Unemployment is Way Down: 3 Tips to Attract Employees in a Tight Market
Global unemployment has dropped to five percent this year, the lowest level in a decade since the 2008 global economic crisis, a report by the International Labor Organization shows.
While this bland statistic may not say much about the quality of the work the majority are involved in and the impact it has on their quality of life, it is clear that despite global economic challenges employers have to compete more for the best talent than a decade ago.
In the United Kingdom, a report released by the Office for National Statistics shows that the national unemployment rate dropped to the lowest in more than four decades despite Brexit fears.
Britain’s joblessness rate dropped to a new low of 3.9 percent at the beginning of the year, the lowest since 1975.
This unprecedented drop in joblessness, analysts say, can only be derailed by a recession-inducing hard Brexit.
At the tail-end of 2018, Canada’s unemployment level dropped to a record 5.6 percent, the lowest level recorded since 1976.
Statistics Canada reported that the employment surge was driven by an increase in mostly full-time jobs, with the private sector contributing to nearly 90 percent of the newly hired.
This has been interpreted to be an indication that the Canadian labor market is still buoyant despite concerns about the state of the nation’s economy.
This is the lowest joblessness rate since 1969, indicating the US’s prevailing economic expansion will not be stalling any time soon.
For more than one year now, the unemployment rate in the US has been below or at 4 percent.
Large gains were recorded in business services, construction and healthcare, although manufacturing jobs seems to be stalling.
Below is a video explaining why unemployment is way down, and why this is not about to change any time soon.
INCREASING COSTS FOR EMPLOYERS
The situation in the United States is approaching what economists refer to as ‘full employment’, where there are more job openings than unemployed people, meaning that most people seeking jobs are able to land one.
It is evident even when you take a short stroll down the street you’ll be met with multiple signs of ‘Now Hiring’, ‘Help Wanted’ or ‘Accepting Applications Now’.
These low unemployment levels are leaving employers with no choice but to raise pay to retain and attract new talent while becoming even more aggressive with training workers.
Over the last year, the average earnings per hour have risen by 3.2 percent, way above inflation, with low wage employees taking home some of the largest increases as companies become more aggressive in filling vacancies.
Several states have also increased their minimum wage.
Businesses are now reporting that their foremost challenge in this labor environment is getting enough workers to fill vacant jobs.
Supply chain company McLane tells The Washington Post that they have been advertising truck driver jobs for $70,000 per year complete with a $6,000 signing bonus in Pennsylvania without much success at filling all available vacancies.
TIGHT LABOUR MARKET
The above situation is what is referred to as tight labor market, where a market is approaching full employment and as such recruitment becomes more difficult leading to an upward shift in wages.
Below is a depiction of what is currently happening in the US labor market as the economy nears full employment.
As full employment beckons in an economy, there is pressure for more outputs to meet the ever-ballooning demand for products.
However, additional labor cannot be acquired easily since the pool of available employees is shrinking. As such the curve for aggregate demand for labor (ADL) shifts to the right (ADL2) since firms would want to employ more people but the labor supply is not sufficient.
Eventually this excess demand for labor makes existing wages to rise steadily since workers now have a much higher bargaining power.
In the diagram below, this is shown by wages increasing to point C at a bigger rate of W1 as a market reaction to excess labor demand.
TRADITIONAL EMPLOYEE RETENTION MAY NOT WORK
With workers having more job options than they have had before, it would be unwise to over rely on traditional employee retention strategies.
This is also a time when job hopping is becoming more commonplace as millennials rise in the workplace and expect to only stick for a company for no longer than two to three years.
More employees are increasingly dancing to the tune of Johnny Paycheck’s song ‘Take this Job and Shove It’ in an environment with more opportunities as Forbes reports.
If you are still relying on traditional retention methods devoid of tracking exits, first line supervisor training, and periodic re-evaluation of stressors, you will have a difficult time retaining your staff in this tight labor market once they get wind of better conditions on your competition’s side.
But even with the best retention strategy your human resources team can come up with, you will still lose workers seeking better opportunities, titles and career nomads. You will also need to plan for expansion.
GLITZY PERKS ARE OUT OF DATE
The culture of startups overstates the impact of fringe benefits such as beer on the tap, Ping-Pong tables and free meals on employee motivation.
Of course, there is a case to be made for this deliberate injection of informality and its effect on workplace cohesion.
But this is probably not what most employees place high up in their quality of work life preferences. In its State of the American Workforce report, management consulting firm Gallup finds that a majority of employees would jump ship if another organization offered them significantly more money and flexibility as opposed to perks.
It is indeed true that adults can and will enjoy arcade games in the escape room or goofing around with co-workers over free snacks but what they would really appreciate more is the possibility of having longer vacations, picking their kids from school and being able to afford better lifestyles.
In a tight labor market, workers are handed the power to get closer to achieving these more meaningful work life improvements.
As such employers can no longer hide under superficial packages and expect to either attract or retain the high-quality talent.
To do so, they must offer more practical and competitive benefits that have a longer-term appeal.
A RECRUITER’S NIGHTMARE
Global employment site, Monster, says about 60 percent of recruiters report a scarcity in the skilled labor they need and are finding it increasingly difficult to attract the high-quality job candidates.
Out of 400 recruiters surveyed in their recent report, 62 percent admitted that their job is more difficult than it was one year ago. Fifty nine percent said it was now harder to attract high-quality candidate than during the last one-year period.
The survey found that the number of job vacancies were at their highest in 17 years. Competition from fellow recruiters is at its most intense causing additional difficulties to get the right talent on-board as reported by 52 percent of the respondents.
Eighty three percent of the recruiters said they have now been forced to employ a multi-solution tactic to attract the best candidates including directly reaching out to candidates, traditional ads, and social media advertising.
In spite of these efforts, the recruiters are only managing to secure only 44 percent of candidates to human resource managers.
Given the growing complexity in recruiting the best talent due to the prevailing labor market conditions, below are three important strategies to enable your organization attract the best talent you need to take your business to the next level.
1. PUT MARKETING AT THE CORE OF RECRUITMENT
Monster’s survey reveals a lack of marrying brand marketing with company recruitment plans.
Sixty seven percent of recruiters admitted that they needed to have a better understanding of marketing to better succeed.
Only 36 percent said they were currently incorporating employer branding strategies in order to attract a higher caliber of candidates with promising results.
Savvy talent acquisition managers are establishing an employer value proposition and communicating this constructed competitive advantage with consistency across recruitment channels.
In addition to incorporating this brand image in job ads, candidate emails and career websites, they go a notch higher and differentiate the messaging based on what they have researched to be most important to their target candidates.
That could be benefits, unique perks, company mission, training programs or unique technology.
This is the first step in creating an integrated recruitment plan that spans the entire candidate life cycle. Employment branding will introduce the candidate to, for instance the cultural difference that provides evidence as to why your organization is a great place to be working at.
Some organizations have excelled at using marketing technology tools. Dallas-based Velo IT Group, for example, combines a number of technologies: The algorithm-based LinkedIn recruiter for candidate suggestions and target messaging, HubSpot for tracking and automating applications, and Facebook and Instagram for ads.
They believe that by combining recruitment with marketing, they are reaching a wider net for ideal candidates.
Toronto-based BlueCat Networks operates marketing and recruitment in concert to ensure talented cyber security experts find the company appealing. Instead of just depending on job postings, the company VP for people, Cheryl Kerrigan, understands that the very best candidates want to see what they could be part of if they were to work at a company.
Kerrigan says it is important to treat prospective employees as you would clients and pitch to them in a similar manner to prospects and customers.
Employer Branding on Social Media
Just as it is relatively simple, fast and affordable to promote products and services on social media, your employer branding and recruitment strategies if employed on social media can help you spread the word and attract the right people.
This page should be used to not just post jobs as a regular careers page would have but to give your prospective candidates a glimpse into your company’s culture, behind-the-scenes views of everyday life and employee testimonials.
You should seriously consider getting a listing on Glassdoor and encourage your employees, who are really your ultimate brand advocates, to write about your organization.
People go to sites like Glassdoor to learn more about company cultures, compensation, job descriptions, as well as current and previous employees’ reviews and opinions.
To build your employer brand on Glassdoor, follow these tips drawn from Facebook and Hubspot.
- Request candidates to rate their experiences after interviews with you to create a useful profile for jobseekers and other candidates in learning what to expect from your recruitment process.
- Respond to Reviews – While you cannot ideally respond to all reviews, you can adopt Facebook’s method to maximize impact. By selecting reviews that most represent the overlying themes raised about your company most recently, balancing between current and future employee reviews and prioritizing those that touch on departments with hiring needs.
- Showcase a valuable review – You can choose a featured review that most represents a variety of aspects for prospective hires, was marked as helpful and that gives constructive feedback.
- Put analytics to work – Glassdoor provides a number of analytics that should be constantly monitored and acted on. These include company ratings, CEO rating, review trend, and keywords.
- Share engaging content – You have an opportunity to showcase your brand culture through articles from your blog and company updates that help you stand out.
Saturate the Market
A final aspect of employer branding is participation in community events that resonate with or involve the talent you seek. You have a good chance of locating your best fits.
For example, if your target hires work outdoor, you could put up a booth at an outdoor event and engage with potential candidates. You could also support a community sports team or hold job fairs that intersect with outdoor festivals.
2. CAST YOUR NET WIDER
While extensive experience in a certain position might make a candidate look really good, it might not always be the best pointer to the best talent.
Such fixation might blind you from the possibility that such a candidate might not be driven enough if they were content to stick in one position for such a long time.
If you are startup or operating in a rapidly changing industry, you would want more adaptable and flexible employees.
In a tight labor market, even attracting these highly experienced candidates may be a daunting task in itself.
These candidates may also most likely demand much higher pay than your budget allows and you might be missing out on more promising talent with lesser industry experience.
You will need to relax some requirements such as non-essential skills, certain educational levels or professional body memberships.
You will most likely be compelled to consider people beyond those you hire traditionally including women in male-dominated roles, looking beyond local markets, agreeing to remote working or being open to relocating new hires.
As you scramble to find the right candidates for the right positions with your competition, you realize that the standards will have to change a bit. In a tight labor market you can no longer insist on finding the perfect.
To some extent, good will be the best alternative for perfect.
In the process of casting your net wider, one relaxation in standard’ to consider is accommodating candidates who you might have excluded in the past for whatever reasons.
For example, there are some companies that only hire from certain colleges but now find themselves unable to fill openings using that criteria.
The VP for the Society of Human Resource Management, Tony Lee, says that in a tight labor market, as companies face acute staffing needs, several biases and stereotypes suddenly fade out because the urgent needs outweigh subjective judgments of who to consider.
What this means is that your net could wade into the region of the formerly incarcerated, caregivers and working parents, veterans, older and disabled workers.
You will be surprised at what gems your organization could unearth from these disadvantaged cohorts if you make the wise decision to consider them.
Relaxing on your company’s hiring traditions could save you the costs of keeping positions vacant until the ideal candidate is found.
Instead, you could hire someone who has demonstrated expertise in a corollary or related skill and invest a few months getting them up to speed through a detailed onboarding program.
Here are some useful guidelines on casting your net wider.
- Steer clear from ‘must-have’ requirements, eliminate overly restrictive pre-requisites and embrace a broad, open-minded approach to recruitment.
- Scrutinize the applicant’s track record for how they fit in their jobs over their career journey and whether they committed too long or too briefly.
- Does the candidate have additional talents that make them more attractive?
- Instead of merely zeroing in on experience, examine what they have accomplished, how they did it and establish how they fit into your company culture.
- Determine if the role is growth or experience driven. There are roles you would not risk a new hire learning on the job.
- Do not hesitate to offer growth-driven roles to candidates you feel are fast learners and fit into and benefit the company culture.
3. REVAMP RETENTION EFFORTS
In as much as you are relaxing your hiring requirements to target a broader talent pool and incorporating marketing into your recruitment processes, your existing employees are your greatest resource and a great marketing tool to potential employees as we have established.
You cannot afford to overlook them in a tight labor market or you will risk increasing your employee turnover.
So as you reorganize your hiring strategies, your employee retention plan ought to evolve in tandem.
Remember, they are no different from the new employees you are trying to recruit and since they too have been given more agency, their bargaining power is much higher than what it used to be before the economy started approaching ‘full employment’.
By improving your retention rate, you will reduce the costs associated with hiring new workers in the current market and receive the most value from the existing ones.
But you will need to make some adjustments to get there.
Remember, irrespective of your staffing needs or whether the positions are full-time or temporary, the facts of the thin market is that skilled candidates are more in demand than never before.
In fact the best candidates in whatever role you are hiring will often receive a number of offers at a time.
It is therefore critical that you now move fast to ensure you are offering the best-in-class compensation and benefits.
Companies that will not adapt or cannot adapt their employee retention strategies are in for some major competition.
Here are a few ways you can consider to ensure your current employees continue to see your organization as attractive.
- Help with preparing for retirement: A 2018 Employee Financial Wellbeing Wellness survey conducted by PWC revealed that nearly half of employees are worried that their retirement savings will not even last until retirement. If you actively provide retirement literacy and investment help to your employees, you are taking a step in securing the future of your workers and they are more likely to stick with you.
- Flexibility options: Workers are concerned about maintaining a healthy work-life balance and this could be a major reason why your employees leave or prospective hires shun your company. A recent survey shows 82 percent of workers in the US consider the ability to work from anywhere as a great step in maintaining that balance.
- Review salary and benefits: This goes without saying. You will need to give your workers a reason not to leave you when your competition is dangling more competitive compensation. A comprehensive benefits package if not in place should be the first item during your next HR strategy meeting.
- Loan debt and housing assistance: The student debt situation in America is getting worse. Probably half of your employees today are burdened by this and would jump ship if one of your competitors with a student loan assistance program comes calling. Why not throw in mortgage or travel assistance while at it?
As the economy nears ‘full employment’, companies are grappling with both attracting and retaining the right talents in the rights jobs.
Unfortunately for them, during a tight labor market, it is the workers who possess better bargaining power and as such employers have to adapt to this recent shift in power.
Flashy perks and tokens are just not going to cut it as competitors boost their efforts to land the best candidates.
A combination of these three tips will help you take a major step in meeting your staffing needs and staying ahead of the competition.