Market trends

“We are hiring but candidates keep dropping out of our process. What do we do?”

Candidates are dropping out at all stages through the interview process. So what is happening, why and what we can do about it?

Over the last couple of weeks, I’ve been asked this question by hiring managers and talent acquisition specialists on more than one occasion. The recurring theme is that vacancies are attracting high-quality applicants, but candidates are dropping out at all stages through the interview process, and unexpectedly turning down competitive offers. And we are seeing these same themes in recruitment processes across our business too.

So what is happening, why and what we can do about it? The below examples are real-life actions candidates have taken whilst in processes, and we have changed the names of those involved.

What candidates are doing

Turning down offers to stay at their current firm.

One of our candidates Molly for this example - came to us wanting to leave her current firm, a relatively sleepy but large asset manager, whose culture she hated and where she’s experiencing no career progression. We introduced Molly to a very successful $3bn credit fund where there is lots of headroom to progress, who then made her a strong offer but she turned it down to stay put.

Declining offers only to accept roles that don’t align with their long-term motivations.

We were referred to ‘David’, a Senior Investment Banker, by another candidate. After being paid poorly for the last couple of years, he wanted to increase his earning power. After various stages in hiring processes, David was offered two roles. One was with a boutique investment bank where there was a significantly higher compensation potential over the long-term and a slightly higher total comp for year one. This role would position him as a sector lead. The other offer was a number two slot in the investment banking team of a commercial bank which had a slightly higher base salary. He opted to take the latter.

Negotiating offers in a way that seems illogical.

‘Diego’, a Financial Controller, pushed back on an offer of $150k base plus $30k bonus to ask for $160k base in exchange for a lower bonus of $5k. He would rather have less cash paid earlier than earning more but paid later.

Withdrawing at late stages to pause their search.

‘Janet’, a Private Credit Associate, was in several interview processes but put everything on hold saying that she just didn’t know what she wanted. She has since started applying for business school.

These examples are the most visible because they are outcomes. We are also seeing some aligned behaviors through the recruitment process including:

  • buying time in order to think,
  • focusing on the negatives rather than the attractions of the opportunity,
  • asking us to game unlikely “what if” scenarios,
  • engaging a much larger number of outside advisors – parents, mentors, colleagues – in order to crowdsource opinions on their prospective career choices. Molly’s father’s response to her intending to accept the offer was “Are you CRAZY? You need to stay where you are”.

But why?

It’s notable that we haven’t seen candidates reneging post-acceptance, and this perhaps points to the key driver behind these features of the current recruitment landscape – fear. The world is more VUCA – volatile, uncertain, complex and ambiguous – than ever and candidates don’t like it!

I’ve been in recruitment for almost two decades and have closed my fair share of candidates. These trends are giving me 2009 vibes: candidates were turning down buyside roles to take jobs with commercial banks, and at least two candidates I knew left finance to become plumbers because “you’ll always need one”. They were looking for stability, certainty, simplicity and clarity.

For many job-seekers, this downturn is the first they’ve experienced. Those of us who were working through the Global Financial Crisis (GFC) or earlier crises, have been benefiting from a buoyant labor market for such a long time that our memories of career destabilizing and rejection during these periods have faded. There was so much fiscal support through COVID that its impact on the job market was too short-lived to cause panic. But now it is a big shock to see wave after wave of layoffs, to know more than one friend to be out of work for months on end or to have family members worried about making ends meet. Whether the anxiety is new, or a resurfacing of those old 2008 wounds, the impact on job-related decision-making is very similar.

When we consider candidate behavior through the lens of fear, these decisions seem far more rational and acceptable, but what can we as employers do about it?

Become a safe-haven employer. Admittedly this is a long-term solution that won’t have an impact now but it will help you next time there’s a downturn. And there will always be a next time. Building strong brand recognition amongst undergraduates is something that Dartmouth’s Early Careers team does for their clients, raising the profile of ambitious younger and smaller firms to cement their brand in the minds of the talent they’ll be hiring in the years to come. The Group’s Classroom to Boardroom Foundation has a different mission but can generate similar outcomes from an earlier starting point of schools instead of young professionals.

Give greater certainty to candidates at offer stage. Offering a higher basic salary might seem like a blunt instrument, but it’s one that can give you the edge against a competitor in this sort of market. A tried-and-true method that the entire banking industry adopted post-GFC, this can move the dial significantly in your favor. Offering sign-ons (with a claw-back) rather than guarantees can have the same impact.

Show the candidate that both you and the organization want them. The impact of market uncertainty on clients is to slow down recruitment processes. This can send the message that you’re not interested, so it is important for you to have regular, and personal contact with the candidate through the duration of a recruitment process. This can be from yourself or using an intermediary such as Dartmouth’s recruitment team. When you are interested in a candidate, ensuring that you are direct about this can help them overcome the fear of being “last in first out”. Making the offer process slick and swift also sends the message that you are serious about the candidate, backing up your words with actions.

If you are interested in mitigating the VUCA in your recruitment processes, speak with myself and the Dartmouth Partners team in Charlotte and we can support you with strengthening your offering.

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