A company is only as strong as the people who work in it. If you want your organization to thrive, attracting the right talent is a must. Sadly, right now, that’s easier said than done.
The past few years have seen a dramatic drop in the number of workers applying for vacancies, leaving many companies understaffed and struggling.
Hospitality, social care, healthcare, and education are particularly stretched, but hirers in many industries are noticing difficulties in recruiting new talent. 48% report that inability to hire new people is the biggest risk to their businesses in 2022, according to research by PWC.
The U.S. Chamber of Commerce reports a shortfall in workers of over 3 million compared with pre-pandemic figures, and data from the U.S. Bureau of Labor Statistics show that the number of job openings vastly outstrips the number of unemployed people.
There’s no sign that this issue is going away any time soon, so businesses can expect hiring to continue to be a problem into 2023 (and potentially beyond).
So, what is driving this shortfall of applicants? And what can your company do to offset the issue?
Why is hiring so tough right now?
Despite a tentative return to “normal” in 2022, the world remains drastically changed from three years ago. The impact of the Covid pandemic continues to be felt across the globe, and its effects seem set to influence how and where people work for the long term.
Sadly, the shortage of talent is unlikely to disappear just because restrictions have been lifted. There are multiple reasons why hiring is difficult right now, which means that there’s no one solution to the issue.
Here are some of the factors driving the difficulties companies are facing in finding the right talent to fill vacancies:
1. Early retirement
One of the early impacts of the pandemic was its effect on retirement rates. More than 3 million adults opted for early retirement because of Covid, creating gaps in the workforce that can’t easily be filled.
By taking some of the most experienced workers out of the labor pool, this trend toward early retirement creates issues for companies facing the loss of institutional knowledge and expertise. It also adds to the existing problem of an increasingly older population, with fewer people entering the workforce than aging out of it.
Although early retirements may create opportunities for other employees to move up the organizational hierarchy, this simply pushes the need further down the ladder, leaving businesses struggling to fill vacancies at the lower levels.
2. Caring responsibilities
Juggling caring responsibilities with work has always been an issue for parents and carers. But that issue came to a head in the early months of the pandemic – and hasn’t yet been resolved.
With schools and daycare centers closing, parents quickly had to rethink their plans. While some managed to limp on balancing childcare and home-schooling with working from home, many left the workforce altogether.
To no one’s surprise, this issue disproportionately affects female workers, who are still more likely to carry the caring responsibilities for their families. A whopping 3.5 million mothers left the labor force in 2020. Many haven’t returned.
In April 2022, the U.S. Chamber of Commerce reported that women’s participation in the workforce has dropped by a full percentage point compared with pre-pandemic figures. In real terms, this represents a million women absent from the labor pool.
This issue is exacerbated by the ongoing struggles faced by the childcare industry, which is itself significantly affected by labor shortages.
With many providers forced to close and others running at limited capacity, finding childcare has become a major issue for many workers. Almost 60% of parents leaving the workforce say that lack of reliable childcare was the deciding factor.
Even those who do find childcare continue to be affected by closures and illness. The result is record numbers of parents missing work because they are needed at home to care for sick children.
While we’ve focused on childcare here, our aging population means that caring for older adults is increasingly affecting people’s ability to work too. Like daycare centers, nursing homes are struggling with staff shortages, compounding this issue.
It’s no wonder that many families decide to skip the stress and have one adult stay at home permanently to care for dependents. But this only adds to the shortage of talent – and creates a worrying lack of diversity in our workplaces.
3. Health concerns
While some have greeted the relaxation of pandemic restrictions with joy and approval, many people are still concerned about the possible consequences of rejoining the workforce on their health.
Some have underlying conditions that make them especially vulnerable to Covid and are, understandably, reluctant to return to busy workplaces. Others are still battling the after-effects of Covid itself, with an estimated 2 – 4 million people out of work due to long Covid.
According to a study published in the Lancet, over 22% of people with long Covid are unable to work and a further 45% have had to reduce their work hours, leaving organizations with gaps to fill to bring themselves back up to full strength.
4. Desire for flexibility
Expectations about what our working schedules should look like are also contributing to hiring issues, as more and more people make work-life balance and flexible hours a priority.
Research from Aviva shows that more people are now attracted to their roles because it offers them the work-life balance they want, instead of because of the salary.
While the salary offer does still play a big part in attracting new talent, this focus on balance and flexibility can make it difficult to hire, especially in sectors known for long hours and stressful workloads.
In a job seekers’ market, more people can afford to be picky about the roles they apply for and accept – and having time to spend on hobbies, caring responsibilities, and even side hustles can play a significant part in their decision-making.
5. Burnout
Let’s be honest – it has been a very stressful few years. Everyone has been impacted, and the result of so much stress and uncertainty is higher than ever rates of employee burnout.
Some sectors are particularly affected by this, notably frontline services like healthcare, social care, and education. But stress is impacting employees across all sectors, with 43% of desk workers in the USA reporting feeling burned out, according to the Future Forum’s latest Pulse survey.
Stressed workers are more likely to miss work and are also more likely to end up quitting altogether. Unfortunately, this leaves businesses struggling with a vicious cycle – employees leave because they are burned out, then remaining team members are forced to pick up the slack, adding to their stress levels in turn.
Burnout leads to higher turnover, meaning you need to recruit more regularly. But it also lowers the pool of available talent as workers turn to lower-stress careers, opt for part-time work, or leave the workforce altogether.
6. Career changers
Speaking of turning to lower-stress careers, another challenge facing recruiters in today’s market is the number of people opting to leave their existing roles to explore opportunities in other sectors.
Record numbers of people left their jobs in 2021, with nearly 3% of the U.S. workforce quitting in October 2021 alone. Initially known as the Great Resignation, this trend is now referred to as the Great Reshuffle, as workers moved to jobs that matched their values and desire for flexibility.
We’ve already looked at work-life balance as one of the drivers for people to seek new work. Another factor for many has been the chance to explore a new career, with 33% of those opting to change jobs saying they want to work in a new industry, according to survey data reported by CNBC.
Not all workers are returning to the workforce straight away either. Many of those looking for new opportunities have opted to retrain first, removing themselves from the talent pool while they gain new skills and knowledge.
Many online training platforms have reported record numbers of course attendees since the start of the pandemic in 2020, illustrating the desire that many people have to continue their learning and move into new areas.
This has left some sectors struggling even more to fill a growing number of vacancies. Many of those who are retraining are seeking roles in IT or digital services – in-demand jobs that offer flexible hours and remote working. Meanwhile, industries that require on-site attendance, such as hospitality, logistics, and retail, are particularly vulnerable to losing people to other sectors.
7. Increased competition
With fewer job seekers, the inevitable result is increased competition, as employers all strive to attract the same smaller pool of worthy talent to their organizations.
The rise in hybrid and remote workplaces has added to this issue. Where companies would once have been limited to the people within commuting distance of their offices, the move to online work has meant those geographical restrictions are now essentially non-existent for many businesses.
While this can be a point in a recruiter’s favor, meaning you can expand your search beyond your immediate location, it also means you’ll have plenty of other firms trying to attract the best candidates.
8. Growth in freelancing and entrepreneurship
It isn’t only other established companies that are in competition for job seekers’ attention either. Another trend since the beginning of the pandemic is a rise in the number of people turning to freelance work or starting their own businesses.
22% of those who planned to quit their jobs in 2021 intended to start their own businesses, according to CNBC. More than 4 million new businesses were registered in 2020 alone.
Meanwhile, 36% of U.S. workers do some kind of freelance work, according to freelance platform, Upwork. While many will do this on the side, or turn to freelancing temporarily, an increasing number are now making the move to freelancing permanently.
Notably, it’s often the most educated who are turning to freelance work. 51% of post-graduate workers are freelancers. Many cite the flexibility and the sense of ownership over their own working schedules as reasons to freelance.
Meanwhile, 56% of non-freelancers say they are considering doing freelance work in the future.
For traditional companies, this trend adds to an already challenging recruitment landscape. If experienced and skilled workers continue to decide to turn to freelancing instead of seeking employment, filling in-house vacancies will remain difficult. As will keeping the employees you already have.
9. Mismatch in skills and experience
Despite the influx of people seeking training and opting for new industries, an ongoing issue in recruitment is the mismatch between the skills and experience required for roles and those of the available applicants.
Many workplaces still look for university degrees or several years of experience when hiring for new roles. But at a time when competition is fierce and many of the most experienced workers are leaving the workforce, this can eliminate potentially good candidates from the pool of available applicants.
This issue has been highlighted recently with the discovery that automated sifting of applications has led to many companies rejecting high-quality candidates at the shortlisting stage.
While automated screening programs may make the hiring process quicker and more efficient, they lack the flexible thinking that human eyes can bring to the table. As the Harvard Business Review discovered, many programs reject applicants based on overly strict parameters, including any gap in full-time employment.
Solving the hiring issue – what can you do to attract good candidates?
As we’ve seen, many factors are making it harder for companies to hire right now. While a shrinking workforce will continue to throw up challenges, there are steps you can take to make your company more attractive to job seekers.
1. Be flexible
From concerns about health to difficulties with childcare, something that underpins many of the factors we discussed above is the increased demand for flexibility in our working lives.
Many companies have embraced remote and hybrid working practices, something that increases the pool of talent available to them and makes them more attractive employers.
But flexibility goes beyond just where work takes place. The more autonomy you can offer applicants over their hours and how they tackle their tasks, the more likely they are to be drawn to your organization.
According to the October 2022 Future Forum Pulse report, workers with full flexibility over their schedules report 29% higher productivity and 53% increased ability to focus. So, your company may benefit from allowing employees to take control of their own working lives too.
As far as is practicable, put employees in charge of when, where, and how they carry out their work. Put policies in place to support those who might need to be unexpectedly working from home or to change their hours – whether that’s to manage their own health, meet caring responsibilities, or simply avoid stress and burnout.
Then, make sure to shout about your life-friendly working practices on your recruitment site, in job adverts, and during the hiring process.
2. Offer help with childcare
As we’ve seen, disruptions to childcare have taken a huge percentage of parents – especially mothers – out of the workforce. So, one of the most attractive steps employers can take is to provide help and support with childcare.
Larger organizations might consider opening an on-site daycare, especially if you expect regular attendance in the office. For those with remote workforces or without the option to open their own facilities, offering childcare vouchers or subsidies to help with the cost of childcare can make your workplace much more attractive to working parents.
Where possible, you could also look at offering help with temporary care when regular arrangements are disrupted. There are specialist agencies that can provide emergency childcare for your employees when needed.
This is an attractive employee benefit that has clear advantages for your company too, as you’ll have fewer staff absences due to childcare issues.
3. Build in career progression and training
48% of workers say that they would move to a new job if it offered opportunities for training and skill growth, according to research commissioned by Amazon. And 65% consider learning and development an important factor when deciding whether to take a new job.
So, when you design your employment packages, make sure that opportunities for training and professional growth are part of the offer.
You may well already offer plenty of opportunities for upskilling – make sure these are clear from your job ad if you do. If this isn’t already part of your offer to employees, now may be the time to start making it a priority.
4. Look beyond your usual pool
Employers have traditionally taken a qualifications-based approach to hiring, looking for candidates with both experience and formal credentials. However, this can quickly remove interesting and high-quality candidates from your pool of applicants. And it can also affect the diversity of your hires, limiting the people and skills available to your organization.?
To be competitive in a difficult hiring environment, it is important to step outside your usual bubble and be more creative in how you consider what makes someone an appropriate candidate for your vacancy.
As a starting point, move to a skills-based hiring approach instead of focusing on qualifications. If someone can demonstrate that they have the necessary skills and attitude to be a success in your company, there’s no tangible need for them to also have a university degree.
Transferable skills are another thing to look out for, especially in a climate where changing industry is becoming more commonplace. Instead of specifying a certain number of years of experience in your particular industry, you can invite candidates to show how their skills and experience fit your needs, even if they’ve been employed in a completely different sector.
Not all experience needs to come from paid work either. Volunteering and community work can give people valuable skills that will benefit your organization. And involving people from a wider range of backgrounds can give you a much richer and wider pool of insight and approaches to inform your work – leading to more creative thinking and problem-solving.
Be prepared to offer training where necessary to bring candidates with a different skillset up to speed. Sometimes “growing your own” skilled staff is the best way to go. And if you use automated screening programs in your recruitment practices, make sure the criteria are left broad enough that you won’t eliminate high-quality applicants unnecessarily.
5. Review your hiring processes
In a jobseekers’ market, speed matters when it comes to making hiring decisions. While we’d never encourage you to rush into making a job offer (which can lead to costly mistakes), it is worth reviewing your processes to make sure you aren’t asking applicants to jump through unnecessary hoops.
Often a truly valuable interview or candidate assessment can replace a lot of extra steps in the process. If you require a lengthy interview process to get a clear understanding of the candidate, when that information can be gleaned more efficiently, it may be worth reevaluating your process so you don’t lose good people to other employers.
6. Explore new advertising opportunities
With plenty of job openings out there, it might take a bit more creativity to get your vacancies in front of the right people. Fortunately, there are ever more platforms available to help your company advertise to qualified candidates.
LinkedIn has long been the darling of recruiters – the professional social media network allows you to target adverts by location, job title, and industry, helping you reach potential candidates even before they start their job search.
However, there are also new opportunities available through tools like Slack. The public communities and invite-based networking groups offered by the messaging service give you more places to advertise roles and connect with job seekers.
You can also invite top candidates to a private channel where they can ask questions or speak with existing staff to find out more about their experience of working with your organization.
Don’t forget to enlist your current employees too. They likely have connections within your industry and can help you spread the word about available vacancies.
7. Evaluate your compensation package
Finally, attracting high-quality talent in today’s market means taking a long hard look at what you’re offering your employees.
Many companies have increased their salary offers recently in response to the shortage of applicants and are also improving the rest of their compensation packages, including benefits like vacation time, health insurance, and pension plans.
Gather data on what others in your industry are offering to make sure your own compensation package remains competitive. Don’t forget that this isn’t about salary alone – applicants increasingly want to see your commitment to flexible working and employee well-being reflected in the benefits you offer.
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A shortage of workers combined with a shift in employee expectations has made it more difficult for employers to hire good candidates in recent years. However, companies can take steps to make themselves more attractive by offering flexible working, supporting their employees with learning and development, and getting the recruitment process right.