The flames of The Great Resignation are still raging. Even as the world plunges into a major economic downturn, employees still leave their jobs in droves, including those in senior management positions.
Even before the ongoing talent war set in to complicate matters, organisations were already facing an unprecedented challenge to hire and retain talent.
With the pressure to attract and engage the right candidates aside, organisations are also hard-pressed to strike a delicate balance between keeping talent engaged and hiring quickly.
And then there is also the question of retaining existing talent. While many companies try to follow guidelines to ensure top talent doesn’t slip from their grasp, the process is perpetually ongoing – one slip-up could very well be all it takes to push talent out of their organisation.
This fragile situation is especially true in the face of the ongoing Great Resignation, with at least one-fifth of workers in the global workforce planning to quit their jobs in 2022 alone. Apart from salary, the modern employee is more mindful of other less tangible factors like flexibility and culture.
However, all hope is not lost. Automation technology has emerged as the panacea to the hiring and retaining conundrum, helping organisations streamline their processes to attract and retain the best talent.
In this article, we spotlight a handful of GGV Capital’s portfolio companies that are leveraging automation to solve the talent puzzle. Here’s a breakdown of what we’ll cover:
- Why is hiring talent so expensive?
- Current solutions are unscalable
- How automation solves the hiring and retaining puzzle
- Why GGV believes in hiring and retaining automation
Why is hiring talent so expensive?
Simply because there are so many components that go into the hiring process. When hiring someone new for a given job, you aren’t just filling a vacant slot in the organisation. Here’s a sample list of common factors that go into the typical talent hiring process:
- Salary for the hiring manager/recruiter in charge of talent acquisition
- Job advertisements
- Basic background checks
- IT equipment
- Training courses
- Employee benefits
- New employee signing bonus
- Salary for the new employee
The above list is non-exhaustive. Depending on the needs of the organisation and the role to be filled, we could add other key considerations, such as skill validation tests – these will inevitably add to the overall hiring cost.
And if you outsource recruitment to a third party? That’s an additional layer of costs to your books.
According to a study by the National Association of Colleges and Employers in the US, hiring an employee in a company with 0-500 employees costs an average of US$ 7,645. The Society for Human Resource Management ran another study revealing that the average cost of hiring an employee is US$ 4,129 – this amounts to six weeks of pay at US$ 15 an hour.
In the case of more competitive positions in investment banking or technology, hiring costs get even more expensive, potentially rising by 10x the average.
What about retaining talent?
Compared to hiring talent, retaining talent is significantly more cost-effective. Just as it is important to attract top talent, so is it vital to retain existing ones. This is because losing talent racks up high costs that supersede retaining efforts, with some studies predicting that replacing a salaried employee costs six to nine months’ salary on average.
Assuming a manager who makes $60,000 annually quits, it’ll cost the company $30,000 to $45,000 on average to replace him.
Talent retention is thus essential – conventional strategies suggest implementing clear career/salary progression, flexible work schedules, paid time off, health benefits programmes, and so on. However, as earlier mentioned, this process cannot be resolved in just one sitting – instead, it is ongoing. It has to be adjusted to fit the changing needs of each individual employee.
Given the ongoing nature of talent retention, a dedicated human resources team must take care of this need – this will inevitably rack up additional costs for the overall organisation.
The current solutions are unscalable
Despite the pressing need to hire and retain talent efficiently and sustainably, the current solutions deployed by HR departments in many organisations are unscalable.
The tried and tested classic approach to hiring, which often took weeks or months, has increasingly been abandoned in favour of a speedy system where companies scramble to fill their recruiting funnel with as many candidates as possible.
Some companies took to outsourcing their recruitment to subcontractors based in other countries. And companies that still conduct their recruitment in-house have been utilising various technological tools, such as machine learning algorithms and applicant-tracking software, to fill roles.
But as Harvard Business Review discovered, many of these new practices share a common problem: there is no definitive sign that they have led to satisfactory hires. Without a precise gauge of the efficacy of hiring practices and solutions today, it’s next to impossible for them to scale.
This is especially important given The Great Resignation, which has given rise to a climate favouring job seekers over companies. It’s no longer enough to leave all the strategy and execution to the HR team and the managers – employers need to rethink and revamp their hiring and retaining systems.
How automation solves the hiring and retaining puzzle
This is where automation comes in as a solution to this quandary. As automation takes over the more monotonous segments of hiring and retaining, HR teams and hiring managers are freed up to focus on creating a safe and productive work environment for employees.
Known as HR Software as a Service (SaaS), automation for talent acquisition and retainment has increasingly been offered as a solution by startups across the US, China, and Singapore.
Although each of these startups solves different parts of the hiring and retaining puzzle, one common factor unites them all: the intelligent use of automation to simplify and streamline the overall process.
Tackling the hourly worker problem with automation in the US
Recruitment and onboarding for deskless and hourly workers in the US are perennial challenges. Despite recording high turnover rates, such workers are perpetually in demand to fill roles like cashier and waiter. Getting them onboard is hampered by the continued reliance on paperwork and videos.
Workstream is a startup with a solution to the hourly worker conundrum, using a suite of mobile-first tools to automate the hiring and onboarding processes. With Workstream, employers can set up automated SMS texts and predetermined workflows to reach qualified candidates. Once they’ve confirmed their new employees, they can help quickly onboard them via automated texts to send them important documents like their offer letter and HR vitals.
Homebase is another startup that is addressing the hourly worker challenge. Specifically, it works closely with small and medium businesses (SMBs), helping them manage their hourly workforces in terms of payroll, shift scheduling, hiring and onboarding, communication, and HR compliance.
Directly connecting talents to employers in China
Over in China, companies are always looking for ways to improve recruitment efficiency and upgrade their talent resource management capabilities.
The classic search-based model has a one-dimensional information flow, as employers and employees don’t directly communicate with each other when resumes are submitted and downloaded.
Against this backdrop of recruitment inefficiency, HR SaaS startups like Boss Zhipin and Moka have gained a solid foothold to meet this demand.
In Boss Zhipin’s case, it forms a direct connection between job seekers and employers via an interactive mobile app. Apart from enabling two-way communication between both parties, Boss Zhipin’s app also leverages AI and automation to make intelligent recommendations based on the varying needs of job seekers and employers.
As for Moka, automation is at the heart of its talent management software solution, which encompasses all stages from hiring to retaining. Through Moka’s solution, HR managers can automate many hiring processes, including posting job openings, discovering potential candidates, and managing existing staff. Moka can also track when employees update their resumes – this is often a sign that they are contemplating a career switch.
Eliminating unwieldy manual HR processes in Singapore
Cumbersome HR processes often hinder small and medium enterprises (SMEs) in Singapore – this is mainly the case for SMEs whose workforces are primarily composed of shift-based or part-time workers. This presents a major hindrance to labour productivity, which costs SMEs both time and resources.
StaffAny answers the HR problem faced by SMEs with its automation solution. This solution enables SMEs to optimise scheduling, consolidate timesheets, and boost overall labour productivity. As Eugene Ng, co-founder of StaffAny shared:
“The main pain points we help with include labour cost optimisation, enabling businesses to build a pool of dedicated casual workers to deal with the manpower crunch, and reduce the administrative nightmare of determining how much to pay your staff.”
StaffAny’s solution automates the tabulation of working hours inputted by staff via its app. The app is also able to track staff performance and consolidate end-of-month timesheets.
A more sustainable approach to recruitment
Hiring and retaining talent is a tricky business – now more than ever. While the key challenges surrounding these processes will continue to endure, integrating HR SaaS automation solutions into the employee management workflow will help to alleviate them in the long run.
By addressing and eliminating glaring issues that hamper hiring and retaining processes, companies can focus on managing other vital operations, such as weathering the ongoing economic downturn and startup winter.