Senior talent shortage: All you need to know about the phenomenon
- Organisations are facing intensified competition for highly qualified talent, with recruiting for senior and skilled roles being particularly challenging.
- Companies are addressing the senior talent shortage by enhancing pay and benefits offerings, cultivating internal talent through upskilling, offering flexible work options, and utilising technology.
- Overcoming the senior talent shortage requires strategic workforce planning, inclusive recruitment practices, and effective marketing, while leveraging technology is also key.
- Recruitment agencies can gain a competitive edge by diversifying outreach, expanding talent pools, and adopting recruitment technology.
- Squire, our AI-powered conversation intelligence, helps agencies record and transcribe candidate calls, improve selection criteria, evaluate soft factors, and enhance the candidate experience.
Why is there a senior talent shortage in the first place?
The term “war for talent” was coined by McKinsey’s Steven Hankin in 1997 and gained popularity through a book with the same name in 2001. It describes the intense competition to attract and retain employees, which has become even more challenging as there aren’t enough workers available to replace the retiring baby boomer generation in advanced economies.
Following the COVID-19 pandemic and the Great Resignation, many employers have faced increasing employee turnover and more open positions.
During the Great Resignation, an astonishing 47 million Americans decided to quit their jobs in 2021, with the majority finding new employment opportunities where positions were available. Their reasons to quit were wage stagnation amid the rising cost of living, limited opportunities for career advancement, hostile work environments, lack of benefits, inflexible remote-work policies, and long-lasting job dissatisfaction, a.k.a. burnout, among others.
As a result, there is now an excess of job openings across various industries. The unemployment rate has reached record lows since the pandemic, with just 3.7% in August 2022 compared to 5.2% in August 2021, according to the U.S. Bureau of Labor Statistics. However, the number of job openings (10.7 million) far exceeds the number of unemployed individuals (six million). Even if all unemployed people were to find jobs, there would still be over four million positions left unfilled.
The COVID-19 pandemic and the Great Resignation have also significantly altered employees’ attitudes towards work, giving them greater bargaining power. In response, companies are making every effort to retain their employees, as the costs of turnover are immensely high, not to mention the ones of being unable to fill an open position.
Employees have realised that changing jobs can lead to more experience and higher lifetime earnings, especially when each new position offers opportunities to develop their skills. When employees are dissatisfied with factors like company values, management style, or salary, they are more likely to quit because amidst the “war for talent” they know they can find better conditions elsewhere, given the shortage of qualified talent. This creates a cycle where talented individuals keep changing jobs, making it even more challenging for companies to retain their workforce.
According to a study by the McKinsey Global Institute, companies in Europe and North America will need 16 million to 18 million more college-educated workers than will be available. This means that one in ten positions may remain unfilled, making it even more challenging to find top talent. On the other hand, in advanced economies, up to 95 million workers could lack the necessary skills for employment, highlighting the magnitude of the talent shortage.
It’s important to note that this situation is the other way around in the case of entry-level positions, which are highly competitive and often offer lower salaries. This dynamic contributes to the growing cost-of-living crisis in Europe, but that is a separate issue.
The status quo: how organisations manage the senior talent shortage
The competition for highly qualified talent has further intensified over the past year, as reported by 70% of the respondents to CIPD’s survey. Among the various recruitment tasks, 58% of organisations found recruiting for senior and skilled roles to be the most challenging. In response to this, 36% of organisations are increasingly focusing on enhancing their pay and benefits offerings, recognising that these factors are now commonly ranked among the top three elements of their employer brand for attracting candidates.
38% of organisations are intensifying their efforts to address their talent needs by focusing on cultivating internal talent. In response to recruitment challenges, the most prevalent strategy, adopted by 60% of companies, involves enhancing the skills of their existing workforce through upskilling initiatives.
Nevertheless, amidst these difficult labour market conditions, there is still a huge market for recruitment agencies to tap into. According to CIPD’s report, only 53% of respondent firms state that they solely rely on internal recruitment, while 41% opt for a blend of in-house and outsourced approaches, with a small minority of 6% choosing to outsource their entire recruitment process. This means that almost half of the organisations (47%) use external recruitment to some extent.
The Rise of Flexible Work Options
In response to recruitment challenges, 54% of organisations – particularly those who have encountered difficulties – are addressing the issue by offering increased work flexibility. As throughout the Great Resignation one of the highlighted issues of qualified talent were inflexible remote-work policies, a significant majority of organisations (69%) now includes flexible working options in the job advertisements for some positions. Among those who have conducted recruitment within the past 12 months, an increasing proportion (30% in 2022 compared to 24% in 2021) consider advertising roles as open to flexible working as one of their most effective strategies for attracting candidates.
Additionally, 66% of companies have implemented hybrid or remote working arrangements, while 47% advertise certain positions as “open to location.” Remarkably, among organisations offering hybrid/remote working options, 68% report that it has enabled them to attract and retain a higher caliber of talent. Furthermore, 45% of organisations have witnessed increased productivity, and 35% have reported enhanced levels of employee engagement.
The Growing Role of Technology in Recruitment
As a result of the COVID-19 pandemic, 80% of organisations have witnessed an escalation in their utilisation of technology throughout the recruitment process. However, only approximately one-fifth of them employ online induction processes, online tests/assessments, or Applicant Tracking Systems. A modest 16% of organisations use AI/Machine Learning technologies.
Companies are increasingly reaping the benefits of technology implementation, with the most common advantage being enhanced accessibility for candidates. This year, a higher proportion of respondents reported that their use of technology has improved the overall candidate experience and made the recruitment process considerably faster.
Similar to previous years, the majority of CIPD survey participants acknowledged that their utilisation of technology has been hindered by limited resources, skills, and knowledge. These factors continue to pose challenges in fully leveraging the potential of technology in recruitment processes.
Our recommendations to overcome senior talent shortage as a recruitment agency
Data-Driven Market Mapping and Talent Strategy Planning
Adopt a strategic approach to workforce planning by conducting a comprehensive evaluation of your talent pool’s critical skills and the key roles you are usually required to fill. Dive deep into the data to gain insights. Take a holistic view of your workforce requirements, considering both permanent and contingent positions, as well as higher and lower-level roles within specific industries. Utilise data analysis to its fullest extent. Identify which positions offer greater rewards and determine the most sought-after talent. By having access to concrete facts and data, you can strategically anticipate future talent needs and proactively build a robust talent pool.
Promoting Inclusive Recruitment Practices and Enhancing Candidate Engagement
It is crucial to highlight the significance of inclusivity in the broader context. Alongside other factors like an organisation’s employer brand and core values, inclusivity plays a pivotal role in enhancing the employer brand and mitigating the challenges posed by talent shortages. Feel encouraged to emphasise that your agency values conversations with talent from diverse backgrounds, recognising the immense value that a diverse workforce can bring to an organisation’s perspective and overall success. This approach has the potential to attract top-tier talent, giving your agency a competitive advantage over others that rely on inappropriate criteria for candidate selection.
Facilitate candidate engagement throughout the recruitment process, supporting them in showcasing their best abilities. Make certain that the selection criteria utilised for hiring individuals accurately predict their performance in the role and develop assessment processes that objectively evaluate these criteria in candidates. Once the process is defined, ensure that all consultants in your agency have a clear understanding of your guidelines.
Seek assistance to conduct a thorough and unbiased evaluation of your end-to-end candidate experience through a diversity-focused lens. This review aims to guarantee that the entire recruitment process is inclusive, accessible to all individuals, letting you reach a wider pool of talent. It is important to note that an enthusiastic candidate with less experience may be more valuable than a highly qualified but disengaged candidate, as the former is more likely to contribute effectively and remain committed to their role.
Additionally, during initial client calls, don’t hesitate to suggest inclusive recruitment and selection practices to hiring managers, aiming to eliminate obstacles for potential candidates. These practices may involve advertising positions with flexibility options, eliminating unnecessary qualifications from job advertisements, and offering financial assistance and accommodations to candidates who require them throughout the recruitment journey. Trust your instincts as you possess a deep understanding of the market. Hiring managers will likely appreciate your assistance in expediting the fulfilment of their positions. It is crucial to ensure that they are well-informed about current market trends and your agency’s inclusive hiring process.
Open a door to differentiation, where marketing is the key
In today’s competitive job market, having inclusive recruitment practices alone unfortunately is insufficient. It is essential to effectively communicate and market your agency’s commitment to these practices. Job seekers place significant emphasis on an employer’s brand and organisational values when making their employment decisions. With numerous recruitment agencies vying for the same pool of candidates, it becomes crucial to differentiate your agency from the crowd. By promoting the right values and consistently communicating about them, you can position your agency as a unique and desirable option for talented individuals. This strategic approach to marketing can serve as your agency’s distinct advantage in attracting top-tier candidates and setting yourself apart in the market.
Proactive Talent Pool Expansion
Adopt a proactive stance in expanding your talent pools by diversifying your outreach methods and channels. It is essential to effectively communicate and showcase your agency’s attractive employer brand to a wide range of candidates. Given the scarcity of qualified talent, it becomes crucial to establish strong personal connections with individuals who may not be actively seeking job opportunities but are receptive to your outreach efforts. Building relationships with such passive candidates can yield positive responses and potentially tap into a pool of talented individuals.
Leverage recruitment technology and automation
Conduct an internal assessment of your recruitment technology capabilities and resources, and invest in upskilling where necessary. Develop a compelling business case for adopting technology that can streamline your processes and enable your recruitment consultants to focus on value-added activities. Explore advanced technology solutions that create a personalised and highly engaging candidate experience to attract top-tier talent.
Ensure that the recruitment technology you choose aligns with your organisation’s needs and promotes a fair and inclusive candidate experience. Continuously evaluate and enhance your use of technology in your day-to-day operations. Embrace the growing trend of recruitment automation, which can significantly improve efficiency and effectiveness. For more insights on this topic, refer to our article available here.
Strike the right balance between technology and human interaction. Seek feedback from candidates and hiring managers, and take prompt action based on their insights. Whenever possible, provide meaningful feedback to candidates to enhance their experience and engagement.
How Squire can help you overcome senior talent shortage?
In today’s talent landscape, there is a significant opportunity for technological improvement as only a modest 16% of organisations currently utilize AI/ML practices. By harnessing the power of these cutting-edge technologies, your agency can revolutionise its recruitment processes, enhance candidate experiences, and ultimately gain a competitive edge.
One area where improvement is crucial is better exploiting your Applicant Tracking System (ATS). With Squire, each and every candidate call is recorded and transcribed, seamlessly integrating the data into your database. Even if a candidate may not be an immediate fit for a specific position, the valuable insights from the interview contribute to the growth of your talent pool. You can easily reconnect with these talented individuals when a more suitable opportunity arises, maximising the potential of your candidate pool.
Squire also empowers you to ensure that selection criteria accurately predict a candidate’s performance. During interviews, the tool automatically suggests questions, ensuring consistency across all interviews. Additionally, you can incorporate custom questions to align with your unique interview structure. With Squire’s recording and transcription capabilities, evaluating soft factors becomes easier, promoting inclusivity in your hiring processes.
Moreover, Squire enhances the candidate experience by eliminating the need for recruitment consultants to take notes during interviews. This modern approach not only streamlines the process but also sets your agency apart, providing an exceptional candidate experience that can be effectively marketed as a distinguishing feature.
In a fiercely competitive market, Squire equips your agency with the tools to stand out and win the “war for talent.” By embracing AI, leveraging your ATS, and offering a modern candidate experience, your agency can differentiate itself, attract top talent, and secure a significant advantage in today’s dynamic recruitment landscape!
We hope that you found this blog post useful! Do not hesitate to follow us, so you won’t miss interesting stories in the future either. This article was provided by Melinda Havas. Rory O’Doherty revised the content.