Where the Talent Went and What To Do About It

If COVID is essentially over for most of us, then why hasn't the labor market rebounded? Where are the workers? Despite a range of efforts, organizations still struggle to fill job openings, with 44% of business owners reporting unfilled positions in May 2023, significantly higher than the 20-year average. Is the reason as simple as some of our C-suite clients claim, that "no one wants to work anymore"? No. Like nearly everything in our world, it's much more complicated. A recent article, "Workforce Warning: The Pandemic Accelerated a Looming Problem. It's Not Going Away" by Andy Medici and Ty West, published in the Atlanta Business Chronicle on November 7, 2023 details the reasons behind what many hiring leaders and HR professionals are experiencing. 

While labor shortages were initially attributed to pandemic-related factors, the talent rebound simply hasn't happened as expected. Persistent labor shortages, triggered by a variety of factors and greatly amplified by COVID-19, indicate that this labor shortage is a structural issue. In turn, businesses must acknowledge that this a long-term problem and adapt to new methods of recruiting, developing, and retaining talent.

Demographic shifts, declining birthrates, and a lower labor force participation rate are contributing to the problem. Federal Reserve Chairman Jerome Powell estimates a labor force shortfall of about 3.5 million workers primarily due to increased retirements and declines in American birth rates. Furthermore, the size of Gen Z is smaller than the Millennial generation, leading to gaps in available talent, especially in certain skills.

To address the ongoing labor shortage, we recommend the following 4 strategies in order to tap into bigger and different pools of talent:

1) Change the thinking about hiring in your organization:
HR and hiring leaders need to pivot hiring habits and beliefs that they've held for years. Two in particular are obsolete in this talent marketplace: 

1. Old notions about hiring preferences and requirements need to be discarded. Assumptions about educational requirements, gaps in employment, 'job-hopping' or non-traditional backgrounds should all be re-examined on a job-by-job (and in some cases, candidate-by-candidate) basis.
2. The idea that the hiring manager is the customer in the hiring process and his/her preferences, timeframes, habits or beliefs must guide the process is a no-win approach. The customer is in fact the top talent in the marketplace and the process needs to be engineered to win them - not please the manager. Ultimately, all hiring managers will be pleased when faster, better hiring takes place.

2) Hire and develop early career talent:
Companies that have robust, mature early career hiring programs are ahead of the game right now in terms of winning tech-savvy and diverse talent. Structured internships, co-ops and rotational programs will be critical talent pipelines going forward. It's not too late to start by building the business case for hiring well in advance for key roles, identifying the right schools from which to recruit (remember, not the hiring leaders' preferred schools - but the best schools for the skills and talent needed), designing concrete assignments and performance measures, and selecting the best managers to guide, develop and retain this talent.

3) Hire and retain older workers:
Some companies pine for the days when there were "adults" in the room. Targeting older workers for appropriate roles allows employers to build a workforce with a greater set of soft skills, a motivated, predictable and customer-oriented mindset, and a willingness to learn and get the job done. In the right roles and with the right supervision, this is a win all around.

4) Evaluate source effectiveness:
Take a critical look at your hiring success without assigning blame or fault. Analyze by key roles and geographies to determine which sources of hire yield the talent that stays longest and performs best? Which do not? For instance, how many interns are ultimately converted to full time, regular positions each year and of those, how many stay and perform well over time? From which schools do we get the most high performing, best cultural fit hires? How successful are referrals? Do re-hires tend to stay and perform better the second time around? What's the attrition rate and tenure for those who respond to job postings? 

It's a safe assumption that if you're reading this article, the talent marketplace is only going to get more challenging until after you've retired. Now is the time to take action.