It may be hard to believe, but even as the COVID-19 pandemic continues to ravage large segments of the economy, specific industries and occupations are struggling to fill open positions. Open placements outnumber the available candidates qualified for these roles. Many hiring managers and talent acquisition professionals may be wondering how to increase their talent supply to meet the demand.
Recruiting in a Tight Labor Market
If you’re facing a talent shortage, here are three of the most common solutions for increasing your available talent pool:
- Assess your compensation package
- Leverage remote work and relocation
- Build a reliable talent pipeline
Using talent intelligence or data-driven software can improve your ability to address these by determining how much to pay, identifying where to find qualified talent and analyzing how labor market trends may impact your business.
Is your pay competitive?
The first step is to assess your current market and know real supply and demand factors that influence new rates of pay. Is there enough available talent supply , and do your required skills and offered pay align with candidate expectations? Let’s say you’re a recruiter seeking a software engineer with a bachelor’s degree and a minimum of six to eight years of experience for work in the Boston area. If you’re not able to interest candidates, then a probable issue is that the employer’s required skills and salary offer aren’t realistic for the Boston area.
Providing the hiring manager with more insight on what skills and compensation would attract and retain the type of candidates desired. LaborIQ® by ThinkWhy shows that for this role at that level of experience, Boston has a significant talent shortage.
The hiring professional’s main talent pool for this position would consist of passive candidates. Since so many employers would be targeting the same small pool of talent, employers should expect to pay at the higher end of pay ranges and offer generous benefit packages. Per LaborIQ, the recommended salary range for this role in Boston is $122,339, which is 19% higher than the median salary of $102,429. With more demand for this role than available candidates, hiring managers would need to compensate at the upper end during salary negotiations and closely monitor the market value of this role to retain top talent.
What if the current market-driven pay does not align with set budgets?
Location matters, maybe even more so because the pandemic has unevenly affected industries and U.S. cities and regions. For businesses dealing with a severe talent shortage, there may not be enough passive candidates to fill all available openings, or you may not be able to pay enough to compete for talent in your local labor market. What do you do if that is the case?
The obvious choice is to search beyond your local talent pool. Businesses would need to decide if they would be willing to relocate candidates or allow them to work remotely on a full-time basis. Referring back to our first example, the talent acquisition team looking to hire the mid-career software engineer in Boston may want to search in cities that have a lower cost of living and a highly educated population. This may lead them to Atlanta and Charlotte, S.C. While these cities also have a shortage of talent, the prevailing salary is significantly lower. In Atlanta, LaborIQ’s recommended salary is $111,247 with a median salary of $93,531, and in Charlotte it’s $109,825 with a median salary of $92,992.
The pandemic has normalized remote work, with many employees now expecting to work remotely at least part of the time. If the company is willing to hire a candidate remotely from either Atlanta or Charlotte, then the company’s compensation costs would be reduced if it paid according to the candidate’s location.
“This is especially important right now as companies start to rebuild their revenues while keeping an eye on expenses,” ThinkWhy’s Chief Innovation Officer and SVP of Business Intelligence Jay Denton told Fast Company. “A tighter labor supply will start to push companies to look to other markets, especially if remote work is becoming more of an expectation rather than a perk.”
Besides cost savings, employers may also want to factor in that social distancing requirements have lessened some of the appeal of relocating to a larger city. Without the popular events, retail and dining options that appealed to so many, candidates may not be willing to move to a more expensive location. Remote work may appeal more to these candidates in other cities, especially if the employer is willing to pay higher wages than most local companies.
Are you planning for your future workforce?
After addressing immediate hiring needs, talent acquisition professionals will want to implement a talent strategy that allows them to resolve for talent shortages. This may involve reaching out to entry-level talent for internships or recruiting from college campuses in specific cities. Another option may be to begin training programs and upskilling existing employees. LaborIQ can help identify other cities with college-educated populations or analyze your local compensation and migration trends to help determine the best approach.
LaborIQ by ThinkWhy reports, forecasts and advises on employment conditions and the impact to jobs, industries and businesses across all U.S. cities.