CHART OF THE DAY: Whose Labor Market is it Anyway?

There is a simple answer to that question, really. 

The candidates run the current labor market, at least for large, (and growing) swath of managerial, professional, and technical roles. 

Check out this week's Chart of the Day, a look at how recruiters see the labor market - candidate driven or employer driven,  courtesy of the MRI Network's latest recruiter sentiment study, (as always, some pithy commentary from me after the chart)

Wow - pretty simple and clear to see how at least this group of surveyed MRI Network recruiters have seen the labor market shift pretty dramatically in just two and a half years.

From late 2011, when the sentiment was that that the power and leverage in recruiting was about an even split between candidate and employer, to one where now these recruiters see about a 4x advantage for the candidates, this shift will have some pretty profound implications for many HR/talent pros.

Quite simply, offers to candidates with desirable, in-demand skill sets are going to have to get sweeter, and they are going to have to happen faster. Digging in to the MRI data you see that the primary reason candidates can't be closed is that they have accepted a different job offer. Sure, there are plenty of factors at play here, but the lesson is that just like in the market for desirable real estate in New York or San Francisco, the market for top candidates is likely to be super-competitive, with candidates holding signifcant leverage and multiple offers.

One more nugget from the data - candidates accepting counter-offers to remain with their current employer are rising. Whether or not it makes sense to even make counter-offers is definitely subject to debate, but the fact that if you don't at least consider the practice for your in-demand talent, you are likely going to find yourself having to replace at least some of that talent sooner than you might have liked. 

Looking back over this data, and the last few Charts of the Day I have posted and it continues to become more clear - job openings are up, employees are more willing to jump for a better opportunity, the competition for candidates is getting more fierce, and the strategy and tactics you were using as recently as 2011 probably are not going to work in labor markets where the best candidates have all the power.

Have fun and be careful out there.

WEBINAR: How Smart HR Pros are Becoming Better Marketers

The next Fistful of Talent (where I am a contributor in case you did not know that), FREE webinar is set and it is a good one - details are below faithful reader.

Kris Dunn and Tim Sackett will present "How Smart HR Pros are Becoming Better Marketers – By Using Company Reputation Sites Like Glassdoor.” on Wednesday, July 30th at 2pm ET, and they plan to hit you with the following topics:

 - How the the yelp-ification of America—the trend towards consumer-based reviews in almost every area of our economy—is changing the way employees and candidates think about job search and employer brands. It’s second nature for your employees to rate a restaurant, a book or a movie online. That means that employees of all types (not just the ones who want to complain) are more willing than ever to participate in your brand through user review.

- Why the explosion of social media and deep coverage of every aspect of our lives through video and photos is changing the willingness of smart companies to increase their transparency.  Every employee and candidate who interacts with your company is a potential reporter, and they expect you to share the good, bad and ugly about working with your firm openly and honestly. Old versions of employment brands won’t cut it—you”re going to have to give up some control to maximize your brand.

- They will cover the 5 Biggest Myths about company reputation sites like Glassdoor and tell you which ones are completely BS and which ones you actually perpetrate by not fully engaging on sites like Glassdoor.  They will hit the usual suspects here: “The only comments are from the bad employees”  and “The salary data out there isn’t factual,” and tell you why things have changed. More importantly, they will hit how you actually may make the myths a reality by not fully engaging on reputation sites.  Think about that last sentence: You’ve got to be in the game to influence the game.

- Last but not least, they will give you a 4-step playbook on how to engage on reputation sites and become more of a Marketer as an HR/Recruiting Pro.  It’s true—you wouldn’t have read this far if you didn’t want to learn more about how to use reputation sites like Glassdoor to maximize your company and your career. We’ll help you get started.

The outside world now has a huge say in how your company/employment brand is perceived, whether you engage or not. We think you should engage.  Join us for “How Smart HR Pros are Becoming Better Marketers – By Using Company Reputation Sites Like Glassdoor” at 2pm ET on Wednesday July 30th and we’ll show you how.

REGISTER BY CLICKING THIS LINK OR FILL OUT THE FORM BELOW!

PODCAST - #HRHappyHour 188 - Live from the NBA Summer League

HR Happy Hour 188 - Live from the NBA Summer League - Featuring The 8 Man Rotation

Recorded Live from Las Vegas, Saturday July 19, 2014

Host: Steve Boese

Guests: Kris Dunn, Lance Haun, Matt 'The Professor' Stollak

This week on a very special HR Happy Hour Show, the guys from The 8 Man Rotation series of Ebooks on Sports and HR made their annual midsummer pilgrimage to Las Vegas to take in a few days of the Samsung NBA Summer League competition, catch a little music courtesy of Soundgarden and Nine Inch Nails, and record a fun HR Happy Hour podcast over a few cheeseburgers.

Steve and the boys talked basketball (of course), but also hit upon many of the angles that apply to non-sports contexts as well, and can be relevant to HR, talent management, and building teams of any kind. The NBA Summer League is one of the great, real-life experiments in talent management and development - you have players trying to learn and acclimate, coaches and on-court officials also trying to prove themselves, and you see played out how team executives talent management strategies manifest in how they try to build their teams.

You can listen to the show on the show page here, or using the widget player below:

Check Out Business Podcasts at Blog Talk Radio with Steve Boese Trish McFarlane on BlogTalkRadio

Additionally, you can subscribe to the HR Happy Hour Show on iTunes, or for Android device users, from a free app called Stitcher Radio. In both cases just search for 'HR Happy Hour' and add the show to your podcast subscription list. 

This was a really fun show, (apologies for the background music and the occasional interruption of the waiters), and many thanks to the guys for participating.

Back to more 'normal' HR content in the next show, we promise!

See you next year at NBA Summer League...

NBA Summer League Part 1 - The Relative Value of Talent

I'm just back from a great 8 Man Rotation trip to Las Vegas to take in a few days of the NBA's annual Summer League and tournament that features 24 teams of rookies, less experienced veterans, and guys trying either to hang on to their NBA dreams just a bit longer, or ones trying to crack that elite 450 or so of players that get to call themselves NBA ballers. It was a super fun trip with the boys, and I will have more on some of the really interesting things we saw, heard, and talked about during the trip, as well as a amusing in a watching a car accident kind of way, HR Happy Hour Show and Podcast I recorded with the 8 Man crew while having cheeseburgers and beers.

In the run up to Summer League, much of the talk around NBA circles was centered around free agent player signings and player movement in general. Most notably, the league's best player LeBron James made the biggest news when he signed to return to his original NBA team, the Cleveland Cavaliers, which set off a chain of events including his former teammate Chris Bosh re-signing with the Miami Heat for a massive, 5 years and $118M. This Bosh contract led to tons of internet chatter about whether or not in the wake of losing James, that Miami was indeed overpaying to keep Bosh, their next most important player from the last four years, to maintain some semblance of competitiveness in the near term.

The problem with most of the 'Miami overpaid for Bosh' takes, (and there are plenty of them), is that they usually fail to address the context in which the Bosh contract was given, and the set of circumstances that make Miami's decision to pay Bosh near the maximum amount allowed by the NBA's collective bargaining agreement with the Player's Association. This contextual factors, also apply quite often to the day-to-day decisions that HR/Talent pros have to make every day when tackling compensation issues - either offers to candidates, counter-offers, (probably a bad idea to even try them, but still), and the nuts and bolts of annual compensation package decisions for existing employees. In both cases, these are the kinds of questions that HR pros and NBA GMs need to think about, plus I will hit you with some of the rationale behind the Bosh decision from which (hopefully) you'll see some parallels to your comp-related challenges.

What's the 'right' salary?

What, in the classic 'perfect information' kind of economy that academics like to talk about, would be the 'correct' salary' for Bosh? This is close to the market rate, but not exactly the same, as the 'market' for any NBA player, as well as for that Ruby on Rails developer you can't find, is never truly perfect.

What would the market value (and actually pay) for his/her role, skills, and ability to contribute to an organization?

This is the classic, 'What did the last 3-5 players similar as we can find to Bosh actually get paid in their last contracts?' question. These numbers create an interesting set of data points that may or may not be relevant to your team. If that last team that signed a 17 and 10 guy like Bosh to an insane contract, does that mean necessarily that you should? Or maybe another team got a relative bargain for a different player (like a Tim Duncan), who at this point in his career is more concerned about winning titles than maximizing his personal earnings, and thus accepted a 'discount' on his deal. Don't think that applies to you? I bet you have lots of employees that turn down 10-20% bumps in salary from competing firms because their 'transaction costs' (moving, pulling kids out of school, learning a new corporate political game, etc.), seems too steep. These employees are probably already giving you the home team discount like we hear about in the NBA. Bottom line, the 'market' doesn't represent you, or anyone other specific firm for that matter. It is just more data. 

What kind of compensation would this person be likely to get from a specific competitor that might be interested in their services?

This piece of 'market' data is much more interesting (and valuable). In the NBA GMs often have to factor in what might happen if a given player like Bosh were to end up on a specific rival team, and how that move might impact competitive balance (and chances to win). Overpaying to keep a player away from a specific rival can happen, and might be one of the few times in the NBA, (and possibly your business too), that tossing money at a problem makes sense from a business standpoint. This takes more insight and effort than simply looking at the 'market' rate, and knowing the compensation and business strategies of your rivals.

What is this person worth to his/her current company or team?

This is the flip side of the last question - what specific skills, capabilities and knowledge of company-specific operations, products, culture, politics, etc. does the person have that are uniquely relevant to your organization, and need to be factored in to the discussion. With James leaving the Heat, Bosh now assumes the role of the team's #1 star, and the Heat elected to offer him a contract reflective of what #1 stars in the NBA are making. He also knows the city, the coaching staff, the other players on the club, etc. There aren't any 'transaction costs' with retaining Bosh, and there is some value in that. There has been a fair amount of research that suggests that in many fields that employee performance degrades when switching organizations. The amount and importance of local, situational understanding of people, process, and culture can provide employees a performance boost that is immediately lost when they jimp to a new organization.

Simply put, Bosh was probably 'worth' more to the Heat than to many other teams in the league, and while seeming to overpay him, the Heat might have made the smart move for their own team.

With Bosh, and with compensation decisions for just about every other important contributor, context matters. 

Off Topic: The Refrigerator Door

On the right is a (partial) picture of my very cluttered and busy refrigerator door.

Maybe yours looks a little something like that too - unless you have one of those shiny stainless steel refrigerators that don't like to cooperate with 'fridge magnets, then chances are there are at least a few things pinned up on the door. click for ginormous view

According to researcher and co-author of Life at Home in the Twenty-First Century Anthony Graesch, families with small children at home have on average about 50 magnets and items tacked up on the refrigerator, (you can see more from Prof. Graesch in a recent interview that aired on CBS Sunday Morning, hat tip to Trish for sending me the link to the video).

That number of 50 seemed pretty high to me, until I began counting up all the stuff I have up on my 'fridge door, mostly mementos from trips or events or airports I have passed through in the last few years.

One funny side note about my door, when I mentioned to my 13 year old that I was going to post something on the blog about refrigerator doors and magnets, he took a closer look at the door and asked, "Why do you still have a picture of you and that MetLife dog up there?"

I replied, "Do you mean Snoopy? That is the dog's name, he isn't 'The MetLife Dog'. He was in Peanuts for about 50 years. You know Snoopy, right?"

"Whatever, Dad. I know him as the MetLife dog."

Welcome to 2014, when stainless steel refrigerators, smartphones, and social networks are eroding the power and majesty of the well-decorated refrigerator door.

And where a generation of kids only knows Snoopy as "The MetLife dog."

Note: I am heading to Vegas for the next four days with most of The 8 Man Rotation crew to soak up a little NBA Summer League action, so the blog will probably be dark until next week.