Out-Law Analysis 4 min. read
09 Nov 2022, 3:49 pm
Companies must adapt their HR strategies to find and retain talent in the midst of a global labour and skills shortage.
Employers are finding it increasingly difficult to find and keep skilled employees because of demographic change, globalisation and changing views on work and careers following Covid-19 lockdowns. Industry and country-specific factors, such as Brexit, are also having an impact.
The 2021 Q3 ManpowerGroup Employment Outlook Survey found that 69% of businesses globally reported talent shortages in 2021. In 2013 it had been only 35%. According to a recent survey from SD Worx, a Belgium-based human resources services company, 42% of European employers struggle to attract employees. More than half of European employers said positioning themselves as an attractive employer amongst increased competition has never been more difficult. In Australia, a third of all businesses struggle to find suitable workers and a recently conducted survey on workforce in Asia Pacific shows that the balance of power between employees and employers is shifting, as the vast majority of employees surveyed plan to ask for a promotion or a salary increase within the next 12 months. A post-pandemic ‘great resignation’ in the US has spread to other countries staff turnover in Europe, Australia and elsewhere.
This generates costs for organisations as they cope with permanently unfilled positions; advertising for new workers and repeated hiring and onboarding processes for new employees. Companies are seeking ways to attract and retain skilled people for the long term but the labour market is now strongly candidate-driven: qualified jobseekers can often have their pick among various job offers, and businesses will have to adapt their strategies to this new situation.
Higher pay is no longer enough on its own; modern employers have to offer more as employees and jobseekers are also looking for improved benefits and a better work-life-balance. It is more important than ever to focus on recruitment and retention of the right people. An efficient and progressive HR strategy must follow a holistic approach, which begins with knowing what employees want from their employer.
To attract the right talent, employers should think of themselves as applicants for talent, as much as they think of jobseekers as applicants for jobs. Businesses need do their best to make a good impression on potential employees right from the start of the hiring process – or even before that. It is now even more important to create an employer brand and build a good reputation.
When deciding where to work, applicants will no longer only resort to statistics of how the company is performing and what the employees find on their annual pay slip. Questions about environment, social and governance (ESG) issues are at or near the list of people’s priorities when choosing a workplace.
The application process in itself is also crucial: Employers should behave appropriately in the advertisement and in the interview, comply with the legal regulations such as antidiscrimination laws and data protection, listen closely during the interview process to the applicant’s expectations in a job and also avoid creating false expectations.
A non-discriminatory recruitment process is not only required by law in many jurisdictions, but also brings a reward to the business, since both the business and its employees benefit from diversity and equal treatment in the workplace. When people from many different backgrounds work together, their views and decisions are often more balanced, and the working atmosphere is more open and inclusive. Employers that provide for diversity take measures to prevent discrimination and inequality to create a balanced and productive working environment. Also, discrimination and unequal treatment can be reasons why employees leave their jobs, so avoiding these pitfalls can help reduce staff turnover and associated costs.
Employers seeking to recruit and retain a productive workforce can benefit from the skills, experience, knowledge transfer, network, and diversity of thought that older people bring to the workplace. To do so, they should offer support to those aged over 55.
Employers should be sensitive to age-related changes such as menopause and provide appropriate support to employees affected by the symptoms. As many employees leave their jobs to spend time caring for dependents, it can also be beneficial for both employer and employee to offer flexible working, paid carers leave and phased retirement. Employers can also set up mentoring programs to encourage knowledge exchange and interaction between the generations in the workplace and challenge negative stereotypes that may be barriers to recruitment.
Work-life-balance and flexibility have become more important to potential employees: for nearly three quarters of employees, a good work-life balance is a priority, and most want to be flexible in their choice of workplace and working time. There are different tools to cater to these needs, but the relevant national laws must be considered when offering instruments like sabbaticals,
unlimited vacation agreements, a four-day week, job-sharing and hybrid working arrangements.
Pay is still a crucial factor for potential employees. However, competition has become stiff in many areas and a solid regular income alone is not enough to stand out in the race to attract talent and keep them for the long term. Employers are beginning to use long-term incentive models such as stock option plans, employee shares and other mechanisms to increase employees’ stake in the success of the business.
Variable payment connected to performance or loyalty is another tool to reward employees on top of their regular salary and increase their motivation. Here, the employer must carefully assess what exactly it is aiming to reward. It might be, for example, personal performance, the business performance, the employee’s loyalty, or social commitment. It must think about how different components are weighed. Also, the legal situation must be taken into account: In some countries employers are free to establish variable payment schemes, in other places there are substantial legal obstacles.
In many countries, the pension system is in a state of disrepair and demographic change means that many people can no longer be sure to have sufficient money when they retire. Even potential employees at the start of their career are thinking about financial security in their old age. Company pension schemes can be an attractive option to cater to these needs and show that an employer cares for its people in the long run.