Workforce planning uses a blend of hard data, human intelligence, and management intuition to accurately forecast upcoming recruiting needs. While the process is vital, a challenge to forecasting efficacy is general economic trends that don’t always jive with the labor market trends.
This can make projecting employee retirement or turnover rates and swings in the labor pool difficult. Tracking labor market trends to proactively predict changes and comparing your company’s historical experience to those changes can increase forecasting accuracy and recruitment strategy effectiveness.
A new Employment Trends Index (ETI) developed by The Conference Board synthesizes data from eight sources to predict swings in the labor market. Since the labor market usually contracts before the general economy and recovers earlier, the index is helpful in spotting changes and explaining variances to senior leadership.
“I think this type of data always helps talent acquisition leaders become more strategic and less tactical in their planning,” says Kevin Wheeler, president of Global Learning Resources.
“The individual index components may also point out potential sources of employees. For example, increases in the number of working temporary employees might point to hiring opportunities within the temp workforce.”
In developing the ETI, The Conference Board states that they plotted back to 1973, and the index accurately signaled every rise and fall in employment over the last 35 years. On average, it leads employment by six-to-nine months at peaks and by zero-to-three months at troughs.
If recruiters have the data and the resources, they can compare their company’s historical experience to the index to see how employee longevity, turnover, and wages have been impacted by the trends and then use the information to forecast similar rises and falls in the future.
Wheeler suggests that talent acquisition leaders review macro labor market data once or twice each quarter to anticipate changes and then integrate the information into the long-term strategic planning process.
The review may also be helpful in gauging the mindset of candidates and then adjusting your company’s build versus buy recruiting strategy.
“When the index is trending downward, it may be very hard to lure passive candidates, and so expenses geared toward executing a buy strategy may not deliver a return and time-to-fill may increase,” says Mitzi Adwell, talent management practice leader for The Newman Group. “Recruiters can anticipate the market and adjust their talent acquisition strategies by watching the trends.”
The components of the ETI:
- Percentage of respondents who say they find “jobs hard to get” (The Conference Board Consumer Confidence Survey)
- Initial claims for unemployment insurance (U.S. Department of Labor)
- Percentage of firms with one or more jobs open (National Federation of Independent Business)
- Number of employees hired by the temporary-help industry (U.S. Bureau of Labor Statistics)
- Part-time workers for economic reasons (BLS)
- Job openings (BLS)
- Industrial production (Federal Reserve)
- Real manufacturing and trade sales (U.S. Bureau of Economic Analysis)
The Conference Board will publish the ETI monthly at 10 am ET on the Monday that follows each Friday’s release of the BLS situation report. A release schedule is available online.