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August 16, 2023

The Future of Talent Acquisition: Four Leading Trends


Talent Acquisition leaders often want to know when recruiting is going to get easier, but the top trends indicate that 2024 is going to be another tough year for recruiting. The challenges we see shaping the future of talent acquisition bring not only new obstacles, but also new opportunities to pivot your recruiting strategy and get a leg up on competitors. Stay abreast of these four leading trends to know what you should prioritize in 2024.

1. Future Recruiting Marked by Tight Talent Markets and Passive Candidates

Competition for top talent continues to be intense. A generationally shrinking talent pool with new Gen Z entrants failing to replace retiring Baby Boomers, historically low unemployment, and near full employment levels will leave few opportunities for easy talent pickups in 2024.

A shift to “Fence-Sitters”: Poachable Passive Candidates

The makeup of available talent is shifting. While the number of active job seekers ticks down from its 2022 peak, the number of fence-sitters—passive candidates open to changing jobs—is surging and will outnumber active job seekers 2-1 in 2024 requiring a recalibration of TA strategy toward sparking interest in otherwise passive talent.

 

A graph showing the relative stability of Active Candidates and the increasing growth of Fence-Sitter talent over the past fiscal year.
While the percentage of Active Candidates has remained relatively stable over the past year, the percentage of “Fence-Sitters” is growing.

 

How economic uncertainty + recession threats impact this trend These factors could shift the balance of power from candidates to employers: Overextension by the Federal Reserve to bring down stubborn core inflation Uncertainty on the impact of the resumption of student loan payments on consumer confidence Possibility of a Fall U.S. government shutdown

 

2. TA Confronts the Generative AI Arms Race 

Job candidate use of generative AI in recruiting is already outpacing TA strategy and will accelerate and become more sophisticated with time.

Over half of job candidates report experimenting with Generative AI, while fewer than 1 in 4 TA teams have a comprehensive generative AI strategy.

The use of generative AI by TA programs is currently in a nascent stage. Many recruiting teams are beginning to experiment with generative AI, but adoption in recruiting practices is—for the moment—slow. Only 14% of employers report a plan to stand up generative AI in recruiting processes in the next 6 months.

Innovative TA teams can catch up to candidates and get ahead of competitors by acting now to develop a generative AI strategy for: 

  1. Responding to candidate AI use – including a system for evaluating the threat posed by different candidate use cases and appropriate recruiting responses 
  2. Systematically integrating generative AI into recruitment – including the strengths and weaknesses of AI, and where to integrate human oversight with generative AI use to speed processes and maintain legal compliance

Get our 8-step process to integrating generative AI into workstreams to maximize potential while recognizing limitations.

 

3. Companies Lean in on Skills-Based Hiring

A highly competitive labor market, DEI mandates, and needs for highly technical talent are pushing TA leaders to reimagine their approach to defining roles and recruiting for them in 2024.

Early adopters of Skills-Based Hiring are already seeing returns: 

  • 90% of companies using SBH see a reduction in time-to-hire, with 4 of 10 filling roles 25% faster.
  • A third of employers using SBH reduce cost-per-hire by over 25%.
  • 3 in 4 companies using SBH report a 10-25% increase in diversity hiring.

Two effective frames for Heads of TAs successfully making the case for Skills-Based Hiring:

  • Position skills-based hiring as a solution to a problem (e.g., filling long-standing reqs, filling highly technical roles, increasing workforce diversity)
  • Frame skills-based hiring as continuum rather than binary. Highlight small, incremental changes the org can make to become more skills-based (e.g., changing degrees from required to preferred, introducing pre-assessments to screen talent, creating standardized interview guides, trialing skills-based hiring with one requisition rather than whole business line) rather than framing Skills-Based Hiring as an org wide change (i.e., we are or we aren’t skills-based).

 

4. The New Labor Movement: Planning for Activist Talent

Dissatisfaction with pay, benefits, and backlash over corporate policies during the pandemic are fueling labor disruptions. 

Strikes (or threats of strikes) are more widespread in the last two years (2022-2023) than the last two decades with notable impacts in the retail, education, food services, transportation, technology, manufacturing, airline, and media & entertainment industries

Separately Gen Z entering the workforce is sparking conversations about improving company culture, DEI, work-life balance, and company values. Compared to before the pandemic, there has been a 40% increase in employee-led activism, where employees are pressuring companies to take meaningful, positive action on the issues that are important to them (e.g., LGBTQ+ rights, reproductive access, environmental awareness & preservation).

 

The state of the recruiting market will be highly impacted by these four trends. As a Talent Acquisition leader, you should keep these trends top of mind as you begin your 2024 strategic planning.

Discuss how these trends should impact your unique recruiting strategy

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