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How to Hire Top Talent in a Tight Labor Market

12 March 2024

Having highly-skilled, talented workers is key to any business. But hiring talent for your business these days can take some doing. Even more so, if you are looking for experienced team members with specific and well-developed skills. If you have a strong company culture (and if you don’t, please seriously consider establishing one), you also need team members who fit into that culture.

Why is It Hard to Find the Best Team Members For My Business?

UnemploymentThere are a number of factors that come into play in the current market.

Some of these are:

  • Extremely low unemployment rates. According to the U.S. Department of Labor (USDL) Bureau of Labor Statistics (BLS), as of the end of January 2024, the total unemployment rate was 3.7%, unchanged since the end of November 2023. This is close to historic lows for recent decades, though the trend has ticked up slightly since 2022.
  • Labor force participation. The USDL also reports that as of January 31, 2021, labor force participation was 61%, down 1.5% from the December 31, 2023 rate of 62.5%. While this is certainly an improvement over the early-pandemic low of 60.2% recorded for April 30, 2020, and the trend has generally (and unsurprisingly) been on the upswing since that time, it has not rebounded to pre-pandemic rates of January 31 and February 29, 2020, which for both months was 63.4%.
  • More jobs than workers to fill them. According to the BLS, as of January of 2024 there were ~9 million jobs available, with ~6.1 million unemployed American workers to fill them. That’s a significant gap.
  • This means workers can be picky – and they are. Of considerable import, as the USDL reports, more and more people want the option of working from home, at least part of their work week, and not all businesses have adjusted to this new reality.
  • With the youngest Baby Boomers (those born between 1946 and 1964) turning 60 this year, more and more “boomers” are retiring and/or engaging in part-time or consulting positions.
  • Younger workers – e.g., Generation X (those born between 1965 and 1980), Generation Y or “Millennials” (born between 1981 and 1996), and Generation Z (born between 1997 and the early 2010s) make up a huge portion of talent in today’s market, and they want more than the flexibility to work remotely, stock options, a good salary, bonuses and healthy retirement plans. These are people to whom a firm’s culture and values matter, as well.

 

Other Economic Factors:

Inflation

Inflation

  • The Consumer Price Index (CPI) rose 0.3% from December 31, 2023, to January 31, 2024, following a December increase of 0.3% over November 30, 2023.
  • As of January 31, 2024, unadjusted CPI increased 3.1% on a year-over-year basis from 2023, and core CPI (which excludes food and energy prices) also rose 0.4% in January 2024, following 0.3% increases for December 2023, and November 2023.
  • Rising interest rates are a factor. In an effort to combat inflation by raising interest rates, and thereby prices, the Federal Reserve has increased its key short-term interest rates by 5.25% basis points (bps) to a rate of 5.25% to 5.50% since March 17, 2022, when rates stood at 0.00% to 0.25%, where they had stood since March 16, 2020. The last time the Federal Reserve’s rates were over 5% bps was 2006.
  • Rising interest rates have dramatically increased the cost of capital – and capital is the lifeblood of any business. Which means it’s more expensive to buy a business, and more expensive to acquire the best talent for your existing or newly-acquired business.

 

People Are Not Changing Jobs as Much

I Love My Job

  • In the immediate aftermath of the worst of the pandemic, the U.S. saw workers changing jobs more frequently than historic averages. As the combination of returning and newly-created job opportunities combined with a drop in labor force participation and demand for workers led to opportunities for significant pay increases, reaching a record of median pay gains for job switchers at 16.4% in June of 2022.
  • But the bloom for new hire pay increases is beginning to fade, and more workers are staying longer with their current employers. By January of 2023, the salary gain had dropped to 14.7%, and by September 30, 2023, to 9%. Predictions are that job stayers, rather than job-changers, will continue to increase.
  • This means you need a compelling value proposition – a reason why a talented, seasoned, skilled person should leave a position they are at least relatively satisfied with and come work for your team instead.
  • And, again, in today’s labor market, the value offered must go beyond the material (though never discount the necessity of making a competitive case dollar-wise, too).

Even so, it is not as hard as it was during the height of the pandemic to hire skilled talent.

Hiring the Right Talent is Still Key To Your Success – But, So Is Your Leadership!

Be a Talent MagnetAgain, no business can flourish without a strong team. It’s one of the biggest drivers to success a business and its owner(s) can have in their pocket. But it takes real leadership to understand that:

  • You aren’t going to find one “magical’ talent to make everything go smoothly. Not even one of these (if they exist – I suspect they are more like unicorns, more an idea than a reality) for every department of your business will accomplish that for you.
  • “Everything” never goes smoothly. And beware if it seems to – real boats rock. That’s why you want the best people, not the “magical” ones – people who can steady the boat when it rocks too far.
  • For a business to thrive, all its team members must thrive. Make sure you have policies and processes in place to ensure there are no “dead-end” jobs – that there is growth and advancement available to all.
  • There’s more involved in filling the right position with the right person than merely ensuring they have the right resume. They need to fit within the company culture – and it will matter to the best workers what that culture is, and how it is implemented.

 

Balance is Key to Company CultureSo, plan strategically. Have the cash on hand so you can make the right offers to the right candidates. Make sure you offer a value proposition your existing employees as well as the new ones you hope to attract can get behind. Screen carefully, as even the most skilled and talented worker may not be the best fit for your team and your business’ culture – and your team needs to function well together for your business to thrive.

What strategies do you use to attract the right talent for your business?

Please click here to email me directly – I’d love to hear your strategies.

Until next time,

Peace,

Eric

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