HIRING CONSIDER THIS GENERAL FINDINGS HR Technology in the Service Industry: Hiring

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1 HIRING OVERVIEW Dependable, skilled employees who can deliver exceptional customer service are crucial to service-industry success; yet 81 percent of respondents do not find it easy to find high-quality candidates. Companies that incorporate a combination of traditional and online hiring processes see an improvement in efficiency, applicant quality and retention, and overall satisfaction. GENERAL FINDINGS Hiring Method by Company Size Large companies are 147% percent more likely to incorporate an online talent Paper/manual Outside consultant or service Other The majority of respondents use manual hiring methods for sourcing, screening and onboarding employees. Overall, more than two-thirds of respondents use paper/manual hiring processes and less than one-quarter incorporate electronic and/or online methods. Because of their typical high-volume and high-turnover business demographic, large companies are 147 percent more likely to incorporate an online talent solution into their hiring tasks than small companies HR Technology in the Service Industry: Hiring

2 Hiring Challenges Hiring Challenges by Company Size Finding high-quality applicants Preventing hourly employee turnover Processing tax credits Managing applicants for open positions Obtaining a sufficient quanitity of applicants Complying with federal hiring regulations Performing background checks Eight out of 10 respondents do not think finding high-quality applicants is easy. Finding high-quality applicants, preventing hourly turnover and processing tax credits are the most challenging hiring tasks for employers. More than eight out of 10 respondents do not think finding high-quality applicants is easy. While nearly one-third of companies use an outside consultant or service to process tax credits, less than 10 percent find this hiring task easy. Uncertain 15% Difficulty with Finding High Quality Applicants Easy 16% Very easy 3% Very difficult 14% Difficult 52% Ensuring hiring compliance and performing background checks pose the least difficulty for companies in general. More than two-thirds of organizations find these hiring tasks easy or very easy. Large workforces, decentralized processes and high turnover increase the probability for noncompliance in large companies; small businesses are less likely to run background checks altogether. Hiring Satisfaction In general, satisfaction with hiring practices is low regardless of company size. Only about one-half of respondents are satisfied with their overall hiring practices and weekly application count. Even fewer companies agree hiring processes are efficient and applicants are high-quality. Overall Hiring Satisfaction Disagree 28% Uncertain 15% Strongly Disagree 3% Strongly Agree 8% Agree 47% HR Technology in the Service Industry: Hiring

3 SOURCING Where and how organizations find talent has an impact on both quantity and quality. Increasing the number of applications a business receives, in turn increases its likelihood of finding highquality talent. Companies are most likely to find new talent through word of mouth and their company website. Respondents who incorporate online sourcing methods generate a higher number of weekly applications, and are more satisfied with applicant quality, than those using traditional methods. Applicant Count Overall, companies would like to receive more applications each week. More than one-third of companies receive fewer than 10 applications per week. Receiving 25 applications or fewer is ideal for small companies. Large companies would like to receive at least 100 applications per week. Applicant Count Satisfaction Disagree 26% Uncertain 18% Strongly Disagree 2% Strongly Agree Agree 45% of respondents use social media networks to source talent. Respondents who incorporate online sourcing methods generate a higher number of weekly applications, and are more satisfied with applicant quality. Management Time More than one-half of companies spend less than five hours per week completing tasks related to new hires, while about one-quarter spend at least 20 hours per week. The average manager in a large company spends more than one-half of a typical 50-hour workweek completing hiring-related tasks. SCREENING Pre-screening applicants helps weed out dishonest or unreliable people, identify the most qualified candidates and determine taxcredit eligibility. Organizations conducting screenings optimize time, increase retention and save thousands in turnover-related expenses. Background Checks Background checks help organizations easily identify candidates who do not align with their values. Most companies outsource screenings or conduct them electronically. Nearly one out of five respondents performs background checks manually, but companies greatly increase their risk for noncompliance, fines and legal issues this way. The average manager spends more than one-half of the workweek completing hiringrelated tasks HR Technology in the Service Industry: Hiring

4 7 6 Paper/manual Background Check Method by Company Size Outside consultant or service None Don t know Hiring Assessments Hiring assessments use proven scientific methods to identify candidates who possess the skills and personality traits specifically linked to service-industry success. Survey results show that one out of five respondents does not implement assessment tests in hiring practices, and that large organizations are more likely to use electronic processes than small companies. Federal and state tax-credit programs can save businesses up to $9,000 per eligible employee. Hiring Assessment Method by Company Size Paper/manual Outside consultant or service Specialized standalone software None Don t know Tax Credit Processing Federal and state tax-credit programs can save businesses up to $9,000 per eligible employee, yet strict paperwork processes, requirements and deadlines make collecting these incentives difficult for service-industry businesses. Managing tax credits manually only increases complexity, yet one out of five companies uses this method HR Technology in the Service Industry: Hiring

5 Tax Credit Processing by Company Size Paper/manual Outside consultant or service None Don t know Less than one-third of large companies report turnover below 25%. COMPLIANCE Ensuring employee data validity and meeting legal-document deadlines are top concerns for service-industry employers. Managing practices by paper/manual processes increases a company s risk for noncompliance through inconsistent data entry, incorrect or outdated form completion, and improper document retention. More than one-half of respondents, however, report using these processes to ensure hiring compliance. Small companies are more likely to use paper/manual methods to ensure compliance than large companies which typically have more resources and staff to invest in electronic processes. The majority of large companies spend $2,500 or more to replace each employee. TURNOVER Overall turnover rates trend toward higher turnover rates as company size increases. Company Size Comparing turnover rates in small versus large companies gives a more accurate view of typical industry trends. High volume and low engagement drive turnover in large companies where less than one-third report turnover below 25 percent. Ninety-three percent of small companies, however, estimate turnover rates below 75 percent. Costs Employee turnover can be tied to soft costs such as customer satisfaction and organizational culture, in addition to hiring and training investments. In general, employee-replacement costs average less than $1,000 for almost one-half of respondents. Replacement expenses rise in large companies, where high turnover only compounds turnover-related costs. More than one-half of large companies spend $2,500 or more to replace each employee HR Technology in the Service Industry: Hiring

6 COMPARATIVE ANALYSIS Turnover Online solutions are more effective than traditional hiring methods in reducing employee turnover and have a greater impact as company size increases. Three out of four large companies using an online talent for hiring processes report turnover below 50 percent. Comparatively, only one-half of large companies using paper/manual processes report equally high retention rates. Process 0 25% % Paper/ manual Online Talent Management Traditional vs. Online Turnover Rates in Large Companies Turnover Rate %+ 38% 23% 8% 6% 5% 37% 39% 2% 7% 5% 13% reduction in turnover * All large companies using a blended approach report turnover below 10. Traditional vs. Online Number of Applications *Assuming a constant distribution rate Process Paper/ manual Online Talent Management Applications per week % 17% 12% 12% 9% 3% 31% 16% 12% 15% 11% 2% % 13% 57% increase in applications * *Assuming a constant distribution rate Companies using a combination of paper and online methods are most effective at reducing turnover rates. In general, seven out of 10 companies that are using a blended hiring approach report turnover below 50 percent and only 3 percent report triple-digit rates. Efficiency -adoption has the greatest impact on background check screening, application, sourcing high-quality candidate and ensuring hiring compliance tasks. Hiring Efficiencies 49% 36% 15% 43% 27% 69% 14% 25% Performing Background Checks Job application Complying with federal hiring regulations HR Technology in the Service Industry: Hiring

7 Survey respondents indicate that incorporating online talent s for background checks find the overall screening process easier than those using traditional methods. Screenings conducted via an online talent are 69 percent more efficient than paper/manual processes and 21 percent more efficient than outside consultants or services. Online hiring processes also generate more applications-received per week than paper/manual methods and increase companies satisfaction with their applicant quality. Satisfaction Utilizing online processes (social media, company website, online job boards) as part of talent sourcing initiatives increases overall applicant quality by 8 percent over traditional sourcing tactics such as print ads or walk-in applicants. Organizations find the highestquality candidates through social media networks, while walk-ins warrant the least applicant-quality satisfaction. In fact, respondents report people sourced through social media are 26 percent higher quality than employees hired via walk-in. Overall Hiring Satisfaction Employees sourced through social media are 26% higherquality than walk-ins. 66% 56% 55% 51% 41% 41% Satisfaction increased by Satisfaction increased by 26% Satisfaction increased by 35% Satisfaction with hiring practice Efficicient hiring process Satisfaction with quality of applicants Nearly six out of 10 companies incorporating online solutions into hiring efforts are satisfied with their hiring across all aspects 28 percent more than paper/manual-users. Adopting online processes also increases overall satisfaction with hiring efforts compared to those using paper/manual methods. ONBOARDING Overview Onboarding typically consists of new-hire orientation and paperwork completion. Employees must complete any business-related paperwork (company policies, handbook) in addition to several legal documents, such as the Form I-9 and W-4. These federal forms and related tasks cause significant confusion, due, in part, to process complexities, retention requirements and regulatory updates. As a result, incorrect, missing or outdated forms can cost businesses thousands for noncompliant hiring practices. Online adopters are 28% more satisfied with their hiring processes HR Technology in the Service Industry: Hiring

8 GENERAL FINDINGS Hiring Method by Company Size Paper/manual Outside consultant or service Other 72% of companies onboard new hires using paper/manual methods. Despite the challenges with paper/manual onboarding processes, nearly threequarters of companies choose to onboard new hires using traditional methods. Similarly, two-thirds of respondents use filing cabinets to manage and store employee documents. Specialized standalone software 14% Document Storage Method 8% Not sure 9% Large companies are three times more likely to use an online talent for onboarding. Companies are more likely to switch to third-party or electronic onboarding processes as they increase in Outside consultant or service 3% Paper in filing cabinets size. Large companies are three times more likely to use an online talent than small businesses. 66% 39% of respondents report spending 31+ minutes to onboard each new hire. Hours-Spent Completing onboarding tasks is not only time-consuming for new hires, but also. Only 16 percent of companies report spends less than 15 minutes onboarding new hires, whereas more than one-third spend 31+ minutes to onboard each employee. Minutes Spent Onboarding Don t know 15% % % HR Technology in the Service Industry: Hiring

9 Nearly one-half of respondents allow new hires to complete onboarding paperwork during business hours on the first day; 43 percent allow employees to complete paperwork prior to their first day maximizing in-store time and training opportunities. Paperwork Completion Timeframe Don t know 9% 43% of companies allow employees to complete paperwork prior to their first day. Completed prior to individual s first day of work 43% Completed during business hours on individual s first day of work 49% Onboarding Challenges As a whole, onboarding tasks are easier for companies to manage than hiring tasks. Tasks are also generally easier for small companies, but become more difficult to manage as company size increases. 6 Onboarding Challenges by Company Size Ensuring data supplied by the individual is valid Meeting deadlines for completion of legal documents Completing paperwork Processing finished documents Storing necessary information Legal compliance is the biggest onboarding challenge for respondents; more than one-half of companies do not find ensuring employee-data validity easy. Overall, companies do not find completing paperwork easy. Onboarding Satisfaction Overall, respondents are dissatisfied with onboarding processes. Small companies are more satisfied than large businesses, where high volume and turnover can compound onboarding complexity and frustration. Companies are most satisfied with their onboarding program s thoroughness, yet less than one-half are satisfied with program efficiency and onboarding practices overall HR Technology in the Service Industry: Hiring

10 COMPARATIVE ANALYSIS Turnover Companies using an online talent to perform onboarding tasks are more likely to report lower turnover rates overall especially below 50 percent than companies using any other processes, including alternative electronic solutions. s have a bigger impact in increasing retention as company size increases. Large companies are twice as likely to use an electronic onboarding process than small businesses, and, subsequently, report better turnover rates. No large company using an online talent reports tripledigit turnover compared to nearly one-third of companies that use a third-party. Fewer than one out of five large companies that uses an online talent reports turnover above 75 percent. All large companies using an online talent report turnover below 10. Efficiency Overall, respondents using an online solution to onboard new hires find tasks to be almost 50 percent easier than those using paper/manual methods. s ease compliance and paperwork challenges more so than traditional onboarding methods. Compliance Efficiencies Respondents using an online solution find onboarding tasks almost easier. 56% 42% 33% 22% 41% 47% Ensuring data supplied is valid Meeting legal document deadlines Ensuring data validity and meeting deadlines the top onboarding challenges for respondents is easier with online talent solutions than paper/manual processes. Even companies using an outside consultant or service find meeting deadlines 52 percent easier with an online solution. Onboarding Paperwork Efficiencies 41% 37% 22% 19% 19% 46% 54% Completing paperwork Processing finished documents Storing necessary information HR Technology in the Service Industry: Hiring

11 Satisfaction Respondents who use an online talent increase overall onboarding program satisfaction, efficiency and thoroughness over all other processes. Companies using online onboarding methods are 85 percent more satisfied with efficiency and 44 percent more satisfied with thoroughness than those using paper/manual methods. 74% of organizations that use an online talent are satisfied with their overall onboarding practices HR Technology in the Service Industry: Hiring