How to Hire Top Talent Effectively
Are you finding it hard to hire for your IT jobs? The labor market is evolving, and it is making it more difficult to hire top talent.
Though the COVID-19 pandemic has had a dramatic effect on the global economy, it is reasonable to expect that the labor market will continue to change in the future, shaped by new technology and increased demand for certain skillsets, among other factors. These changes can create opportunities or make it more difficult for businesses to find employees.
To remain competitive in the job market, companies should re-evaluate their staffing strategy to ensure they are providing the right skillsets for their business needs. In addition, companies should also re-evaluate their recruitment methods as they may not be as effective because of an increasingly competitive labor market.
Here we examine the labor market from a staffing perspective.
Hiring Shortages
A study by the American Action Forum estimates that through to 2029, employers across the United States will experience severe shortages of skilled workers. Its forecasts include shortages of:
- 800,000 workers with some college or associate degree
- 8.5 million workers with a bachelor’s degree
The cost of shortages of skilled workers is colossal: around $1.2 trillion of lost economic output.
The skills shortage will worsen, but it is already having a significant effect on employers. A survey by the Society for Human Resource Management (SHRM) found that:
- 83% of employers find it difficult to find suitable candidates
- 75% of these are experiencing a skills shortage in their talent pools
There are many reasons why the skills shortage exists and is growing worse. These include:
- An aging workforce that is starting to retire
- Decreased labor market participation rates
- Slowing in the civilian non-institutionalized population
- New technologies changing the skills needed to compete
Increasing Wages
Conventional wisdom has it that wage growth in the United States has been sluggish at best, and negative in real terms at worst over the last four decades. Certainly, if you consider wages in the middle of the wage range, this hypothesis is largely true. However, this masks discrepancies at the outer edges.
Globalization, combined with a lack of economic dynamism, and lower union memberships – as well as other factors – have been major contributors to slow real wage growth. Between 1964 and 2018, inflation-adjusted wages rose by less than 12%.
However, at the periphery, wage increases have been quite dramatic. For example, in the 90th percentile, wages have increased by 34%. In low-wage jobs, the tighter labor market and minimum wage rises have also boosted wages over the last decade.
For businesses, this is driving the need to automate away low-paid, labor-intensive jobs. However, increasing use of technology, new processes, and greater competition in a globalized economy also mean a higher-skilled staff is needed.
Therefore, despite so many workers seeing minimal pay rises, the wages of those people who companies need to hire are rising the fastest. This is, of course, aggravated by the skills shortage.
According to Gallup’s State of the American Workplace report, more than a third of employees have changed jobs in the last three years. More than four in 10 of these say that an increase in income is very important to them. Consequently, many hiring companies outcompete their competitors by offering higher salaries – causing an upward spiral in wages for suitably skilled candidates.
Top Talent Is Being Hired Faster
Companies are becoming more competitive in their hiring practices and more generous than ever with their offers and benefits. Instead of having one offer on the table, the best candidates are likely to receive multiple offers – it is not unusual for top talent to be hired in 10 days or less.
Elongated hiring processes and poor candidate experiences will persuade talent to accept one of these other offers. However, it is not only the possibility of missing out on a candidate that should concern you.
Every day a post remains unfilled is a day that vacancy costs you – in lost productivity, management time interviewing, associated HR costs, and decreasing morale of an understaffed and overworked team.
Some companies are so rigid in their hiring criteria that they wait for a better candidate to come into the interview room, not realizing that every day of indecision is a day closer to them losing out on the best candidate.
How Do You Hire for IT Jobs in a Candidate-Driven Market?
The skills shortage has changed – and is changing – the dynamics of the job market in the United States. In most industries and most states, the jobs market is now candidate-led. How do you hire the best in this environment?
First, it is essential that you ensure your hiring process is fit for purpose. To hire the best candidates, you must ensure a smooth and hassle-free candidate experience. Keep candidates informed, shorten the time-to-hire, and be prepared to be more flexible with hiring criteria – consider what skills are essential to hit the ground running and what skills can be learned over time (and hire the candidate who is most capable of achieving long-term success with your company).
Organizations should also highlight compensation for candidates. You should ensure that hiring managers have real conversations with those candidates about pay structure, benefits and perks, and career potential during interviews.
However, you must also recognize that a viable attraction and recruitment strategy needs to encompass more than a ‘competitive compensation package’. Find out what the candidate really desires most from a new job, and sell your vacancy to their highest-priority needs.
Finally, you should consider other staffing solutions to resolve your skills shortage crisis. These include hiring temporary staff, considering temp-to-perm candidates, and outsourcing to access the skills of highly talented contract staff.
To learn more about how we help companies like you build high-performing teams, contact Gravity IT Resources today.
