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Corporate recruiters (R) gesture and shake hands as they talk with job seekers at a Hire Our Heroes job fair targeting unemployed military veterans and sponsored by the Cable Show, a cable television industry trade show in Washington, June 11, 2013. REUTERS/Jonathan Ernst/File Photo GLOBAL BUSINESS WEEK AHEAD PACKAGE SEARCH BUSINESS WEEK AHEAD 10 OCT FOR ALL IMAGES - RTSRJ2F

Ask the Headhunter: Why recruiters aren’t always good for the economy

Nick Corcodilos started headhunting in Silicon Valley in 1979 and has answered over 30,000 questions from the Ask The Headhunter community.

In this special Making Sen$e edition of Ask The Headhunter, Nick shares insider advice and contrarian methods about winning and keeping the right job, on one condition: that you, dear Making Sense reader, send Nick your questions about your personal challenges with job hunting, interviewing, networking, resumes, job boards or salary negotiations. No guarantees — just a promise to do his best to offer useful advice.

Recent research by the Federal Reserve suggests that switching jobs — and probably employers — is the best way to boost your salary and your career.

But if you’re been solicited recently by recruiters, you know getting a better job and a higher salary is not an easy feat. Let’s explore what the Federal Reserve doesn’t know about how recruiters affect the economy, and why you should stay away from recruiters who waste your time with been-there-done-that jobs and lower salaries.

Are recruiters killing careers and the economy?

The best recruiters and headhunters boost employers’ productivity by identifying discounted and up-and-coming talent to fill jobs those people may not have done before. By stimulating capable job candidates with new, motivating career challenges, insightful recruiters help create value for an employer — and boost our economy.

But untrained, inept recruiters lack insight and foresight. They don’t bother to understand an employer’s future needs or a job candidate’s untapped potential. They look for quick and easy “perfect matches” turned up by automated recruiting algorithms. These keyboard jockeys do little but process resumes whose key words match key words in job descriptions. They add no value. In the end, they kill career growth and job productivity. (See “Why HR should get out of the hiring business.”)

READ MORE: Ask the Headhunter: How to tell a good headhunter from a bad one

Inept recruiters seem to far outnumber good ones these days, and that’s not doing the job market or the economy any good. Companies aren’t filling jobs with the best hires.

New research and analysis from Federal Reserve economists reveal a problem of mismatches between workers, salaries and productivity, but don’t identify and discuss the structural cause of the problem — counterproductive recruiting.

Is the mad rush to fill jobs mindlessly contributing to inflation?

With the Department of Labor reporting lower unemployment and increasingly scarce talent, employers are rushing to fill jobs by relying on methods that yield staggeringly low signal-to-noise ratios.

By design, these systems actively solicit as many applicants as possible for each job. Consider the applicant funnel ZipRecruiter, which exhorts HR managers to post a job on “one hundred-plus job sites.” The ease with which these systems enable and encourage job seekers to apply for any job in a mindless feeding frenzy contributes to a large stack of applications, but only a few solid candidates. Then HR managers, who don’t seem to realize that more is not better, claim to be shocked and cry “talent shortage.”

An employer’s first contact with an engineer, a scientist, a software developer, a machinist, an accountant — anyone the employer needs to hire — is through a go-between who is probably the least likely to understand qualities and characteristics that make the candidate the best hire. That go-between is the person least likely to understand the work and the job. Except in rare, wonderful cases where employers have very good recruiters, it’s an incompetent recruiter.

READ MORE: Ask the Headhunter: The sales trick that helps employers keep job offers low

When matches are made, they’re often undesirable to the candidate. It’s a common complaint: Employers want to hire you for a job only if you’ve done that job for several years already — and they’ll often pay you less. Even when they offer you a raise, the job is usually a lateral move. It’s not a career opportunity or a chance for you to build your skills — it’s just an easy database match.

This seems to be much more than a job-seeker frustration, as there is a tie between wage growth and inflation.

Giuseppe Moscarini, a visiting Yale scholar at the Philadelphia Fed, told Bloomberg that workers who get raises in a tight labor market aren’t fueling inflation because often these raises are a result of their increased productivity.

But what happens when a worker’s productivity doesn’t increase? It’s hard to argue that productivity will increase when job applicants do the same jobs they’ve done for years, without new training or skill development. Thus, it’s worth considering whether contemporary recruiting practices are in fact contributing to inflation and where the failure to make good hires lies.

The failure may be on the front line

Employers look for “perfect matches” between workers and jobs. The assumptions behind this quixotic search seem to be driven by marketing from candidate vendors like Indeed, LinkedIn and ZipRecruiter, who suggest that:

  • Employers can hire without training anyone or allowing time for a learning curve.
  • Perfect hires are best.
  • Talent can be had at a discount.
  • Employers don’t have time to find talent on their own.
  • Every job can be posted to “a hundred-plus” job boards instantly.
  • “Big data” makes perfect hiring possible.
  • More job applicants are better.
  • And so on.

These assumptions push employers into automated recruiting. But when we start questioning those assumptions, we run into those responsible for creating the biggest constraint on hiring the best talent: Inept recruiters on the front line.

Because employers believe they now have “intelligent applicant systems” at their disposal, many dispense with highly trained and skilled recruiters. Employers on the whole have unsophisticated, untrained recruiters who quickly eliminate the best candidates because they’re rewarded for making the easy choices, not the best ones.

I find that when a problem seems complicated, it’s best to start with the law of parsimony: The simplest explanation is probably the right one.

If employers had better recruiters, they’d hire better people, increase productivity and stimulate the economy.

This seems to be what the Fed’s economists don’t know about recruiters and the job market.

Connecting the dots: talent, pay and productivity

The Federal Reserve suggests higher productivity coupled with better career opportunities and higher salaries is better for everyone — and for the economy.

Steve Matthews in Bloomberg Businessweek, deftly puts the jobs puzzle together:

“Labor economists… are increasingly studying how job-hopping Americans drive compensation gains and affect the traditional interplay of low unemployment, wage gains, and inflation.”

It turns out those economists are now focused on what we already know: The surest way to get a big salary boost is to change employers and stretch yourself.

Consider this handful of factoids and data cited by Bloomberg, from economists at the Federal Reserve in Chicago, Atlanta, New York and St. Louis:

  • “23 percent of employees are actively looking for another job on any given week, putting in four or five applications over a four-week period.”
  • “The so-called quit rate, a favorite indicator of [Fed Chair Janet] Yellen that measures voluntary separations from an employer … has almost recovered to levels seen before the recession of 2007-2009.”
  • “Job switchers earned 4.3 percent more money in July 2016 than a year earlier, while people who remained in the same job enjoyed only a 3 percent increase.”

What this means to you

Your best bet to make more money today is to switch jobs. From my own experience and reports from Ask Headhunter readers, I’d say that you also need to switch employers if you want that dramatic pay increase.

But you can and should optimize that bet by making sure the next job you take also enables you to be more productive, improve your skills and accomplish career objectives.

We already know that most recruiters love to stick you into a “new” job that’s not new at all. They don’t get paid to give you a chance at career development — or to help a manager hire for the future. They offer the same job you’ve been doing because you’re the least risky choice for them. (See “Why do recruiters suck so bad?”)

READ MORE: Ask the Headhunter: Top talent wanted to work cheap? That’s an employer problem

There’s no need to train you. You will require no learning curve. You are the safest bet, and if you’re unemployed, the recruiter knows he can probably nab you for less than you were earning at your last job, because you need a job. (A tip for employers: “Why you should offer job candidates more money.”)

So, it’s your job to follow the money. When a recruiter pitches you a re-run job for little or no extra money, suggest he go find a job he’s better at — because he’s not helping you or the employer. He could be killing your career and the economy. Has anyone told that to the Fed’s economists?

Dear Readers: Did you get a better raise for staying in your job or for switching out? What was the percentage raise? Did a recruiter move you into another same-old job, or did he or she help you advance your career? What’s your take on the Fed’s findings and conclusions?

Nick Corcodilos invites Making Sense readers to subscribe to his free weekly Ask The Headhunter© Newsletter. His in-depth “how to” PDF books are available on his website: “How to Work With Headhunters…and how to make headhunters work for you,” “Keep Your Salary Under Wraps,” “How Can I Change Careers?” and “Fearless Job Hunting.”

Send your questions to Nick, and join him for discussion every week here on Making Sense. Thanks for participating!

Copyright © 2016 Nick Corcodilos. All rights reserved in all media. Ask the Headhunter® is a registered trademark.

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