Scarcity is felt these days in many different ways. From the low supply of lumber for building new homes to the limited inventory of new and used cars to even a noticeable “dog shortage.”
But one of the most widely felt scarcities these days is talent. Where have all the workers gone? Here are the stats we’re all seeing—and experiencing:
- The quit rate in June 2021 was 2.7% while the job openings rate has also climbed to 6.5%—both are at historical highs
- The service economy is experiencing the worst, and it is still far below pre-pandemic levels with 9% unemployment but 1.7 million open jobs
- Wages are up and the overall unemployment rate is down
- Talent represents the top threat to business in Q3, according to West Monroe’s Q3 poll of C-suite executives
People are quitting, changing careers, or just finding other things to do. It’s the topic of conversation almost everywhere I go. As CEO of a consulting firm, it’s something I am seeing all our clients experience and talk about, from private equity to manufacturing to healthcare and beyond. It is pervasive and impactful. But most importantly, it doesn’t seem to be going away.
We all have our own theories about what is going on. The work-from-anywhere phenomenon has caused people to move, but not every job can follow. Unemployment benefits and stimulus programs have been extended. Meaningful work—that is, finding purpose in one’s role—is becoming more important to more people in re-evaluating how they spend their time. And the pandemic forced many to adapt their skill set months ago, leaving entire industries nearly empty-handed today.
My take? Every now and again you have to evaluate the balance in supply and demand. And if there is an oversubscription of demand, you have to be willing to open up or change your supply requirements. That needs to apply to talent—you may look for a certain type of employee or hold a certain approach to hiring and employment today. But you likely need to relax some of those requirements or change up your approach—in both small and big ways.
In other words, it’s time to open your mind to alternative forms of supply. Here are some ideas I’m thinking of:
- A longer-term hybrid staffing approach. Full employment may not be possible for quite some time. Instead of figuring out how you can fill all of your various open positions, you likely need to open up avenues not previously explored, including staff augmentation, contingent workers, and outsourcing. A workforce made up of both FTEs and non-FTEs. And not just temporarily — having programs and vendors in place that represent all of these approaches may need to become part of your longer-term workforce strategy. I’ve heard from clients they’re considering more outsourcing (or offshoring) than ever for back-office functions, choosing to focus their talent strategies on their core business alone. And they’re relying on consulting firms like West Monroe to attract and retain talent for special, strategic initiatives so they can access top talent without having to invest in the recruitment and retention of it.
- M&A. Acquiring a company has always been a tool for companies to get the talent they need. In fact, 18% of C-suite execs told us M&A is a top opportunity for their business this quarter. It can come at a price, though—multiples are high for sought-after firms and not every company wants to go through a merger or multiple acquisitions for talent reasons only. Plus, you’re not always guaranteed the talent will stick around. But this option could work for businesses that need specific skill sets or top-level talent for whom it’s easier to bake in “stay” clauses.
- Rethinking your skilling, reskilling, and upskilling. I get the sense that we may all be waiting for the workforce to “go back to normal,” and that might never happen. That means tapping into the talent you do have – or developing your desired workforce on your own. Don’t wait for the workers to return. Don’t wait for trade schools to do the recruiting and training of skills that you need. You probably need to get in the business of doing this yourself.
- Be willing to make small sacrifices to your culture to attract the right talent. From flexibility in where and when work is performed to the required education and experience for a role, we all need to challenge our norms and expectations. Additionally, people want to see the impact their work will have, not just the activities they’ll perform. Job roles and descriptions that lean into what people are looking for right now could have a big impact in casting a wider net. A FlexJobs survey of 1,800 job seekers found that nearly half were frustrated by their search because they aren’t finding the right positions to match what they want. By bending certain aspects of your culture, you could attract more workers. This HBR article does a great job of expanding on these points.
Who would have thought during the early weeks of the pandemic that we would be here today? That we would all see “Help Wanted” signs everywhere—from the corner restaurant all the way up to tech giants?
Talent scarcity is a bit of a puzzle and has brought on some surprising challenges for company leaders in 2021. But as you navigate the challenge, remember the basic economic principles of supply and demand. We can handle it if we respond accordingly.