Feast and Famine in Recruiting of Professionals

April 24, 2006
Recruiting comes easy for Atlanta-based law firm Alston & Bird.

   More than 16,000 applications flowed in for 200 openings in 2005. The firm employs 1,500 workers--700 attorneys supported by paralegals, IT specialists, legal secretaries and administrative staff--in five offices. Alston & Bird comfortably manages all staffing in-house with a firm-wide recruiting staff of 17.

   Recruiting does not come easy for Chicago-based accounting firm Grant Thornton, which is now pursuing passive candidates to fill 470 open positions, some of which date back six months. The firm recruits with an in-house staff of 60, up from 10 only three years ago. It’s now hiring 10 new recruiters and tapping outside search and sourcing firms for help.

   Grant Thornton employs 4,500 workers, primarily audit, assurance and tax professionals who are in short supply nationwide.

   "This is where we feel the pain," says Monique Brannon, Grant Thornton’s national director of recruiting. "We work the phones, direct source from the Big Four accounting firms and pull in employee referrals. With all of this work, we may net 10 to 12 possible candidates."

   Both Alston & Bird and Grant Thornton recruit from the broad category of professional and management workers, where the unemployment rate is 2.1 percent and falling. Both firms are high-visibility employers of choice looking for recent graduates and lateral hires in competitive industries. Both draw from national labor markets and offer new employees the opportunity to work with an attractive client pool.

   Despite these seemingly meaningful similarities, Alston & Bird enjoys lower recruiting costs and quick time-to-fill, while Grant Thornton pours recruiting efforts into what appears to be a black hole. The increasingly uneven nature of U.S. labor markets creates this discrepancy, which will only grow worse during the next decade, according to new detailed data from the Bureau of Labor Statistics.

   The labor supply will remain adequate for the legal industry during the next decade. Accounting, however, is another story. The shortage of accounting talent will continue for the next decade, even though enrollment in accounting programs jumped 19 percent from 2000-2004 and the number of accounting degrees awarded rose 8 percent in 2004, according to the American Institute of Certified Public Accountants.

   The legal industry employs about one million workers and will add 194,000 new jobs by 2014, according to the BLS. Both employment rates and starting salaries have been flat since 2000, according to data from the National Association for Law Placement.

   The accounting and auditing occupations also employ about 1 million workers, but will add 386,000 jobs by 2014--double the number of new legal jobs. The imbalance will increase as accounting firms continue to pull corporate work away from the more costly legal firms.

   Across a number of industries, similar extremes are emerging. Best practices in recruiting will diverge rapidly as employers face increasingly dissimilar markets and long-term supply trends complicate workforce planning.

Résumé overload

   Alston & Bird does not use above-market pay to draw its vast pool of job seekers. Starting salaries for attorneys range from $115,000 in its Atlanta, Charlotte, North Carolina, and Research Triangle offices to $125,000 in its New York City and Washington, D.C. offices--right at the market for all of these locations. But it has ranked high on Fortune’s list of the "100 Best Companies to Work For" seven consecutive years, and its offers a rich benefits package, including child care, flexible hours and paid overtime for some nonexempt regular staff.

   "Anecdotally, we know that the Fortune ranking and the employer-of-choice label appeal to this generation of law graduates and to candidates for staff positions," says Cathy Benton, Alston & Bird’s chief human resources officer. "Even for single new hires, the child care facility is important."

   The firm does not rely on soft local markets to generate a steady stream of candidates; unemployment levels in four of the firm’s five office locations are well below the national average. Its high profile as a star-studded corporate law firm specializing in technology and new-media clients provides significant recruiting power against competitor firms.

   Alston & Bird handles all 16,000 applications in-house, beginning with data entry and matching résumés to open positions. Every applicant receives a response. For applicants that seem to fit, the recruiting staff uses brief phone interviews with specific questions to determine whether the credentials and experience listed on the résumé hold up under scrutiny.

   Candidates who pass the phone screen are asked in for face-to face-interviews.

   "We listen for a service orientation, interest in teamwork and how they have handled past challenges," Benton says. "For managerial positions, we want to hear candidates talk about coaching and mentoring without prompting from the interviewer. There is a lot of gut feeling involved."

   The interviewers place a heavy emphasis on firm culture and note the candidate’s response. If HR is satisfied, the candidate proceeds to interviews with department managers and, in some cases, co-workers. Nonexempt employees are evaluated at three months. Exempt non-attorneys are evaluated at six months and attorneys are reviewed at one year.

   Although it has a surplus of candidates, Alston & Bird still recruits on more than 30 law school campuses every year, following the traditional law firm model, and hires 50 to 80 new graduates, most of whom have been through the firm’s summer associate program.

   "We receive a lot of unsolicited résumés, and we always look at them for laterals," Benton says. "For positions with special requirements such as Japanese language skills, we post the position on our Web site, which generates a lot of traffic."

   The firm also offers an employee referral bonus of $1,000 for staff positions and $5,000 for attorneys.

   "Once in a while we get stuck and have to get creative, but we receive so many unsolicited résumés that it’s uncommon," she notes.

Résumé shortage

   At Grant Thornton, it is an entirely different story.

   "Up until two years ago, we could rely on jobs boards such as Monster to fill positions; we did not even post jobs on our Web site," Brannon says. "Now the market is so tight that we have to focus on passive candidates, who are getting eight or nine phone calls a day."

   After scrambling to put together a small group of suitable candidates for an open position, Grant Thornton recruiters use extensive behavioral interviews to select finalists; successful candidates go on for interviews with the hiring partner or manager.

   Grant Thornton relies on employee referrals for 40 percent of its new hires for positions ranging all the way up to partner, but the firm is still struggling to keep up with its rapid growth. To cope with the acute labor shortage, Grant Thornton is actively hiring new recruiters, one of the few positions at the firm for which the supply is relatively abundant.

   The last recruiting position posted on the firm’s Web site pulled in 500 résumés. Grant Thornton’s staff compared the required skills with the résumés and identified 50 qualified candidates. Fifteen-minute phone calls to each candidate, focused largely on verifying résumé information, left the recruiters with five highly qualified job seekers who met with managers for the final step.

Forecasting change

   Grant Thornton is one of 46,000 U.S. accounting firms scrounging for talent in the post-Sarbanes-Oxley world. Although accounting and finance salaries rose 25 percent from 2000 to 2004 and are continuing to climb 5 percent to 10 percent a year, demand jumped too quickly for a typical supply-side adjustment to meet needs.

   The recruiting problem at Grant Thornton is exacerbated by the firm’s explosive revenue growth of 29 percent in 2005, well above the already high industry average.

   "Recruiting’s job is to build the infrastructure to support the firm’s growth," Brannon says. "It’s difficult because we don’t want to over-hire, so we work with some contract employees and plan carefully."

   Clearly, planning is the key, but even Grant Thornton’s best-practices approach is no match for sharp upswings in product demand that require infusions of new labor. The unpredicted rash of corporate scandals and the subsequent passage of the Sarbanes-Oxley Act obliterated the possibility for accurate labor market forecasting in the accounting industry.

   "We forecast hiring needs and salary and recruiting costs for our fiscal year, which begins in August," Brannon reports. "This year, we revisited the forecast at the midpoint in February and were happy to see that it was on target."

   She submits quarterly reports on recruiting needs and results to the firm’s top executives.

   Although many companies rely on outside recruiting firms to meet a sudden rise in the need for a particular skill set, Grant Thornton still keeps most of its recruiting work in-house, with recruiters split equally between experienced candidates and campus recruiting. The firm has been forced to use some outside recruiting and sourcing agencies, but prefers not to.

   "We get the best results through our in-house efforts," Brannon says.

   Pushing accurate forecasts out more than one year is the next challenge for firms in tight labor markets, but even then, quantifying the size of the shortage does not solve the problem. To cope with what is expected to be a long-term shortage of accounting talent, Grant Thornton is expanding its recruiting horizons.

   The firm is experimenting with recruiting in Singapore and bringing in employees from Grant Thornton International offices in other English-speaking countries, using H-1B and L visas. It is also establishing programs to recruit more foreign students enrolled at U.S. universities.

   "We have to think beyond our own borders," Brannon says.

   The latest BLS projections indicate an acceptable balance of labor supply and demand on a nationwide, all-industry basis, but troublesome shortages and surpluses on an occupational and industry-specific basis. These sharply divergent conditions will force some recruiters to extend workforce planning out three to five years to accommodate training time and alternative sourcing for hard-to-fill positions. At the other end of the spectrum where unsolicited résumés still flow, planning can drop to three months or less.