It won’t be a surprise to see that internal hiring is particularly low for sectors such as Retail & Consumer – a sector in which the large majority of hiring will be made at entry level. More surprising perhaps to see the significant variances in internal hiring between regions. Whilst Retail Banking, for example, has internal hiring rates of 52% in EMEA and 41% in APAC, internal hiring rates in the US are running at just 22%. Indicative perhaps of a lower job level of hiring for retail banking in the US.
I know Talent leaders are always keen for data that helps them compare their hiring metrics to other organizations and I’m sure they will find this data useful. My plea though is for leaders to focus less on the numbers and more on the trend – whether your internal hiring is running at 10% or 30% there is an imperative to continually increase our levels of internal mobility and internal hiring. Doing so will reduce employee turnover and increase value to your business.
We need to transform the way that we approach internal mobility; we need to make it easy for employees to identify and apply for new internal roles, whether they are promotions or lateral moves. We should invest in technology to facilitate the processes, we should empower internal recruiters to better support, we should incentivize managers to progress rather than hoard their existing talent.
These are the challenges that we thrive on in AMS, if you would like to discuss how best to optimize your internal hiring, please reach out to us for a discussion.
As always, if you would like to be notified when future articles are published, please click the ‘subscribe’ button above to receive a link in your inbox.
Employees who make an internal move are more likely to stay at their organization longer than those who stay in the same role.
Before you read this article, if you would like to be notified when future articles are published, please hit the ‘subscribe’ button above to receive a link in your inbox.
This time last week I was returning from a fantastic few days at the LEAP TA Life Sciences conference in Boston where I was proud to present alongside many Talent Acquisition (TA) leaders within the pharmaceutical and life sciences sector. I started my presentation by sharing some insight in to the talent shortages that we’re seeing within the sector in the US with the main assertion being that we will see over 1 in 3 jobs vacant by 2030 unless we start to tap in to new talent pools. You can read more on that topic here.
Alongside the insight in to talent shortages I spoke about how TA leaders measure effectiveness today; I shared the metrics most commonly used and some benchmarks for the Life Sciences sector compared to averages for other sectors and regions. Within AMS we will support our enterprise RPO clients to make more than 240,000 permanent hires this year, across 7 key sectors and in more than 90 countries around the world. That level of hiring activity gives us rich data and real insight in to key hiring trends at a sector and regional level.
Given the nature of the hiring market in 2022, it’s not a surprise to see that overall time to hire (from the point of vacancy approval to the acceptance of a job offer) has increased by 14% from a global average of 50 days in 2021 to 57 days for the year to date. The average time to hire has increased for every region between a low of 8% in APAC and a high of 43% in LATAM as the chart below demonstrates.
The Life Sciences sector has seen similar increases in 2022 over 2021. Global time to hire is averaging 56 days for the first 7 months of this year compared to 52 days for the prior year, an increase of c. 8%. At a regional level the average time to hire has increased by between 6% in EMEA and 32% in LATAM.
At a functional level our data gives greater insight in to the comparable time to hire between roles and regions as the chart below demonstrates. In all regions we see that hiring for ‘operations’ roles (i.e. manufacturing) and ‘sales and marketing’ (i.e. commercial) tends to be fastest. Hiring for ‘IT, tech and engineering’ (i.e. R&D) and Medical Affairs tend to take the longest.
Time to hire is one of a number of metrics that TA leaders use to demonstrate the effectiveness and success of their functions. And it’s an important metric – if you ask your business stakeholders what good looks like when it comes to hiring they will undoubtedly tell you that they want the best talent available as fast as possible (and likely at a reasonable cost). So speed to hire is important.
But if you could demonstrate to your business stakeholders that you can make demonstrably better hires, albeit it in a longer timeframe, I strongly suspect that they would prioritize quality of hire over time to hire.
The metrics I’ve shared in this article are important as operational and tactical measures for talent acquisition. But I would argue strongly that TA leaders need to move beyond these measures towards strategic value measures. And there is no better place to start than with a new definition of quality of hire. More to follow on that point in my next article.
With staff turnover showing little sign of reducing, and companies struggling to get the critical skills and talent that they need, many are increasingly looking at more flexible approaches to identifying and hiring staff. One approach being considered is to allow managers to hire talent in any country that they see fit, often referred to as ‘above market’ or ‘location agnostic hiring’.
The concept of location-agnostic hiring is not new but few companies are embracing it given the myriad of operational challenges that are associated. Those challenges will likely include the processes for posting and advertising for talent across multiple countries, the logistics of recruiters or HR specialists managing a hiring process for multiple countries and the challenges of offering and onboarding new employees in a country for which the hiring manager isn’t based.
Another key challenge of course is cost. Whilst an ideological view may be to say ‘we want to hire the best talent with digital skills and we don’t care where that talent is based’, that ideology may come unstuck if the best talent is likely to cost >300% more than the cost of that talent within an organization today. But demonstrating the value of skills and talent, here’s a truly brave and innovative approach to hiring talent being demonstrated by Airbnb – a commitment to pay staff the same rate regardless of location.
I’d love your thoughts – please join the discussion on LinkedIn.
“We want to hire and retain the best people in the world (like you),” Chesky wrote in an email to staff. “If we limited our talent pool to a commuting radius around our offices, we would be at a significant disadvantage. The best people live everywhere, not concentrated in one area. And by recruiting from a diverse set of communities, we will become a more diverse company.
I’ve written a lot in the last six months about the strategic challenges facing talent leaders. The ‘great resignation’ isn’t a bump in the road, it’s an ongoing trend that started prior to COVID and will continue for some time to come, fuelled by rising inflation and an ongoing quest by workers for greater flexibility. Whilst there is no silver bullet for what is a huge operational and commercial challenge for employers, there are strategies which progressive companies should be pursuing.
Let me describe those strategies by describing my view of the optimal Talent Function of the future. Let’s think of this company as Talent Inc.
Talent Inc takes a skills-based approach to all things talent. They have an Integrated Talent leader who sits on the HRLT and oversees their entire talent strategy including demand planning, internal talent management, L&D and talent acquisition.
Talent Inc has a Talent Intelligence function which can plan the skills that their business will require in the short, medium and long-term. They have also mapped all their existing talent and skills so they know where they have immediate gaps and where those gaps will widen in time. With this insight they can set a learning and development strategy to plug those gaps internally – focussed on upskilling, reskilling, and retaining their great talent for as long as possible.
These efforts mean that the Talent Acquisition function focuses more than internal mobility than other organisations; they place more internal candidates, and the external hiring profile is at a lower level that their competitors. They can focus more than others on entry-level talent and early career hiring. When they do need to search externally for skills, their Talent Acquisition function is empowered by market insight, able to advise the business where future skills can be found and able to tailor their recruitment brand (lets call it Talent Value Proposition) specifically to those skills areas that are in demand. And of course, Talent Inc focuses their pipelining efforts on skills and only those skills that they know are going to be in demand.
TalentInc understands that the long-term success of their business relies on not just hiring job-ready candidates but hiring the talent with the greatest potential to develop, to reskill and upskill in the future. They assess candidates for cognitive agility, they place less emphasis on years of experience and, as such, they are radically shifting the diversity of their organisations through their external hiring efforts.
And TalentInc has a progressive approach to external talent acquisition – the function looks after all hiring whether it’s permanent, fixed-term contracts, whether contractors or gig workers.
This is the talent function of the future and this is how companies will win and retain the best talent. But there are other significant benefits too; by reducing the amount of external hiring required, the TA function is much more cost effective than their competitors. By driving up internal mobility and hiring externally at lower job levels they are reducing their overall payroll costs. And by hiring for future potential, they are baking in these commercial benefits for the long-term.
AMS is helping clients to achieve these ambitions, please reach out to me if you would like to discuss any of the concept I’ve shared here.
Bottom line: in this time of labor shortages, job-hopping, and increase in wage inflation, it’s business-critical to get this process right. Talent Acquisition has become one of the most important priorities in business.
