Amid Global Labor Shortage, Businesses Rethink Talent Strategies
June 23, 2022 – Amid ongoing labor shortages around the world, The Conference Board has released a new report to help business leaders rethink strategies for finding the right talent. The report, Navigating the Global Talent Tsunami, encourages leaders to fundamentally rethink long-held assumptions about who can do the work; where, when, and how the work gets done; and the talent acquisition function itself. The approaches offered, such as alternative credentials, utilizing untapped populations, and flexible work hours from flexible locations, can help businesses to identify, revisit, and overcome notions that may implicitly limit candidate searches and talent pools. Rethinking sourcing strategies, says the study, will yield more candidates in the short term and more agile and diverse talent pools—and organizations—in the long term.
“Organizations willing to overcome deep-rooted beliefs about how work should be done—and who should be doing it—will have an advantage in this war for talent,” said Robin Erickson, vice president of human capital at The Conference Board. “Hiring from underutilized groups will not only expand the candidate pool—it will expand the diversity of thought and experience within your organization.”
Rethink Who Can do the Work
- Seek skills instead of experience: Evaluate the skills the work requires and target candidates from other professions who have those skills.
- Hire for potential: Hire for qualities that are not easy to teach, rather than skills that are.
- Consider untapped populations: People with disabilities, retired seniors, college students, migrants, refugees, and the formerly incarcerated have historically been overlooked as hiring candidates. Also consider employees who have voluntarily left the organization and workers who prefer to work as independent contractors rather than full-time employees.
- Revisit traditional hiring credentials: Alternative credentials, like certificates of competency, allow organizations to consider a more diverse range of candidates, especially for hard-to-fill positions.
Rethink Where, When, and How the Work Gets Done
The Conference Board report suggests that companies be flexible about where work is performed. “Organizations that allow for some flexibility in work location, which employees overwhelmingly want, have a competitive advantage over those that do not,” the report said. “Question when the work needs to be performed: Consider abandoning the concept of an eight-hour workday or experimenting with a permanently shortened workweek. Redesign job roles in ways that will expand the pool of potential candidates. Try job sharing, in which two or more people perform the work traditionally performed by one; intraorganizational employee sharing, in which one person performs work for more than one part of a single organization; or interorganizational employee sharing, in which one person performs work for more than one organization, coordinated by those organizations.”
Rethink Talent Acquisition Itself
Make everyone a recruiter, says The Conference Board. Companies should provide their employees with current and accurate information about job openings and qualifications, along with strong incentives to refer candidates. Recruiting internally can also be beneficial. “Employers should dissuade managers from hoarding employees, clearly define potential career pathways, and tightly integrate internal and external job postings,” the report said. “Doing so will create highly motivated employees, preserve institutional memory, and increase employee engagement and retention.”
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AI, meanwhile, can increase the efficiency of recruitment processes, improve employment branding, bolster recruitment marketing, improve the hiring experience for both candidates and hiring managers, optimize sourcing, and enhance the quality of the candidate pool, all while driving down costs and streamlining boring and repetitive tasks, The Conference Board report said.
Companies can also reconsider salary increases and not rely heavily, or even exclusively, on salary to attract candidates—especially at the cost of your current employees. “Instead, offer other incentives like flexible work arrangements,” said The Conference Board.
Veteran Search Consultants Weigh In
“The past few years have led to some radical shifts in the workplace, and things that we might once have thought of as temporary have now become long-term aspects of the working world,” said Ruben Moreno, HR practice lead for Blue Rock Search. “The most high-profile, obvious shift has been the change in attitudes towards hybrid and remote work, both among employers and among employees and job seekers. As the push for return to normal collides with the new expectations created over the last few years, we’re seeing a wide variety of perspectives.”
Some job seekers don’t want a hybrid opportunity, and some employers lack the infrastructure and/or interest in offering hybrid roles, he said. For others, however, hybrid or remote opportunities are all they will consider. “When competing for talent, companies have to be aware of this, as well as trends within their specific niches, and offer policies that are in line with what their particular set of job seekers are looking for,” said Mr. Moreno. “Pair this with all-time highs in employee burnout, and it’s requiring a lot more creativity and flexibility for employers to stand out in the job market and attract top talent.”
“We’re also seeing a rise in confidential searches,” said Mr. Moreno. “These can happen for any number of reasons, from keeping strategic moves under wraps from competitors, to wanting to ensure news about organization or role changes doesn’t get out too soon, and more. Because of the extra discretion required in these searches, typical avenues like word-of-mouth and professional networks are off-limits. Instead, the war for talent becomes much less public, though no less competitive.”
In the current work world, presentation of the opportunity is more important than ever, said Mr. Moreno. “We’re also having more discussions about skills to manage a hybrid workforce, about career development beyond the immediate opportunities and roles, and about overall culture,” he said. “These reflect some of the major concerns of prospective employees in the current job market, and they can be more complex than they seem at first glance.”
“In my opinion, many companies have reacted too quickly to what they have perceived as the new normal,” said Deveran George, SVP of executive search at MalinHughes. “The lack of available talent is almost self-inflicted. Regardless of how it happened, or what caused it, change is happening and affecting how we source and hire talent. Our clients are working to become more competitive by addressing the war for talent from several different perspectives,” she said. “They are moving to a completely remote workforce. Some companies have moved to a hybrid model which is part remote, part in the office. There are some companies, in healthcare for example, that for obvious reasons cannot offer their employees either a remote or hybrid opportunities.”
Given the nature of their business, it would not be realistic or practical to provide such an arrangement, said Ms. George. “It’s these organizations that I find are struggling the most to find talent but have also responded with the most creativity,” she said. “These organizations resort to increasing compensation and benefits packages to become the local employer of choice. Health and wellness programs are becoming more robust as are total rewards programs designed to promote and increase employee engagement. We see increased diversity, equity, and inclusion initiatives so that not only do they become better internally but they become a more accurate representation of the population/customers they serve.”
“One of the most consistent changes being made, regardless of where people work, is the sincere implementation of diversity, equity, and inclusion initiatives,” Ms. George said. “DEI is no longer a buzzword, but it has transitioned to a cornerstone of responsible corporate culture. Offering remote and hybrid solutions has had both positive and negative effects on talent acquisition. The positive is that having no restrictions on from where people can work provides the company with a far bigger pool of candidates. The downside to implementing these strategies is that companies are competing for talent across a far broader geography.”
Companies are realizing that remote work is here to stay, said Dana Feller, founder of Hudson Gate Partners. “With the exception of only one or two of our most traditional clients, all of the funds we work with are allowing remote work as part of their new normal,” she said. “In order to attract talent, this is a must. However, we have noticed recently that even the funds that are offering one to two days of remote work per week are losing out on top candidates to funds that allow for entirely (or almost entirely) remote work. Companies are also beginning to understand that salary transparency is on the horizon and will likely sweep across many states and industries in the next few years. Companies are focused on analyzing their current salary levels to ensure that they are market competitive, and if necessary, raising the salaries of some of their current employees to ensure their salaries are in line with the broader market.”
Search firms, for their part, have made a number of changes, Ms. Feller said. “Before launching a search, we are setting parameters with our clients to ensure that when we find them great candidates, they will be able to expeditiously interview the candidates and have their full process in place. More than ever we are advising our clients around speed of execution.”
“Business has been great so far in 2022,” Ms. Feller said. “Even with the rocky economic outlook and the volatile markets as of late, most hedge funds and private equity firms are continuing to hire. Certainly the second half of 2022 is less clear at this point, but I believe that most funds will continue making strategic hires even in a recessionary environment. If they don’t, they will be behind the curve vis-à-vis their competitors when the market rebounds, as many firms were in early 2021.”
“In my 34 years of executive search, 2022 has delivered a never before seen spike in search activity,” said John Gilmore, co-founder and managing partner of BarkerGilmore. “The demand for in-house legal and compliance leaders is surging. With the state of the economy and stock market in flux, it is impossible to predict the future, but for now, my firm is reaping the benefit of a candidate driven market.”
“Every client has similar search criteria: diversity, top credentials, proven leadership track record, commercially minded, business savvy, high EQ, willingness to roll up their sleeves, and ability to influence others,” said Mr. Gilmore. “Clients with mission-driven leadership and a focus on ESG and DEI are at an advantage because top-tier talent is drawn to opportunity over position. BarkerGilmore is attracting five-star talent and filling jobs by aligning with clients to understand the short and long-term potential of the opportunities. This insight is critical to attract top performers who are content in their current position and not actively seeking a change.”
“Like everything else right now, it’s a flashback to the 1980s,” Mr. Gilmore said. “I’m revisiting the recruiting basics I learned from industry all-stars decades ago. I recently had lunch with my long-since retired mentor, and after discussing the state of the industry, he pulled out a copy of How to Master the Art of Selling by Tom Hopkins. This was a training staple back in the day, and it’s remarkable how everything still holds true today.”
Now, more than ever, recruiters must work harder and smarter. “Building trusted relationships across the industry, earning a reputation for treating people right, and delivering the highest quality talent were critical components to the business more than 30 years ago and remain essential today,” said Mr. Gilmore. “As my mentor told me, when times get challenging, always go back to basics.”
“The new normal, for a while, was that companies found a way to work without their employees physically coming into an office,” said Gary Erickson, managing partner of Executive Search Partners. “This had tremendous benefits for both employees and employers. It expanded the pool of available workers and improved the work/life balance for all.”
“However, many companies today are eliminating most remote positions by requiring their employees to be in the office two to three days a week,” said Mr. Erickson. “Tesla and Google are two highly visible examples of this trend. These trends have increased the war for the smaller pool of available talent and are increasing costs for companies (higher salaries, taking longer and more work to fill open positions, increased office space, higher travel costs. reduced diversity, and more). While we don’t see this trend changing, we do think that companies should reconsider their requirements for employees to be in the office.”
Search firms have always had to adjust to changing company requirements and the pool of available talent, according to Mr. Erickson. “When companies were looking for remote workers during the pandemic, we had a wider pool of available candidates,” he said. “This also allowed us to present a more diverse group of candidates quicker. Now with companies requiring two to three days/week in the office, the only viable candidates are those that live within commuting distance. The requirement many companies have that their employees must be in the office two to three days/week has increased time-to-fill and overall costs for our clients and for us.”
Executive Search Partners focuses on senior-level information technology positions. “2022 has been our best year ever as the demand for top IT professionals has accelerated,” Mr. Erickson said. “We attribute this growth to the pandemic-
fueled realizations that a strong IT team is critical for a company’s survival and its growth.”
“My first observation is that there are serious challenges cleanly identifying new normal,” said Matt Mooney, partner at ON Partners. “Are we in a booming market or looming downturn? Pandemic or post-pandemic? Back in the office or remote? This lack of clarity forces companies to make assumptions that may or may not be true. Multiple blue-chip companies have embraced a fully remote work model, while just this week we saw Tesla order everyone back to the office full time. This lack of market clarity will cause ongoing disruption and confusion.“
Candidates Still Have Leverage
“Candidates still have leverage in this war for talent, but a growing wave of layoffs has the potential to turn that tide quickly,” he said. “The key will be for companies to remain nimble, be transparent, and attempt to communicate a philosophy that matches the current market conditions. Many companies appear to be pushed into a reactionary mode which is not well received by current or potential employees.”
Search firms have been through a lot in the last 36 months, Mr. Mooney said. “From a booming market heading into the pandemic, to a market that essentially shut down for a few months, back to a booming market in a relatively short period of time. Given the circumstances, most firms have adapted well and have continued to provide top talent despite the adverse situation. The biggest changes we have seen firms make is around the speed to embrace change. From remote work to adapting to 100 percent video-based interviewing, client meetings and internal discussions, an industry that had been slow to change for decades demonstrated true adaptability. It is this openness to evolve and the change in process and philosophies that embodies a more nimble industry. The drop in consultant and candidate travel also dramatically reduced the cycle time of engagements, proving that firms and clients can move fast.”
“Business has been historically good for ON Partners,” said Mr. Mooney. “We continue to grow at unprecedented organic rates and solidify our partnerships with top brands across a range of industries. Companies are still hungry for top talent, and even where we are seeing early adversity, companies are simply adapting to the type of talent that may be needed in a more challenging economic environment. Top roles are hard to fill and will remain difficult for the foreseeable future. Adding economic uncertainty to an already evolving environment only makes hiring that much harder. Great firms will always adapt and position clients to acquire the necessary leadership to fit what looks to be ongoing opportunities in the market.”
Many companies now recognize the need to move from a reactive approach to a strategic approach to recruitment, said Frank Scarpelli, managing partner and chief executive officer of HireWerx. “Innovative companies are making quick and decisive decisions when interviewing and assessing talent,’ he said. “They know that candidates have other options if the process takes too long. Smart companies are implementing retention strategies. It’s not always about the money, but bringing on new talent at higher compensation levels is demoralizing for existing employees. Most, if not all, will seek out other opportunities. Companies should not forget to address flexible work arrangements and other perquisites that will improve retention.”
“Search firms are more selective about the work from clients they accept,” Mr. Scarpelli said. “In a market still primarily controlled by the candidate, attracting quality candidates to companies with less desirable cultures is pretty challenging. Search firms aren’t taking on assignments from such firms. Moreover, because recruiters are also in high demand, professional fees are at a premium.”
“This market is the busiest we have seen since the dot-com era,” said Mr. Scarpelli. “Companies are competing for talent at all levels, with few exceptions. Of course, recent events are forcing companies with weak balance sheets to cut overhead due to economic forces. Our firm has not experienced this, most likely due to our focus on technology-centric organizations and our work with private equity and venture capital firms.”
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Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media