Build it or buy it? Like other software firms, we at iCIMS face this classic product development question every day of the week. Whatever their industry, whatever the nature of their products, all our customers face this question too – whether they realize it or not.
Every employer faces the question of whether to buy or build its incoming talent. They might not think of it that way, because so much of the time “buy” is the most obvious choice: traditionally, there is a ready pool of labor to dip into, and the employer’s lure of money, work environment, and professional opportunity provides a well-established package for reeling in the talent.
A host of forces now conspire to complicate that formerly tidy model. As most HR professionals are aware, new technologies are changing the way workers engage with potential employers, empowering them to search for both jobs and employee reviews more widely and with av tighter focus. As economists have widely noted, five years of job growth have tightened the U.S. labor market to the point where hiring may be downshifting to a rate consistent with labor force expansion. And for several years now, policymakers and the business press have been bemoaning how secular shifts seem to have reduced the degree of turnover in the labor market, perhaps due to workers lacking confidence about prospects for finding a new job. Finally, there has been much debate about the possibility that skills gaps have been opening up as the workplace changes faster than the education sector.
This state of affairs is particularly trying for small businesses, who often lack the resources to support staff specialized in the increasingly complex area of recruiting. Also, they lack the brand-name recognition that drives much of job seekers’ online search activity. Many seekers may ask themselves why they should take a chance on a lesser-known firm when there is so much information they can gather about larger firms, and when it is so easy to apply for positions with them.
The toll this takes on small businesses is clear to see. The National Federation of Independent Business (NFIB) survey indicates that unfilled openings at small businesses are mounting, along with concerns about a lack of qualified candidates. iCIMS system data indicate small businesses are taking longer than others to fill their positions and have seen a decline in applicants per open position. While these problems might be particularly acute among small businesses, to varying degrees these challenges are common across U.S. employers.
In this environment, buy is no longer the obvious choice. Employers who can’t readily find what they need will have to give more serious consideration to building their own talent pipelines. How can they do this? They can use employee referral programs to draw in more candidates and ensure that those they bring in are more promising, they can cultivate passive candidate pools for just-in-time hiring, and they can grow their next crop of talent by expanding their internship programs. Unsurprisingly, small businesses appear to have some room for improvement in this area. More surprisingly, our data suggest that some of iCIMS’ largest customers may have room for improvement here as well.
That said, in a tighter labor market, all employers need to take a careful look at their operations and search for opportunities to cultivate their own pools of talent.