Finding talent in 2022 is difficult, finding affordable talent in 2022 is nearly impossible. Globally, workers are retiring or branching out and accepting new lines of work for better wages and more flexible working situations. In fact, by 2030 there will be an estimated shortage of 85 million workers worldwide. The worker shortage has made hiring in the fields of technology, manufacturing, and healthcare extremely difficult as there are simply more job openings than workers.
Companies that can understand and navigate this issue will be able to hire and retain better talent in the long term, although hiring is likely to remain difficult in the short term. Many of the causes of the shortage are impacted by local market conditions, there are a few key common factors that are causing the lack of workers.
Factors Causing the Global Worker Shortage
Although the impact of the global labor shortage looks different from country to country and even from city to city, the underlying causes stem from global factors that impact the world economy. To combat the worker shortage and overcome this massive issue at the company level it is critical to understand the underlying causes. Globally, three main factors are causing the worker shortage.
1. COVID
It is impossible to consider anything in the economy today without viewing it through the lens of the COVID-19 pandemic. With over 6 million lives lost to the pandemic, it is no wonder that the global job market has been significantly impacted. Along with the deaths caused by COVID, many workers also experienced a rise in mental health issues that may have caused them to temporarily or permanently leave the workforce, lowering the number of workers available.
The work dynamic during the COVID pandemic has also caused many workers to change what they expect and value in the workplace. In some industries, workers were asked to work remotely, or they were asked to continue as usual with minimal safety precautions, and some workers were simply laid off, left without a job at all.
All of this has led to employees changing their values, over 95% of workers surveyed in 2021 were considering changing jobs with 92% willing to completely switch industries to find a new job. COVID has caused many changes and creating a healthy home-work balance is at the forefront for many workers. People are looking for flexible work schedules, higher pay, and greater personal autonomy.
Although COVID may have been a catalyst for the worker shortage, there are additional factors to consider that may make the worker shortage more endemic than originally thought.
2. The War in Ukraine
You cannot think about the global worker shortage and not factor in the war in Ukraine. With over 5 million jobs lost in Ukraine and an innumerable number lost in Russia and the greater region due to companies refusing to do business there, we are feeling the impact of the loss of offshore workers in the eastern bloc.
Ukraine, while not a hub for software development, does play a significant role in the technology industry. Their workers, who are known to have one of the best work ethics in the world, play a critical role in the cog of offshore labor for companies based in the United States. In conjunction with COVID, the war serves as another drop in the bucket, another set of workers that must be replaced.
3. Narrowing Salary Gap
As developing countries begin to grow at a faster rate than developed countries the wage gap continues to narrow as well, with local markets able to provide higher salaries than in years past. This means that workers no longer need to look abroad to work for large multinational companies, instead, workers can find gainful employment in their local market.
Of course, none of this happens in a vacuum. When offshore labor shifts to local markets, those jobs need to be filled. However, at the moment, there isn’t enough talent available to fill these positions at the same salary as those who left. This leaves companies with a choice, either pay higher wages for the same work that was done before or accept a lower quality product by a less qualified worker. Both of these choices put companies in a bind as they try to emerge from a pandemic.
Impact of Worker Shortage on Tech-Based Companies
The worker shortage is impacting companies in all sectors and industries worldwide. From a lack of workers to load trucks or manufacture goods causing supply chain issues, to a shortage of software developers slowing the creation and development of new technologies, the labor shortage impacts different industries in different ways.
For the tech industry, this means that software development, website development, or even data processing that might typically have a quick turnaround, may take longer than expected. This can have a trickle-down effect impacting an entire company and causing production to grind to a halt.
Not only has it been difficult to find workers in general, but it has also been difficult to find top talent and even more difficult to retain the most qualified workers after hire. Here is an in-depth look at the impact created by the labor shortage in the tech industry.
Companies Cannot Find Enough Workers
The bottom line is that there are simply more jobs available than there are workers to fill them. With an estimated 25 million new project professionals needed by 2030, it will become more difficult for companies to complete projects that are on a budget, on time, and give the customer what they want.
As businesses scramble to hire new workers it is also possible that there may be a high rate of turnover, leading to more time being spent training new talent and less time on creating and delivering products. With new talent rotating in and out at a higher rate additional strain may be placed on the employees who remain and further delays may be experienced as the new workers learn all of the nuances that come with working for a company.
Large Companies Attract the Best Talent
One of the biggest issues that the worker shortage has exposed is that the largest companies in the world are attracting all of the best talents. Leaving little left for everyone else. These companies, such as Google or Apple, have great name recognition and can offer high wages, making it exceedingly difficult to hire new talent.
Having these giants of tech attracting talent also means that you have a lot of young talent or new talent training specifically to work only for Google or only for Apple. These folks or people who are currently working for these giants, may not be able to integrate into other forms of technology development. They have been trained in a system and that system is what they know.
High Expectations Make it Hard to Hire and Retain Talent
Along with exceedingly high salaries and benefits (well over $200,000 a year for some employees), these tech giants also make it hard to hire new talent because everyone wants the big league treatment, even when applying at smaller companies.
A major factor at play here is the transparency afforded by the internet. When a person is searching for a job they can see how much other people are making at the big companies and the perks and benefits that they receive, and they expect to get the same treatment. These prospective candidates may expect to be wined and dined, so to speak, and when that doesn’t happen they don’t accept the job offer, or they accept and immediately are hunting for a job elsewhere.
The Companies that Adapt Will Survive
With all of these challenges facing companies in the technology sector and hiring employees, it is easy to think that many of these companies will fail, and many will. However, companies that adapt will survive and thrive.
There is still room for tech companies outside of Google, Apple, and the like to find quality employees. To attract talent in today’s environment CEOs will need to push their limits and think outside of the box. It may not be enough anymore to get a stack of resumes and hire the most qualified candidate.
So, how can companies adapt to survive and hire quality talent even with a shortage of workers? Here are four areas that companies should focus on when hiring during a worker shortage.
Rethinking Traditional Hiring Practices
In traditional hiring, the hiring manager would sift through a stack of resumes and pick out several qualified candidates to interview and then hire the best fit. Often this meant that if an applicant didn’t have a specific degree or experience their application would never move forward.
The problem with this hiring model is that it completely neglects folks that may have the skills to do the job but don’t have the formal education to go along with it. This is especially true in software development and coding-related jobs. There are many ways to learn the skills without formally attending a college to do it.
It also may mean hiring underqualified workers and then training them within the company’s system to do a specific job. This may take time but it is a way to get workers that cannot find work at other tech companies due to high competition.
Of course for all of this to happen companies need to rethink how they evaluate talent during the pre-hire period. Instead of relying on resumes, employers can ask for portfolios or provide job-related performance tasks to see how potential employees work in a real-world setting. It also requires employers to get rid of biases and assumptions based on a person’s education and look directly at the skills required to do a job and whether the employee possesses those skills.
Finding Untapped Global Talent
Although traditional tech hiring hot spots may not be producing the same amount of talent, there are other areas in the world where tech companies can find global talent that can provide affordable, high-quality labor. By expanding the job search to these areas, companies can find talent where the bigger tech companies aren’t even looking.
One such area is Nigeria. Nigerians have been utilizing the influx of online learning courses to teach themselves coding and software development. Nigeria is producing high-quality software development professionals and with a robust freelance market, they can build professional portfolios and land jobs with US-based companies.
For companies to find and utilize the untapped talent they need to first be willing to be flexible with job listings and requirements. As mentioned in the previous section, many of these workers have the exact skills required to do the job, however, with traditional hiring practices they will not get a chance to show what they can do. This is a tremendous opportunity for companies willing to adapt and hire for potential.
Be Flexible With Job Expectations
We are currently in a worker-centered economy. Highly talented, prospective employees can pick and choose where they would like to work and many employees are prioritizing much more than a high salary. Aspects of the work-life balance such as remote work options, flexible time off, and reduced stress all play a role in a candidate choosing one job over another.
For companies to attract workers today, it is important to offer employees flexibility and a working environment that fits in with their lifestyle. By offering benefits that other companies don’t and by rethinking when and how work gets done, employers can get a leg up on hiring and attracting top talent.
Retain and Promote
With the difficulty that companies are having in hiring, it is more important than ever to keep the talent that a company already has and reduce turnover. By retaining current employees, a company can help themselves not only by maintaining full employment but also by having an employee that needs little training and already knows the ins and outs of how the company works.
A key way to keep good employees happy and attract new talent is to have a proven promotion pathway. If an employee feels like they have no path forward then there is little reason to stay with a company when a more lucrative job comes along. However, when an employee is promoted and feels like their career is on a positive trajectory they are more likely to stick it out even when other companies may come calling.
Looking Forward
Even though there is a shortage of workers today created by COVID, the war in Ukraine, and the vanishing gap in salaries between countries, it is still possible to hire top talent. However, to do so requires a fundamental shift in how employers treat the hiring process and how they look at prospective employees.
Companies that can adapt quickly and offer candidates what they need will be able to hire quality workers more easily.
Peter Pantelides is the President and CEO of Policy Administration Solutions.
Founded in 1996, Policy Administration Solutions specializes in state-of-the-art automation solutions for insurance carriers, sureties, and large Managing General Agents (MGAs). Our mission is simple: to provide the technology your organization needs to achieve its goals more efficiently and cost-effectively.
At PAS, we pride ourselves on our culture of honesty and integrity. Our extensive technology and business experience in the insurance industry makes us unique. Working collaboratively, our team of skilled specialists applies solid planning and superior execution to every automation project. For more information about our services visit our website here or our LinkedIn page.
