The problem with increased hiring

It’s hard to open a newspaper these days without reading of the strong confidence among employers. A host of surveys have highlighted the so-called “cautious optimism” now developing in hiring markets throughout Asia, with a majority of employers indicating a plan to expand their headcounts in the first part of the New Year.

This is great news for the economy; and for workers – who can expect increased demand to flow through into pay rises and bonuses. But it could also spell danger for HR professionals that haven’t kept their house in order.

The HRM team ventured into the Singapore recruitment space last month, as it also did in January 2009. The change in both volume and quality of candidates has been remarkable – with far more experienced and able jobseekers looking for new roles in this post-recession climate. What’s more telling has been that for the vast majority of résumés received, the latest period of employment is dated “… to present”.

In stark contrast to HRM’s candidate-search last year, it’s not just the unemployed that are now applying for advertised vacancies.

Instead, Asia appears to have a vast army of turned-off staff. They’ve waited out the economic downturn in their present positions and are now confident enough with their immediate job security to search for something new. And employers – having held to their own wait-and-see strategy last year – look set to reciprocate.

While total employment is expected to grow in all markets, experts still predict some amount of “merry-go-round” activity, with firms effectively swapping staff among themselves. There’s no real productivity gain for any of the organisations, but each pays out a great deal of time and resources in securing new staff to replace those that had grown tired in the same position.

There is also the lost knowledge and training invested over the course of each staff member’s employment. All those organisation-specific routines and procedures will need to be taught again.

And finally, organisations also lose value from their future plans and strategies. Where departing employees have had earlier input and buy-in into the organisation’s direction, taking that person out of the equation can only have a negative overall effect. The Corporate Executive Board, an international forum of business leaders, sums up this phenomenon well. “There exists quiet, yet dangerous, disengagement among companies’ best employees – which means most strategies are built around those most likely to leave.”

Each of these factors adds up to a significant impact on both direct finances and overall productivity. “The average organisation faces an imminent 7% productivity loss from the combination of departing top talent and under managed recruiting pipelines,” the Corporate Executive Board notes in its Executive Guidance for 2010 report. What’s more, those most likely to fly the coop are those that organisations desperately need to stay. “Over the past six months, high-potential employees expressed a 13% increased desire to leave their company within the next year, compared to no change in this desire for non-high-potential employees.”

For many staff and organisations, the damage may already have been done. If disengagement has passed a certain point, it can be difficult to pull the staff member back into the fold. But there is still time to begin instituting a strategic response to minimise the fallout of any departures.

The Corporate Executive Board is advising its members to look closely at their attrition rates, particularly among high-potentials. It says it is essential to keep recruiting pipelines full, meaning applications for open positions are also assessed for other potential roles. At the same time, HR should work with line managers and peer groups to keep employees focused and build, or rebuild, morale.