Throughout my years in recruitment and executive search, I’ve never seen a labour market this competitive. I’ve been recruiting 20-30 years and I’d say this is one of the most acute shortages I’ve ever experienced over an extended period.
In previous times, I’ve been able to rationalise why there’s a talent shortage and see the light at the end of the tunnel. However, right now we’re seeing an incredibly unpredictable market with significant uncertainty in terms of how or when things will change.
Recruitment as an industry tends to be at the forefront of economic downturn and indeed up-turn, making it easy to anticipate as it sits comfortably between consumer confidence and business confidence. However, the past couple years have been disruptive and unpredictable, which has led to a historic shortage of talent that has put bargaining power in the hands of employees and jobseekers.
A Gartner report from earlier this year noted that manager quality, respect, and location all ranked higher than compensation as drivers of attraction and attrition. Businesses must be more flexible and human-centric if they’re to find and keep top talent in this increasingly competitive labour market.
The Impact and Uncertainty of COVID
COVID changed the way many of us think about work. While some bigger businesses were already offering staff hybrid-work arrangements before the pandemic, many organisations were forced to adapt rapidly during its outbreak.
Today, hybrid work is far more prevalent; in fact, many jobseekers expect some form of hybrid or remote work as part of their job offer. Businesses pushing too hard for a return to office risk alienating their team and potentially driving them to more flexible employers.
During the pandemic, businesses pivoted and embraced the notion that we would need to recruit executives before ever meeting them in person. Operating digitally created greater flexibility and reach than ever before, giving talent far greater choice and employers more incentive to look outside their usual channels.
However, while we struggled as a society during the early days of the pandemic, business confidence remained quite high, particularly with assistance and support from the Australian government. However, now inflation is rising, talent shortages are affecting numerous industries, and the nature of work has changed significantly.
A Post-Pandemic Pause from Work
While there’s a lot of discussion around the ‘great resignation’, I’ve also seen a lot of people almost putting their careers ‘on hold’, sticking closely with familiar employers to weather the current uncertainty. I understand this sentiment. Sometimes we’ll reach out confidentially to targets and they tell us it’s not the right time as they’re still steering out of covid and fearful of making any drastic changes.
Inflation is biting and the rising cost of living is only compounded by the uncertainty of how much further costs will rise. Sticking with a safe and comfortable work environment adds some sense of security that money can’t buy.
The other ‘hold’ people are making is a complete stop, finally succumbing to the fatigue of the past few years to either take a break or move to a less stressful job. Another potentially understandable feeling as we’ve all seen how important safety and wellbeing are during times of disruption or widescale change.
Beyond the new expectations and stressors affecting employees and jobseekers, recruiters and employers cannot make assumptions about recruitment timelines these days. It’s about providing innovative sourcing strategies that don’t just rely on advertising; gone are the days of simply throwing a job listing on Seek or LinkedIn!
A Shift in Values and Priorities
As noted, organisations and recruiters need to be innovative with how they attract and retain the right talent. However, in such a competitive market for talent, it is critical that the recruitment process is as efficient as possible.
Assessing candidates and ensuring alignment with the business and company culture takes time and remains fundamental, but organisations and their recruitment partners need to work together to reduce unnecessary steps. We must be quick, without sacrificing on the quality of the assessment process.
Organisations must continue to look at their own cultures and continue to explore ways to attract talent, looking beyond salary to offer a competitive package that aligns with candidate’s unique needs. Providing flexible work arrangements used to be a great pull for candidates, but today it’s almost seen as a prerequisite. Many businesses can’t secure talent without offering some form of hybrid work.
Recently, we offered an executive a salary package that was some $30,000 above their current package, but it still was not enough to secure the candidate. Candidates are also seeking out businesses that prioritise learning and development. This is especially pertinent as we need to reframe how we equip people for the future.
If we’re to close the widening skills gaps that we’re seeing across industries, organisations have to offer clear pathways for career progression, which will assure candidates of their value and help promote longevity.
Building a Future-Proof Workforce
Presently, business confidence remains reasonably high and there’s still no shortage of work, which has left businesses clamouring for talent. However, businesses and individuals are now facing an ever-increasing cost of living. Inflation, supply chain issues, rising energy costs, and economic uncertainties are affecting all of us.
Here in Australia, we’re seeing our national economy tighten while government funding has slowed down. I believe business confidence and job-market opportunities will necessarily decline and therefore equalise in time. This time next year should be far more balanced.
Notwithstanding, an economist who presented at one of our recent client events, noted that the feedback for Australia’s business outlook over the next 12 months is far more positive that the media is presently portraying. And while the next 12 months will be choppy – we are not, in his view, headed for a recession.