Veteran talent acquisition specialists are worried. Many say they can’t remember the last time hiring was this hard, and that recruiting is unlikely to get any easier next year. “The biggest issue is a lack of applications,” explains Greg Muccio, director of talent acquisition at Southwest Airlines, referring specifically to interest in airport staff roles.
While some sectors have begun to bounce back, none have been completely immune to the rapid changes brought on by the global coronavirus outbreak. “It has been the most unpredictable labor market I can recall—truly uncharted waters,” Muccio says.
Traditional conventions about how, when and where people work have been upended, accelerating major shifts in how talent acquisition is practiced. For HR and recruiting teams, the near-total move to working from home led to revamped hiring practices that included virtual technologies. But the most enduring challenge may be changed candidate behavior and expectations.
“This is a different candidate than we had in January 2020,” says Melissa Thompson, former senior vice president of talent acquisition at Nielsen, the global information and data provider. (She recently joined Ford Motor Co. as global head of talent acquisition.)
Across industries, recruiting leaders believe job seekers and candidates are more selective and expect something different from before. That makes it essential for employers to develop a compelling employee value proposition that includes competitive compensation and meaningful benefits, especially career development opportunities and flexible work.
The War for Talent Is On
“Hiring is hard,” Thompson says, especially when it comes to field technicians and call center staff at Nielsen. Recruiters there told her they never had so many job offers declined, she says.
For retail pharmacy chain CVS, hiring for in-store and distribution center positions has been a recruiting pain point, even while the company managed to scale up staffing massively during the pandemic to meet the demand for vaccines.
“It feels like zero percent unemployment in some markets,” says Jeff Lackey, vice president of talent acquisition at CVS Health, which owns CVS Pharmacy stores and other businesses. He adds that across the country, businesses dependent on hourly, front-line workers are going under because of labor shortages. In the hospitality, food and leisure industries, for example, 93 percent of employers are struggling to hire for entry-level positions, according to Society for Human Resource Management (SHRM) research.
“We just can’t find the talent we need” has become a common refrain, whether spoken about customer service representatives at Enterprise Rent-A-Car sites, assembly line workers at General Motors or delivery drivers at LaRosa’s Pizzeria.
To respond to the challenge, HR professionals are reimagining talent acquisition strategies and deploying a variety of new tactics and technologies.
As a result, organizations are experimenting with novel ideas involving benefits such as flexibility, career development and holistic care and adjusting them to candidates’ new expectations. At the same time, companies are refocusing on the basics: streamlining the candidate experience, reviewing pay to be more competitive and sprucing up employee referral programs.
“There definitely is a war for talent, and, even more than that, it is an arms race to attract talent,” says Jamie Kohn, research director for the HR practice at consulting firm Gartner. “Companies are trying to get back to pre-pandemic growth and are focused on increasing headcount, while job seekers feel they have more options and now expect more from potential employers.”
The power balance between employers and employees has shifted, according to Amy Goldfinger, senior vice president for global talent at Walmart. “The pandemic has fundamentally changed the labor market, creating a high demand/supply gap for talent, and today’s job seekers have higher expectations,” she says. “We’ve introduced cash bonuses, leave policies, vaccine incentives and counseling services to help associates get through these trying times.”
A Matter of Supply and Demand
The latest data from the U.S. Department of Labor shows there are approximately 4.2 million fewer workers in the labor force compared to just prior to the pandemic. Labor force participation today is lower than at any time in the past 20 years.
But job openings, a measure of labor demand, stood at 10.9 million at the end of summer 2021—the highest level ever recorded. That’s all the more remarkable because it occurred during a period of elevated unemployment.
At the same time, the number of people quitting their jobs monthly is setting records.
Workers tend to quit at high rates when jobs are abundant, but evidence suggests that the pandemic-induced “turnover tsunami” has been propelled by additional factors. Workers are unwilling to return to industries that experienced severe lockdowns, for example, and they have been able to be more selective due to stimulus payments and enhanced federal unemployment benefits (which ended in September 2021).
Employees are also motivated to change jobs for better pay and benefits, as well as more flexibility. Or they may have concerns about health, safety and wellness. Many are pursuing career changes or going into business for themselves.
“The leisure and hospitality sector was grounded during the pandemic, opportunities shrank, and employers did not realize how difficult it would be to get furloughed and laid-off employees to come back,” says Julia Pollak, chief economist at ZipRecruiter. “Leisure and hospitality and manufacturing are having the biggest troubles, because so many of those jobs need to be done in person and face-to-face. One of the main difficulties is that remote opportunities have expanded in other industries.”
While the supply and demand for workers will eventually come back into balance, experts and practitioners believe many of the changes in how companies recruit and hire talent will remain long after the pandemic subsides.
“The pandemic was a catalyst for changing things that organizations maybe knew should be changed but lacked enough incentive to make the change,” says Jeff Lackey, vice president of talent acquisition at CVS Health.
Greg Muccio, director of talent acquisition at Southwest Airlines, says, “The last 20 months have taught employers that you can’t discount how people feel about their jobs, their lives and their families, and how important it is to take care of your employees and their families.” —R.M.
Wages on the Rise
As the U.S. labor market began to rebound in the summer of 2020 and the competition for hourly workers got fierce, employers began citing labor shortages as the cause for hiring difficulties. Critics responded that the lack of job seeker interest was proof that low-wage workers simply aren’t paid enough. These employees also are often asked to enforce mask mandates and risk physical harm at the hands of irate customers. In response, employers such as Chipotle, CVS, Southwest Airlines and Walmart have given front-line workers raises.
“Employers are realizing they have to be wage-competitive,” says George Kelly, senior vice president at Milwaukee-based recruiting and staffing firm ManpowerGroup. “Wage growth in the U.S. has been incredibly slow over the last 30-plus years, but since the summer of 2020, wage growth has accelerated, driven by competition.”
Nela Richardson, senior vice president and chief economist at payroll provider ADP, notes that compensation in October 2021 grew 4.9 percent year-over-year. “In the decade leading up to the pandemic, wages never grew more than 3.5 percent from the previous year,” she says. Wages in low-paying service-sector jobs have been growing fastest during the recovery, she adds.
The number of postings on jobs sites like ZipRecruiter that advertise pay of $15 an hour has more than doubled since 2019, says Julia Pollak, the site’s chief economist. The proportion of jobs that offer signing bonuses has also risen.
Practitioners tend to agree that resetting compensation is a solid long-term move, but many say the increased use of signing bonuses is an ugly and unsustainable facet of the current environment.
“Because many employers thought this labor shortage would be temporary and would clear up this year, they resorted to solutions like hiring bonuses,” says Niki Ramirez, SHRM-CP, founder of Phoenix-based HR Answers, an HR consultancy for small businesses. “[The practice is] flexible and easy to roll back, but some employers have found as a consequence that workers are staying for a short period and then moving on to the next job, trying to snap up multiple signing bonuses.”
Steve Browne, SHRM-SCP, chief people officer at Cincinnati-based LaRosa’s Pizzeria and a member of the SHRM Board of Directors, says his team is reviewing compensation but does not want to end up in a reactionary predicament, despite the difficulty the company is having recruiting cooks, drivers and servers.
23% of organizations are planning to increase pay to attract more job applicants for difficult-to-fill positions.
Source: The COVID-19 Labor Shortage, SHRM, 2021.
“I see companies trying to compete from a wage perspective, offering signing bonuses, and people just chase the dollars,” Browne says. “I know several employers in the Cincinnati area that are offering a high wage, and they still can’t get applicants. If you only change wages, it won’t work.”
In today’s talent-scarce environment, employers should be conducting regular industry benchmarking and reviewing salary plans, experts say. However, pay is just a starting point.
Thompson’s team at Nielsen worked closely with the compensation professionals in HR to understand where they needed to adjust compensation in order to hire in this labor market. “But winning the competition for talent will be more about the culture and the people and not just about the money,” Thompson stresses.
Offering Perks that Matter
A prominent feature of the war for talent has been the way companies have been one-upping one another when it comes to employee benefits.
“Creative perks have become in vogue again,” Kelly says. These benefits, many of which are designed to alleviate the stresses of the pandemic, include mental health, well-being and family caregiving support; financial planning; onsite child care; sponsored transportation; and allowances for home office and remote technology.
Organizations have also announced they are making big investments in workers’ professional development, with the idea that employers can offer their front-line workers something truly meaningful: a brighter future through upskilling and an internal career path, or a debt-free college education.
Walmart is investing nearly $1 billion over the next five years in career training and development. Other large employers of hourly workers, including Amazon, Chipotle, Starbucks and Target, have announced enhancements to their tuition and training programs.
Walmart’s Live Better U program pays 100 percent of tuition and books for eligible associates who want to earn college degrees or learn trade skills. In addition, “Walmart Academies give us more avenues to upskill associates so they can reach for their dream job internally,” Goldfinger says. “For example, as we grow our health and wellness business, we’ve made available degrees and certifications to support these business areas, like pharmacy technicians.”
Chipotle offers to cover all expenses for 100 types of degrees across agriculture, hospitality, culinary, technology and business studies at 10 universities, says Mike Miller, director of talent acquisition at the company. “Our retention rate is three-and-a-half times higher among employees enrolled in the education assistance program, and crew members participating are seven-and-a-half times more likely to move into a management role,” he adds.
Ramirez says she’s seeing a renewed focus on reskilling and upskilling across organizations of all sizes, as well as training and career pathing being promoted in job ads. SHRM research shows that 2 in 5 organizations plan to offer additional professional growth and development opportunities to attract more job applicants to positions that are difficult to fill.
Southwest Airlines officially launched its internal career mobility program earlier this year. Muccio says there’s already been a lot of interest from employees who want to understand the roles available to them and the development opportunities that can help them land those positions.
Chipotle believes its transparent path to advancement can be a life-changing inducement for hourly workers. “Crew members can advance to restaurant management in just three-and-a-half years, making an average salary of $100,000 and leading a multimillion-dollar business,” Miller says. “More than 90 percent of our restaurant management roles are internal promotions.”
A Downsides of Signing Bonuses
Sign-on bonuses have gained widespread popularity this year as employers struggle to attract talent. Countless busy roads are lined with temporary signs in front of retail and hospitality businesses offering bonuses of as much as $1,000 to new hires. But hiring experts warn that one-time bonuses have a range of drawbacks that employers must consider, including the following:
Sign-on bonuses should be offered consistently to all new hires regardless of position; otherwise, engagement may be low for those not cashing in. Current employees will wonder where their bonuses are and may jump ship to collect them somewhere else absent a monetary reward for staying.
Some new hires will take the money and run; even if payments are spaced out over time, many workers will still leave if they don’t find value in the work. Attempting to reclaim bonuses from employees who leave early can be a legal nightmare that’s rarely worth the expense.
Keeping employees on board for a year or more without offering additional bonuses may prove difficult, since those workers have already shown a preference for such payments. —Tony Lee
The Most Desired Benefit
Then there’s flexibility, the most sought-after benefit of all, according to widespread research. The demand undeniably grew out of the pandemic experience. Job seekers from all sectors and levels are making it clear that flexibility is a top priority—including for jobs that can’t be done remotely. It’s also a critical factor in managing employee retention.
“Where people have gotten the flexibility to be able to choose how they integrate their work with the rest of their life, they are not willing to give that up,” Kohn says. “Job seekers have so many options right now that they don’t have to make the trade-offs and sacrifices they used to make and are proving unwilling to do so. That’s why flexibility is the most common theme employers are promoting to attract talent.”
She adds that flexibility is different for varied talent segments. For knowledge workers, autonomy is paramount. And for employers hiring for remote-friendly roles, proximity is no longer a limiting factor for recruitment.
“Rethinking talent location has been one of the biggest changes,” Kohn says. “HR leaders are pushing the business to think about which roles really need to be in the office and how often, and then determining whether they can source talent from anywhere.”
Throwing off the shackles of geography-bound recruiting by offering work-from-home opportunities has helped General Motors boost its hiring above pre-pandemic levels, says Cyril George, the company’s global talent acquisition director.
In April, the automaker unveiled its “Work Appropriately” campaign, which George describes as a culture change for its professional workforce. “Leadership decided to put the trust in the employees and their managers in terms of deciding what works best for them based on their roles and situation,” he says.
“From a recruiting standpoint,” George adds, “it has significantly opened up the talent pool for us.”
Then there’s the majority of workers in the U.S., especially in front-line roles, who aren’t able to work remotely. For these employees, flexibility and predictability in scheduling are important, specifically in support of health and wellness, as well as child care and caregiving responsibilities.
“Flexibility matters to hourly workers,” Kohn says. “Think about the struggles that front-line workers have had during the pandemic. Retail workers are leaving their jobs to work in customer service roles that can be done at home to get that flexibility that meets their core needs.”
It’s not possible to offer field agents at Enterprise a work-from-home experience, says Marie Artim, vice president of global talent acquisition at Enterprise Holdings. “But what we can do is offer more flexible scheduling and schedule certainty so our employees can take care of the things they have to do in their lives outside of work.”
Getting Back to Basics
The pandemic has forced organizations to be agile and to adopt creative recruitment approaches, but the public health crisis has also presented an opportunity to perfect the fundamentals.
“Candidates are walking in the door with a couple of offers in hand, and employers need to be ready to move as quickly as possible,” Kohn says. “That means rethinking assessments, controlling the number of interviews and postponing background checks, all to eliminate any delays in the process.”
As a result, many companies have streamlined their application processes. General Motors invested significantly in technology to improve the candidate experience, including by integrating online job postings with the applicant tracking system so candidates don’t have to duplicate their application information.
Employers have also been removing unnecessary obstacles that historically limited candidate opportunities. “We’re focused on lowering barriers to entry,” Walmart’s Goldfinger says. “For example, we do not have arbitrary education requirements—even our store managers are not required to have a college degree.”
Lackey says CVS eliminated a high school education requirement for many front-line positions and uses a simple assessment instead. In addition, CVS has been recruiting against attrition in order to have roles filled prior to employee departures.
Employers have also reinvigorated their employee referral programs. “Referrals have been a top source of new talent for us and a great way to recognize our employees,” Artim says.
Old-school sourcing channels produced stellar results for Thompson at Nielsen. Those channels included reaching out to local churches and running ads for bilingual roles in ethnic community newspapers. Experimenting with a mix of old and new—including virtual hiring events—was also “hugely successful,” she says.
The pandemic is provoking employers to rethink traditional ways of operating—and to rethink talent acquisition. As candidates at all levels weigh opportunities differently and the competition for talent continues to intensify, companies will need to offer an employment experience that candidates prize.
Roy Maurer is an online writer/editor for SHRM who focuses on talent acquisition and labor markets.
Illustrations by Woody Harrington.