Traditional conventions about how, when, and where people work have been upended, accelerating major shifts in how talent acquisition is happening now.
For HR and recruiting teams, the trend of working from home, or hybrid work has led to revamped hiring practices that included virtual technologies. But the most enduring challenge may be changed candidate behavior and expectations. Across industries, recruiting leaders believe job seekers and candidates are more selective and expect something different from before. That makes it essential for employers to develop a compelling employee value proposition that includes competitive compensation and meaningful benefits, especially career development opportunities and flexible work.
Many veteran talent acquisition specialists say they can’t remember the last time hiring was this hard. “The biggest issue is a lack of applications,” explains Greg Muccio, director of talent acquisition at Southwest Airlines, referring specifically to interest in airport staff roles.
While some sectors have begun to bounce back, none have been completely immune to the rapid changes brought on by the global coronavirus outbreak. “It has been the most unpredictable labor market I can recall—truly uncharted waters,” Muccio says.
The War for Talent Is On
Across the country, businesses dependent on hourly, front-line workers are going under because of labor shortages. In the hospitality, food and leisure industries, for example, 93 percent of employers are struggling to hire for entry-level positions, according to Society for Human Resource Management (SHRM) research.
As a result, organizations are experimenting with novel ideas involving benefits such as flexibility, career development and holistic care and adjusting them to candidates’ new expectations. At the same time, companies are refocusing on the basics: streamlining the candidate experience, reviewing pay to be more competitive and sprucing up employee referral programs.
“There definitely is a war for talent, and, even more than that, it is an arms race to attract talent,” says Jamie Kohn, research director for the HR practice at consulting firm Gartner. “Companies are trying to get back to pre-pandemic growth and are focused on increasing headcount, while job seekers feel they have more options and now expect more from potential employers.” Employees are in control now not employers.
The power balance between employers and employees has shifted, according to Amy Goldfinger, senior vice president for global talent at Walmart. “The pandemic has fundamentally changed the labor market, creating a high demand/supply gap for talent, and today’s job seekers have higher expectations,” she says. “We’ve introduced cash bonuses, leave policies, vaccine incentives, and counseling services to help associates get through these trying times.”
As the U.S. labor market began to rebound in the summer of 2020 and the competition for hourly workers got fierce, employers began citing labor shortages as the cause for hiring difficulties. Critics responded that the lack of job seeker interest was proof that low-wage workers simply aren’t paid enough. These employees also are often asked to enforce mask mandates and risk physical harm at the hands of irate customers. In response, employers such as Chipotle, CVS, Southwest Airlines, and Walmart have given front-line workers raises.
“Employers are realizing they have to be wage-competitive,” says George Kelly, senior vice president at Milwaukee-based recruiting and staffing firm ManpowerGroup. “Wage growth in the U.S. has been incredibly slow over the last 30-plus years, but since the summer of 2020, wage growth has accelerated, driven by competition.”
Nela Richardson, senior vice president and chief economist at payroll provider ADP, notes that compensation in October 2021 grew 4.9 percent year-over-year. “In the decade leading up to the pandemic, wages never grew more than 3.5 percent from the previous year,” she says. Wages in low-paying service-sector jobs have been growing fastest during the recovery, she adds.
The number of postings on jobs sites like ZipRecruiter that advertise pay of $15 an hour has more than doubled since 2019, says Julia Pollak, the site’s chief economist. The proportion of jobs that offer signing bonuses has also risen.
Practitioners tend to agree that resetting compensation is a solid long-term move, but many say the increased use of signing bonuses is an ugly and unsustainable facet of the current environment.
“Because many employers thought this labor shortage would be temporary and would clear up this year, they resorted to solutions like hiring bonuses,” says Niki Ramirez, SHRM-CP, founder of Phoenix-based HR Answers, an HR consultancy for small businesses. “The practice is flexible and easy to roll back, but some employers have found as a consequence that workers are staying for a short period and then moving on to the next job, trying to snap up multiple signing bonuses.”
Steve Browne, SHRM-SCP, chief people officer at Cincinnati-based LaRosa’s Pizzeria and a member of the SHRM Board of Directors, says his team is reviewing compensation but does not want to end up in a reactionary predicament, despite the difficulty the company is having recruiting cooks, drivers and servers.
“I see companies trying to compete from a wage perspective, offering signing bonuses, and people just chase the dollars,” Browne says. “I know several employers in the Cincinnati area that are offering a high wage, and they still can’t get applicants. If you only change wages, it won’t work.” In today’s talent-scarce environment, employers should be conducting regular industry benchmarking and reviewing salary plans, experts say. However, pay is just a starting point.
Thompson’s team at Nielsen worked closely with the compensation professionals in HR to understand where they needed to adjust compensation in order to hire in this labor market. “But winning the competition for talent will be more about the culture and the people and not just about the money,” Thompson stresses.
Offering Perks that Matter
A prominent feature of the war for talent has been the way companies have been one-upping one another when it comes to employee benefits. “Creative perks have become in vogue again,” Kelly says. These benefits, many of which are designed to alleviate the stresses of the pandemic, include mental health, well-being and family caregiving support; financial planning; onsite child care; sponsored transportation; and allowances for home office and remote technology.
Organizations have also announced they are making big investments in workers’ professional development, with the idea that employers can offer their front-line workers something truly meaningful: a brighter future through upskilling and an internal career path, or a debt-free college education.
Walmart is investing nearly $1 billion over the next five years in career training and development. Other large employers of hourly workers, including Amazon, Chipotle, Starbucks, and Target, have announced enhancements to their tuition and training programs.
Walmart’s Live Better U program pays 100 percent of tuition and books for eligible associates who want to earn college degrees or learn trade skills. In addition, “Walmart Academies give us more avenues to upskill associates so they can reach for their dream job internally,” Goldfinger says.
Chipotle offers to cover all expenses for 100 types of degrees across agriculture, hospitality, culinary, technology, and business studies at 10 universities, says Mike Miller, director of talent acquisition at the company. “Our retention rate is three-and-a-half times higher among employees enrolled in the education assistance program, and crew members participating are seven-and-a-half times more likely to move into a management role,” he adds.
Ramirez says she’s seeing a renewed focus on reskilling and upskilling across organizations of all sizes, as well as training and career pathing being promoted in job ads. SHRM research shows that 2 in 5 organizations plan to offer additional professional growth and development opportunities to attract more job applicants to positions that are difficult to fill.
Southwest Airlines officially launched its internal career mobility program earlier this year. Muccio says there’s already been a lot of interest from employees who want to understand the roles available to them and the development opportunities that can help them land those positions.
Chipotle believes its transparent path to advancement can be a life-changing inducement for hourly workers. “Crew members can advance to restaurant management in just three-and-a-half years, making an average salary of $100,000 and leading a multimillion-dollar business,” Miller says. “More than 90 percent of our restaurant management roles are internal promotions.”
The Most Desired Benefit
Then there’s flexibility, the most sought-after benefit of all, according to widespread research. The demand undeniably grew out of the pandemic experience. Job seekers from all sectors and levels are making it clear that flexibility is a top priority—including for jobs that can’t be done remotely. It’s also a critical factor in managing employee retention.
“Where people have gotten the flexibility to be able to choose how they integrate their work with the rest of their life, they are not willing to give that up,” Kohn says. “Job seekers have so many options right now that they don’t have to make the trade-offs and sacrifices they used to make and are proving unwilling to do so. That’s why flexibility is the most common theme employers are promoting to attract talent.”
She adds that flexibility is different for varied talent segments. For knowledge workers, autonomy is paramount. And for employers hiring for remote-friendly roles, proximity is no longer a limiting factor for recruitment.
“Rethinking talent location has been one of the biggest changes,” Kohn says. “HR leaders are pushing the business to think about which roles really need to be in the office and how often, and then determining whether they can source talent from anywhere.”
Throwing off the shackles of geography-bound recruiting by offering work-from-home opportunities has helped General Motors boost its hiring above pre-pandemic levels, says Cyril George, the company’s global talent acquisition director.
In April, the automaker unveiled its “Work Appropriately” campaign, which George describes as a culture change for its professional workforce. “Leadership decided to put the trust in the employees and their managers in terms of deciding what works best for them based on their roles and situation,” he says. “From a recruiting standpoint,” George adds, “it has significantly opened up the talent pool for us.”
Then there’s the majority of workers in the U.S., especially in front-line roles, who aren’t able to work remotely. For these employees, flexibility and predictability in scheduling are important, specifically in support of health and wellness, as well as child care and caregiving responsibilities.
“Flexibility matters to hourly workers,” Kohn says. “Think about the struggles that front-line workers have had during the pandemic. Retail workers are leaving their jobs to work in customer service roles that can be done at home to get that flexibility that meets their core needs.”
It’s not possible to offer field agents at Enterprise a work-from-home experience, says Marie Artim, vice president of global talent acquisition at Enterprise Holdings. “But what we can do is offer more flexible scheduling and schedule certainty so our employees can take care of the things they have to do in their lives outside of work.”
Excerpts taken from SHRM HR Magazine. Article by Roy Maurer Winter 2021