Candidate Experience Management: Creating a Competitive Edge for SMEs

Bozen – A shortage of qualified employees throughout Europe becomes evident to everyone involved in human resources management (HRM). Unfortunately, while McKinsey pronounced the “War-for-Talent” already in 1997, it appears that this warning has gone unheard by many companies. As a result, small and medium-sized (family) enterprises increasingly face severe problems finding and hiring new employees.

Like winning and retaining customers, winning and retaining employees has become relevant for hiring companies to survive or even create a competitive advantage. Therefore, using comparable approaches for both activities appears to be a logical consequence. While the concept of customer experience management, the systematic analysis and design of the customer journey and customer touchpoints is a well-established method in marketing, candidate experience management (CXM) is becoming the equivalent in HRM.

CXM analyzes a candidate’s journey through the application process. Based on the concept of Verhoeven (2016), we divide this journey into six steps to provide impulses for small and medium-sized enterprises interested in improving their candidate experience management:

1. gaining attention and creating candidate attraction;
2. providing information to the candidate;
3. initial application;
4. candidate selection;
5. onboarding;
6. retaining.

While we perceive the sixth step mentioned by Verhoeven, “retaining” as equally important, we treated it as part of the employee experience and thus did not address it in our study.

Focus on candidate experience management in SMEs

Our recent research project focuses on candidate experience management in small and medium-sized (family) enterprises (SMEs). We interviewed twelve human resource management members in German small and medium-sized family firms. These firms struggled because they often could not match large firms’ salary levels, their HR function was understaffed, and they lacked the time and input to professionalize their CXM processes.

Our results indicate leverage points for creating advantages for SMEs through CXM. Analyzing the candidate’s journey in small and medium-sized enterprises is neither complicated nor time-intensive. However, it requires critically assessing and reflecting on a company’s processes and awareness of these processes within that company: Thus, in the following, we will discuss that – step by step – while providing insights for SMEs:

Step 1: Gaining attention and creating candidate attraction

The first step is similar to assessing the company’s employer brand. While large firms can partially rely on their reputation and are recognized outside the region, SMEs usually operate and are known primarily within their surrounding areas. Consequently, they should focus on the question, “From where do candidates learn about our firm?” There are several ways in which SMEs can increase awareness of candidates: First, they profit from word-of-mouth by their current employees and can support this with bonuses paid for successfully bringing in new employees. Second, non-targeted communication, such as websites, social media profiles, and the appearance at points of sale, are major touchpoints that increase awareness. Depending on the positions available, targeted job advertisements are relevant. However, that requires a clear understanding of the channel’s nature: While (inter)national platforms may reach high-potential candidates, they often do not reach the “operating workforce”.

To our great surprise, few study participants mentioned (and seemed to be aware of) rating portals during the interviews even though they had received ratings. While portals, such as Kununu or Glassdoor, do not officially operate in Italy, ratings of South Tyrolian companies appear in the search.

Step 2: Providing information to the candidate

The second step of the candidate journey in SMEs is often interconnected with the first one. Wherever potential candidates learn about the firm, they will most likely receive their first insights from the same source. While large companies offer dedicated career portals, chatbots, and image videos, SMEs must provide information about current openings and unsolicited applications on their websites. The importance of an approachable contact person was reported as especially important. For SMEs, this poses the chance to form a personal bond through pre-application interactions such as phone calls and emails. Owners and top-management members are often responsible for interacting with candidates; a unique feature SMEs can actively coin into a competitive advantage over larger firms.

Step 3: Initial application

Submitting applications, especially for lower-qualified jobs, can pose the first barrier to candidates. Therefore, reducing such obstacles by, for example, only requesting a CV and forgoing motivation or reference letters may increase applications. One company in our study used “quick application forms” printed on flyers and distributed at their points of sale to increase the number of applicants.

Once companies receive the application, speed is of the essence: Returning to the applicants and making them feel valued is considered essential, not only by our experts. For example, several interviewees returned to the applicants via phone within seven to ten days to invite them to a job interview. In contrast, we were surprised that many organizations did not automatically respond or used pre-defined text blocks to confirm receiving the application. Such a response is of utmost importance to the applicants as it lets them know that the documents have been received and that the company is interested in the process.

Step 4: Candidate selection

Interviewing candidates has changed from an inquisitive style to a conversation. Especially during this step, SMEs often bring in top management or family members (if a family-owned firm) to create personal relationships and show that they value the candidates’ time.

Most firms in our sample offered a test-working period if the candidate is potentially suitable. On average, the test work lasted six hours, during which the candidate could gain insight into the job, meet potential colleagues and supervisors, and leave an impression on themselves. Such a procedure appears unique to SMEs and establishes an authentic image of the firm and the candidate.

After this, a timely decision to hire or decline a candidate is of the essence to leave a professional impression. Even if it becomes evident that no contract will be closed at this point, the firms should treat the applicants with the highest regard. They may become relevant candidates later (and thus should be asked to join a candidate pool), provide word-of-mouth feedback to other potential candidates, and be the firm’s (future) customers. Some firms in our sample even provided candidates with giveaways produced by the firm. This behavior strengthens the company’s perception as an employer of choice (compare Step 1).

Another strength of SMEs in this step is the high level of contractual flexibility. While large firms are often bound to pre-negotiated contracts, SMEs can adapt to their employees’ needs much faster. Using this as a bargaining chip in candidate negotiations often outpaces larger companies, leading to signed contracts. This flexibility should also be communicated in steps 1 & 2.

Step 5: Onboarding

In our study, all but one firm did not provide their new employees with information concerning their new role before starting their new job, sometimes not even staying in touch with the candidates. Especially here, larger firms are ahead of SMEs by continuously caring for recently hired employees and staying in touch through (easily composed) information packages and email updates. SMEs should invest the effort to bridge the transition phase and start creating bonds. Nevertheless, there is a lot that SMEs can do to make new employees feel welcome.

The SMEs in our study sample draw upon their family-like atmosphere, establishing welcome procedures on the first day (e.g., an introductory meeting) and welcoming new members by top management or owners.

Ultimately, the candidate journey and experience must be designed according to the context of the firm. With our article, we would like to raise attention to the topic among SMEs and encourage the firms to play the strength inherent in their organizational uniqueness. They must cease considering hiring an administrative issue and perceive talent acquisition as a top-management job. As for the future attracting and retaining Human Resources will provide a competitive edge, and the personal bond created in family firms can serve as an asset. Time may change, but the old saying holds true: You’ll never get a second chance to make a first impression – especially as an SME.

Björn Schäfer, Thomas Schäfer, Paul Goldmann und Marjaana Gunkel

THE AUTHORS
Schäfer B. is a researcher at the Free University Bolzano and a post-doc fellow at WFI Ingolstadt School of Management. His research focuses on the effects of digital transformation on strategy, organizational design, and human resource management.

Schäfer T. is a Professor at IU International University of Applied Sciences, Stuttgart. His research focuses on small and medium enterprises, family businesses, and human resource management.

Goldmann P. is a Professor of Human Resource Management at Westsächsische Hochschule Zwickau. His research focuses on competencies for digital transformation, organizational behavior, and user experience in HRM.

Gunkel M. is a Professor of Organization and Human Resource Management at the Free University of Bozen-Bolzano. She is the dean of the Faculty of Economics and Management. In her research, she examines international human resource management and organizational behavior, multiple intelligences at work, and global virtual teams.