In October, the U.S. Department of labor reported that the U.S. Economy added 531,000 jobs, and the unemployment rate fell to 4.6% from 4.8% compared to the previous month.
That's good news.
The not-so-good news? Even though now-hiring and help-wanted signs are springing up around the country, they are being taken down at a much slower pace, proving that the right talent is hard to find.
“What we are seeing is that job postings have been rising for months. Yet, job-seeker interest remains stagnant. This has created a mismatch in hiring urgency between employers and job seekers, which has made it difficult for employers to compete for talent,” said Raj Mukherjee, senior vice president and general manager of SMB at Indeed.
“There are many reasons why we see job-seeker interest remaining stagnant. Some job seekers are reevaluating their career paths, while there are still a vast majority of job seekers who do not want to start a job right away because they have employed spouses, care responsibilities or COVID-related concerns.”
In fact, the DOL announced in November that 4.4 million Americans quit their jobs in September. Dubbed “The Great Resignation,” every industry seems to be affected by this phenomenon, none more than health care. (See “Stop the Bleeding” on page 26.)
According to a recent article in The Atlantic, “The U.S. Bureau of Labor Statistics estimates that the health- care sector has lost nearly half a million workers since February 2020. Morning Consult, a survey research company, says that 18% of health-care workers have quit since the pandemic began, while 12% have been laid off.”
But as the economy bounces back from COVID-19 and job postings continue to grow, will that story change? Will more people return to the workforce? If so, how will businesses attract and retain their talent?
Where are the workers?
An August 2021 survey of 380 employers by Willis Towers Watson found nearly three in four employers (73%) are having difficulty attracting employees. According to WTW, that’s nearly three times the number (26%) that reported difficulty in 2020 — and up from the 56% that reported difficulty the first half of 2021.
“What’s really interesting is that back in 2013, companies were already predicting several labor shortages in 2021,” said Lesli Jennings, senior director, work and rewards at Willis Towers Watson. As the labor force increased, Jennings said, two segments decreased: entry-level positions (workers ages 16-24) and leadership roles (workers ages 45-54).
“Because of this supply and demand issue, employees now have the buying power,” she said. “They’re pickier, and it goes beyond pay. If they’re not happy in their current situation, they will leave.”
And it’s not just younger employees leaving their jobs behind. According to a Pew Research Center analysis of the most recent official labor-force data, as of the third quarter of 2021, 50.3% of U.S. adults 55 and older said they were out of the labor force as a result of retirement. Before the onset of the pandemic, 48.1% of those adults were retired, said the report.
“When the pandemic and lockdowns hit, many older workers who were planning on working for a few more years opted to take that retirement now,” explained Jeanne MacDonald, president of global RPO solutions for Korn Ferry, a global organizational consulting firm.
MacDonald also shared a recent Korn Ferry survey of professionals that showed a third of employees would quit their job even if they didn’t have another one lined up.
“Some people are switching careers entirely, some are going back to school, and some opted to stay home and take care of their loved ones,” she said.
After nearly two years of dealing with the COVID-19 pandemic, priorities are shifting for workers. They’re looking for more flexibility with their schedules, better pay and a more inclusive work environment.
"Because of this supply and demand issue, employees now have the buying power …they’re pickier, and it goes beyond pay. If they’re not happy in their current situation, they will leave."
“The companies that treat their employees well and have a positive culture are going to be the companies who will win in this competitive market. Increasingly, candidates are seeking to work with companies that also have a commitment to ESG. While compensation isn’t the only thing that matters to employees, we are seeing significant salary increases and sign-on bonuses, even for more junior roles,” MacDonald said.
Jennings called this “The Great Awakening” for companies.
“This is their moment to pause and reflect,” she explained. “Rather than put a Band-Aid on this issue, they should be connecting with employees on all levels. We always talked about the employee experience, and now is the time to capitalize on it. Connect with employees, whether that’s through pay, benefits or opportunities. Some companies are implementing short-term changes, such as raising the starting pay and adding sign-on bonuses, but what does this mean to their long-term strategy?”
Ed Bray is a senior director of human resources for a leading retailer. He sees the talent shortage from two viewpoints: the retail and office associate space. Before the pandemic, Bray said, retail workers “operated like a well-oiled machine,” but during the pandemic, they had time to ask themselves, “Is there something out there that can make the quality of my life better? Something safer, easier? One where I don’t have my boss hanging over my shoulder, or where I can go watch my children’s soccer games?” As a result, many workers quit in order to find a job that checked off those boxes.
Even if businesses consider raising wages to keep employees happy, more people will continue to leave if management isn’t educated about the high cost of turnover, Bray said. Building better relationships between managers and associates will help the company.
“If people aren’t being treated well, they’re going to leave, even with the extra money, and if we lose them, it will be difficult to replace them,” Bray said.
In the office associate space, remote work has been the biggest challenge, said Bray.
“The pandemic demonstrated that associates can effectively work remotely — and they like it,” he said.
Employees who work in departments such as accounting, finance, marketing and human resources are considering leaving jobs that don’t offer remote work or a hybrid model as an option. If companies aren’t currently addressing remote work, they run into two problems, according to Bray: (1) They may have to hire less qualified candidates; and (2) The people who decide to stay may end up being overworked, and, as a result, they may start looking for a new job elsewhere.
Offering remote work has forced companies to stay competitive in the job market, and they are using it to their advantage in the hiring process. In the office associate space, for example, Bray said he suspects that the first thing people now ask in interviews is if they can work remotely.
But if companies can’t find workers, there are many ways the talent shortage can hurt them.
“If a store is going to stay open, we need appropriate coverage,” he said. “That takes a heavy toll on managers because they have to work more on the floor instead of doing their job, which is actually hiring new employees.”
Given the current mismatch in hiring urgency, “employers are finding it especially difficult to compete for talent,” Mukherjee said.
“This is affecting businesses and causing employers who lack staff to be spread more thinly. In fact, a recent Indeed survey found 76% of employers saying their inability to find talent has had a negative impact on their businesses. And many employers (91%) have had to take on additional jobs and/or responsibilities to keep their business afloat due to the labor shortage.”
Jennings called this disconnect “a domino effect.” Despite the talent shortage, work still needs to be done and that burden falls on the people still employed.
“People are burning out,” she said. “That’s why it’s not just a talent shortage; it’s a talent shortage, plus a significant amount of work for who remains. If we don’t fill in those gaps, we will continue to see people get burned out and quit.”
Companies are experimenting with different incentives to either attract or retain employees. For example, Macy’s Inc. recently announced it was launching an industry-leading tuition benefit program and raising its companywide minimum pay rate to $15 per hour.
According to Mukherjee, an Indeed survey found that 78% of small- and mid-size businesses and 84% of enterprise employers have changed how they hire in order to compete for talent in the current hiring landscape.
Heading into 2022, Mukherjee said employers remain optimistic, and many feel that their companies will grow and have even more job opportunities in the new year.
“As we enter into this year, employers should try out new strategies and tools that can help them stand out and attract potential candidates,” he said. “The pandemic has led to a ton of innovations meant to help improve the hiring process, and there are many tools, like skills assessments and virtual interviewing, that can help employers quickly identify and hire the talent they need in 2022.”
"Bring human back to human resources."
But Jennings believes the talent shortage will not be resolved anytime soon. According to a Korn Ferry study, there will be a global human talent shortage of more than 85 million people by the year 2030. And, if left unchecked, that talent shortage could result in about $8.5 trillion in unrealized annual revenues.
The companies that get the employee experience right will stay ahead, said Jennings. That includes training current employees to help build future skills to address those missing gaps. In addition, the biggest component to under- standing the employee experience is listening and engaging with them. Jennings added that senior leadership should keep a “regular pulse” on their people and have regular conversations with them to help address any challenges. This feedback is important, Jennings said, because by the time unhappy workers reach their exit interviews on their way out the door, it will be too late. Connecting workers with a sense of purpose and all available opportunities will only improve the employee experience, according to Jennings.
“Bring human back to human resources.”