How is it that 200 million people globally are available for hire, while 34% of companies around the world report having difficulty filling jobs? U.S. job openings jumped to a record high in January 2018, outpacing hiring, the latest indication that companies are having trouble finding employees who are qualified for the positions.
Hiring managers in practically every industry are concerned about the lack of available talent. Several factors are contributing to the shortage. According to Gallup, about a third of today’s workforce is made up of 75 million Baby Boomers. The oldest Boomers turned 70 last year, and the youngest are in their early 50s. More than 44 million of them are still working, but InvestoPedia indicates that about 10,000 Boomers a day are retiring.
The second factor causing concern is that Generation X is made up of approximately 65 million people. According to Pew Research, Gen X contributes nearly 53 million workers to the U.S. economy. Do the math, you’ll see that leaves a dearth of 10 million workers. There simply aren’t enough Gen X workers to fill the gap. Complicating matters further, not all of those 53 million Gen Xers will continue with full-time employment. Many are at a life stage where they’re raising children or caring for their aging parents. For these workers, schedule flexibility and an improved work/life balance are critical components of the decision to stay or step away from the workforce.
The third issue is simple: Many Millennials lack the necessary work experience to immediately step in and fill the shoes of the retiring Boomers or Gen X’ers who choose not to work or only work part time.
At the same time, low-skilled workers exceed demand while highly educated staff members are in short supply. So, for highly skilled workers, that shortage means they have a bargaining chip to aggressively negotiate their current compensation or move to a better-paying company. In fact, according to the Federal Reserve’s Beige Book, “A larger number of firms mentioned higher turnover rates and more difficulty retaining workers.” The Fed closely monitors the quits rate, which is near a post-recession high of 2.2%, as a gauge of how confident workers are in finding new jobs when they resign.
The future is uncertain, but one thing is for sure: The skills gap is very real, especially as job markets constrict. Here’s what you can do to find top talent and employees for your organization.
Tips for helping your business survive the new economy
1. Retain the Talent You Have
The Center for American Progress analyzed 30 case studies taken from the 11 most-relevant research papers focused on the costs of employee turnover (including SHRM and the DOL among others). For all positions except executives and physicians, the median cost of turnover was 21 percent of an employee’s annual salary. Very highly paid jobs and those at the senior or executive levels (where many Boomers likely fit in) tend to have disproportionately high turnover costs – up to 213 percent. For workers earning less than $50,000 annually — which represents three-quarters of all workers in the United States — the typical cost of turnover is 20 percent of salary.
The easiest way to retain an employee on your payroll is to offer a pay raise or bonus. You could also include perks such as free dry cleaning or gym memberships. When you understand how costly it is to replace a senior-level associate, it’s easy to see why retention is a no-brainer.
2. Engage the Talent You Have
Retention and engagement, while often confused for one another, are not the same things. Engaging an employee is basically retention as a result of him or her wanting to stay for non-monetary reasons, such as liking the work or admiring the company and its management. Employee engagement is the practice of making your employees feel that they truly make a difference in your company and that management cares about them and wants them to succeed. Look at it as heart vs. pocketbook. A highly engaged workforce will stick around and produce better results because they want to.
3. Develop a Recruiting Pipeline
For recruiting, it’s important to have a substantial database of qualified candidates for future hiring needs. A high-quality pipeline helps ensure that you’re never without relevant candidates. Since positions often must be filled quickly, you should be proactive rather than reactive when recruiting. Sourcing qualified candidates from job boards, employee referral programs, networking with former colleagues, and seeking out competitor’s employees are all excellent tactics for building a pipeline. Once you’ve found appropriate candidates, it’s not necessary that you have a specific job in mind. What is important is to build relationships and when an appropriate position comes available, you immediately have candidates.
4. Optimize your Benefits
A competitive benefits package is typically second only to salary when it comes to candidates’ wish lists for a new job. A well rounded benefits plan can not only help you retain employees, but attract new talent as well. But an important factor to keep in mind is that a one-size-fits-all benefits program will likely backfire with five generations in the workplace. A targeted benefits program is the way to go.
5. Benchmark your Compensation.
Potential job candidates are savvy and are more informed than ever about the salary you’re offering. They’ve done their homework and scoured sites such as GlassDoor and Payscale to find out exactly what they should be paid. To compete for top talent, it’s critical that you do the same. You must be aware of what the market is paying for certain positions and skillsets and develop your salary ranges around that data.
For more inspiration, best practices and action plans, check out our dedicated HR Center of Excellence resource hub on all things recruiting.