The unemployment rate remains elevated at 6.1%, but companies are having trouble finding people to fill jobs. This unusual dynamic was underscored by the release of the April labor statistics, which found that 266,000 jobs were created that month, far short of the roughly 1 million new jobs that estimates had predicted. Some analysts blamed an economic recovery that isn’t as strong as it seems, but others have pointed to powerful forces such as ongoing health fears and robust unemployment insurance for keeping people from seeking jobs in some industries.
At the same time, we are grappling with a shrinking workforce. Fertility rates in developed countries have been steadily dropping while baby boomers are retiring at record rates. Many women have left their jobs in order to care for children and other family members.
To cope, HR leaders are radically rethinking recruiting and talent development. For instance, according to the Washington Post, restaurants are offering incentives such as signing bonuses, college tuition payments and even cash just for showing up for job interviews. I recently spoke with leaders from Ashley Furniture Industries, a $7 billion manufacturer, who told me the company simply cannot find enough skilled people to staff its automated manufacturing plants. To address the shortage, the company is actively recruiting and training students graduating from high school.
It’s clear that companies will no longer be able to “hire their way to growth” as they have in the past. Here are some of the short-term changes in recruiting, talent management and development that will be needed to cope with the workforce shortages ahead. I believe companies must:
- Diversify recruitment: For decades, we’ve known that a college pedigree is not the secret to success. Companies are now hiring people from a range of educational backgrounds and investing money in development to bring them along. Bank of America, a company I greatly admire, has grown its consumer banking business by reducing turnover and rethinking its entire process of development. The company recruits at local community colleges, focuses on a strong and enduring brand, and takes great care of new hires.
- Get very serious about internal mobility. Much of the top talent you need might already be in your company. But which employees have this potential, and how do you transition them to new roles? Marketing employees can move into sales; finance people can move into IT; HR professionals can move into operations. Identifying such alternative career pathways are essential to company growth. Recruiting teams must include internal headhunters responsible for identifying internal talent suitable for new positions, while tools that can manage internal talent marketplaces will become essential.
- Focus on retention, employee experience and employee engagement. Many companies now have employee experience teams that are charged with taking a holistic look at employee needs and obstacles and bringing together resources from HR, IT, facilities and even legal functions. The massive adoption of employee experience solutions from companies like ServiceNow and recent announcements from Microsoft, Oracle and others point to the importance of creating positive employee experiences and ongoing development.
- Create candidates through development. Diverse companies like Ashley Furniture, Kaiser Permanente, Verizon and Chipotle are all training people to fill open jobs—as opposed to focusing solely on finding people with the exact skillsets needed. We have to adopt the mindset of “creating candidates” through development programs.
- Create diversified talent portfolios. It’s time to strategically incorporate part-time, contract and outsourced workers into your talent portfolio. Doing so will increase your company’s ability to adapt to fluctuating needs, and you’ll widen your talent pool.
The bottom line for employers is this: Don’t think about hiring as the only way to grow. While traditional hiring will never go away, sustainable growth will come from upskilling and redeploying people, redesigning the company for automation and scale, and investing in programs that improve productivity, wellbeing and culture.