How underemployment can change your hiring strategy in 2010

Posted by: Matt Rivera

Last week, a Wall Street Journal article highlighted the growing number of people who are underemployed. These people are working multiple part-time jobs, or positions that don’t utilize their skills just to make ends meet. This is the only option left for the unemployed. For companies, it means the lure of getting a highly-skilled worker at a bargain rate.

It’s no shock that underemployment has been on the rise since the end of last year. What is surprising to many employers is the effect it will have moving forward. In my opinion, this working arrangement will further confuse and compound the issues facing both employers and workers.

First, conventional wisdom says that underemployed workers will quickly leave their low-level jobs as soon as a better, more suitable opportunity presents itself. This is going to lead to increased turnover for companies, and it’s compounded by the fact that the person may be working two jobs. Many workers are already looking for a new job. Once they find a new one, multiple employers will have to handle their departure and replacement.

Second, filling a vacancy internally can create a human resources nightmare. What is the best way to determine who is next in line, especially for a management position? Or, when you start ramping up again, exactly where does this person fit in?

Lastly, this does nothing to help the unemployment figures and lack of optimism that drives the financial markets down. There will be a lot of hiring next year. The question is, will it be a result of growth or turnover? And does it make sense for your company to hire two full-time, qualified employees, or go through ten part-time, over-qualified hires at lower rates?

This is why we recommend all companies look closely at hiring while thinking about their succession plan. Also, turnover results in lost cost per hire, and potentially an increase in the overall cost per hire as more effort is expended to get more people in the door.

Keep this in mind next time you consider hiring someone into a lower position or at a substantially lower rate than their skills or experience warrant. While there are certain situations where this makes sense, and I’m certainly not against making more jobs available, in many skilled areas and at companies who are trying to maintain their employment brand, it’s something important to consider.