The talent landscape continues to be volatile and challenging. While jobs are plentiful and compensation has increased, turnover is up, the unemployment rate has stayed relatively high, and the labor participation rate is lower than expected. As we consider the talent situation for this new year, two major trends have emerged.
First, the talent shortage is here to stay for the foreseeable future. Although the front-line worker shortage may ease as more reenter the job market when the pandemic recedes, the long-term trends that existed well before Covid will continue, perhaps at an accelerating rate. Baby boomers will continue to retire and there are simply not enough experienced Gen Xers and millennials ready to replace them.
Second, many individuals have or will fundamentally rethink their relationship with work. The pandemic not only demonstrated that remote work can be effective, but it also altered living arrangements and family responsibilities while shifting priorities. As a result, we’ll see more workers change industries, seek greater flexibility, look for more fulfilling roles and, in some cases, find a way to drop out of the full-time workforce altogether.
We believe organizations will respond thusly:
Focus on retention
It’s much easier to retain current employees than attract new ones. Organizations have begun offering improved benefits, hybrid work, enhanced culture, etc., but if employees don’t feel engaged, don’t have a path to grow, and (this is a new one) aren’t comfortable with the flexible work arrangements, they will look elsewhere. As part of this retention effort, employers must:
- Expand the use of bonuses and other variable compensation at all organizational levels.
- Proactively address employee burnout.
- Continue to connect employee responsibilities to organizational purpose.
- Ease up on policies that restrict access to benefits and PTO during the first months of employment.
Accelerate process automation
Factory automation has been at the forefront for years and now the concept is moving to business process automation outside the factory. The ROI can be tricky to measure, but it’s something many organizations will embrace.
Hire for talent
As it becomes increasingly difficult to find candidates who bring a long list of specific skills and experiences, companies will move toward hiring for talent, motivation and potential. We’re seeing more organizations deepen their candidate pools by targeting second chance employees, workers without college degrees, those with employment gaps and individuals who are later in their careers. Being intentional about reducing bias in the hiring process also can ensure viable candidates are not needlessly eliminated.
Expand internal development activities
Even smaller and mid-market organizations will take more direct responsibility for employee training, development, re-skilling and up-skilling to ensure they have a strong talent pipeline.
Push CEOs to the front lines
Instead of relying solely on HR leaders, CEOs will take personal responsibility for enhancing corporate culture and employee development, two critical imperatives in today’s environment.
While the talent landscape has changed significantly over the past two years, the organizations that innovate and respond to the ever-changing talent environment are the ones that will benefit most.
This article originally appeared in the Cincinnati Business Courier in January 2022.