Talent Scarcity, Skills Gaps Challenge Recruiting

It’s tough being a recruiter: Unemployment remains low. The number of open jobs far exceeds available workers. And skills continue to change.

SHRM surveyed 2,366 HR professionals in January, and three-fourths (77 percent) reported difficulty recruiting for their full-time positions over the last 12 months.

“Yes, it’s difficult, and I think it comes down to scarcity for certain roles and also skills gaps,” said Jill Eubank, executive vice president for business professionals and health care at global recruitment firm Randstad.

That’s down from a high of 91 percent in 2022, but about half (47 percent) said that it has been somewhat or much more difficult to recruit than it was one year ago.

Among those experiencing recruiting difficulties, the top three challenges are a low number of applicants (60 percent), competition from other employers (55 percent) and candidates ghosting (46 percent). Employers also cite changing skills and the inability to offer flexible work or more competitive compensation as major hurdles to recruitment.

Leading recruiters and workplace experts weighed in on the struggle to recruit and hire in this new labor market.

View from the Top

Erin Scruggs, vice president and head of global talent acquisition at LinkedIn, said that the biggest challenges she’s hearing recruiters talk about are competition from other employers, figuring out how to attract Generation Z candidates and shifting skills.

“Skills are changing so fast,” she said. “Skills for jobs are projected to change by 68 percent by 2030 because of advancements in AI. Talent leaders must always be thinking about the future as they build a holistic talent strategy for the company. It’s complicated.”

Employers in health care and government were the most likely to say that candidates lacked the right certifications and credentials, according to the SHRM research. The industries most likely to report that candidates lacked the necessary technical skills included manufacturing, professional and technical services, and construction. The industries experiencing the most candidate ghosting were health care, retail, transportation and manufacturing.

“The number of applicants as well as hires who end up ghosting us has increased over the last year,” said Rodney Smoczyk, SHRM-CP, global director of talent acquisition at Rinchem, a transportation and logistics company based in Albuquerque, N.M. “When and if we end up reconnecting with them, we often hear that they found another opportunity that they thought was better, but it didn’t work out or live up to what they were expecting. It seems they are being promised big things that go undelivered.” 

Smoczyk said that applicant volume has been steady, but applicant quality has sometimes been lacking.

“Perhaps it’s due to the specialized skill set we’re looking for, but there has not been a sudden surge in available tech talent after the layoffs at the big tech companies,” he said. “We did not see an increase in qualified CDL [commercial driver’s license] drivers after the slowdown in the trucking industry, either. I don’t doubt that there are some sectors that may have found it is easier to locate talent over the last year, but I believe there are many more who have not.”

Keeping Pay Competitive

Larger employers were more likely than smaller organizations to report recruitment challenges due to employer competition, lower salaries and a lengthy hiring process. 

Offering competitive pay and keeping pace with inflation are a big piece of the talent acquisition puzzle, Scruggs said.

“There is a perception that salaries have not kept pace with inflation, and there has been an acceptance of that among job seekers because people understand where the U.S. economy is and people have stayed put because of the economic realities,” she said. “But as people start to reshuffle again, you’ll see competitive salaries get more important.”

Smoczyk said that Rinchem uses salary surveys and market data to ensure its pay stays competitive. But ultimately, attracting talent has to be about more than just the money, he said.

“There will always be someone who can pay a few bucks more, and if it’s just the money keeping the team there, then the highest bidder wins,” Smoczyk said. “If, however, you create a culture where you are constantly pouring into your team’s development and providing a great place to work, where they are contributing to something more than a timesheet, then fair pay can be enough, but it has to be in partnership with a great work environment.”  

Remote Considerations

SHRM found that organizations operating in person (83 percent) or via a hybrid approach (76 percent) are much more likely to report hiring difficulties than fully remote employers (43 percent).

“People are getting more used to a flexible work model,” Eubank said. “Where employers can make flexible work happen, there’s an opportunity to be had there. That doesn’t just mean remote work. Not all jobs can be flexible, and offering flexible work can mean getting creative, like allowing different work hours or unlimited paid time off as a benefit.” 

This is a time for talent leaders to step up and act as talent advisors, sharing real-time data and advocating for flexible work, Scruggs said: “The companies that are able to do that will see higher applicant volumes and larger talent pools to choose from.”

Skills Gaps

Seven of the top 10 hardest to fill positions in 2016 remain in the top 10 in 2024, according to SHRM, with high-skilled medical roles such as doctors and nurses and skilled trades roles such as carpenters, electricians and machinists at the top.

“Health care and skilled trades have had the same talent scarcity for years,” Eubank said. “That hasn’t changed. There are just not enough new people coming into those professions to meet the demand, which leads to fierce competition for the people with those skills.”

On top of current scarcity, health care roles represent 6 out of the top 10 jobs with the fastest growing demand, Scruggs said: “It has become an increasing challenge to attract and retain people in that profession. One way to do that is through building an attractive employer brand.”

Some of the hardest jobs to fill over the last year have been those requiring newer skills like working with data analysis and artificial intelligence. Soft skills such as communication, teamwork, project management and leadership are also in high demand.

“Hard skills are trainable, but the soft skills are critical,” Scruggs added. “The hard skills will shift so dramatically that having the right soft skills, like communication and a learning mindset, will be very important.”

Scruggs said that employers can start to embrace skills-based hiring and embed skills throughout the employee’s life cycle. “It starts with a strong relationship with L&D [learning and development]. Talent leaders should be ensuring that organizations have the right upskilling and talent mobility programs in place.” 

Smoczyk said that Rinchem addresses the skills gap by looking internally for talent. 

“When we’re unable to find the talent that possesses the needed skills externally, we develop programs to help get our current talent to the next level and provide the opportunity for them to grow and stretch their careers,” he said. “In fact, we’ve filled 67 percent of our roles with internal talent.”

Recruitment Tactics

Among employers that have not had much trouble recruiting over the last 12 months, maintaining a positive workplace culture and offering competitive benefits and salary along with flexible work were the top reasons why, the SHRM research found.

Although the pandemic led employers to try innovative recruitment strategies to find talent, the survey results show they’ve backed away from that strategy at the start of 2024. The percentage of organizations offering flexible work arrangements and the percentage of employers improving compensation both decreased by 16 percentage points from 2022.

Scruggs said that the top things job seekers are looking for typically stay the same—fair compensation, flexibility, internal mobility and career development.

“If companies can’t afford a pay bump or flexible work, they need to make sure they lean into a culture of learning,” she said. “Upskilling has been shown to be especially important to Gen Z.”

Scruggs added that a large part of talent acquisition strategy is driven by labor market factors.

“Whenever the competition for talent gets fierce, we throw everything at it, but when the competition recedes, companies fall back on investing in recruitment,” she said. “Once the economy picks up and the job market opens up again, we will be right back to doing what we need to do to find the best talent.”      

According to SHRM, the most used recruiting tactics include recruiting through social media, improving compensation, promoting a positive work culture, applying pay transparency in job postings and expanding job advertising. Some of the least used recruiting tactics include eliminating college degree requirements for certain positions, expanding geographic search parameters, and considering “untapped talent” such as older workers and workers with disabilities.

Most respondents who have eliminated college degree requirements have only done so for a few positions, but when they have, 73 percent of those organizations have successfully hired people who would have previously been deemed unqualified.

“We have several roles that yield high incomes and do not require a degree,” Smoczyk said. “We are hyper-focused on how we can attract talent to fill those roles from our local communities, which are made up of very diverse individuals—we are always looking to tap in to those talent pipelines.”

Eubank said that recruiting professionals need to establish long-term talent acquisition strategies in order to not be caught reacting to market forces.   

“A talent acquisition strategy assures that hiring aligns with long-term business goals, which provides hedging against future disruptions,” she said. “Talent acquisition represents a long-term approach that ensures all of your company’s recruitment efforts drive business results—now and into the future.”