Attracting and retaining skilled talent has always been a goal of successful organizations. Employees are the lifeblood of a company, after all! The right mix of hardworking and talented individuals is the ticket to a long lifespan of future successes. And while organizations have always competed to recruit the most talented individuals and keep them happy, the current climate of the talent economy makes this crucial task even harder to complete.
This news comes as no surprise to any hiring manager who’s been paying attention over the last couple of years. It’s nearly impossible to browse today’s headlines without coming across multiple references to today’s talent shortage. But what exactly does this mean for the world? When did it start, and what caused so many workers to disappear?
What does the talent shortage mean for the world?
Simply put, the number of open positions currently available far exceeds the number of qualified candidates. According to U.S. Labor statistics, the global talent shortage currently amounts to 40 million skilled workers and is predicted to reach over 85 million by 2030 if the trend remains unchanged. Such a shortage would cost companies around the world over $8 trillion in lost revenue. In the U.S., the number of job openings increased to 11 million in October 2021, with the most significant increases in accommodation and food services, manufacturing, and education.
When and why did the talent shortage start?
While it’s easy to point the finger at the COVID-19 pandemic and related shutdowns as the sole cause for this phenomenon, the talent shortage that the world is currently facing has actually been developing for some time. In fact, over the last ten years as Baby Boomers have begun to retire, younger generations haven’t shown the same amount of interest as their predecessors to snatch these jobs up; either through a lack of training or a lack of interest to join the traditional corporate route up the ladder. Some sources blame stagnant wages, slow promotions, and the elimination of middle management jobs for these younger workers’ disenchantment. However, when the COVID-19 pandemic hit, the steady trickle of retiring Boomers became a rushing stream. A study by Pew Research revealed an increase of 3.2 million more Boomers reporting themselves as retired between the third quarters of 2019 and 2020. This is a substantial increase of over one million more retirees than the average annual rate of 2 million since 2011.
Another potential cause for the labor shortage is the enhanced unemployment benefits and stimulus packages offered during the pandemic. Early on, this was potentially the most popular culprit upon which to cast blame for all the missing workers. However, a federal jobs report released in October 2021 disproved this theory by demonstrating that the labor force continued to shrink even after the enhanced unemployment benefits ended nationwide in September. There were additional reports indicating that even in states where governing bodies decided to end these enhanced benefits early, the job growth has yet to see any change.
Has this happened before?
As always, we stand to learn a great deal by looking through the history books for instances where something similar has happened before. Has the world ever experienced such a plague and ensuing shortage of laborers?
One possible comparison is the Black Plague pandemic of the Middle Ages and the subsequent Peasant’s Revolt of 1381. After the bubonic plague swept Europe and parts of Africa and Asia for seven years, leaving anywhere from 75-200 million people dead, many lords found themselves with far fewer serfs to farm their manorial lands. A majority of the remaining serfs took the opportunity to evaluate their circumstances and seek employment elsewhere, either at other manors whose lords were willing to pay higher wages or among the tradesmen and merchants in larger cities.
To combat these alarming changes, the king passed laws freezing wages to pre-plague levels and requiring serfs to stay on their manors unless they had the permission of their lords to travel. This escalated into an organized, violent revolt by the working class against royal officials. And while the revolt was eventually defeated by the king’s army, serfdom declined from this point while wages increased, offering laborers unprecedented social mobility.
Is there a solution?
While today’s labor shortage has thankfully been a much more civil event than the bloody Peasant’s Revolt, there are still some lessons to be learned from its medieval counterpart. Namely, that employees will eventually grow tired of working harder and harder every year just to maintain the status quo. Any organization that could do better for its workforce, whether in the form of monetary compensation, benefits, or working arrangements, and chooses not to, could find itself a victim of the imminent market correction.
So what can businesses do today to align themselves for future talent attraction and retention?
In the short term
The pandemic forced many workplaces to set up remote working arrangements overnight just to keep the lights on. As a positive consequence, many employees realized increased productivity while also reducing the stress of the morning rush out the door, daily commute, school drop off/pick up, and care for children in the home. Revoking the flexibility of these remote or hybrid working arrangements, especially for no better reason than just returning to how things used to be, will likely result in instant burnout and resignations across the board. Employers should realize that this change to flexible working arrangements for everyone (wherever possible) might have needed to happen for some time, and things will likely never be the “same” again.
With the lack of available talent, organizations should understand that their people might be stretched a bit beyond comfort for the immediate future. Employers should encourage their teams to have faith that this is only temporary and compensate those loyal team members picking up the slack for their increased workloads. Businesses can also use this time to reset, figure out what is really important to their brand, and eliminate extraneous projects that fall outside of these new priorities.
Learn from others
One of the most important factors that an organization focused on talent attraction and retention needs to understand is what the competition is offering. The laws of supply and demand dictate that it is an applicant market, offering potential recruits the opportunity to shop around and choose from any number of employers’ offers. A business can’t compete if it doesn’t understand what other offers are out there for comparable work. Employers should do the research to figure out the compensation packages, benefits, and working arrangements offered by competitors and do their best to meet, if not beat, these alternative offerings.
In the long term
Culture, culture, culture
An all-too-common complaint among today’s workers is having to exist in an environment fraught with toxic behaviors and practices that belittle team members’ achievements for personal gain or allow for poor treatment of colleagues or subordinates.
Industry publications report that a common denominator of the world’s most successful companies is a strong workplace culture. This culture consists of shared beliefs and values set forth by an organization’s leadership and should be consistently reinforced through day-to-day behaviors that shape perceptions and define the proper way to behave within the organization.
A strong business culture can promote employee engagement (and likewise, on-the-job happiness and retention) by taking a “People First, No Matter What” approach. If an organization’s lifeblood is its team members, then the culture should communicate its importance. Diversity, Equity, and Inclusion initiatives celebrate the individual and cultural differences of a company’s workforce, promoting diverse hires and ensuring that every team member has an equal opportunity to make their contributions to the best of their abilities.
Finally, once an organization’s culture has been established, its leadership must walk the walk. Expectations and values must be communicated regularly, and all leaders must set the example. A business must protect its culture by achieving buy-in from every member of its team and fearlessly part ways with partners, clients, and employees who exhibit toxic behaviors that jeopardize the cohesiveness of the team. Leadership should look after its people tirelessly, caring for their needs like family and not the means to a profitable end.
The labor shortage currently facing the world has proven to be much more than an anomaly caused by pandemic-related shutdowns or enhanced unemployment benefits. Rather, it appears to be the long coming result of decades of enterprises failing to keep up with employees’ wishes for fair pay and benefits, proper treatment, and the flexibility afforded by modern technology. And employers struggling to return to pre-pandemic businesses practices might as well be digging their own graves.
To succeed in attracting and retaining talent in this new normal, organizations should embrace the changes brought on by the pandemic, focusing on creating a business culture that genuinely values every team member. Doing so will help them rise to the top, organically attracting their industry’s top talent as an employer of choice.
The following video shows hiring trends we’ve seen with our Goodwin Recruiting clients throughout 2021, which very much mirrors the content above. To learn more about how we can help move the mark with your future hiring needs, reach out today.