Hiring Pressures Mount As Talent Supply Tightens
July 19, 2017 – The global workforce is changing rapidly. Skills shortages, new models of engagement and demographic shifts, as well as economic and political forces, are pushing companies to re-think their approaches to securing critical skills. As talent and business leaders look to the future, a strategic understanding of the forces of change is essential.
Allegis Group, a Hanover, MD-based global talent, staffing and recruitment services firm, has developed a snapshot of notable trends influencing the talent landscape around the world. Its newly released ‘Global Workforce Trends Report’ provides a region-by-region breakdown of major economic and demographic statistics and trends influencing the supply of talent.
Based on research into global economic and demographic data, the study found that workforce trends not only vary widely among regions, but they are enormously complex, and the pace of change is accelerating. Behind the trends, a big-picture view of the talent landscape reveals three key factors driving change globally.
1. Changing Demographics: Global population changes are setting the stage for a new talent supply profile that is likely to last for decades. This change is due to the retirement of a disproportionately large generation of older Baby Boomers in many countries, leaving a workforce shortage behind them.
Likewise, country-by-country shifts from manufacturing to service-based economies, or vice versa, also add pressure to workforces in certain areas. These pressures, both demographic and economic, are reflected in key productivity measures such as gross domestic product (GDP), and, perhaps more revealing, per capita GDP.
2. Technology: New technologies put a premium on emerging skills. As the influence of innovation permeates many traditionally lower-skilled areas of business, companies will grow increasingly dependent on science, technology, engineering, and math (STEM) fields of expertise.
In today’s economies, the increasing demand for technical skills spans both IT and manufacturing sectors. This trend is accelerating, and it influences different countries in different ways. Regardless of location or industry, companies around the world will find themselves struggling to address new demands for technical skills.
3. Workforce Strategies: Finally, shifting economic conditions, demographics, and skills demands are leading to potentially disruptive changes in the way companies secure workers. These changes are reflected in the way various regions approach the use of staffing services and contingent workers, MSPs, RPO solutions, and freelancer and statement of work (SoW) talent. The maturity of talent strategies and solutions still varies greatly from country to country, but companies in nearly every region are experiencing pressure to get creative in expanding their talent supply. Organizations are re-examining talent requirements, increasing their use of flexible workers, boosting their commitment to developing current employees, and improving visibility and planning for future skills needs.
For talent decision makers, the trends underscore the growing importance of key elements in an effective workforce strategy. Flexibility in talent planning is essential as the traditional employee is no longer necessarily the default goal for filling a position. The care and development of a company’s incumbent workers are a priority as external sources of talent are subject to keen competition. And finally, the ability to adapt quickly to meet new talent demands will be a defining characteristic of successful companies in the future.
Regions
U.S.: The U.S. economy has been an effective job creator, and skilled workers remain scarce. The need for cost control and efficiency will consequently be part of an effective procurement and contingent workforce strategy. Other factors including talent quality and retention may combine to compel planners to increase wages more quickly in the future.
U.K.: While Brexit is a potential disruptor to longer-term hiring initiatives, job vacancies are at record highs following the 2009 economic crisis with a shortage of skilled workers to fill them. The U.K’s mature market is conducive to the use of contingent workers, Indian offshoring and contingent RPO, but that maturity may also slow MSP and RPO growth compared to the rest of Europe.
Primary Eurozone: France and Italy still experience unemployment rates of 10 percent or greater. The region is also experiencing a high level of retirements, expected to continue for the next several years, as well as a shortage of STEM workers and an overabundance of industrial or low-level office workers. Further, the rate of RPO growth is expected to be higher in Europe, and contingent RPO may contribute to that growth. A focus on flexibility will be important for companies navigating these markets.
APAC: Japan represents the dangers that extreme labor tightness can put on GDP while India represents the opposite: a potential labor supply to help other nations struggling to find enough skilled workers. Improved training and access to workers across boundaries will become an economic necessity in the region. RPO and MSP markets also have room to grow in size and sophistication.
Based on its extensive experience and the research outlined in the ‘Global Workforce Trends Report,’ Allegis Group said that successful talent organizations will be those that apply a conscious approach to three critical areas:
- Expand the External Talent Supply: Smart organizations are adding flexibility to their job requirements, opening themselves to the people with the right skills regardless of worker types.
- Optimize Internal Talent: Beyond determining where to recruit and what type of worker to seek, successful companies are increasingly looking to internal talent as their best defense against worker shortages and changing skills demands, especially as talent scarcity becomes more acute. An employee-first approach applies active training and skills development to fill workforce needs.
- Commit to Change – Looking Beyond Transactional Results: An effective talent partner goes beyond filling roles and finding workers, applying strategy, expertise and technology to help clients navigate changing talent needs.
“Workforce trends not only vary widely among regions, but they are enormously complex, and the pace of change is accelerating,” said Allegis Group’s director of labor market business intelligence Ron Hetrick. “Today’s trends underscore the continuing pressures of shrinking talent supply, rising demand and industry competition. As employers look to the future, they see that traditional workforce management approaches may no longer fill the gaps.”
Workforce Summer Fling Could Set Up Race for Workers
While employee retention is hardly a new concern for employers, the race to keep top workers in-house has escalated significantly in the past year. New findings from the 2017 Emerging Workforce Study commissioned by Spherion Staffing indicate that employees are more willing than ever to test their options.
Executive Recruiter’s Viewpoint
Stacy Pursell, CEO of executive search firm The Pursell Group, agrees with all the reports on talent shortages, especially highly skilled and technical talent. “It is becoming increasingly difficulty to find qualified talent and the employers that are the most flexible are the ones who are going to win the war on talent,” she said. “This means allowing flexible working arrangements and being more open to people working from home instead of being required to report to an office.”
Ms. Pursell pointed to a past study that showed workers who work from home are more productive than those who report to the employer’s office. “I’ve seen employers who require someone to work out of their office who are desperate to fill a position and are having a difficult time getting someone to relocate to work where their office is located,” she said. “There are perfectly qualified candidates who are interested in the open position but are simply not able to relocate to the city where the employer’s office is located. Then that employer will miss out on a capable individual and it all comes down to geography.”
In this day and age, she said, with the communication tools we have, more employers are going to have to start being more flexible and creative or they are going to miss out on some key talent. “In fact, they already are,” she added. “Employers may have to reconsider the hours too. Why is it necessary for an employee to sit in your office from 8:00 to 5:00? As long as they get the work done, why not let them work when they are most productive whether it be 7 to 3 or noon to 8 p.m.? One of the biggest reason I see people turn down opportunities is due to geographic location.”
Candidates are getting more picky because they know they have options. “I recently had a candidate go on seven interviews and she got seven job offers,” said Ms. Pursell. “If you are not offering the best opportunity, then that individual will simply go somewhere else where they are offering the best opportunity”
Also, if your interview process is too long then you can bet top candidates will drop out. “Our firm did an annual employment survey and we asked individuals how they would spend in an organization’s hiring process before bowing out,” she noted. “A little more than 13 percent indicated that they would spend three weeks in the process, while another 15.7 percent said they would spend four weeks. That is nearly 29 percent of candidates who would drop out of a hiring process in four weeks, tops. Then five percent said they would drop out after five weeks, and another 23 percent said they would drop out after six weeks. Employers are taking too long to take candidates through the interview process and they are losing top candidates,” said Ms. Pursell.
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Will Schatz, Managing Editor – Hunt Scanlon Media
