Recruiting & Retention Crunch
The effect of the 2020/2021 economy has wrecked recruiting and budget plans, causing a shifting of power. Specifically, the transition and pausing of business in the early months of the pandemic resulting in a precipitous decline across all sectors. The economy has rebounded, yet many businesses have not been able to find or retain the talent to fill their crucial positions. What has caused the lack of available talent? Quite frankly there is no one answer, but an amalgamation of many different factors such as i) quality of life, ii) new skills, and iii) competition.
Quality of life has been the single largest area of emphasis workers are leveraging. After spending more than a year at home, many workers do not want to revert to commuting or the monotony of a desk job, while others are simply experiencing “burnout” from logging long hours while also balancing childcare and remote school, sometimes all at once. Now that they have enjoyed the quality of life increase that remote working alternatives bring, they are unwilling to return, preferring the flexibility of remote work at least a few days a week. While many organizations and managers have announced plans to bring employees back to the office this fall, it seems many people are simply unwilling to do so.
What is the Great Resignation and What Does it Mean for You?
The Great Resignation, termed by Anthony Klotz, associate professor of management in the Mays Business School at Texas A&M University, anticipates an unprecedented number of resignations on the horizon. Specifically, Professor Klotz identified that due to the uncertainty caused by the pandemic, many employees who would have otherwise quit their jobs in 2020, stayed put. This phenomenon is substantiated by comparing historical resignations year-over-year (6 million fewer in 2020 vs 2019). Many of these employees have spent the past year studying new areas of expertise and bolstering their respective resumes in hopes of finding higher pay in a more stable, yet flexible working environment.
Competition within the market has compounded the quality of life and emphasized the development of new skills. With an enormous number of organizations experiencing this crunch on talent, each has tried to outmaneuver their peers, creating a “leap-frog” mentality of the likes the market has not seen since $100+ oil from March through September of 2008. Leapfrogging had key talent leaping from company to company for incrementally more pay with each move. The only factor that decelerated this was the commodity pricing collapse that bottomed out in January of 2009. In today’s market, there is no commodity price throttle to slow down this acceleration.
What Employers Can Do to Attract & Retain Talent
Given the overabundance of job openings now, the best workers have their pick of employment, and companies are being forced to be more deliberate in balancing employee satisfaction and well-being with overall financial returns. Strategic alignment between flexible working policies and compensation and benefits packages stand as the only competitive advantage a business can have, assuming they are quick enough to act. Additionally, understanding the root causes of employee burnout and finding ways to mitigate this issue has become critical in the war for talent attraction and retention.
In closing, for what seems like the first time since 1938 under the Fair Labor Standards Act, employees have shifted power away from employers, resulting in the need for organizations to be as vigilant as possible in gauging the temperature of the market and leaning on Human Resources to guide through these unprecedented employment times.