The Talent Acquisition Industry Hits an Inflection Point

Many industries find themselves in a constant “war for talent,” with C-level executives giving top priority to hiring, especially the hiring of candidates who can harness emerging GenAI capabilities. Traditionally, talent-acquisition professionals (recruiters) have played a key role in this process, connecting the right talent to the right company. Over time, however, business leaders, candidates, and even many recruiters themselves have taken an increasingly dim view of the industry. It will be up to recruiting professionals themselves, with help from outside, to reverse this downward trend.

A Critical Role in Hiring

Understanding why recruitment professionals get a bad rep requires a frank and candid assessment of the state of the industry. By aligning on the realities and challenge facing our profession, we can begin to create a vision for how a truly strategic talent acquisition function would operate.

Before diagnosing the maladies of the talent-acquisition industry, let’s explore the roles recruiters play, and why these roles are so important to growing organizations.

First, fully 70% of the current workforce is comprised of passive talent who aren’t actively job searching: Even the most-optimized job posting will reach only 30% of potential talent. Recruitment professionals improve these numbers by proactively reaching out to passive talent (headhunting) to bring more skilled candidates into the hiring pool. Headhunting is particularly useful when dealing with highly competitive markets and skillsets where strong nurturing approaches and clearly communicated employee value propositions (EVP) help attract passive talent.

Once a hiring pool has been identified, top recruiters use their deep understanding of the talent market and the shifting dynamics of supply and demand to guide and manage both client and candidate expectations. They serve as “matchmakers,” introducing the most appropriate candidates to the companies that can benefit the most by hiring them. With a bad hire costing an organization as much as much as $240,000 per hire, a good recruiting function can pay for itself.

Recruiters must also serve as mediators, especially during high-stakes negotiations and the potentially life- and business-changing decisions that accompany them. These negotiations usually take place in emotionally charged and time-sensitive environments where nuances can be lost in translation. And the stakes couldn’t be higher: BCG research that shows 52% of respondents would decline an otherwise attractive offer if they had a negative experience during the recruitment process.

Today, successful recruitment of highly skilled talent requires the participation of recruitment professionals knowledgeable in marketing, sales, psychology, business and organizational strategy, communication, negotiation and, increasingly, in artificial intelligence. Now maybe more than ever businesses need the talent industry — just when the industry itself is in disfavor.

So Why the Bad Rap?

The currently negative view of the industry can be attributed to several factors. Business professionals tend to view recruiters as either transactional hucksters with shady sales tactics or do-gooders who don’t understand the need to drive business outcomes. (In fact, many more HR leaders see their primary goal as helping people rather than helping their employer.)

Nor is a sense of professionalism helped by the fact that external recruiting agencies and internal HR departments are often pitted against each other to fill the same vacancies, a situation that can lead to in-fighting and name-calling. Staffing agency turnover rates of 25% further exacerbate the public’s negative impression of the industry.

Furthermore, many for-profit staffing agencies tend toward a very transactional mindset. Tracked activity, monthly quotas, and revenue based on placements rewards volume instead of relationship-building, while industry tropes such as “recruiting is sales” and “time kills all deals” undermine a sense of professionalism. This mindset fails to promote a keen understanding of business strategy or of the importance of building deep, mutually beneficial partnerships between clients and recruiting professionals.

Transformation As A Joint Endeavor

BCG is already helping HR departments understand how to use Generative AI to augment — or transform — the recruitment process. But machines cannot replace the unique human interactions that typically lead to successful hiring decisions. Humans excel in some areas; machines in others. Humans, for instance, are superior at problem solving, and there is no greater problem to solve than matching the right candidate with the right company, in setting proper expectations and providing informative, effective, and efficient candidate-hiring experiences.

If we are to transform our industry, it will require a joint effort with businesses and candidates. Organizational leaders must seek out recruiters who are business-savvy strategists and experts in the markets they support, who have worked with hundreds or thousands of clients looking for the right hire. They must seek out recruiters who know how to pressure-test client assumptions about required skills; how to bring relevant market intel and viable alternatives to align business needs with the talent supply; and how to hire talent capable of producing 4-8 times more than average performers — that 1% who account for 10% of a company’s output.

Candidates themselves need to think of recruiters as career consultants, skilled professionals who can help candidates frame potential employment or career change in a way that reflects each individual’s unique experiences and personal situation. These recruiters are at the top of the industry because they’ve helped thousands of candidates decide if a job opportunity is the right opportunity. They know how to share market intel, provide coaching on resume and LinkedIn profile positioning, advise on application and search strategy, help with interview prep and offer negotiation, and support resignation, bridge-building, and networking. And they know how to help clients achieve tangible business objectives.

How Can the Industry Help Itself?

Clearly, GenAI (and whatever comes after it) will play a major role in any such transformation. But it will be up to humans to reset expectations on what quality recruitment looks like. Our industry must improve its ability to communicate to our less-experienced colleagues the importance of building relationships and thinking strategically, of mastering the multi-disciplinary skillsets of the truly great recruiters. When we do, we can once again serve as a force multiplier for organizations competing in today’s tight labor market. Whether with an agency or in-house, recruitment professionals must do a better job of passing on the lessons of its best practitioners. Only then will it elevate the profession in the eyes of its candidates and clients.