Halfway through the year, the post-pandemic recovery is well underway. As vaccination numbers go up, large cities that were hit hard by COVID-19 are preparing to fully reopen. Consumers who were restricted from travel and retail in 2020 have pent-up demand for services and products, driving a boom in spending. U.S. GDP increased at a rate of 6.4% in Q1 of 2021, the second-fastest growth increase in 18 years.
As the economy booms, companies of all sizes are facing both exciting opportunities and complex challenges. One of those challenges is a vastly different hiring landscape in an extremely competitive labor market.
Consider this: in just the first few months of 2021, the U.S. has recorded the highest number of job openings and the highest employee quit rate in over twenty years. Professional and business services experienced the second-highest quit rate of all sectors, with 94,000 quits in April alone.
As a result, businesses are now facing the most competitive hiring landscape that’s been seen in decades. Employee turnover rates are skyrocketing, competition is intensifying, remote work is becoming a standard benefit, and salaries are increasing. For companies that want to attract and retain great employees, the current hiring arena has thrown them a curveball, and they’re searching for answers as it becomes more urgent to fill vital roles.
Fortunately, the Vaco team is here to help.
For a recent webinar, some of our top hiring experts took an in-depth look at the current labor landscape, explored the hiring challenges companies are facing, and offered some key ways to stand out in this competitive market.
Check out our recap of this fascinating discussion below (complete with poll data from our 230+ attendees) and watch the full webinar on-demand so you don’t miss out.
3 critical factors impacting the current hiring market
Donna McIlveen, Managing Director of Executive Search at Vaco, kicked off the webinar discussion by outlining the biggest factors affecting the current hiring landscape. McIlveen emphasized three key elements that are having a huge impact on the current market: high employee turnover, a growing labor shortage, and a changing landscape that has impacted both employees and employers.
During the webinar, our hosts polled over 230 attendees to get their feedback on the current hiring market. Check out their responses to poll question #1:
Anticipated high employee turnover rates
Approximately 26% – 52% of workers plan to look for a new role over the next one to three years, a phenomenon many are calling the “COVID flip”.
“There’s a blend of reasons, including pandemic burnout, a desire to work from home, and an overall major demand across the nation,” Kelly Maxwell, Director on Vaco’s Accounting and Finance Direct Hire team, said of the historically high turnover rate employers are facing this year.
Many workers who delayed plans to find a new job during the pandemic may feel more comfortable starting their job search now that vaccinations are more widespread.
Employees may also be experiencing a “grass is greener” mentality when it comes to their professional lives. Many workers faced high levels of overtime on leaner teams during the pandemic. Now, many are seeking work experiences that are less stressful. Several others simply want improved work environments that better align with their new priorities and desires.
Finally, the sheer volume of job openings is enough to tempt many workers away from their current roles—especially considering the higher salaries and better perks many companies are offering to entice top candidates.
Addressing the webinar’s 200+ attendees, Maxwell pointed out just how many businesses are in the hiring game this year, and how supply and demand in the labor market has driven up salaries:
“Companies can hire again. You can hire. Your neighbors [can hire]…This pushes the competition up, and the pay is there to support it. As you’ve noticed, salaries are exponentially increasing, growing 30 or 40K sometimes,” Maxwell said.
Sejal Chunchu, Director of Business Development for Vaco, expanded on the increasing salary trend by listing recent examples she has seen in her own department, including a senior analyst who took a management role and received a $40,000 pay increase.
Maxwell urged companies to be prepared, not only for increased turnover rates but also for higher salary expectations in candidates.
“We see examples like this more and more every day as demand continues to increase…The best companies with the best reputations are facing this kind of turnover, and it requires real attention to help serve your team,” Maxwell said.
Nationwide labor shortage
Companies of all sizes, in nearly every industry, are struggling to find the qualified talent they need, whether it’s hourly employees or senior leadership.
In the accounting & finance industry, for example, there has been a steep decline in the number of college students who want to study accounting. Colleges have reported a 34% drop in students majoring in accounting, as well as fewer accounting majors opting for graduate school or CPA licensing.
This leads to far fewer early-career candidates, a smaller talent pool for employers to choose from, and more intense competition for available talent. This tight talent pool requires companies to approach their candidate base with an entirely new perspective.
Changing landscape that impacts both employers and job seekers
In addition to a high employee turnover rate and a labor shortage, employers are also facing a hiring landscape that has drastically changed over the past year.
Maxwell noted that many candidates’ priorities have shifted since the pandemic began. Remote work options and better work/life balance are now many candidates’ biggest concerns during their job search. Companies that don’t offer flexible work may struggle to attract these candidates—especially if they don’t offer competitive salaries or additional attractive benefits.
Chunchu agreed, noting that lack of flexibility is a vulnerability for companies pursuing hiring initiatives this year:
“If the corporate policies don’t allow any flexibility, it can create a big risk point for companies that are trying to attract and retain employees,” Chunchu said.
By offering remote positions, companies can expand their talent pools when hiring and appeal to candidates’ desires for flexibility.
It’s important to remember, however, that the new remote environment means businesses are now competing nationally for local talent.
If you scan recent job postings, dozens of high-value, professional roles are listed as “entirely remote.” This means a company in Raleigh may have to compete with a company in San Francisco for the same candidates—something many business leaders have never faced before.
For our second poll question, we asked attendees to evaluate their own organization’s experience with remote work:
What can companies do to compete?
McIlveen, Chunchu, and Maxwell emphasized five separate elements companies should focus on to compete for top talent in this competitive market:
- Reimagine your workplace
- Sell your company’s strengths
- Foster culture & connection
- Assess the benefits offered
- Focus on improving the hiring process
It is vital for companies to not only offer the benefits and workplace policies candidates want, but to also understand their own differentiators in the market.
When discussing how companies should assess their benefits, Chunchu again emphasized the importance of flexibility and WFH options:
“This is the easiest way to promote productivity, profitability, and happiness throughout an organization. There is less commute stress, money savings on both ends (for the employee and the employer), increased productivity and performance, and just an overall happier, healthier work life.”
Get the full breakdown of strategies for setting your company apart by watching the complete webinar on-demand.
Here’s what our webinar attendees had to say about allowing permanent remote/hybrid flexibility for their teams:
As employees seek new opportunities this year, they’re doing so with fresh, refined expectations and desires. Flexibility, culture, and connectivity are more important to candidates than ever before. With the rise of remote work nationwide, great candidates have more options for fulfilling their professional dreams than they did just one year ago.
These changes have intensified the competition to land the best talent, and businesses are facing challenges they may not feel prepared for as their talent search begins.
But have faith, hiring companies: education, resources, and strategies are available to not only help you adapt to the new hiring landscape, but win your bid for top talent against your stiffest competitors.
Offering flexibility (in the remote vs. in-office conversation) is perhaps the single biggest way to make a positive impact on your hiring process. Job seekers are not shy about indicating their desires on this topic to their recruiters, and they won’t be shy about indicating them to the companies they interview with, either.
Another important way to set yourself apart in this hot labor market is focusing on your company’s unique “sizzle.” Find the qualities that make your company stand out, and place them front and center in your communications to candidates. You should also take a deep dive into your workplace benefits and policies, and ask yourself if there are areas that can be improved to make your organization more attractive to top job seekers.
Finally, don’t forget to use the resources and help available to you during this challenging hiring time.
At Vaco, our teams are dedicated to helping companies and hiring managers find the best talent out there. But we don’t stop there. We’re also experts in helping companies develop strategies for standing out in today’s challenging labor market.
McIlveen closed out the webinar by emphasizing Vaco’s dedication to not only finding the best candidates, but also bringing out the best in the companies we work with:
“You have friends at Vaco who are here to help you. We can provide resources to you to help assess your culture, help assess your compensation plans … and we’re also here to devise solutions to help you have an edge in your bid to hire top talent.”
Ready to work with Vaco on your next hiring project? Contact us today!