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SHRM Report: Recruiting Difficulty and New-Hire Compensation Up in July

Hiring in August will decrease, according to the Society for Human Resource Management’s monthly survey of HR professionals at more than 1,000 companies. Yet, difficulty in recruiting and new-hire compensation both increased in July.


The Society for Human Resource Management’s (SHRM) Leading Indicators of National Employment® (LINE®) Report, including the only national employment index of HR professionals’ month-ahead hiring expectations, shows that service-sector hiring will dip the most, decreasing by a net of 19.1 points compared with August 2010. Manufacturing-sector hiring will decline by a net of 1.6 points compared with last year.


“The August LINE employment expectations index shows a worrying rise in layoffs, especially in the services sector where planned layoffs are more than double the rate from August 2010,” said Jennifer Schramm, GPHR, SHRM’s manager of workplace trends and forecasting. “The question now is: Is this only a temporary setback for the labor market’s recovery or a sign of a more troubling trend?”


Almost half of manufacturers (49%) plan to hire in August, while 13.4% intend to cut jobs. Hiring will be up compared with one year ago, when fewer companies were planning to hire (44.9%) and fewer were planning to cut jobs (7.7%).


A third (34.5%) of service-sector employers will hire in August, while 15.3% plan on cutting jobs, a year-over-year decrease of 19.1 points. In August 2010, 44.3% of service-sector employers planned to hire, while 6% planned to decrease jobs.


The SHRM LINE Report shows that, despite expected hiring declines in August, HR professionals both increased compensation packages for new-hires and reported increased difficulty recruiting job candidates in July.


“The recruiting difficulty and new-hire compensation indices continue to rise, suggesting that even as many continue to struggle to find work there are also a large number of employers having trouble filling key positions,” said Schramm. “Job seekers possessing very in-demand skills may find a more welcoming labor market than the high unemployment rate would suggest.”


The recruiting difficulty index rose by a net of 11.2 points compared to July 2010 in the manufacturing sector and by a net of 2.7 points in the service sector. New-hire compensation in July rose on an annual basis by 5.8 points in the service sector and 2 points in the manufacturing sector.


The LINE Employment Report examines four key areas: employers’ hiring expectations, new-hire compensation, difficulty in recruiting top-level talent and job vacancies. The LINE Report is based on a monthly survey of human resource professionals at more than 500 manufacturing and 500 private service-sector companies. Together, these two sectors make up more than 90% of America’s private-sector employment.


Highlights of SHRM LINE year-over-year findings:

Employment Expectations Manufacturing Service
In August, hiring is down slightly in the manufacturing sector and down sharply in the service sector. -1.6 points -19.1 points
Recruiting Difficulty    
In July, the index for recruiting difficulty rose in both sectors compared with a year ago. +11.2 points +2.7 points
New-Hire Compensation    
The rate of increase for new-hire compensation in July rose on an annual basis in both manufacturing and services. +2.0 points +5.8 points
Source: SHRM Leading Indicators of National Employment