Traditional hiring is an expensive and time-consuming process. In a traditional brick-and-mortar Fortune 500 environment, complex systems of workforce planning, staffing, performance management, compensation and benefits, HRIS, and on-boarding systems all integrate for a single hire. The process might begin with a competency profile—where key necessary competencies are identified for a particular position, which might include high-level dimensions (like strategic vision or business acumen) or could include practical abilities (like the ability to lift 40 pounds). The company values are often added to this framework for the job description; those identified values are usually the result of a vision and strategy session by high-level leadership.
Compensation and benefits offerings are identified for the job, often the result of comprehensive pay grade systems and thoughtful performance management and incentive systems. The staffing organization identifies key recruiting methods (websites, universities, networking) and gets the job description out there. Resumes come in and costly, complex HRIS systems attempt to do a lot of the time-consuming work of filtering out poor matches. Eventually, a much smaller set of resumes reaches human eyes and more scanning and filtering takes place. And finally, a short list of candidates gets contacted for interviews.
| Interviewing is usually a multi-step process, beginning with a phone screen or a video call. Candidate lists are narrowed again and a smaller list of individuals is brought in for usually a series of interviews. An individual is selected and an offer extended (often with negotiations) until a firm offer and acceptance results. The process isn’t over yet because of background and reference checks (if they haven’t happened already), and then there is on-boarding to orientate employees to their new job and organization. Depending on the level and importance of the position, this can be a larger-scale or a simpler process, but overall, this describes the typical process for hiring a new employee. It is no wonder it is such an expensive and lengthy process! |  |
Interviewing is usually a multi-step process, beginning with a phone screen or a video call. Candidate lists are narrowed again and a smaller list of individuals is brought in for usually a series of interviews. An individual is selected and an offer extended (often with negotiations) until a firm offer and acceptance results. The process isn’t over yet because of background and reference checks (if they haven’t happened already), and then there is on-boarding to orientate employees to their new job and organization. Depending on the level and importance of the position, this can be a larger-scale or a simpler process, but overall, this describes the typical process for hiring a new employee. It is no wonder it is such an expensive and lengthy process!
The Society for Human Resource Management (SHRM) surveyed 2,048 company respondents and calculated a general cost for every hire in terms of money and time.[1] They estimate that the average cost-per-hire is $4,129 and it takes 42 days, on average, to fill a position. Companies have been hiring this way because there is value in a thorough, integrated system in terms of finding the right candidate and the competition for talent can be fierce. However, there is a mismatch between today’s economy and the needs and expectations of the millennial workforce.
In a society where one can reach almost anyone at almost any time, where texts are used for all kinds of significant communication (everything from delivering momentous news to relationship break-ups), the antiquated process of traditional hiring appears slow, tedious, and indecisive. Millennials typically neither expect nor want the heavy process-orientation of traditional hiring because they are more comfortable with systems that are shorter on detail, more responsive, and less intimidating. They value flexibility, open possibilities, and quick decisions.
The gig economy is a natural result of the technological and societal impacts of today’s culture. Workers are hired in a more fluid process with shorter commitments and changing terms. Yet all of the factors described in traditional hiring processes are still needed in the gig economy. Employers still want to find the right fit of values and skills. They still want to filter out a flood of poor resume matches. They still need to offer effective compensation and rewards. They still require some onboarding for new employees and they still need to manage the performance of the worker.
Gig economy employers need new HR systems to meet those considerations. Traditional HR systems are built neither for speed, nor for flexibility, nor for rapid change. They are built to be thorough, to handle massive numbers of individuals, and to reduce risk and liability because employees were traditionally in-house and long-term. Faster, more flexible, more open-ended HR systems are needed that align with employer and employee needs in the gig economy.
[1] https://www.shrm.org/hr-today/trends-and-forecasting/research-and-surveys/Documents/2016-Human-Capital-Report.pdf