Although several weeks into a new year, residual HR issues from 2022 still abound. Of particular concern for employers is the continued tight labor market. 2022 saw inflation and interest rates soar while stocks plummeted. Interestingly, the labor market remained stable partially due to the multiple rounds of fiscal support during and after COVID-19. While the economy grew more slowly than in 2021, 2022 ended with a historically low 3.7% unemployment rate, lower than where it started in early 2022. Adding to the worker shortage is the shrinking labor pool. The overall labor force participation rate ticked down in November to 62.1% down from 63.4% in pre-pandemic February 2020. Some decline is due to older worker retirements. However, the share of 25 – 54-year-olds, those in the prime of their careers, fell to 82.4%, .6 percentage points below pre-pandemic levels. Wide gaps remain in certain professions that took big hits during the pandemic and that have a major impact on the economy. In contrast to early 2020, nursing home and residential care facilities have lost 288,000 workers, local government education workers are down 271,000 and child-care service workers are down 84,000.
What to Expect Going Forward?
Most economists believe that as the economy continues to slow, the job market will eventually follow suit. The 2022 interest rate hikes can take six – 12 months to be felt throughout the economy. In basic terms, rising interest rates increase the cost of financing expensive goods like cars and furniture which decreases demand, which, in turn, affects manufacturing and lastly those who manufacture, employees. However, until, or even if, that happens, finding and hiring top talent through the first half of 2023 will likely remain challenging. Even as HR professionals deal with the whiplash that can be the labor market, on a very basic level, some things never change. What’s an employer to do? Get back to basics. No matter the state of the economy, inflation, recession or stability aside, it benefits employers to find, hire and retain the best talent. Besides tried-and-true recruiting strategies, here are some newer, possibly untapped, strategies that could help employers combat the tight labor market.
Make Remote Work Work
That’s not a typo. Employers should rethink ways to make remote work work for them. Employees have spoken and most enjoy the flexibility allowed by remote work. Recently, as employers recognize the benefit of some office face time, there’s been some tension between employees wanting to remain remote and employers wanting employees back in the office.
While a balance should be the goal, there are benefits to remote work for recruiting strategy that some employers may not have considered. While employers can save money by hiring remote workers in states with a lower cost of living by paying the employees the going rate in the employees’ cities, employers may choose to pay those remote workers the going rate for the city in which the company operates which is higher. In other words, to hire the best talent, pay remote employees a higher salary than they could receive accepting the same job in their geographic area. A recent Gallup poll involving 13,085 U.S. employee respondents revealed that pay and wellbeing-related issues are the two most important factors employees consider when contemplating accepting a new job offer, with pay occupying the top spot. While pay has always been one of the most important factors for employees throughout Gallup’s historical workplace research, researchers were surprised by how much pay and benefits have increased in importance over the years. Since 2015, pay has risen in priority for employees from No. 4 on the Gallup list in 2015 with 41% of employees citing is as “very important,” to its current No. 1 spot with 64% of employees citing it a critical factor when accepting a new job. One possible reason for this is that employees know they are in the driver’s seat in this labor market with intense competition for talent, and they are unafraid to ask for and seek more money when job hunting. The talent pool is wide open for employers allowing remote work. Why not find the best talent, no matter its location, and pay a salary too good to refuse?
Implement Four-Day Work Week
After years of hybrid or remote work during and after the pandemic, employees have become accustomed to flexibility in the workplace which is key to attracting and keeping top talent. While hybrid and remote work is highly desirable to many, a recent study suggests working a four-day work week could also be a big draw for potential employees. The idea behind the four-day work week is like that of hybrid and remote work models. Employers want to keep employees satisfied by offering more flexibility, leading to more free time and increased productivity during work time. Traditional four-day work week programs usually require employees to work their normal 40-hour work week over the course of four days, instead of five. However, in this study, employees’ schedules were reduced on average by six hours/week. The non-profit 4 Day Week Global in partnership with researchers at Cambridge University, Boston College and University College Dublin conducted a six-month pilot from approximately April through October 2022 in which employees worked a 100-80-100 model: employees received 100% of their pay for 80% of the time and maintained 100% productivity. More than 900 workers across 33 businesses in the U.S. and Ireland participated and none are going back to a five-day model. Employees rated the experience a 9.1/10, and 97% said they want to continue the condensed schedule reporting high levels of performance and lower levels of fatigue and burnout. As for employers, they were equally pleased reporting a decrease, on average, of six hours/week to employees’ schedules but an 8% increase in revenue throughout the trial period, and a 38% increase from the same time period a year prior. In addition to being a recruiting tool, the four-day work week can lead to lower turnover rates, higher productivity, fewer absences and higher morale among existing workers.
Upskilling and Reskilling
According to Deloitte Insights, “employees rate the ‘opportunity to learn’ as among their top reasons for taking a job and 94% say they would stay in a company if it helped them to develop, yet only 15% can access learning directly related to their jobs.” Employees’ skills are one of the most valuable assets in the workplace leading to more productivity and profitability for the company and greater advancement opportunities for employees. Skills can be inherited, learned, tweaked, changed, enhanced and, unfortunately, lost. Two ways to attract and retain top talent is through upskilling and reskilling. What exactly does that mean, and what’s the difference between upskilling and reskilling? While both upskilling and reskilling are about learning new skills, there’s a significant difference between the two. Upskilling helps employees become more knowledgeable and develop new skills and competencies that relate to their current job. Reskilling focuses on providing employees with new skills to use in a different job within the company. While upskilling has long been a part of career development, 2023 will see a greater focus among corporate leadership to use internal talent to fill positions and help employees succeed in the workplace. An “old is new” way to accomplish upskilling or reskilling is through apprenticeships. Traditionally, apprenticeships have been prominent in building and constructions trades, but can now be found across many industries including business, health, engineering and retail. Apprenticeships are “earn-and-learn” programs that combine formal learning, in-person, virtually or computer-based, with on-the-job training experiences. They provide the candidate with the training and mentorship needed to develop proficiency in specific business and technology areas along with the soft skills required by most jobs. According to the Department of Labor, “Apprenticeships combine paid on-the-job training with classroom instruction to prepare workers for highly-skilled careers. Workers benefit from apprenticeships by receiving a skills-based education that prepares them for good-paying jobs.” Accenture has become a leader in the apprenticeship movement. In 2016, Accenture established its internal apprenticeship program, and a year later cofounded, along with AON and Zurich North America, the Chicago Apprentice Network, partnering with local employers like Walgreens and JP Morgan Chase to jumpstart their apprenticeship programs. Apprentices currently make up 20% of all entry-level Accenture jobs, with over 2000 apprentices in over 40 states. Accenture published a national playbook to help other businesses implement apprenticeship programs. Whether through apprenticeship programs, partnerships with educational institutions, job shadowing or mentoring, upskilling and/or reskilling employees helps diminish existing skills-gaps and gives companies a competitive edge in a tight labor market.
Get Smart HR
The labor market ebbs and flows. Employers and employees alike have dealt with whiplash-like conditions over the past few years. Fortunately, many economists see more equilibrium in 2023 between the number of jobs and candidates available. That being said, there will always be competition for the best talent and the most successful companies are constantly seeking ways to get the most desirable employees in the door. Whether your recruiting strategy is a bit stale and not reaping the talent you want or you’d just like a fresh set of eyes on all your HR functions to ensure optimum results, Smart HR is your go-to source. Call today.