How Employers Can Adapt to Remain Competitive in Today’s Labor Market

August 17, 2022 – Worker confidence is at an all-time high, with a majority of job seekers believing it’s easier to find a job this year than the previous year and one-third feeling comfortable quitting a job without having another lined up, according to the 2022 Job Seeker Nation Report from Employ Inc., the parent company of Jobvite, JazzHR, and NXTThing RPO. The priorities and expectations of job seekers have drastically shifted over the past year, says the study, which offers an in-depth look at the motivations of the modern workforce and illustrates how this shift has left organizations struggling to engage and retain top talent.

Key findings from the report highlight how today’s job seekers are leveraging their upper hand to secure new jobs, higher wages, and better benefits. Survey data further shows that nearly half of workers are actively looking for a new job or plan to within the next year, and the same number believe they can make more money by simply switching jobs.

“In this employee-driven market, recruiters and employers must quickly adapt to the current reality of talent acquisition to remain competitive in today’s labor market,” said Pete Lamson, CEO of Employ. “This includes creating workplaces that align with job seekers’ needs, while also leveraging the right systems, tools, skills, and channels to effectively grow their organizations.”

Conclusions from the report include insights into the recruiter-candidate experience, the impact of organizational turnover on workers, the importance of chatbots and artificial intelligence in talent acquisition, and the influence of remote work.

State of the job market

• 62 percent of those surveyed are satisfied with their jobs, yet close to half are open to other job opportunities, said Employ Inc.
• 30 percent have left a job within the first 90 days of starting.
• 23 percent have changed industries since the onset of the pandemic.

Money and compensation

• 71 percent are comfortable negotiating salaries in the current job market.
• 67 percent want higher compensation from their employer today.
• 35 percent of workers who were denied their raise request left the job because of it.

Remote work

• 52 percent believe that company culture is just as important as ever in an increasingly remote work environment.
• 40 percent would be willing to accept a lower salary to work remotely.
• 30 percent said their ideal work situation/setup is 100 percent remote.

Search Experts Weigh In

Do job seekers or employers have the upper hand in today’s market? Stacey Mainiero, CEO of H.I. Executive Consulting (HIEC), says that to some extent this is sector-specific, but outstanding board members and executives in particular, especially in the digital ecosystem, are saturated with new employment opportunities. “Significant investments in the imperative transforming of business models, and the early Great Resignation of the Baby Boomer generation, are both prevalent here,” she said.

In regards to retaining top talent, Ms. Mainiero said that “at executive and board level, while the financial aspects always play a role, the most important factor is always the realism of the employer’s strategy and its ability to execute against it. An increasingly important consideration is the employer’s mission and purpose, including its ESG position and intentions,” she said. “Offerings such as hybrid/remote working arrangements are table-stakes only.”

“At leadership levels, technical skills and experience are a given and so chemistry and values/culture fit remain crucial,” said Ms. Mainiero. “The extent to which the candidate can impact the future of the whole firm or a substantial part, also help. Compensation packages for almost all leaders should be tied to company results through stock options, RSUs, etc. Perhaps the biggest change is accepting that our target candidates are now often considering several new employment opportunities simultaneously. This makes it all the more important to get to know candidate’s motivations, goals, and future plans in detail at an early stage of the recruitment process and to discern wisely which applicants’ ambitions are the best fit for our clients.”

“The leverage in the market has clearly shifted to the candidate,” said Ron Godier, founder and managing partner of Intalegence. “Today candidates have options and expectations that they have not had in the past. Part of this was due to the pandemic’s effect of accelerating changes in worker preferences. Part of it is a generational shift in the place work occupies in the lives of prospective employees. This shift was underway in the decade prior to 2020 as companies like Uber, Grubhub, Upwork, and Fiverr gained traction as options for workers seeking more flexibility in the when, where, and how of work.”

“Flexibility is the watchword of the times,” Mr. Godier said. “Candidates at all levels have readjusted what they value in life post-2020 and the ways in which they were working during that period. The last two and a half years have taught workers that they could be good corporate citizens from home. When you factor in that the talent coming into the market is focused more on outputs than time spent in a cube or office and you get a paradigm shift that will inform those companies that intend to stay competitive and how they will work going forward. It is sad to say but the genie is out of the bottle as it were,” he said. “While I think we will settle on some form of hybrid work environment, flexibility across the board will be the most sought after company trait ranking as high or higher than a stance on social issues, as the critical factor when considering new opportunities. That flexibility will extend beyond schedules and include voluntary benefits options that fit a person’s life and needs like, back-up child care, elder care options, and pet insurance.”

“I can’t speak for all executive recruiters but in the work that we have done with executives over the last two years we find that their preferences for when, where, and how work gets done have split along generational lines,” said Mr. Godier. “Older executives have been more than satisfied with returning to familiar environments while younger executives have shown a willingness to adopt new work environments that may have differed from where they came from.”

With unemployment returning to historical lows, continued growth of U.S. economic output driving hiring demand, and a shrinking post-COVID domestic labor force, candidates may find themselves in an unusually strong bargaining position, according to Jordan Shapiro, senior managing director, financial services at Bachrach Group. “The need for qualified talent, particularly in specialty areas like finance, technology, and medical/pharma, has never been greater, and demand continues to outstrip supply. Further exacerbating the candidate shortage are the high number of disruptive new entrants to the marketplace that shift candidate preferences and desires away from traditional firms,” he said. “Fintech and digital currency continue to draw candidates away from traditional investment banking and finance roles while digitally enabled start-ups are aggressively seeking diverse backgrounds from traditional, established industries. Even with the abundance of opportunity, candidates should continue to exercise caution when pivoting career paths and accepting offers that have high guaranteed compensation attached. Despite strong economic indicators, the potential for staff reductions along with the fixed cost exposure firms commit to when hiring large numbers of talented individuals and the possibility for future uncertainty should all be factored when considering offers that seem too good to be true.”

“As executive search consultants, we educate clients and candidates on the disruptive effects of current market demands, while also taking care to guide their understanding that many of these impacts are temporary,” said Mr. Shapiro. “All candidates are seeking to maximize the advantages they are afforded in a strong employment market, but must be cautious not to demand compensation or benefits that are far outside of reasonable expectations. Outrageous requests cast a negative perception of an individual’s candidacy and will most often result in lost opportunities. Additionally, demanding and securing compensation far outside that of the monetary value a firm has traditionally placed on a role leaves a candidate immediately exposed during a market downturn.”

“Similarly, clients must be prepared to react quickly to ever-changing market conditions and adjust compensation ranges, tele-work policies, and other benefits to remain competitive as they seek talent,” said Mr. Shapiro. “Relying on internal equity or the pay ranges of existing employees previously hired under different circumstances will prevent a firm from attracting new talent today. This leaves roles unfilled, current staff overworked, and will drive attrition during a time when retention has never been more crucial. All parties must remember that hiring demand is cyclical, much like the broader economy, and must work to balance reactions to today’s employment environment with and understanding that in time, a return to normal levels of supply and demand is certain.”

“Over the last year, this has definitely been the case,” said Elisa Sheftic, president and managing partner of Right Executive Search (RES). “In our proactive sourcing at RES, we find that candidates are still very willing to have conversations with our client companies, whether they are actively looking to change jobs or not. However, their expectations for making a move are considerably higher and less negotiable. In addition to competitive salary rates, they expect flexibility in terms of work from home practices and they seek high levels of employee engagement and corporate culture as top priorities. COVID has made employees reassess quality of life issues, and what’s important to them. Enjoying what you do and who you work with are now even more paramount.”

Paying market rate is of course important, but there are other high-value factors as well to retaining top talent, according to Ms. Sheftic. “Employers definitely have to be flexible about working from home and they have to step up their communications in this digital age, actively working to increase employee engagement when the team is now more spread out,” she said. “Employers need ongoing and well-communicated messages about the mission, company values, opportunities for learning and advancement, and community involvement — things that build a corporate culture of engagement and mutual respect.”

“We’re very busy and are seeing a lot of growth in our specialty field of financial services,” Ms. Sheftic said. “We’re doing what we’ve always been doing, only more so – listening carefully to both the candidates and the clients and getting deeper into all the surrounding details of the job and the corporate environment. We have to present the whole picture. Both sides have their must haves and nice to haves as they consider each other and recruiters have to be transparent throughout every step of the recruiting cycle and manage the expectations of the vested parties. Also, in this job market, we’ve found that proactive sourcing and connection sourcing has become even more important, so we’re doing a lot of outreach to experienced, passive candidates in order to work with a wider candidate pool of top talent.”

Job seekers have the upper hand because of how tight today’s talent market is, said Phil Brakewell, vice president – executive search NAM & EMEA, WilsonHCG. “Most, if not all industries, are struggling with skills shortages and demand far outstrips supply, and will continue to do so for a long time to come,” he said. “We’ve all seen the headlines about the Great Resignation and the competition for talent. Over the past 12 months or so, workers have taken more risks than usual. They changed jobs and negotiated increased pay using the high demand for talent as their bargaining tool. However, we’re starting to see a slowdown, which isn’t surprising given a potential recession is looming. At the moment, people are not leaving jobs in search of higher pay – instead, they are moving for stability and safety. They’re going to well-established organizations with long-term growth plans.

When retaining your talent Mr. Brakewell notes to make sure you prioritize work-life balance and employee well-being. “Flexibility is critical too – today’s candidates don’t want to work in offices full-time; they want to be able to choose where they work, hence the rise in hybrid working,” he said. “Learning and development is also a key driver for today’s candidates, so invest in a robust L&D program and promote opportunities for growth internally. Showcase the career paths available via recruitment marketing materials to show potential candidates they will have the chance to progress without having to change employers. And they want to work for a company that has a purpose, so share your mission and vision with employees regularly. Employee expectations have evolved at a rapid pace over the past couple of years, so companies must update their employee value propositions accordingly and ensure their employment brand aligns.”

“Today’s candidates aren’t just interested in pay – they want flexibility and a comprehensive total rewards package,” Mr. Brakewell said. “Candidates are more likely to join organizations that have robust employee well-being programs, enhanced medical and retirement plans, generous time-off policies, and they want the chance to make a real difference. Organizations must ask for feedback from both successful and unsuccessful candidates and then use the feedback to make adjustments as necessary.”

Mr. Brakewell explains that executive recruiters have leveraged more talent acquisition technology to help them make better hires faster. “Top candidates are often juggling multiple offers, so executive recruiters have had to expedite their hiring processes,” he said. “They’ve also been turning to real-time labor market intelligence to make data-driven decisions. For example, executive recruiters need to know what their hiring competition is offering when it comes to compensation and benefits, so they can make a case for improved offers (if necessary) with hiring managers and ensure any offers they make are accepted.”

“Since the onset of the pandemic we have experienced and encountered the most candidate-favored market than we can recall in recent memory,” said Tracy McMillan, CEO and managing partner of BroadView Talent Partners. “Whether for-profit or non-profit, remote, hybrid or in-office, candidates seem to have leverage and an upper hand vis-a-vis the prospective employer. CEOs and their direct reports have more opportunities to choose from to navigate their next logical career move. The trend towards remote and hybrid work schedules – that which may be permanent — has also complicated matters for hiring managers.”

The key to retaining top talent today is leaning into, listening, and learning about a top executive’s highest career goals and aspirations, according to Mr. McMillan. “Once determined, map out a plan and reasonable time frame for said candidate to achieve desired goals,” he said. “No promises can be made, but our clients must be proactive and transparent about talent retention. Unfortunately, this very simple concept eludes many talent management leaders, thus continuing the cycle and proliferation of retained search recruitment as our clients suffer regretted losses. The latter is also the result of the absence or abandonment of succession planning and succession management measures, the likes of which elude our clients far too often.”

“Executive recruiters must be nimbler and more flexible with their timelines and search process management,” Mr. McMillan said. “We have also had to step up our game in terms of informal referencing – the mechanism we use to gain knowledge and insights about those attributes and limiting factors that candidates skillfully and willfully seek to hide from recruiters and our clients. We must not allow the Zoom, Teams, virtual interviewing trend to prevent us from providing excellent and expert candidate assessment to assuage and limit client downside risks.”

In this tight talent pool, “we are definitely seeing that candidates have the upper hand in today’s market,” according to Kevin Stockslager, partner at Wray Executive Search. “The restaurant industry, the primary industry that we serve, is currently 750,000 jobs below the pre-pandemic peak employment rates. This has resulted in an exceptionally tight talent pool and the top candidates have utilized that leverage to improve their compensation with their current employer or find opportunities for personal and professional growth with other companies,” he said.

The key for retaining top talent today is providing an environment where team members feel valued and critical to the success of the organization. “In most cases, that includes providing a compensation structure where employees feel that they are being fairly compensated for the value they are bringing to the company,” said Mr. Stockslager. “In addition to strong base salary and bonus programs, we have seen an increase in additional compensation and benefit programs to retain top achieving talent, including profit sharing and various types of equity programs across the industry.”

“We have seen many of the same influences in accepting or rejecting a job offer that we have seen in past years,” said Mr. Stockslager. “Candidates are often seeking opportunities where they feel their compensation package matches with the value they are adding to their current or potential employer. The potential for internal growth within a company has also been a major factor. In some cases, we have seen candidates accept a similar compensation package with another company, provided there is a path for growth in the new opportunity. Over the past few years, we have also seen a higher value placed on work environment, including the ability to work in remote and/or hybrid work environments. However, compensation and growth opportunities have remained as two of the biggest influencers in candidates deciding to stay with their current employer or seek interest in outside opportunities.”

For Wray Executive Search, the biggest adjustment has been developing a strong understanding of the changing compensation structure for various opportunities across the country and being open and honest with clients and potential candidates, said Mr. Stockslager. “The good thing is that I believe most of our clients understand that the compensation equation has changed over the past few years and top quality candidates are in high demand,” he said. “They are working to create environments where their team members feel supported, valued, and fairly compensated for their role within the company.”

Related: Hiring Top Talent in Unprecedented Times

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media