3B Analysis: Prices on the Rise
How Inflation Affects the Recruitment Industry
Last week we focused on “The Great Resignation” and more specifically on how it affects the recruitment sector. We showed you that the increased demand for blue-collar workers provided the opportunity for a large number of people to “hop” between jobs with the goal of increasing their income. We also mentioned how savvy staffing firms can exploit this situation in order to increase their revenue.
In today’s article we look at another problem (more of an opportunity in disguise), namely the rising prices and how inflation affects the recruitment industry, as well as how to make the most out of this situation.
Prices on the Rise
For the past decade, the U.S. has had relatively low inflation of 2%. However, the recent pandemic and the resulting massive economic rescue package pushed through Congress changed this. The first reason for inflation is due to the print of $13 trillion (yes, that’s trillion with a “t”). Out of this amount $5.2B was spent for COVID, $4.5B for quantitative easing and $3B for infrastructure. You don’t need an MBA to know that the more money is in circulation, the less valuable it becomes and thus its purchasing power diminishes. This is especially the case when you have such a staggering amount of new money in the system.
The second reason is due to the high demand and low supply of goods and services. If a lot of people want a particular product, naturally the price will start increasing and the buyers will start “bidding” for it. It is something that we see in the markets every day.
So, on one hand we have the Federal Reserve overheating their money printers, while on the other, we have a large mass of people who have delayed gratifications for far too long and thus have saved a significant amount of money… money that they just itch to spend. As you may have guessed it, the industries that will see the highest influx of people once the Covid barriers fall are the leisure and hospitality sectors. The very same industries that had the hardest time during the Covid period and many businesses had to close doors for good.
We happen to find ourselves in a situation where hungry, travel and service-seeking mass wants to remember again what it feels like having a normal life again and for that reason they are willing to pay a premium. It’s not just services that are in high demand, though. The disrupted supply chain has caused an increased demand for products due to low availability.
How Inflation Affects Recruitment
The higher the prices for goods and services, the more pressure is put on the HR and Payroll executives to raise salaries. It’s natural for the workforce to want to get compensated for their loss of purchasing power, as they don’t want to lose the lifestyle that they are so used to. The whole paradox, however, is that by rising labor costs, the profit margins shrink and thus the business owners need to increase their prices again, to reflect for those changes. We get into a never-ending loop of cost increases.
But how does this, as a recruiter, concern you? Well, every business wants to acquire and retain top talent at the best price. High inflation rate along with diminishing workforce (or at least one with higher requirements now) indicates that those companies will need to spend more and be more creative, in order to snatch certain candidates before anyone else.
What Should You Do?
In order to attract the right candidates, either for your company or for your client, you need to apply what we like to call SAMM, which stands for System — Attitude — Money Management. Here’s what we mean:
- System - you need to have a great system in place, which helps you find, track, onboard, vet, comply and forward the right candidates to the right places. This is not done through some mediocre excel or Google spreadsheet. The more complex and transparent your system is, the greater control you will have over it and the better results you will get. As simple as that.
- Attitude - personal relationships are more important than ever. Most people, and especially the talented ones, get bombarded with a gazillion messages and emails every day. Even if you manage to locate the right people, you still need to reach out to them in a creative, polite and warm manner so that you can build rapport. It’s no longer enough to just throw money in someone’s face and say “Come work for me”. You will need to stress the value of the benefits your company provides.
- Money Management - regardless of how good your system is and how charming you are, at the end of the day we all work for money. So when you get to the question of salary and bonuses, remember that cheap is expensive. Very few things and very few times will you come across something that is undervalued. If you want to acquire top talent in your organization, you will need to be willing to open your pockets. Be creative in your approach — tie the monetary bonuses to some tangible benefits like partially paying for a tuition, extra office equipment, covering some part of travel expenses, etc.
While we can’t help you with the first two recommendations, where we can most certainly make a difference for your company is in helping you integrate a state-of-the-art software. 3B Onboarding provides Salesforce native solutions, so you can rest assured that you are truly getting the best CRM in the world with some of the best staffing solutions on the market. To book a demo, feel free to use the Contact Page on our site and we will show you just how powerful our software is and how much more efficient your company can operate.