Companies that were strong enough to survive the recession are now facing a new challenge - rebuilding the workforce amid increasing competition for qualified talent.
The worldwide recession that began in late 2007 culminated in the loss of more than eight million American jobs, the biggest labor market contraction since the Great Depression of 1929. Now that the economy is rebounding and U.S. jobless claims have hit a 42-year low, companies are finding it more and more difficult not only to fill new positions, but also to retain existing workers.
During the decline, we saw staff reductions, as well as declining wages and benefits, while many companies struggled to keep the doors open in the face of decreasing sales and reduced profits. Many were forced out of business as the economic storm was simply too difficult to weather. Displaced workers were spending months in search of a new position and many times were forced to take whatever came along after trying unsuccessfully to stay in their previous field, often at a salary much lower than the position they were displaced from. It was a case of supply and demand that played out in favor of business.
Economy boosts workforce competition
Companies strong enough to survive this labor climate are now faced with a new challenge - rebuilding the workforce. With the economy rebounding, competition for qualified talent is increasing. Many workers are now receiving multiple offers, which in turn drives up wages and benefits. Although this might seem like a relatively recent phenomenon, in reality it is common in a rebounding economy. The talent pools are being depleted in virtually every industry from skilled trades to professional positions, including most engineering fields. Software engineers are the likely leader in the shortage of workers, according to a cybersecurity business report. In the article, Veronica Mollica, founder at Indigo Partners had this to say: “Candidates are facing competing offers from multiple companies with salary increases averaging over 30 percent. Current employers are scrambling to retain talent with counter offers including 10 percent and higher salary increases for information security team members to remain on board."
A CareerBuilder survey found that there were more than 2.5 million engineering jobs posted from 2014 to 2015, with only 567,000 active job candidates seeking those jobs.
On the skilled trades front, a recent article from HomeAdvisor pointed to huge concerns hindering business growth in the residential construction and home improvement fields due to worker shortages. An article in Forbes points to the aging American worker as still another reason for the shortage, but points to the same consequences as earlier cited reports. According to Forbes, Walmart has announced to raise wages in the face of a tightening labor market. This move is also being echoed across many states that are pushing for higher state minimum wages, which usually results in a ripple effect of higher paying job roles as well.
Strategies for hiring and retention
Businesses who don’t act could face a lack of growth, lose current talent to more progressive organizations and miss opportunities to acquire top talent ahead of the competition. Here are some proactive actions that businesses can take right away.
Reduce the hiring cycle to lock down candidates and keep them from going to the competition
Cross train current employees so they can see value in remaining with your company
Provide more advancement opportunities to keep them engaged and challenged
Some forward-thinking businesses are experiencing fewer issues with attracting and retaining skilled workers, as they have discovered what is known as the “farm team concept.” At EASi, this concept has been optimized, as EASi serves clients by hiring, on-boarding, managing and developing highly qualified engineering interns. It’s a win-win solution, as it gives entry-level employees hands-on experience. This provides the employer an opportunity to hire from a pool of talent that has already learned the company’s processes and procedures, and that has proven itself worthy of full-time employment.
As the workforce is depleted, the law of supply and demand plays against businesses and favors the job seeker. Barring a downturn that could disrupt the momentum, there might be a wake-up call on the horizon of the industry that higher wages and increased competition become the new norm, at least for the time being.