Updated: Dec 8, 2022
After a wave of layoffs earlier in the pandemic, companies are finding themselves in a very different position a year later. In Australia, 1 in 4 businesses are struggling to fill vacancies while in America, vacancies hit a record high at 9.3 million unfilled positions. In the UK, it’s reported that job vacancies jumped by 45% between March and June. Globally, 69% of companies are experiencing talent shortages, the highest in 15 years.
What’s causing the talent shortage?
When we examine the breadth of industries affected by talent shortages, we see different issues relating to the supply of talent. In some industries, the skills “don’t exist” while other industries are not able to attract enough people to do the work.
Education and immigration are often at the forefront of the skills debate.
“There’s no one to do the job!”
In many white-collar industries, education institutions are put under fire for not producing “job-ready” graduates. This argument focuses on technical skills and short-term outcomes (1 to 3 years post qualification) and largely ignores the importance of soft skills such as critical thinking and problem-solving, the importance of lifelong learning, and the organisation and individual’s responsibilities to invest in their skills.
In other industries, the work is physical, the hours anti-social and the pay is low. A common complaint from these industries is that “locals don’t want to do these jobs” so vacancies are largely filled by new migrants.
Closed borders exacerbate existing hiring challenges
Pre-COVID, countries like Australia and Singapore relied heavily on importing talent to meet skill shortages. In the UK, Brexit made it difficult for companies to fill out positions, especially those who relied heavily on European talent. The COVID-19 travel restrictions and closed borders only made the situation worse. Evidence? Singapore lost 13.7% of foreign labour in 2020, going from 1.42 million workers in 2019 to 1.23 million workers in 2020.
As of June 2021, Australia’s Labour Market Information Portal reported that 1 in 2 businesses are actively recruiting, with 43% of businesses citing a lack of applicants as the most common problem, followed by a lack of suitable applicants at 39%. In another report, 32% of Australian businesses cite closed borders as a reason for recruitment difficulty.
Who will look after the kids?
According to the OECD, an Australian couple earning average wage with two children aged 2 and 3 are likely to spend 24% of their wages on childcare costs alone. In 2020, almost 90,000 Australian parents stayed out of the workforce, up 21.7% compared to 2019, due to climbing child care costs. Parents of children under 5 years old chose to look after their children because affordable, quality child care was unavailable.
More often than not, women end up leaving the workforce to assume child care responsibilities. On top of that, leaving the workforce also incurs considerable repercussions for women’s careers - lost promotions, falling back on years of experience, and tough re-entry.
Given that a 10% reduction in child care costs could lead to a 0.5% to 2.5% increase in workforce participation, companies can do a lot to help parents. Child care subsidies, tutoring services, and backup care are great ways for companies to lure high-quality talent and prevent existing workers from quitting.
What can companies do to improve hiring?
Stop searching for purple squirrels
While companies report difficulties finding the right person for the role, it’s important to recognise if you’re looking for the right person or the perfect person, a purple squirrel, who might not exist.
As you examine your hiring preferences, review your job description too. Does the hiring manager clearly understand the role, what it involves, and what interpersonal and technical skills are required? Has this been accurately depicted in your job advertisement?
To get it right, recruiters can help hiring managers create a list of non-negotiable skills crucial to the role’s success.
Freelancers, part-timers, or full-timers?
Contracting freelancers and part-timers could be a great way to reduce hiring time while securing specialised skills for specific pieces of work. If you broke down the job scope into tasks, could a freelancer or part-timer get it done?
Interestingly, Upwork found that 37% of jobs in “non-tech industries'' in America could be done by freelancers. While there’s a shortage in the overall job market, the gig economy has grown by 24% in 2020. Chances are, you’re much more likely to find a contract worker to complete smaller tasks, relieving your existing team of extra work.
What about transferable skills?
Transferable skills are both hard and soft skills that candidates can apply to different roles and industries. While transferable skills have been talked about for years, very few companies actually recruit based on this. Recruiting on these skills can expand your talent pool, and significantly reduce time spent searching for the right person.
The set of hard skills you choose to focus on will depend on the job you’re recruiting for. In terms of soft skills, LinkedIn found that creativity, collaboration, adaptability, time management, and emotional intelligence were the most sought-after soft skills in 2020.
When demand exceeds supply, the price goes up
Everest Group’s CEO Peter Bendor-Samuel wrote that companies need to “change their mindset about wages”. In the current skills shortage climate, it can no longer be about paying as little as possible. Instead, to stand out and keep people on board for the long term, it’s about paying people above living wages that not only lets them live, but thrive.
Flexibility is expected
In industries that pivoted to remote work, the abrupt shift to remote proved that most office jobs could be done from anywhere with a stable internet connection. While adapting to remote work might have been difficult at the start, a majority of employees have come to value the flexibility they get from remote work.
Tech company GitLab reported that 1 in 2 people would choose a remote role over an office-based one. Furthermore, 30% of respondents said they would leave their current roles if remote work was no longer an option post-pandemic.
With the existing talent shortage and the Great Resignation on the horizon, companies need to prioritise their culture and improve employee benefits to motivate employees. After all, it is much easier to retain employees than recruit new ones.
Building your recruitment pipeline
What’s your Employee Value Proposition (EVP)?
Beyond a steady paycheck, what do you offer candidates in exchange for the time, skills, and experience they bring to your company? Developing your EVP will be crucial to set yourself apart from all the other businesses out there. It should be relevant, authentic, and inspirational.
To start, consider the following questions from international recruitment agency Michael Page:
What attracts potential candidates to your company and what keeps existing employees around?
What makes your company unique to existing employees?
What do people value most about working at your company?
Why do people stay?
Why do people leave?
Once you’ve distilled down reasons why your company is different from the rest, make sure to include it in your recruitment strategy.
Nurturing talent communities
With clear reasons why your employee brand is different from the rest, it’ll be easier to market your company to both internal and external talent.
An internal talent community, when done right, can encourage employees to stay on longer because they’re aware of the available growth opportunities and could fill out critical senior positions in the long run. Another positive side-effect of a well-nurtured internal community is that they become ambassadors for your company who could send valuable referrals your way.
On the other hand, companies that have nurtured external talent communities should be top of mind for candidates looking for a change. To start, add a simple form to your career page to ask for the candidate’s details such as industry, level of expertise, specific skill sets, and anything else that might be relevant. It should also include an opt-in to future communication.
Effective nurturing of internal and external talent communities involves proper segmentation of your candidates and consistent delivery of relevant content to each segment. You can segment your candidates by departments, skill sets, and any other characteristic relevant to your business. In terms of relevant and consistent communication, this could include updates about the company and other culture-related content to attract and engage candidates.
Another way to expand your talent pipeline is to look out for unrecognised talent, a segment of candidates commonly overlooked by other recruiters in your industry. While this is definitely a long-term strategy for talent acquisition, it could become a great source of skilled professionals in the future. Keep an eye on coding boot camps or other similar paid courses, and stay in touch with graduates from local universities - you never know where they might end up.
Getting the right processes supported by the right tools for your company
To successfully build your recruitment pipeline, recruiters should also focus on developing their candidate experience, reviewing both the recruitment process and the tech that supports it.
When reviewing your recruitment process, go through it as a candidate would. From the moment they land on your website and scroll through vacancies, to the number of steps it takes to submit an application, to receiving an email to confirm the application was received, to hearing back from your team about next steps - where are the kinks in the process and how can you improve?
Only after you have developed a clear idea of the candidate experience you want to design and where you’d like to improve, should you start evaluating your talent tech stack and identifying the gaps you need to fill.
Moving forward, recruiters will play a key role in reshaping a company’s culture. From how talent is recruited and assessed, to developing an appealing EVP and making sure your management backs up their hiring promises with tangible action, recruiters will need to rely on every tool in their toolbox to stand out in this competitive climate to attract the right talent.
Learn how Talent Tech Solutions can help build the right recruitment process and talent tech stack for your company.