Data Shows the Talent Shortage is Getting Worse Everyday
As 2022 kicks off, one fact I think we can all agree on is that talent shortage is real. It’s here to stay and it’s getting worse by the month.
I spent the last few weeks of 2021 preparing some webinars. In that time, I researched for metrics to validate the overall sentiment I was hearing from pretty much everybody I talked to about talent shortage.
I pulled data on job opening growth versus unemployment rates month over month, and I looked at the gap (meaning the difference between the number of unemployed people versus the number of jobs that are open now).
The data shows that the supply and demand balance is off. Like way off!
While the jobs that are open today are most likely not going to be filled just by unemployed people, the fact is that without more people being added into the active labor market, there will continue to be a shortage, and job seekers will continue to play musical chairs.
Post-COVID, most industries are struggling from a lack of available talent, and so they start to steal from their competitors. They use their ads and pay sign-on bonuses to pull applicants from the other competitors in their industry, which leaves an opening with their competitors. Those competitors then steal from others, and the cycle goes on and on until it comes back around resulting in the first company losing the new talent they just hired!
The issue isn’t unemployment, per se, the issue is the lack of available people to fill the roles that an employer has, and the lack of new people coming into the labor market in those areas.
When we look at the gap between the two metrics, pre-COVID versus today, I found that in almost every market, in almost every demographic, and at almost every level of role, the gap
between those metrics is getting worse. A lot of times, much worse. It’s growing and ranging from anywhere between two times as bad as pre-COVID to as much as five times as bad.
Whether it is general unemployment, youth unemployment, professional unemployment, blue-collar unemployment, health care unemployment, etc., the same thing is happening in the metrics. The gap is trending towards widening.
Simply put, most people just don’t think there is a lot of hope. COVID has created massive chaos and shifts in the labor market.
See, when you think about the game of musical chairs, if each chair is a job, and the people running around the circle are the workers, there are fewer workers than jobs/there are fewer players than chairs. In the game of musical chairs, that would mean that there wouldn’t be a whole lot of motivation for people to rush to get a chair. In a normal labor market, we assume that there are enough people inside the market for the chairs available, at least, as it shifts between the two, we see changes between a job seeker market and an employer market.
However, the normalcy of the game is reliant upon the assurance that the number of new people entering the game is greater than the number of people leaving the game, at least by the number of new jobs being generated. This is the piece of the game that is broken in the job market and is causing chaos in almost every single situation.
Why is it broken?
1. People left a lot of these labor markets and jobs because of COVID. They retired early, they moved to a new part of the country, they went back to school, they found new opportunities in the gig economy, etc. Some left their old industry for a new one. And a huge segment of the workforce has had a major reassessment of their work-life priorities. These were all the people leaving your game of musical chairs, in your economy, in your local market for the type of talent you hire.
2. People coming into the labor market have slowed up as well. For a lot of people,
they’ve reassessed what they want to do with their life, and what type of jobs are willing to fill in which industries.
Now, most employers simply don’t know what to do about this problem.
As an employer, I know what it’s like to have your team feeling stuck and unable to solve this problem, feeling like they have very limited options for trying to solve it (which mostly is throwing money at it), and feeling like even that isn’t working.
However, over the last year, we, at ApplicantPro, have grown from 140 to 260 employees, hiring over 160 people.
I want to share with you how we did this, and how you can too!
The most important thing you can do to kick off this year before you start making changes is to stop and assess your current situation. Let me walk you through what you need to do.
Current Assessment
1. Do you have more openings at the beginning of 2022 Q1 than at the ending of 2021 Q4? Has the number of things you’re trying to do gone up? Therefore, have your needs gone up?
2. Have you been posting your ads in more places?
3. Have you spent more on ads?
4. Have you increased sign-on bonuses, compensation, improved benefits, etc?
Have you increased your employee referral payouts?
5. Have you increased your use of third-party staffing, temp recruiters?
6. Let’s look at your indicators.
Are you getting fewer applicants than normal?
Are those applicants of lower quality?
Are you getting less engaged applicants (ghosting on interviews or rejecting our job offers)?
You want to think about this, not just the overall number of applicants and quality, but per hire needed per opening that we have.
In answering these questions, you may find that the result is that…
a) you have more needs
b) you’ve done more stuff to try to solve for it
c) that you’re seeing worse results
Now the actual results may take a little longer for you to start to feel, but my gut says that you’re
already starting to feel the indicators of it…that it’s taking longer to fill jobs, it’s costing you more for each hire, that your 90 Day fail rates are going up, and maybe that your turnover has increased.
This probably isn’t a happy set of questions to ask, but it will at least give you some level of measurement of the current struggle you’re facing today.
And the real question to ask yourself is…
Based on what you’re doing today, did things get worse, stay the
same, or get better versus the beginning of the year? Meaning, what
was your trend as you’re ending the year?
Because that’s the spot we’re going to be starting on with what’s coming next.
Future Needs Assessment
Next, you need to assess your future needs.
Just stop for a moment and think about your estimates about your organizational changes for 2022.
Now, I know you’re not going to have perfect data on this, that’s fine.
All you want to do is measure this like a T-shirt size (small, medium, large, extra-large).
So just think about what changes or needs are going to happen in this next year.
1. Is your organization going to increase its headcount? Either because of new locations, new initiatives, growth of the company?
2. Do you project that turnover is going to increase based on all the
competitiveness from everybody else in your industry for that talent?
Think about how competitive you are versus everybody else.
a. Are your ads going to get more competitive and unique versus your competitors?
b. Are your competitors going to start making changes?
c. Is your differentiation going to be as strong or less strong versus your
competitors than it was last year?
d. Are you going to increase your pay benefits change or improve your work experience versus your competitors?
e. Is your aggressiveness with your recruiting process going to stay the
same as your competitors get worse than them or better?
3. Finally, think about how you estimate the indicators of what’s going to happen within your industry and roles.
a. Do you think there’s going to be an influx of people entering that industrial role?
b. Do you think that there will be an increase in people leaving the industrial role?
c. Do you feel like there’s going to be more demand for hires in that industry because of the overall growth of the industry? Whether again, it’s location increases, or new initiatives going on with your competitors, new companies opening in the market, etc.?
The overall result of answering these questions is to get a feel for how you think next year will be versus where you’re at right now.
Do you feel like you’re going to fall further behind in filling roles, stay
about the same level of struggle, or do you think it’s going to get easier?
Now that you’ve assessed where you are at right now, at the beginning, and what additional increase or decrease of struggle or needs is going to happen throughout this year, we can now sit down and ask ourselves some hard questions to rate our ability as an organization to solve it.
You need to be honest, and rate how well prepared you feel your team and your organization are to meet the challenges you’ll be facing in the next year, to deal with your current struggles starting on day one, as well as to overcome and compensate for how much harder things are
going to get throughout the year.
You’re going to ask yourself a handful of questions.
Preparedness Assessment
1. First, start with strategy. Do you have a solid strategy? Are you going to keep doing the same things that you’re doing today? Are you going to do something new? If you’re going to do something new, are you just making some small adjustments, or do you need some major initiatives to make things change? My question is, do you feel that you have a strategy that’s been proven to work?
2. Will this strategy be enough to solve your talent shortage? What you want to know is, will it provide you with enough, or more than enough talent for your needs?
3. Do you know the steps needed to execute it? Do you know the tactics that are required to accomplish the strategy that you’re putting out there? Are you just kind of winging it? Or do you have a team that has successfully done it before?
4. Do you have the tools and software necessary? It’s possible that you don’t have any sourcing tools outside of maybe an applicant tracking system that feeds the job boards. So you have to ask yourself, do you have an ATS? If you have a great ATS, does it do something more than just job boards? When it comes to tools, do you have an approach and software that will help with outbound passive applicant engagement, cold emails, building talent, communities, social instant or direct messaging? Do you have tools in place and a strategy to go with the tools to drive an outbound strategy? Most importantly, do you have a platform to track, manage and drive referrals coming from employees, customers, and influencers? Again, if you don’t have anything, you’re not alone? That’s a normal answer to this question.
5. Do you have the budget that is required? A lot of times the organization puts out the requirements for how much growth is going to happen without understanding that the budget is going to constrain it. So, are you planning on increasing your budget compared to last year on a per hire basis or are you planning to increase your job budget on a per-job basis?
6. Finally, do you have the time and people required? Are you planning on increasing the size of your recruiting team? Are you planning to increase the knowledge of your recruiting team? Are you planning to bring in people with new skills and knowledge? And are you planning to use your marketing team to rewrite your ads or help you with some of the messaging that’s going out? If your team isn’t big enough, then you might be looking to augment your recruiting team without side services. So there are three main questions here.
a. Are you planning to use temporary staffing agencies?
b. Are you going to use third-party recruiters or headhunters?
c. And then finally, are you looking for a recruitment marketing agency of
some type that will come in and help you execute a strategy?
Overall, the goal of this entire needs assessment is to figure out…
How much are you struggling on day one?
How much harder do you project it’s going to be?
And then the most important one is…
How prepared do you feel your team is to solve these problems?
Think about that ranging from: I’m scared we’ll get even further behind. I’m confident we’ll be able to improve versus our competitors.’
Look, sometimes the most important first step in solving a problem is recognizing exactly where you’re at, to begin with. And that sometimes isn’t the happiest conversation to have with yourself or with your team if you have to recognize just how bad the pain is, how much worse you project it will get in the future, and how maybe unprepared you are to solve that problem.
But this is a crucial, necessary assessment to have to course-correct as early as possible.
If you have any questions as you’re going through this audit for yourself, please feel free to let me know. I’d love to spend some time with your team talking through exactly what your needs are.