By Peter Weddle, CEO TAtech
The U.S. Labor Department reported that the country’s inflation rate surged to 7.9 percent last month, the highest rate in 40 years. That benchmark means that the vast majority of talent technology companies – whether they’re a job board or ATS provider, a conversational AI solution or a programmatic platform – are in new and precarious territory. Neither they nor their customers have lived through a period of such rapidly increasing costs and the disruption to business that can result. So, what should they do to protect themselves and their relationships with employers?
This threat is best managed by dividing it into two spheres: internal and external issues and opportunities. That’s right, while inflation does present a very real danger to financial performance, it also creates a potential upside to the companies that deal with it effectively, both within their own organizations and in the adjustments they make in their interactions with customers.
Internal Issues & Opportunities
Rapidly rising inflation will affect almost every facet of talent technology company operation. For example, just as many companies are now planning for a return to the office, it will make the cost of commuting much higher for employees, whether they’re getting to work in their own car or on public transportation. The calls for continuing or introducing a work-at-home option are likely to intensify, as a result, and the company’s decision is likely to be a factor in workforce morale and performance.
Those rising transportation costs will also eat away at the company’s budget for business travel and force much more careful decision-making about which current or prospective customers are visited in-person and which are contacted virtually. There will even be spikes in the cost of such mundane budget items as electricity, internet connectivity, cell phones and marketing collateral, so talking to suppliers now, in advance of any significant price hikes will enable a company to manage those increases more effectively.
Most importantly, Inflation drives up the cost of living, and rapid increases such as those we’re now experiencing drive up the cost of living at what seems like warp speed. The research shows that most of those who have participated in the Great Resignation did so to take advantage of the higher salaries offered to new hires. To retain staff, therefore, talent technology companies should review their own internal wage scales to ensure they remain competitive with those offered in the market.
In addition, the cost of benefits is also likely to increase, so talent technology companies will have to resist the typical counsel of CFOs, who will call for slashing benefits to save money. Indeed, ensuring internal salaries remain competitive with the external market and retaining the benefits to which employees have grown accustomed will enable a talent technology company to refocus its brand to include a powerful attribute: it walks the talk when it comes to caring about and for talent.
External Issues & Opportunities
The customers of talent technology companies face similar inflation issues, but have a different set of opportunities. By proactively recognizing, planning for and effectively managing the impact of rising prices, recruiting teams can establish a model for the rest of their organization. That success, in turn, will help to reposition those teams as true “business partners” – not groups that simply do the bidding of hiring managers, but instead internal centers of excellence that make a real and measurable impact on the bottom line.
First, they will have to adjust the salaries they are providing to recruit and retain recruiters. Demand for this talent has never been higher, and of course, recruiters know that. They see the openings posted daily on LinkedIn and on the job boards they use. And yet, for decades, corporate recruiting teams have not had the priority to petition for higher salaries and better working conditions (such as the option to work from home). Now they do, and talent technology companies can help HR/TA leaders correct the situation by providing current market data on the compensation packages being offered to recruiters in different locales around the country.
Second, HR/TA executives will need to advocate for higher salaries in the other openings their recruiting teams post online. Anecdotal data from the field suggests that, to date, there has been a fair amount of resistance to making such adjustments because the need to do so wasn’t fully apparent or the budget for the position was already set. Now, however, HR/TA leaders can feel the impact of inflation on their own personal finances, so they are likely to be more willing to make the case up the chain of command for an increase in the compensation being offered for open positions. Here again, talent technology companies can help them succeed by providing data on what those increases need to be to advance the company’s prospects in the talent market.
And third, HR/TA executives will have to budget for the increased prices of the talent technology they plan to acquire (e.g., a conversation AI solution) or use (a job board). No talent technology company can absorb the full brunt of the higher costs it is experiencing, so some of those costs will have to be passed on to customers. There is likely to be some pushback on those bigger price tags, of course, but they are likely to be less disputed – or at least better understood – if solution providers have already stepped forward and provided the support described above. When talent technology companies have established themselves as recruiters’ partners in addressing inflation, their price increases are more likely to be viewed as unwelcome but not unreasonable.
Inflation is a multi-headed hydra of issues and opportunities. To be successful, talent technology companies have to act decisively to avoid the bite of the issues and simultaneously step up to capture the benefits of the opportunities their actions create.
Food for Thought,
Peter Weddle is the author or editor of over two dozen books and a former columnist for The Wall Street Journal. He is also the founder and CEO of TAtech: The Association for Talent Acquisition Solutions. You can download his latest book – The Neonaissance – for free at OneStoryforAll.com. And, if you don’t have time to read the entire book, just download this short excerpt of his inspiring message.