Recent statistics on the job market provide a positive outlook for both the direct hire and contract sides of recruiters' desks. But on the heels of that good news is a less positive statistic: it is taking companies an average of 25.1 days to fill open positions, according to the Washington Post. This is the longest duration since the statistic has been tracked. It only took employers 15.3 days to fill positions in in July 2009 when the recovery first began.

There are currently 9.5 million unemployed individuals compared to 4.6 million open jobs. Plus employed individuals are finally starting to feel confident enough now to look for a new job.  So what gives?

A number of experts and recruiters say the long hiring process is a result of a mismatch between the skills that available workers have and those that are needed. Employers hiring for specific positions and in specific industries are definitely encountering this skills shortage. But a number of experts deny that this is the whole problem.  For example, Catherine Rampell points out in the Washington Post that if a skills mismatch were the only obstacle, there would be an overall increase in wages as companies compete for the small number of qualified individuals, but there is not. Also, four regional branches of the Federal Reserve and former chairman Ben Bernacke could not verify a bonafide skills crisis when they looked into the issue. They concluded that “current skills mismatches are limited,” Inc.com reported.

There are many other factors at play that are contributing to the hiring decision delays:

1. Economic instability - The economy is getting stronger, but there is still a lot of uncertainty driven by political disputes, the expected turnover in Congress due to the November Elections, the unknown impact of the Affordable Care Act (ACA or Obamacare), and more. This uncertainty is making employers less than confident about hiring direct. With the recession fresh in their minds, no one wants to hire only to go through devastating layoffs.
2. More employment regulations – It's not just the ACA that is worrying employers. Employment legislation is increasing on every level, even down to the local level.  For example, an increasing number of states and localities are passing paid sick leave laws. If they have to comply, employers must figure out how to administer the leave and how to cover the costs. The regulatory burden is heavy on employers minds and is a major consideration whenever they go to hire.
3. Unemployed mindset – Employers tend to avoid unemployed candidates because they think there must be something wrong with them if they are not actively employed.The 3 million people considered to be “long-term” unemployed, meaning they have been out of work for 27 weeks or more, have an especially hard time finding work. Citing data from an Evolv study,Bloomberg reported that callbacks for those with 8 months of unemployment is 45% lower than those out of work only a month.
4. Requiring the “perfect” candidate - Companies don't seem to want to settle for anything less these days than the proverbial "purple squirrel". Inc.com reports that 67% of hiring managers said they “don’t feel like they have to settle for a candidate without the perfect qualifications.”  This leads to the disqualification of candidates for something as simple as having one year less than the requested years of experience on their resumes. Those who make it to the interview process may go through several interviews and still not be hired.  Meanwhile, clients are giving recruiters fits asking for more options even after quality candidates have been presented.

Failing to act in the face of these issues may actually cause more problems for companies. For starters, the longer a hiring process is dragged out, the higher the risk that the company will lose quality candidates.  While the position remains vacant, companies have no choice but to overtax their existing employees, which impacts productivity and retention. Not hiring also hampers future growth. 

There is a way that you can help clients speed along the hiring process: offering candidates on a contract-to-direct basis.  This addresses all of their fears.  Because candidates are the legal employees of a third party (you as the recruiter or an outside contract staffing back-office service that you utilize), that third party assumes the responsibility for legal compliance. If economic uncertainty is their concern, they can hire someone on a contract basis and convert them to a direct hire when they feel more secure.

And when the purple squirrel fails to materialize, contract-to-direct arrangements can help clients try quality candidates. They can evaluate the workers’ performance and work ethic during the contract period and then decide whether or not to extend the direct hire offer.  Recruiters are telling us that a number of companies are requiring a contract period for most of their new hires.

Long hiring processes are not good for you, your clients, or your candidates. Fortunately, there is an option that can help everyone – contract staffing.

Debbie Fledderjohann is the President of Top Echelon Contracting, Inc.