While they are mostly optimistic about the state of the economy, executives are still laser-focused on the pandemic and its related effects. Nearly half (49%) of them believe the Delta variant and Covid-19 had the biggest impact on their businesses this year with other coronavirus-related factors — including the Great Resignation and the pandemic’s effect on employees — not too far behind.
Those findings from West Monroe’s most recent Quarterly Executive Poll underscore the talent shortage that is bedeviling companies in the United States and around the world. But when discussing the shortage, it’s important to understand that the pandemic merely accelerated long-term labor trends — trends that are likely more permanent than we think. To adjust, companies may need to fundamentally change the nature of work and their underlying business models.
Going Beyond Compensation
Regardless of the myriad of reasons behind the labor shortage, the need for talent is clear and executives’ hiring expectations remain steady: 71% of respondents in the West Monroe survey still expect to hire this quarter, down only slightly from the previous quarter despite the Delta variant and depressing economic growth in recent months.
Among the sometimes-overlapping strategies for addressing talent shortages, increasing wages/salaries topped the list for the executives surveyed. And while compensation may be what companies look to first, it’s not a sustainable strategy past the short-term. At least, it can’t be without weaving in other concurrent approaches, according to Dave Hilborn, managing partner, people & productivity at West Monroe. “It’s a buyer’s market for job seekers right now and competitive compensation is no longer enough. People are seeking opportunities with firms that also offer purposeful and interesting work, accelerated career growth, and hybrid working options,” stated Hilborn.
A multi-pronged approach appears necessary to compete and win in the talent market. Survey respondents seem to understand that they have no choice but to embrace approaches beyond traditional compensation increases, including providing more flexibility where talent permanently resides, offering employees higher signing bonuses and investing in retention.
Ultimately, as these talent shortages force companies to further evolve how and where work is done as well as their business operating models, digital transformation and the automation of work will be crucial. “The demographic facts are clear — there are, and there will continue to be, fewer and fewer people available to fill job vacancies. Companies have to embrace this reality and increasingly look to digital solutions to compensate for worker shortages,” said Hilborn.
Acquire New Capabilities
Besides the labor shortage, there’s also an expertise shortage. Likely to bring in new expertise, most organizations in West Monroe’s survey are planning an acquisition before the end of 2021. C-Suite respondents picked acquiring new capabilities as the second-most common reason for an acquisition, behind only geographic expansion.
M&A, of course, has long been a way to bring in new and specialized talent. But to effectively execute a deal — especially when you’re banking on it to bring in outside talent to fill labor needs — Hilborn notes it’s important to align organizational structure, talent strategies and management practices to reinforce desired culture and behavior. Otherwise, the talent being brought in might not stick around for very long or perform well.
We’ve seen far more “Help Wanted” signs in the past eighteen months than we had previously. But the pandemic simply sped up what was already happening — or going to happen — when it comes to broad labor issues. And with the labor shortage we’re currently experiencing not going away anytime soon, companies will need to leverage a broader range of complementary solutions when it comes to their talent needs in the year ahead.