In the war for talent, the right HR practices can determine whether you can hire and retain the best workers or not. Thanks to changing demographic trends, finding top-quality workers isn’t as easy as it was a few decades ago. By making a few changes to the way you hire and manage employees, you can navigate the tight labor market and come out on top.
What Is the War for Talent?
Back in 1997, McKinsey & Company first coined the term “the war for talent” in one of their quarterly briefings. At the time, McKinsey & Company was referring to a forecasted drop in 35-to-40-year-old workers. Ed Michaels, Helen Handfield-Jones, and Beth Axelrod from McKinsey & Company wrote a book called “The War for Talent” in 2001. In the book, they argued that the fight for talented workers was going to continue for decades.
Today, workers are in high demand. Since the influx of births that led to the baby boomers, births have dropped. In recent years, baby boomers have started to retire at the pace of 10,000 retirements per day.
For workplaces, this means that there is a war for talent that is only going to continue. There simply aren’t enough skilled workers to fill all of the available roles. As a result, companies will need to be proactive and plan ahead if they want to attract top talent.
Who Is Impacted by the War for Talent?
Ultimately, the war for talent will be felt by all workplaces. While low-wage jobs are struggling to find and retain employees, high-wage jobs are also having issues. There are currently more open positions than applicants for jobs in leisure and hospitality, financial activities, professional and business services, and manufacturing.
The war for skilled workers is particularly concerning because you can’t just teach someone econometrics or open-heart surgery. For industries that rely on skilled employees, a dearth of workers can mean lower productivity, decreased revenue, and less innovation.
How To Win the War for Talent
By learning how to attract top talent, you can attain a competitive advantage. A better quality of workers can boost your brand image, improve your morale, and enhance your productivity. The following are a few key drawbacks that businesses face in the war for talent and ways that you can overcome them.
1. Lack of Workers
Solution: Technology, a better work environment, and changed job requirements can help you counteract a lack of applicants.
During a recent podcast with Mission to Grow, Anita Lettink, partner and founder at HRTechRadar, discussed the ways technology can be used to replace employees and complement your workers’ efforts. When it comes to technology, “I think the only thing that you should be afraid of is being replaced by your competitor who offers a more seamless experience.”
While every task can’t be automated, you can automate certain tasks or incorporate generative AI into your workflow. For example, a restaurant can have customers order using QR codes so that fewer servers are needed.
A better work environment and changed job requirements can make attracting applicants easier. Many job listings have multi-page lists of job requirements that are completely unnecessary. Boil your requirements down to the essentials, and you’ll have an easier time attracting applicants. Additionally, a good work environment and strong culture will help you draw in new employees.
2. Higher Labor Costs
Solution: Offering employee development opportunities and job sculpting can help you retain top performers and keep your labor costs down.
Attracting and retaining top performers is a challenge when your business can’t afford to pay higher labor costs. However, you can overcome these obstacles through employee development.
“When people choose to work for you and not for someone else, the number one thing they take into account is compensation,” says Lettink. “On day one, that changes into now the most important thing is: How can I grow here?”
You can circumvent higher labor costs by giving employees what they want. Unlike huge corporations, small businesses are more likely to know each individual employee and their unique dreams. From day one, you can provide them with development opportunities to help them grow. You get a more capable worker, and they get new skills.
Another way to manage higher labor costs is through job sculpting. Get creative and build jobs that will attract a broader range of workers. For example, offering remote flexibility or a 9-to-3 schedule can appeal to carers who have children in school or who need extra flexibility to work from home.
3. Increased Issues With Employee Retention
Solution: Boost your retention rate by providing clear advancement opportunities and recognizing your best workers.
If you’re struggling to retain workers, clear advancement opportunities and employee recognition can help you retain workers for longer. Advancement opportunities help workers see the benefit of staying with your organization over the long term. By discussing potential career ladders and long-term goals with your workers, you show that they have a future with your company.
In surveys, advancement opportunities were closely tied to retention. In fact, Gallup recently took a survey of why people reported leaving their previous jobs. Compensation was the only reason for leaving a job that ranked higher than wanting advancement opportunities.
Likewise, employee recognition can boost your retention rates. When workers feel like they are valued and recognized for their contributions, they are more likely to stay at a company. Recognition is also an incredibly affordable way to improve retention rates. The most effective recognition is honest and authentic. Something as simple as recognition in a company meeting or a thank-you note can help employees feel appreciated for their efforts.
4. Difficulties With Recruitment
Solution: Adjust your job listings so that they’re directly relevant and have fewer requirements. Then, rebalance job tasks so that some tasks can be outsourced or handled by technology.
In the war for talent, some companies struggle to recruit and attract new hires. This is especially common in small businesses where it’s harder to rely on word-of-mouth or brand reputation to attract applicants. If you want to win the war for talent, start by revising your job listings and rebalancing your tasks.
First, take a look at your job listings. When your requirements are too extensive, you deter potential applicants. You’ll also drive up the cost of the applicant you end up hiring if you expect a lot of skills that might not actually be necessary.
When you revise your listings, spend some time rebalancing job tasks as well. In her interview, Lettink discussed an example from her company. Some of their office employees had to babysit the phone in case someone called, but few customers ever called. Eventually, they realized that they could hire a phone service to answer calls and take messages. Customers were happy to get a call back later on in the day, and the decision freed up valuable employees to handle other tasks.
You might not be able to outsource an entire position, but you may be able to give individual tasks to an outsourced HR team, new technologies, or another service provider. For example, teachers spend less time on lesson planning by using AI. In grocery stores, self-checkouts use technology to reduce the number of cashiers needed. These organizations still need workers, but those workers can be made more efficient.
Support Your Company’s Long-Term Growth
From handling retention problems to managing recruitment difficulties, there are a few things you can do to navigate a tight labor market. While demographic trends aren’t going to change, companies can meet labor-related challenges through foresight and proactive planning.
If you’re ready to win the war for talent, we can help. Our experienced team can help you outsource HR tasks, navigate payroll processing, and find technological solutions. To learn more about navigating a competitive labor market, reach out to our team of small business HR and payroll experts today.