The frustration on all levels is real. Hiring managers and business leaders across all industries are struggling to fill the open seats on their bus. So, what gives? Where has all the talent gone? And why is taking so long to find someone?
Let’s start with the bad news.
The Hiring Pool Keeps Shrinking
Put simply, job openings are through the roof. The number of openings grew throughout 2021, and show no signs of stopping in 2022. But what’s more is that the employment rate has simultaneously plummeted, which has created a major talent deficit in the hiring pool. Just take a look at the trends compiled by the Bureau of Labor and Statistics for January 2020 through February 2022 below.
On March 16, 2022, Jerome Powell, Chairman of the Federal Reserve, even went as far as to describe the labor situation as “tight to an unhealthy level” as the central bank enacted its first interest rate increase in more than three years.
Source: Bureau of Labor and Statistics
But, why? Don’t people need to work?
It’s a Job Seeker’s Market
Yes, people need to work. And they want to work. It’s just that they are far pickier about where they work, what their work stands for, and how they spend their time than ever before. Simply making ends meet isn’t a great enough motivator.
So right now, in the tightest labor market we’ve seen in decades, employees hold all the cards. Job seekers are essentially using this power to demand more fulfilling jobs and work, whether “more fulfilling” means higher paying or more flexible work options.
You see, this isn’t a phenomenon that’s coming completely out of left field. It’s just that it’s coming a little sooner—and with more vengeance—than anticipated. In 2019, Texas A&M Business School Professor Anthony Klotz predicted that the workforce would eventually face a tsunami of voluntary quits spurred by a flourishing labor market in which employees had far more agency over their employers than ever before. And he was right.
A Massive Talent Drain
The Great Resignation gained momentum across the US in 2021 with almost 48 million people quitting their jobs. In 2022 alone, nearly 4.4 million people quit their jobs before the end of February.
This trend started showing its face among younger workers a few years back, but this is different. This is a massive talent drain, and not just of junior hires, but in employees across the board. The pressing challenge for employers now is how to hire and retain their workforce.
But what are they up against?
- Fierce Competition: Getting through to potential job candidates when sometimes hundreds of other recruiters are reaching out to them at the same time.
- Larger Competition: Even when smaller companies offer competitive salaries and benefits, job candidates are sometimes drawn to the perceived status and job stability associated with larger firms.
- Better Culture: Millennials and Gen-Z want to work for companies whose mission and vision align with their own set of values and personal identifiers. Candidates, especially millennials, need to know you’re a company that really cares about its employees if they’re even going to consider applying.
- Inside Information: People are savvier today about figuring out if a company is a good place to work. Anonymous online tools like Glassdoor and information on LinkedIn allow candidates to see what people are saying about the company and co-workers. In a competitive job market, people will have more than one place they could work, and they evaluate resources like these.
The Pressure is On to Retain, then Obtain
This type of environment puts even more pressure on employers to find ways to appeal to and retain candidates, such as benefits packages, work from home options, or an awesome work culture. Candidates know they have choices, so it takes a lot of effort to really stand out.
(1) Focus on Retention First
Before you start mining this small pool, make sure you are doing what you can to keep the key talent you already have. It’s far easier to retain top talent in this environment than to find it. Plus, recruiters are speaking with seemingly happily employed candidates, too. You don’t want to lose your key employees out of left field.
(2) Up the Ante
Take a look at your benefits options, your work-from-home flexibility, and other workplace perks to make sure they are up to snuff. In a job seeker’s market, you may need to pull out all the stops to stand out. Do you have a non-discretionary compensation/incentive plan? If not, this will turn off potential candidates. “Maybe” getting a bonus doesn’t cut it anymore. You need a plan based on “if this happens, this will happen”. Not “if this happens, this might happen”. Do you encourage personal and professional growth by offering to pay for conferences, etc.?
(3) Culture, Culture, Culture
Company culture may be an “eye roll” item to you, but it’s a deal-breaker to some of the top talent out there. Be sure “who you are” and “what you stand for” are abundantly clear all over your website and on your social media platforms. This is where candidates will go to learn about your firm. Give them something to lean into.
(4) An Undeniable Experience
To find success, create a great candidate experience. From website to interview, design the process to be one that attracts high-quality candidates who can easily sense that the company is superior to other options out there.
The Silver Lining
If there is an upside to this trend in the workplace, it’s twofold. First, that leaders and decision-makers are learning the importance of retaining their employees sooner. And second, I believe everyone is finally starting to understand the need to transcend the idea of a work-life balance. As the pandemic has proven, today’s work is more of an ongoing attempt to integrate one with the other in a way that is meaningful and fulfilling. Better ways of working have arrived, we just need to adjust to the accompanying changes in order to keep our businesses thriving and growing.
So, if you’re hiring now, be patient (I mean REALLY patient). Stick to your process. Remember, there is no “pool” of candidates out there right now waiting for you to post your job application. You’ve got to get creative, which could even mean moving someone off their current position with the enticing pay, top perks, quality benefits, and the unbeatable company culture you can offer.
We can help. We offer hiring services with a proven process and help Advisors create compensation/incentive plans. Want to learn more, schedule a call with us.
Thanks for listening, Ginny