What You, the C-suite, Should Know about the Current Labor Market

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While the unemployment rate rose in June to 4.0%, up from a historic low of 3.8% in May, job growth is on the rise with open positions still outpacing new hires. With the holidays fast approaching and many businesses experiencing consistent growth, more companies will be seeking employees to address demand. And in a candidate-drive labor market, that will be more challenging than ever.

For the C-suite, tackling talent shortages is high on the list of what keeps them up at night. That, combined with emerging concerns about the potential impact of new tariffs, wage pressures that can eat into profits, immigration-related recruitment challenges, and an economy that some say could lead the country into another depression means that you must—more than ever—enter the minds of America’s workforce.

Stand up and take notice.

The C-suite often leaves issues related to recruitment and retention to the HR department, but, in this environment, it’s important to not presume that HR has the right strategic focus to address business demands. While there’s a growing labor shortage—especially in high-tech and niche-related STEM roles—it’s not just specialized roles that are in short supply; Service industries are also feeling the pinch with jobs formerly filled by students now remaining open, causing some businesses to cut back on business hours.

Even when jobs are accepted, there is a growing trend of workers “ghosting” interviews, not showing up as scheduled after accepting a job. This seems to be especially true in light industrial and manufacturing across major markets, where certain candidates are hired, and then quickly receive better offers elsewhere. However, some say, that despite doomsday predictions, the hiring landscape is not that dismal.

As Cara Silletto, president and chief retention officer with Crescendo Strategies, and author of Staying Power: Why Your Employees Leave and How to Keep Them Longer(Silver Tree Publishing, 2018), says: “Executives must understand we’re in an employees’ market today where current staff and job candidates have the advantage. Everyone is hiring which means workers have choices and they no longer have to work for a boss they don’t’ respect, at a company they don’t believe in or on a schedule that doesn’t fit their lives.”
For you, the C-suite, these impacts mean taking a different view of recruitment—a long view focused not only on the hard skills needed today, but the soft skills needed tomorrow. And potentially even making compromises to land—and keep—the best talent in your internal and external talent pools.

Different Drivers

What motivated workers just a decade ago is not likely to motivate them today.

“It’s time for C-suite leaders to recalibrate their new hire tenure meter because long-term employment is a thing of the past,” says Silletto, who notes that pensions no longer motivate today’s employees as they did previous generations. “The employer-employee relationship has shifted to one that must remain mutually beneficial to serve both parties. Leaders who do not prepare for the impending transition to a shorter-term workforce will struggle to remain sustainable as excessive turnover deplete their profitability.” (Calculate turnover costs for hourly-wage employees; Calculate turnover costs for salaried employees.)

What exactly does America’s workforce want? According to our “2018 U.S. Workforce Report,” here are the top five job factors:

  • Salary/wages – 42%
  • Work-life balance – 21%
  • Health insurance – 9%
  • Skills training/career growth – 9%
  • Workplace culture – 7%

Space Concerns and Constraints

But it’s not just those five job factors that matter, or interactions with managers (although studies continue to support the notion that managers have a major impact on employees’ job satisfaction and tenure). The physical setting also makes a difference. Recent studies have suggested that open workspaces may have negative impacts on productivity and job satisfaction. A report from Continental Office supports that notion. Their research of employees found that:

  • 88% value options that provide privacy.
  • 87% want flexible settings (e.g. workshops, meeting rooms, private and
  • social areas).
  • 85% want settings that allow for collaboration and working together.
  • 82% see the need for an engaging workspace.

Ira Sharfin is CEO of Continental Office. He says: “As leaders, it’s important for us to disrupt and take risks. The old ways of working aren’t helping any of us attract today’s top talent.”Another disruptor: the burgeoning gig economy.

The Gig Economy

Despite the fact that Bureau of Labor Statistics recently indicated that the number of gig workers in the country declined to 10.1% of the workforce, it’s a workforce segment that is difficult to pin down accurately. According to an article in recode, its size could be anywhere from 4% to 40% of the workforce. (Per our “2018 U.S. Workforce Report,” the number is 33%.)

These workers have different needs and different expectations and, notably, they’re increasingly disinterested in being tied to a single employer. That represents both opportunities and challenges for organizations. You must respect why your job is not their only one (they need more money, want to develop other skills, want to fulfill another passion, etc.) and potentially alter their course at your company so that they’re not as reliant on side jobs.

Your Next Step

In this employee-driven labor market, you need to become engaged in decisions and planning related to the workforce. This means, says Michelle Tenzyk, CEO and founder of East Tenth Group, Inc., a boutique HR consulting firm:

  •  Making qualified, competitive and fast hiring decisions—offers—is a must.  You’re not the only game in town.
  • Articulating to prospective candidates what their experience working for you will be like—everything from the day-to-day, to potential for development and growth and why you are an employer of choice.Determining what sources of talent will need to be leveraged to deliver on business objectives down the road, not just today. This, says Tenzyk, “allows the C-suite to better understand the investment required for the talent needed to maintain their competitive edge.”The workforce is changing; it’s time for all of us to change, too.

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