Hiring in the era of labor shortage

Introducing state of labor shortage

50 percent of human resource managers that tell CareerBuilder they currently have open positions for which they cannot find one qualified candidate. Finding the best talent for your company has never been more difficult than it is in 2019. To add insult to injury, 32 percent of workers say they are planning to change jobs this year.

Other Statistics that shed light on this:

Putting it bluntly, a labour shortage exists and it’s going to get worse before it gets better. The reality that it coincides with a growing skills gap makes for a very challenging time for human resources professionals. Not only is that gap growing as a result fewer skilled workers making up the talent pool, but thousands of Baby Boomers are retiring every day. That’s knowledge that simply passes through the doors of an organization and never returns.

Countering this new reality is of paramount concern for HR. This report will take an in depth look at the labour shortage as well as strategies and technologies that can help level the playing field and strengthen the recruitment function. It will also include feedback from HR professionals.

The Contributors are Johnny C. Taylor, Jr.,President and CEO SHRM, Larry Brand, Chief Human Resources Officer HR Specialist Elkay Manufacturing Eric Torigian, Vice President of US Human Resources and Assistant General Manager of Global HR Akebono Brake Corporation.

Labor shortage overview

First, it’s important to set the stage.

If we look at the labor shortage from an economic perspective, a shortage doesn’t necessarily translate to a lack of available workers although that is how it is usually framed. It can also mean there are workers who are voluntarily remaining unemployed and/or there are available workers that companies simply don’t want to hire.

The labor shortage, as an issue, is still very much in its infancy having only plagued HR since 2018. As of the writing of this report, the latest information from the U.S. Department of labour - Bureau of labor Statistics states job openings remain at 7.2 million, while just 6 million people continue looking for work. It’s the first time since the Department of labour began tracking job turnover that a situation like this has existed.

For some, however, it’s not really a shortage.

“It’s not so much a lack of talent as it is a misalignment of talent expectation and available roles,” Eric Torigian said. He’s the Vice President of US Human Resources and Assistant General Manager of Global HR for Akebono Brake Corporation.

“It’s having the right skills in the right places. And if you can see there’s a trend of technical skills and skilled laborers from electrical, mechanical, technician-level everything from blue collar to white collar,” he continued.

Lack of education

And it’s not just white-collar workers employers are struggling to find. It also includes blue collar workers as well. Examples include home health care workers, hotel staff and even restaurant workers. Another example: manufacturing workers. Elkay Manufacturing chief human resources officer Larry Brand says the industry is about to see a huge impact in the lack of skilled workers and it’s connected to education.

“20 years ago, many kids would get out of high school and go for job training programs or one- or two-year technical degrees like HVAC or refrigeration or plumbing or the trades,” Brand explained.

                                      SHRM President and CEO Johnny C. Taylor agrees

The consequences

A dilemma that has some real consequences according to Brand.

“Now this unbelievable 10-year shortage that’s going to come here in about five to 10 years where it’s going to be really, really hard for companies like us to even manufacture because everyone is going to college and nobody wants a blue-collar job,” Brand said.

The reason for this: more and more students are leaving high school and going to university. As a result, Brand and other manufacturing companies are looking toward a new partnership to shore up the missing skilled workers.

“So, we’re in the business right now of building relationships with universities and high schools,” Brand said. “As an example: an entry level accountant for the first four years out of school, they’re making less than $60,000, but yet if you get out of high school and do one year of technical training and go into a facility you can be making $45-50,000 the entire four years some else is off to college building up debt.”

Taylor says it’s a similar proposition as cities reach out to companies looking to build or relocate facilities in their communities.

Case and point: Amazon Echo Devices

“So, Amazon had to pick a city to relocate to and ended up in Long Island City and right outside of Crystal City, Virginia,” Taylor said. “What Amazon will say to you is one of the most significant factors they looked at was the quality of public education in that market because they were going to need employees and many of these employees were not high skilled employees. They were call centre reps, but to answer the phone, you’ve got to be able to speak properly and write properly. So, they looked very closely at public schools.”

All of this drives to one significant point Brand wants to highlight.

Pain points

The skills gap itself isn’t the only pain point related to the labour shortage. There are others to consider.

Time To Fill:

According to HireVue, the average time to fill is 42 days. That’s more than four times the number of days it takes the best candidate to find a job, which is 10, according to Workonic. Of course, the time to fill varies across industries. In some instances, it’s 14 days. In others, it can be upwards of 63. For every day the position is unfilled the company will lose money.

1. Employer branding:

The employer brand is significant in that it helps attract and engage better candidates.

2. Candidate experience:

Qualified candidates can and will drop out of the recruitment process and decline offers if their experience is subpar. That means HR professionals would have to essentially start all over again. A negative candidate experience can also have a bad impact on the employer brand.

3. Diversity-led recruiting:

More and more companies struggle to attract diverse candidates. Unconscious bias is often to blame.

4. Data-driven recruitment:

Data is essential to the recruitment process. It can help teams determine which candidate sources provide the best workers and it can help target candidates based on any number of criteria.

5. Candidate pipeline:

Cultivating a solid candidate pipeline helps a company source potential hire. With this comes sourcing concerns.

There is one pain point not listed and that’s technology. Technology presents a unique problem in that in itself, technology can be a solution to every challenge listed above. Having said that, it’s important to understand what HR professionals are looking at in terms of investment areas.

Data collected by IQPC Exchange during its most recent Talent Acquisition Exchange gives us some idea as to what solutions Senior HR professionals feel they need to invest in immediately.

For the purposes of this report, the top areas of investment will be the focus.

Candidate experience

As previously stated, the candidate experience can make or break the success rates of a recruiting strategy. Finding ways to be innovative and appealing can be a bit tricky, but if done properly, it can make it very easy for a company to find the needed candidates. Children’s Mercy Hospital in Kansas City is a perfect example. At one point, the facility reported suffering from a 40 percent candidate dropout rate with their process. That’s when they created the Introduce Yourself program. With the use of video recording technology, candidates are allowed to record a short video as part of their interview. The candidates are asked to respond to two questions. From there, the videos are reviewed by the recruiting team. Based on the responses, the team then recommends roles for the candidates that might fit their experience. If they have none available, recruiters keep the videos on file and contact the candidate once a position that fits their needs is available.

Talent Acquisition: HR’s Guide For Finding the Best Talent

Talent Acquisition (TA) is more than just a strategy. It’s about creating a framework that helps an organization hire smarter. In the guide below, the HR Exchange Network explores the topic of TA in more detail. It takes a look at the current state of affairs, strategies, and what talent acquisition leaders should expect in the coming years. 

Learn More

Another example of using technology to better the candidate experience: Yodel.

The UK company is one of the country’s largest delivery services offering different types of employment. Yodel says it receives more than 1,200 applications a week. That number more than quadruples during the holiday season. To deal with the sheer volume of candidates and to ensure candidates apply to the job that’s right for them, the company developed candidate experience bots one for each of its three different driver roles. When visiting the company’s website, candidates are able to submit questions to the bot and receive answers relevant to the roles for which they are considering applying.

Also read: Yodel

Diversity hiring

Diversity is one of the main focuses for companies today. As a focus of hiring, it definitely has impacts on the candidate experience, but it’s also important to as a dimension to building the best teams possible. That said, it’s not always easy. Good examples of where companies have successfully employed diversity hiring are Microsoft and Pinterest.

Microsoft had a desire to increase the number of disabled employees on their payroll. Their Autism Hiring Program is designed to attract and support candidates on the autism spectrum. Through it, these candidates are offered recruiting opportunities at events around the globe.

Pinterest, on the other hand, wanted to expand the number of women holding engineering roles to 30 percent. Additionally, they wanted eight percent of those roles to be held by underrepresented ethnic groups. Partnering with another company, Pinterest changed its strategy to include that candidates being interviewed for roles to include at least one from an underrepresented background and one woman. They also instituted unconscious bias training for every employee.

What is artificial intelligence

Recruitment technology is evolving and forcing HR to evolve with it. Why? It helps target the right candidates and speeds up the process mostly through the use of artificial intelligence. Two examples include faster resume screening and fairness.

For HR professionals the most time-consuming part of the screening process is going through applications. Smart recruitment technology can speed that up.

IBM, GE and Hilton Worldwide are among the growing number of companies using this technology to screen, test and hire new talent. All of them are using machines to scan candidates’ work samples, social media posts, and analyse their faces. One example of this: Unilever. For more than a year now, the company as used AI to hire all of its entry-level employees. Each candidate was asked to play a neuroscience-based game which measured inherent traits. Then, each had recorded interviews analysed by Artificial Intelligence. Candidates where then rated through AI using thousands of data points from video interviews. Some of those included vocal intonation, word choice and even facial movements. It’s been so successful; Unilever VP of Human Resources North America Mike Clementi says the company has been experimenting with using a similar process for mid-career hires or lateral internal changes.

From a fairness perspective, HR is seeing a huge push to remove bias from hiring practices as noted previously. Smart recruitment technology can help level the playing field. How? Specifically, it can look for ways to better job posts and descriptions. It can also help create questionnaires that are not bias and can help alleviate the same issue with regards to screening.

Employer branding

Attracting the future worker is a difficult proposition these days. Consider the cost per hire alone. According to LinkedIn, companies with stronger employer brands compared to competitors see, on average, a 43 percent decrease in the cost per candidate they hire. Why? Companies will benefit from the natural talent attraction traits of an attractive employer brand instead of spending money on advertising and marketing campaigns.

That’s where employees come into the strategy. Companies with a strong brand stand to grow in profitability. Employees who are able to live and breathe a company’s culture to other employees and potential job candidates have real power over the brand. Employee testimonials can be an incredibly strong tool in both the job market and against competitors.

When it comes to employer branding one of the best examples includes Netflix. The video streaming company uses videos to recruit new potential employees. On the jobs page, candidates can find videos from Netflix employees. They tell candidates about the company culture, the team environment even what they do for fun. This allows candidates a real look inside the company and how it works.

Another way to advertise your employer brand is through social media. That’s one area in which the World Bank Group has seen real success in recruiting candidates.

As HR professionals continue to work toward dealing with the ongoing labour shortage, there is a desire for actionable tips that can point toward success.

HR Exchange Network Editor Mason Stevenson provides 10 tips for recruiting the best talent:

1. Workforce planning

Workforce planning must be conducted regularly. HR professionals must understand talent supply and demand. Focus should be put on what is happening in the labour market and how it relates to the business goals of the company.

Other areas of focus should include:

• What products and/or services are the company planning to provide or is already providing?
• What is the competition doing?

2. Improve the candidate pool

In many cases HR misses out on their best candidate because they’ve not built the candidate pool in advance. The majority of these names in the pool belong to passive candidates, or candidates who are currently working for someone else and are most likely not actively looking for a new job. Other ways to build the candidate pool:

Other areas of focus should include:

• Look to and build relationships with universities, recruiters and search firms.
• Allow current staff to take part in external professional activities to help attract new talent.
• Look for potential employees on LinkedIn and other social media outlets.

3. Look internally

Providing promotional and lateral opportunities for current employees increases morale. It also makes staff feel their talents, capabilities, and accomplishments are appreciated. Giving an internal candidate an interview gives HR a chance to know them better. In return, the employee learns more about the goals and needs of the organization.

4. Modern recruiting tools

There is a lot of tools out their HR teams can and should be using in the recruitment process. These tools often improve effectiveness. Take smart recruitment technology. AI-equipped recruiting technology allows for some key increases. It allows for faster screening. It also allows for more fairness in the process. Translation: it can help combat bias.

Also read: Smart AI Implementation in Human Resources article

5. Focus on candidate experience

Next, HR should give adequate attention to the candidate experience. The best way to better the candidate experience is to simply respect the potential new employee as you would a current employee. The same can be said for those internal employees. What does this entail? For starters: transparency. HR should be completely open and honest and communicate as much as possible. 81 percent of job seekers say continuous communication betters the overall experience.

6. Employer branding

HR should take a look at the company’s employee practices for retention, motivation, accountability, reward, recognition, flexibility in work-life balance, promotion, and involvement. These are key to becoming an employer of choice. If these practices are successful, current employees will brag about the organization being a great place to work. This will help increase the odds of candidates searching out the company.

7. Involve current employees

As mentioned previously, current employees can be a big asset in attracting new talent. Look to employees to recommend candidates. They can event assist in outlining the qualifications of potential candidates. Employees can help in the interview process. As they are the ones doing the job, they can help ask questions that go to the reality of the job.

8. Offering the best pay and the best benefits

This often goes without saying: the company that pays better and has better benefits will attract the better employee. It is important for HR to keep track of the pay scale both at their company and their competitors. The same can be said for the benefits. Being able to compete in this way will help HR attract the best candidate possible.

9. Check references

HR should ALWAYS check references and do background checks. In today’s society, HR needs to pursue every avenue to assure that the people being hired can do the job, contribute to the company’s growth and development, and have no past transgressions which might endanger the current workforce. In fact, the company may be liable if a background check was not conducted, and it was later learned the new employee attacked another employee at a previous job.

10. Offboarding is as important as onboarding

The majority of the information included in this article focuses on finding and hiring the best talent. Many of those strategies include using current employees. HR should also harness the power of former employees. Not all relationships that have ended between employee and employer are negative. Those who left the company on good terms will often speak positively to other potential employees. Even better, these former employees could turn into boomerang employees meaning that they eventually return to work for the company. If the relationship ended on bad terms, neither of these prospective strategies will work.

The future of recruitment

Recruitment is more important now than it has ever been. As evidenced by this report, the face of recruitment itself is changing and HR has to find ways to adapt quickly to that transformation. The overall challenge is staying ahead of that transformation and being able to read the proverbial “tea leaves” and predict the next big change to come. In the meantime, HR continues to search and acquire the right and best candidates. Talent is the lifeblood of a company. Without it, a business cannot hope to survive. The stronger the recruited talent, the better the future of the business.

Also read: Learning culture driving business success