A Candidate-Driven Job Market
The U.S. unemployment rate across all industries dropped to 3.8% in May, and it was the 92nd straight month where more jobs were added to the workforce than lost. There are now more job openings than unemployed workers and the U.S. economy is experiencing the second longest run of GDP expansion in history, with positive growth every quarter since the end of the Great Recession in 2009. As a result we have been experiencing what recruiters refer to as a “candidate-driven job market,” where the demand for talented, ambitious employees with unique skills far outpaces the supply of those workers.
Some of the growth can be explained by economic difficulties in other industrialized regions around the world, as well as by sound economic policies implemented since the recession. A significant cause of the imbalance in the job market, however, is the changing demographic patterns in the U.S. workforce. The retirement of baby-boomers has led to a management void and there aren’t enough bodies to replace them, particularly in certain knowledge-intensive industries like Pharmaceuticals, Biotechnology, and Med Tech. The net result is that, although we can expect a temporary rebalancing in the labor market in the next recession, talent shortages will be a significant issue in the U.S. economy for many years to come and we need to prepare accordingly.
What does this mean for employees and job candidates?
Good news, generally speaking. Candidates who are open to making a job change now routinely have multiple opportunities in front of them and often more than one job offer to consider. Wages are increasing and candidates have more leverage in salary discussion, particularly if they anticipate that their current employer is likely to extend a counter-offer when they resign (that is a topic for a different Blog). We’re seeing more willingness by employers to allow for remote work arrangements or telecommuting because employees don’t feel much pressure to relocate for job opportunities. Employees with hard-to-find skill sets know they are well positioned to ride out the next recession, even if there is a year or so of widespread downsizings.
What does this mean for employers and hiring managers?
It requires a change in both hiring and management orientation for those organizations that want to succeed in the War for Talent. For a company or division who long-term survival depends on the presence of knowledge-based workers it is absolutely critical that they are trained in how to attract and retain the best people. Many organizations will have difficulty changing their culture and orientation to adapt to this new reality, particularly large, multinationals that have a tradition of “screening applicants” and choosing new employees as if they are shirts on a rack in a department store. The shirt doesn’t say “no, I’m not going,” but the A Player at the direct competitor does, and he or she needs to be sold on the idea of quitting their job and taking another one. It’s not very difficult: if as an employer you have a good story to tell then tell it, particularly if it includes opportunity for career development and advancement. Be fast and responsive to candidates in the interview process and show interest in them personally. Those simple, common-sense steps will help progressive employers win the War for Talent.
In our candidate-driven job market employees are now basing their decisions about where to go to work – and where to remain – on things other than compensation and benefits. They want competent, trustworthy management with limited re-organizations, a collaborative atmosphere, and a runway for advancement of some sort, among other things. Salaries, bonuses and stock offerings have all bounced back nicely since 2009, but other cultural changes have been slower to develop, or to re-emerge. An example of this is how companies are handling the issue of relocation for new employees. Before the recession, which was caused in large part by the mortgage crisis, employers were quick to provide full financial assistance in moving new employees, including paying real estate transaction fees. Now even the large global organizations are rarely doing that for middle-management workers, and instead are offering small sign-on bonuses to cover the cost of moving household items and a few months of temporary housing. So that’s an example of an opportunity for an employer to differentiate themselves in the talent war, by offering more generous relocation packages.
There are many changes an organization can consider as it repositions itself to become an employer of choice. Some are large, expensive endeavors, but most are small actions that demonstrate a “high touch” orientation and a feeling that the company really cares about their people. The first step, of course, is to make the decision that you want to be an employer of choice. As a recruiting professional I have a unique opportunity to see the various tools and techniques used by many different organizations, and some are more effective than others. Please let me know if you would like to discuss them.