Ready for some sobering news?
Google and Amazon, two of the most iconic and best-performing companies, are among the list of companies with the highest employee attrition rate, according to a recent PayScale report. In fact, their median tenure rates are only a year, the report found.
Now for the elephant in the room: If these high-flying companies can't retain employees with lavish benefits and flexible work styles, who can?
Obviously, modern workers—particularly millennial ones—define "career," "company loyalty," and "benefits" differently than their predecessors. So there's that to consider. But in our research, forward-thinking companies can attract and retain prospects by focusing on the early stages of talent management.
As a reminder, talent management covers three specific areas: acquisition, development, and continuous engagement. While challenges exist in all three phases, many companies struggle at the beginning of the cycle. For instance, they fail to conduct pre-hire assessments and spend insufficient time creating relevant job profiles and competency frameworks.
Skipping these steps, however, almost always leads to hiring and retention problems later on. When that happens, talent costs ultimately skyrocket.
This is particularly true when you consider the already high cost of recruiting and hiring U.S. talent: $3,500 per new hire, according to Investopedia. The cost is even higher and expected to rise when considering the replacement deficit of retired workers, increased competition among employers, and the talent scarcity affecting technology and engineering in particular.
Using SMAC Stack to Enhance Talent Acquisition
To further complicate the issue, talent acquisition itself has changed radically in recent years, brought upon largely by social, mobile, analytics, and cloud technologies (known as the SMAC Stack™).
As a result, roughly half of all U.S. organizations have decreased their spending on recruitment agencies and resources such as Monster.com recently in favor of lower-cost alternatives—including LinkedIn, social media, and CRM tools—to find the best job candidates.
They're also changing techniques. Predictive analytics, virtual workspaces, and video interviews and widely used and aided by SMAC technologies.
Consider TiVo's social recruiting strategy. As a small organization with big recognition, TiVo wanted to create a recruitment process that would attract candidates who exemplified the strengths of its own culture. This entailed incorporated elements of its corporate identity into the recruitment process, along with software that sourced talent from social networks and online hangouts, while allowing employees to easily send job application to Facebook friends.
As a result, one-third of new hires now come through referrals, meeting TiVo's goal of attracting already acclimated workers with similar values.
Cloud-based applications are also transforming talent acquisition and opening the door to pre-assessment testing, which was validated in a landmark study1 that proved a link between economic gains and improved hiring methods. According to the study, a company with 1,000 retail or customer service associates could improve pre-tax profit by $15 million annually while using pre-assessments that contained validity measures, including job profile aptitude, knowledge tests, and other predictors. Today, the cloud puts pre-assessment within reach for most companies by cutting the cost — traditionally $300 to $500 per assessment — by 75% or more.
Analytics, too, are fueling innovative approaches to candidate sourcing. Notable examples include workforce requirements forecasting, attrition analysis, available talent supplies, and successful candidate profiles, including offer acceptance predictions.
Companies that excel at talent acquisition through SMAC technologies understand and can more precisely target their workforce needs. Nike is a good example. When the consumer brand giant recently decided to improve its talent acquisition in China, for instance, the athletic apparel giant used cloud-based recruitment system to extend the reach of its recruiters and agencies. According to HR Magazine, the collaborative system enriched the candidate experience and enabled the acquisition team to better screen and manage a large volume of applications.
Simply put, SMAC Stack recruitment strategies help cognizant companies better connect with modern workers and digital natives, especially millennials. It allows them to attract "best fit" candidates faster, modernize the acquisition and screening process, and even localize the recruitment and hiring process for global organizations.
To effectively modernize the talent acquisition processes — including talent forecasting, candidate assessment, job profiling, and engagement — organizations must leverage social, mobile, analytics and cloud recruitment technologies.
For more information, read the full white paper, SMACking Talent Acquisition available on our SMAC and Future of Work Web sites.
1 F.L. Schmidt and J.E. Hunter, "The Validity and Utility of Selection Methods in Personnel Psychology: Practical and Theoretical Implications of 85 Years of Research Findings," Psychological Bulletin, 124, 262-274, 1998