With more than 10 million job openings in the U.S. and historically low unemployment rates, it's understandable that businesses are having trouble finding qualified employees. Although some employers and industries are not experiencing any issues with recruitment, many industries, such as the health care, manufacturing, and hospitality sectors, are having trouble filling open positions. Employee competition has never been fiercer, and the situation isn't expected to improve soon.
Finding the right employees for your business can be challenging, even when job candidates are plentiful. It's even harder to find candidates when there's a labor shortage. Understanding what causes labor shortages and how they affect employers is crucial for navigating them. This understanding will help you develop effective strategies for attracting ideal candidates during a labor shortage.
Understanding labor shortages
A labor shortage is a supply and demand issue. It usually occurs either when there are more job openings than workers to fill them or when the demand for workers in a given occupation or industry is higher than the supply of qualified workers available to do that job. There are currently too many open positions and insufficient workers to fill them.
What's causing the labor shortage?
Several factors are contributing to the current labor shortage. The main contributing factors are demographic changes, such as low birth rates and aging populations. Since 2014, the U.S. birth rate has fallen by 2% annually, and fewer working-age Americans now live in the country than in previous years. We are also dealing with a generation approaching retirement and, in some cases, choosing to retire early, leaving many of their positions open.
Other factors contributing to labor shortages include:
- Increased use of artificial intelligence, automation, and information technology services
- A scarcity of skilled labor
- Strict immigration regulations
- Evolving job requirements
- Insufficiently high wages to attract workers
- A growing preference for self-employment among employees and job seekers
How do labor shortages affect employers?
Labor shortages were disrupting standard hiring procedures long before the pandemic. Three years after the pandemic, there's still a persistent gap between employer demand and available qualified candidates. Labor shortages impact employers in many ways. In labor shortages, labor pools are smaller, skilled workers are more difficult to find, vacancies are filled more slowly, and retention rates are lower. As a result, labor costs rise, performance and productivity suffer, organizational goals are disrupted, and competition intensifies among employers for the limited number of qualified candidates.
Six hiring strategies you should be using in a labor shortage
By understanding the causes and effects of a labor shortage on your business, you can develop effective strategies to ensure you always have a qualified workforce. The following six hiring strategies will help your company successfully navigate a labor shortage:
Streamline your application process
Applying for jobs can be stressful for candidates. During a labor shortage, you don't want to take the chance of losing qualified potential candidates due to a lengthy and complicated application process. Create a job application process that is as quick and simple as possible.
By streamlining your application process and asking only for the necessary information, such as the job seeker's resume, contact info, and salary expectations, you encourage more job seekers to apply to your company. You can also inquire about the applicant's interest in additional job opportunities with your company. This makes it easier for you to find potential employees for other open positions.
"Your employment brand is an opportunity to highlight the advantages of working for your company and how it differs from competing businesses at a time when both employees and job seekers are demanding greater accountability and transparency from their employers, higher pay, and better benefits."
Have a robust interviewing process
The interview is both your chance to sell the candidate on your company and their chance to sell themselves for the position. While assessing the job seeker's fit with your company, use the interview to set your business apart from your competitors.
Use effective interview techniques to better understand the candidate, such as probing questions to learn more about the job seeker's goals, skills, and experience. Along with outlining the advantages of working for your business, be approachable and able to explain why your company is a desirable place to work.
Make sure you have solid processes, from interview scheduling to post-interview follow-up. Offer accessible means of interviewing, whether in person or virtually. Follow best practices and thank candidates for their time, whether you decide to hire them or not.
Develop your employment brand
Your company's identity, mission, and values are communicated to job seekers, employees, and clients through your employment brand. Whether communicated via the internet, the media, or the community, it must be clearly understood to have an impact. Your employment brand is an opportunity to highlight the advantages of working for your company and how it differs from competing businesses at a time when both employees and job seekers are demanding greater accountability and transparency from their employers, higher pay, and better benefits.
Highlight your company's culture
Employees' ability to feel connected to their work is still a critical factor in people's choice of where to work. People want to feel that their work is impactful and appreciated. They want to work in diverse, employee-focused environments where employees are respected and supported. Your company culture plays a massive role in creating that environment.
Discuss and demonstrate your company's culture throughout the hiring, interview, and onboarding processes. Showcase how much your business values, respects, and cares for its employees to help candidates see themselves working at your organization. Highlight current employees on your website and social media and encourage them to talk about their experiences and why they enjoy their jobs and appreciate their coworkers.
Diversify your candidate sourcing methods
During a labor shortage, diversifying your recruiting sources can help you find more applicants and ensure a diverse pool of candidates. Start by analyzing the methods you're currently using to find candidates and rate their effectiveness. Keep the strategies that work and consider adding the following:
- Use your online presence, including your website and social media, to share job postings.
- Post on niche job boards.
- Attend or host job fairs and networking events, both in person and virtually.
- Collaborate with local colleges, universities, nonprofits, community-based organizations, and media companies to share job opportunities.
- Consider working with groups that help people formerly incarcerated or involved in the justice system.
- Offer employees an incentive for candidate referrals.
- Don't ignore your passive candidates or candidates you previously engaged.
Review and update your compensation, benefits, and perks.
Evaluate your current compensation and benefits plan. Does it match the cost of living in your city? Is it competitive? Is it attractive to your ideal candidate? Consider improving your benefits packages. Ensure your medical insurance covers mental health care and monitor how well your wellness initiatives, retirement plans, and other benefits are meeting the needs of your employees.
Increase work-life balance and workplace flexibility. Be willing to personalize compensation and benefit plans to suit candidates' requirements. For instance, a job seeker with caregiving responsibilities might choose to work remotely and forego commuter benefits in favor of benefits for dependent care.
It takes work, creativity, and tenacity to survive the labor shortage and establish yourself as a premier employer. Now that you're aware of the underlying reasons and effects of a labor shortage, you can develop a plan that incorporates these strategies to help you weather the shortage while continuing to recruit and retain qualified workers.
Related advice: Recruitment and hiring strategies
Need to meet production demands today? Learn seven tips for sourcing candidates faster.
Use these hiring strategies to turn candidates into employees.
Keep candidates engaged by improving your onboarding process.
