Hiring In A Tight Labor Market: What Entrepreneurs And SME Owners Need To Know To Win Over Top Talent
Finding the right employees for the job has perhaps never been more of a headache for small to medium-business owners in the current economic climate and tight labor market conditions.
A ManpowerGroup Talent Shortage Study found that roughly 77% of employers have reported finding it difficult to fill roles, a nearly 17-year high.
What’s more, a survey by the NFIB Research Foundation of small business owners reported 44% of respondents said they currently had little to no qualified applicants for open jobs.
Yet, with inflation still high and corporate companies seemingly laying off thousands of employees each week, several workplace trends are keeping workers out of the workforce and further fueling tight labor market conditions only further hurting small businesses.
A Closer Look
The pandemic was the catalyst that completely changed the American labor market, and the effects that followed are still being felt by some.
The onset of workplace trends such as The Great Resignation, among several others, saw millions of employees quit their jobs, as many looked to improve work-life balance, better compensation, and an overall strong company culture.
In 2022 alone, more than 50 million workers left their jobs, all of them looking for something more fulfilling, swiftly changing The Great Resignation into The Great Reshuffle.
While many workers are quitting their jobs, a lot of them are getting re-hired, as indications of the U.S. Chamber of Commerce show that hiring rates have steadily outpaced quit rates since November 2020.
Several industries including leisure and hospitality; wholesale and retail trade; professional and financial activities; and durable goods manufacturing are among the sectors that have experienced persistent and ongoing labor shortages.
Businesses in these industries were among those that lost the highest number of employees at the start of the pandemic, now almost three years later, some are still struggling to fill vacant positions. The manufacturing industry still sees more than 800,000 open jobs as of January 2023, while leisure and hospitality lost around one million employees in the same month.
A closer look reveals that employees are seeking better work opportunities that can offer them more flexibility and workplace autonomy.
Though some industries have been less impacted by labor shortages, many are seeking alternative solutions for increased demand in remote and hybrid work, a workplace benefit millions of employees are looking for when changing jobs.
In a Gallop study, around 91% of U.S. workers said they hope to continue working some of their workweeks from home. The same study showed that 3 in 10 workers said they would quit or seek new employment if they are recalled to the office.
While the benefits of remote work are plentiful, both for workers and employers, recent indications show that an increasing number of companies are requesting to have their workers back in the office some or all days of the week.
Ongoing friction between what employees need to thrive in the workplace, not only having remote or hybrid working conditions, among other things, has made it harder for employers to attract and retain the right talent for open positions.
Demands from workers are often harder to meet for small and medium enterprises, even more so for younger businesses.
A lack of resources, finances, and operational experience is often seen as the root cause of these issues, yet it can take smaller organizations several months if not years to attract and retain qualified talent in a tight labor market if they’re unable to provide employees with attractive benefits.
Winning Over Top Talent
In a time where labor shortages continue to be a persisting problem for companies, especially for smaller and less established firms, and where big corporations are constantly scooping up top talent, business owners and entrepreneurs are required to be more savvy and forward-thinking than ever before.
Think More Strategic
One of the first ways for small companies to win over more qualified talent is to have more strategic planning during the hiring process. Being more flexible in what they can offer potential employees can help them be more dynamic and garner top talent for open positions.
Having a strategic blueprint will help business owners see what they can offer employees, both in terms of compensation and workplace benefits, but also whether they can provide them with suitable compensation that meets their workers’ financial needs.
Employers need to understand what the business needs and how the right people will fulfill these desired needs, both in the short and long term. From this point, employers should look at the roles they have available, and consider what the right candidate will look like and how they will be able to contribute to the overall company culture.
Understand The Need For Flexibility
Since the start of the pandemic, and perhaps sometime before that, many employees and those actively seeking employment were looking for improved flexibility in their day-to-day schedules.
The introduction of remote and hybrid work helped employers realize how much their workers valued autonomy. This ensured that although employees are working away from the office either full-time or partially, many of them remained highly productive and engaged.
Companies that have been able to provide their employees with remote and hybrid working conditions have seen a significant increase in productivity, and improved project collaboration.
After all, some research has indicated that 67% of employees who were allowed more and improved flexibility in the workplace felt a greater sense of empowerment since the start of the pandemic.
Though these conditions might not be reflected across all industries, flexibility can mean something different for every company and its staff. But in the bigger scheme of things, it shows that those companies who were more active innovators with workplace flexibility noticed a significant improvement in their employees’ overall performance and collaborative spirit.
Establish A Company Culture
One thing that smaller businesses might not have over their larger and more established counterparts is having an established company culture. The traditional understanding of company culture has over time evolved to become an important element of any business that hopes to grow and attract top talent.
Following a 2019 Glassdoor study that polled more than 5,000 workers from several developed nations, more than 77% of respondents said that company culture is one of the first considerations they think of before seeking a new job.
What’s more, the same survey found that 56% of respondents said that having a positive and inclusive workplace culture was more important than their salary.
Another facet of a strong company culture is the fact that many employees seek out jobs at organizations that align their values with their own personal values.
This would mean that smaller enterprises and startups would need to consider how their current values align with those of the talent they’re trying to attract. If they are unable to provide a positive, inclusive, and developing environment to potential candidates, employers could find it harder to meet their employment needs.
Offer Nurturing Benefit
Traditionally, some companies offer their employees benefits that include medical and life insurance; retirement plans; or paid time off. While these remain important attractions for potential employees, some employers are now looking to introduce several innovative benefit offerings to attract top talent.
For starters, some have been helping employees with childcare and child-centric benefits, which are stretched to all employees.
Research by the American Psychological Association (APA) found that America’s working parents are more stressed than ever before about their household income, financial position, and childcare responsibilities.
Even more importantly, a different study from KinderCare showed that 18% of working parents have cited childcare benefits among the top three most important reasons why they have stayed at their current employer.
Across most industries, and businesses of various sizes, childcare benefits, and support structures are becoming increasingly important for many working and soon-to-be parents.
Allowing better access to childcare services, and helping them to have improved work-life balance can eliminate barriers for small businesses that are seeking to fill vacant positions.
Not only is this helping these companies widen their hiring pools, but it’s helping employees apply for jobs that meet their requirements and work for companies that align themselves with their personal values.
Establish Groundwork For Further Development
In more recent years, studies have shown that younger employees, those categorized as Millennials and Generation Z were more determined to apply for a job or stay at their current employer if they offered them skills development opportunities.
No longer is the workplace simply an environment where employees are confined to their current level of education and knowledge, as many of them are now seeking jobs that can further grow their skills, and help them remain employable in the coming years.
One study, in particular, found that 29% of both Millennials and Gen Z workers ranked learning and development opportunities among the main reasons for staying at their current employer.
Employees that are only now starting to enter the workforce, or have done so in more recent years want to have better career advancement opportunities from their jobs.
This would mean that companies, including smaller businesses, should establish an environment where employees will be able to learn on the job, upskill themselves and further grow their current level of skills for the future of the workforce.
Create Jobs With A Sense Of Purpose
Then there is the fact that many employees are looking for jobs that are more purposeful, not just in terms of what a job can offer them, but also the difference it can make in the broader scheme of things.
Employees want to do jobs that make a difference such as helping to combat climate change or working to narrow the inequality gap between employees of different races and genders.
Workers want to see a difference in the work they do, and the companies they do it for. And as a small business, this would mean that the work you do should be meaningful, and should have a bigger purpose than simply improving the bottom line or turning a profit.
While financial growth and well-being are crucial to a company’s existence, looking further shows that many employees want to do work that is fulfilling, but will be able to make an ongoing difference in their communities and help find valuable solutions to wider issues.
The Takeaway
Finding the right talent has become harder these days, and tight labor market conditions have made it even more challenging for smaller businesses and startups to attract and retain the right pool of workers.
Smaller businesses and startups might not have the necessary resources and structures to provide qualified employees, but taking it as a learning curve and seeing how these benefits can be included will help widen the hiring pool for many.
Employees are no longer simply looking for good pay and flexibility, and this would mean that new employers will need to be more savvy and innovative if they want to build a strong, yet dynamic team of workers.
Published First on ValueWalk. Read Here.
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