In the past ten years, the talent shortage in the United States increased by over 300%. Then, the COVID-19 pandemic wreaked additional havoc on the labor market. To find suitable talent, companies are rethinking their HR practices, talent strategy, and tweaking retention efforts to combat these talent shortages.
With the Turnover Tsunami dictating how the labor market works, adjusting to the "new normal" is on the agenda. By changing existing recruitment and retention practices, it's possible to keep the top talent and become the employer of choice.
Let's take a closer look at what you can do to conquer the talent shortage and stay on top of your game.
What are the main reasons for the current talent shortage?
By 2030, global talent shortages could reach 85.2 million employees. This would result in the loss of trillions of dollars in economic opportunities for businesses. The industries that feel the effect the most will be technology, telecommunications, financial services, and media.
By digging deeper into the reasons behind the shortage, you can gain valuable insight.
COVID-related issues driving talent shortage
While the pandemic seems to be subsiding, it's still affecting the labor market. The pandemic-related talent shortage can come from a few:
Workforce burnout – many employees had a tough time readjusting to remote work, dealing with salary cuts, and working overtime to fill in for laid-off colleagues.
Health issues – some employees are afraid of facing infection after returning to the workplace, so they are looking for other opportunities. Others are facing increased family care needs.
Industry changes – the pandemic changed how healthcare, hospitality, and public safety industry operations. Many employees are unhappy with how that affected their work.
Retirement – some employees chose to retire instead of adjusting to the new normal in the workplace.
Postponed education – many people had to postpone their training, education, and even graduation due to the pandemic, thus staying away from potential positions.
Pent-up demand – some companies were delaying projects due to the pandemic. As it started to subside, they revisited the need to make new hires but can’t find the talent.
While acute, COVID-19 issues are hardly the only reason for the current talent shortage. The problem has roots that go back before 2020.
What is the talent gap?
While older workers are toying with retirement, younger employees don't have the numbers to step up. In the third quarter of 2020, 28.6 million Baby Boomers were forced to retire. By the end of the year, 40% of them left the workforce.
Millennials are having a hard time replacing Boomers in many industries, especially to fill tech jobs. According to Gartner, IT executives cite talent shortage as the biggest barrier to 64% of emerging technologies, compared to only 4% in 2020.
The number of jobs that require technical certification and education is growing rapidly. Meanwhile, younger generations simply don't have sufficient experience and training to fill up the existing positions. As the rest of the Baby Boomers retire by 2030, the talent gap is likely to increase.
The needs of employees are changing rapidly, and many companies can't keep up. 21st-century job seekers are looking for flexibility, excellent engagement effort, better work-life balance opportunities, and higher pay.
According to a recent survey, more than 50% of employees plan to leave their jobs after the pandemic if they aren't provided flexibility.
While businesses are struggling to stay afloat, they often don't have time and resources to rethink their approach to retaining talent. As a result, they are vulnerable to the effects of The Great Resignation.
Poor attachment and engagement
In a world where flexibility and remote work dominate, workplace attachment is volatile. While working from home, employees don't form close relationships with their colleagues and tend to have a vague understanding of their role in the bigger picture.
With more and more remote or hybrid job openings becoming available, it's easy for employees to jump from one opportunity to another. This, in turn, affects the workplace morale even further.
How to retain your existing talent
With talent shortage becoming acuter by the minute, it's imperative to review your retention strategies. Here are a few things to start with.
Rethink benefits and perks
The talent shortage sends companies into a competitive frenzy. Many of them are ready to offer higher pay and benefits to capture top talent. If your existing employees are unhappy with the current benefits, they could start shopping around.
Besides reviewing your benefits, take a closer look at perks like these which significantly impact your workforce:
These additional benefits don't just make your workplace more appealing to existing talent, they also improve the overall workplace morale.
Help employees grow in their career development
Many employees leave their positions due to a lack of career growth. During the pandemic, this growth slowed down even further. To keep your existing talent, consider helping them grow in their roles and beyond.
From providing training opportunities to encouraging stronger co-worker relationships, it's up to you to help employees understand their value and capitalize on it. We’ve heard from Council Members in our Innovation Advisory Council how the programs they launched to identify employees who want to grow within the organization and are hungry to learn new skills have been highly successful.
The costs of internal recruiting are six times lower than external hiring costs. Upskilling and reskilling existing employees to help them grow are much easier than trying to close the talent gap with external hires.
Besides saving money, you are boosting employee satisfaction, helping the existing staff grow, and improving employee engagement without struggling with the culture fit.
"We invest heavily in putting our colleagues in direct touch with leading security practitioners who build and run security infrastructure for Netflix, Figma, Mastercard, and others. Our retention strategy is to be the place where colleagues can grow the most personally and as a team." - Mohit Tiwari, CEO, Symmetry Systems
Work on improving employee morale
During the pandemic, employee morale took a serious hit. Work-life balance disruptions, salary cuts, and layoffs forced people to look for new opportunities. Meanwhile, businesses that are too busy staying afloat sometimes simply don't have time to deal with morale issues. That said, working towards improving the morale of your employees and consistently taking a pulse of your organization can be paramount in the success of your business.
Find out what you can do to keep employee morale in top shape. Consider doing it by:
Ask for employee feedback. It can provide valuable insight into the current morale situation. Make sure to act on this feedback—so your workforce sees that you listen.
Provide employees with what they're asking for
What does your top talent want? More money, better benefits, more flexibility, higher engagement? Try your best as an organization to meet the requests of your employees. While some of their requests may seem difficult or expensive, recruiting, onboarding, and retaining new employees is even more challenging. Find a balance between identifying quick wins for both the company and employees while working towards planning for potentially more impactful asks.
You could find that employee demands are much leaner than you expected. All you need to do is ask the right questions and listen carefully.
Provide support and embrace soft skills
Disengaged or unsupportive managers are one of the top reasons why employees leave. To provide adequate support, you may need to revamp your approach and provide additional training to your managers.
Support is an essential part of excellent company culture. You can make sure that all employees know their roles, schedules, and expectations while always having an opportunity to provide feedback.
How to attract skilled workers
Shouldn't The Great Resignation make it easy to find new talent? Not at all. Recruiting top-notch employees, especially those with specialized talent, is still complicated. With a wide variety of positions on the market, standing out from the crowd requires extra effort.
Don’t fall into age bias
While employees don't need to put the date of birth on their CVs, age discrimination is still widely accepted, especially for technology-related positions.
Older people may have higher salary expectations. However, they possess the right set of skills and tremendous experience. If you can't handle high salaries, compensate with flexibility, perks, and shorter working hours.
By avoiding age discrimination, you can attract top talent who is less likely to churn than younger specialists are.
Focus on safety
For many employees, the safety issues raised by the pandemic are fundamental in the choice of workplace. To become an employer of choice, address these fears and implement special practices to minimize infection rates in the workplace.
While COVID continues to impact work environments, even as we look towards the future it is critical to take into consideration the safety of your employees—pandemic or not. The importance of showing your workforce that you as a business really do care about their wellbeing is something that has been explicitly highlighted over the past two years.
Create an employee referral program
Employee referral programs are excellent recruiting tools. If you've managed to implement top retention practices, your employees can easily attract top talent.
The key to maintaining a referral program is providing monetary and non-monetary incentives to your existing workers. It's up to you to give your staff all the necessary tools for smooth and transparent recruitment efforts.
Adopt DEI practices
While recruiting a diverse and inclusive workforce may seem tough, especially in a competitive environment, it's part of any company's appeal. According to a recent survey, 48% of respondents said they would consider switching to another company if it had an effective DEI strategy.
In our Q4 2021 Tech for Good Roundup, it was noted that businesses in the top quartile for diversity were up to 36% more likely to outperform the industry median than businesses in the bottom quartile. Employees want an environment that invests in and believes in a diverse and inclusive workforce, and it’s critical to walk the walk, rather than just talking the talk when it comes to adopting and following through with DEI practices.
Reduce unconscious hiring bias
Unconscious recruitment bias is a serious problem. Without understanding how bias works, many HR specialists succumb to it and make wrong hiring choices.
To attract and hire top talent, it's imperative to rethink your hiring process with the hiring bias in mind. Consider implementing structured interviews, reviewing your recruitment software, and educating your hiring managers. Harvard Business Review put together a great piece on seven practical ways to reduce bias in your hiring process. While some of these methods seem obvious, take a step back and see if your HR teams are really adopting some of these practical ways.
When will the talent shortages end?
The fast-growing turnover rate coupled with the widening talent gap could mean that we aren't out of the woods just yet. Right now, it's safe to assume that the talent shortage will remain an issue in 2022 and even beyond.
That's why it's important to rethink your hiring and retention strategies as soon as possible. With the right approach, it’s possible to retain talent and outdo the competition.
At Vation Ventures, we frequently hear about the hunt for technical skills from our Innovation Advisory Councils and Roundtable Sessions. Contact us today to discover how our technology ecosystem can help your company be an innovative organization that employees crave.
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