Tips to Combat the Talent Shortage in Global Market

In 2022, the world witnessed a concerning phenomenon as global talent shortage reached a staggering 16-year high. Across various regions and industries, 77% of recruiters reported significant difficulties in finding skilled and qualified individuals to fill the vacant positions within their companies.

Recent global talent shortage statistics from a new report by Korn Ferry indicate that this problem is projected to worsen. Korn Ferry estimates that by 2030, the global talent crunch could reach a staggering 85.2 million individuals, resulting in the loss of trillions of dollars in economic opportunities for companies. Labor market analysts refer to industries particularly susceptible to this crisis as "knowledge-intensive industries," including technology, manufacturing, financial services, telecommunications, and media.

This hiring challenge stems primarily from the soaring demand for skilled professionals in these tech-enabled, knowledge-intensive sectors. The talent shortage predicament is further exacerbated in countries with low levels of unemployment, as employed individuals are often less motivated to undergo retraining, reskilling, or transitioning to different fields.

The Present Global Talent Shortage at a Glance

The ongoing talent shortage is a critical issue with significant financial implications for companies, as experts predict it could result in a staggering cost of $8.5 trillion by 2030. This situation is not surprising considering that currently, only 25% of companies can readily find the right talent for their open positions, highlighting the severity of the challenge.

While skill shortages are prevalent across various industries, it is particularly pronounced in the finance, IT, and tech sectors. These industries face substantial skill gaps, with soaring demand for qualified professionals surpassing the available talent pool.

Why Is There a Global Talent Shortage? What’s Causing It?

Truck drivers and software engineers may seem like they have little in common, but both professions face a pressing issue impacting businesses on a global scale: a significant talent shortage. Companies worldwide are engaged in fierce competition to attract, hire, and retain employees who can meet the demands of the modern workforce.

The scarcity of skilled workers has become a paramount concern for organizations across the globe. According to a recent survey conducted by Gartner, CEOs worldwide rank the current talent shortage as a significant emerging risk for their companies. This concern outweighs other considerable business risks, such as privacy regulations and the rapid pace of change. Over two-thirds of respondents from crucial sectors like financial services, government, and manufacturing express deep apprehension about the talent shortage.

The landscape of talent availability and employment is influenced by a multitude of factors that can vary across different countries. These factors encompass public policies, changing demographics, supply and demand dynamics, wage structures, and the education system's effectiveness, among others. Examining the current trends in the workforce and talent pipeline, we can identify three key dimensions:

• Departure of Experienced Professionals from the Workforce

Citing research from Pew Research, it is evident that Baby Boomers, born between 1946 and 1964, constitute approximately one-third of the current workforce. However, the impending retirement or planned retirements of a significant portion of this generation within the next decade present a substantial challenge. Compounded by the COVID-19 pandemic, the situation has become even more pressing. Disturbingly, the third quarter of 2020 witnessed the forced retirement of nearly 30 million Baby Boomers, thereby intensifying the unanticipated void within the skilled labor pool.

• Inadequate Preparedness of Younger Generations to Assume Workforce Leadership

Despite Millennials constituting the largest population group, many lack the essential managerial experience and skills required to assume the vacant positions by retiring Baby Boomers. A significant 2021 McKinsey & Co. study involving employers, students, and educators revealed a consensus that today's young workforce needs to be more adequately prepared for professional challenges.

A notable disparity emerges as more Millennials transition into leadership and sought-after roles. While some thrive in their new positions, many face a formidable learning curve. Consequently, employers compete fiercely to secure individuals with the necessary skills and readiness to assume leadership responsibilities.

• Shifting Needs and Expectations of the Modern Workforce

The Fourth Industrial Revolution brought rapid and transformative changes to work dynamics, demanding workers with specialized skills. Concurrently, worker expectations are evolving, encompassing flexibility, better compensation, remote work options, improved work-life balance, and revised productivity measures. The COVID-19 pandemic has amplified these expectations, emphasizing the importance for organizations to adapt to the shifting work landscape and meet the evolving needs of their workforce.

• Rise in Job Hopping

In contrast to a few decades ago, when individuals typically remained in the same job from their initial hiring well into retirement, today's employment landscape has significantly departed from this norm.

Millennials and Gen Zs have gained notoriety as the job-hopping generations, and the reputation is well-founded. A report by Gallup revealed that a remarkable 21% of Millennials changed jobs within the past year, surpassing the number of job changes among non-Millennials by over threefold. The costs associated with Millennial job turnover are substantial. Gallup estimates a staggering over $30.5 billion impact on the US economy.

Millennials frequently switch jobs due to several factors. Pursuing higher-paying positions is a key driver, along with discontentment with company culture and a desire for career exploration. Millennials readily resign without hesitation, seeking better opportunities when their job falls short of expectations.

Solving the Talent Shortage: Tips to Overcome

Addressing the talent shortage requires a comprehensive approach that combines attracting, developing, and retaining skilled professionals. Here are some tips to overcome the talent shortage:

• Harnessing the Power of Global Talent: Expanding Hiring Horizons

To overcome the challenges posed by the talent shortage, it is essential to broaden the scope of your hiring efforts. By embracing global recruitment and considering job seekers from different countries, you significantly increase the likelihood of finding qualified candidates and successfully filling vacancies.

Leveraging the global talent pool not only aids in finding skilled individuals but also facilitates the expansion of diversity within your company. Research has shown that diverse teams contribute to improved productivity and performance, bringing various perspectives and experiences.

Furthermore, embracing remote work opens doors to extend your reach beyond geographical boundaries. This approach helps overcome local skill gaps and can save your organization's costs.

• Strategic Talent Acquisition: Leveraging Data for Success

Talent acquisition is evolving into a more scientific process, driven by the understanding that the cost of a mis-hire can amount to approximately 30% of an employee's 1-year earnings. Consequently, organizations recognize the importance of adopting a strategic approach to finding suitable candidates, as failure can prove a costly mistake. Human resources (HR) teams increasingly use data to gain insights into effective practices, address employee turnover and skill gaps, and drive productivity improvements.

Contrary to the misconception that only large organizations can benefit from data-driven approaches, even smaller businesses reap the rewards. By implementing a well-designed people analytics strategy that aligns with the team's unique needs, organizations can swiftly identify challenges and proactively address them promptly and efficiently.

While intuition plays a vital role in recruiting, more than relying solely on gut instincts is required. Incorporating metrics and data into the talent acquisition strategy can significantly enhance its long-term effectiveness.

• Unlocking the Power of Employee Referrals: Building a Strong Talent Pipeline

The significance of employee referrals in successful hires is widely recognized, transcending industries. According to CareerBuilder, 82% of employers consider employee referrals the top source of return on investment (ROI) in the hiring process. Therefore, establishing a well-structured employee referral program can profoundly impact cultivating a robust talent pipeline.

Effective employee referral programs require clear incentives for full-time and temporary employees. By offering enticing rewards, organizations can motivate their workforce to participate in hiring and recommending candidates actively. Leveraging social media platforms enhances program reach and effectiveness, enabling easy sharing of job opportunities within employee networks. Tracking referral sources helps identify successful channels and focus efforts accordingly.

Implementing an employee referral program accelerates and streamlines the hiring process and increases employee satisfaction and engagement. Employees who work alongside their friends tend to be happier and more fulfilled in their roles. Leveraging existing social networks to build the team fosters a sense of camaraderie and connectivity within the organization.

• Fostering Internal Talent: Nurturing and Developing Employees from Within

While hiring the right team members is a crucial step, truly overcoming the challenges posed by a talent shortage requires investing in the growth and development of existing employees. A practical approach is introducing career pathing early in the onboarding process, allowing employees to envision the opportunities available within the company and identify the skills required to advance in their careers.

Implementing a career pathing demonstrates a commitment to employees' futures. It offers a roadmap for professional growth, clarifying roles to aspire to and the skills required for advancement. Career pathing fosters mentorship opportunities, empowering employees at all levels to engage in meaningful learning and benefit from experienced colleagues.

By emphasizing career pathing, organizations not only show their investment in the long-term success of their workforce but also foster a culture of continuous learning and professional development. This approach nurtures employee engagement, promotes retention, and enables individuals to unlock their full potential within the company.

• Harnessing the Power of Automation: Streamlining Talent Processes

In the face of reduced staff and talent shortages, investing in artificial intelligence (AI) and automation can be a game-changer. By automating time-consuming and repetitive tasks, organizations free up their existing employees to focus on more critical responsibilities. It not only boosts productivity but also alleviates stress and helps combat burnout.

Rather than shunning automation and artificial intelligence, embracing these technologies and discovering ways to leverage them to support your workforce is crucial. Embracing automation can enhance the capabilities of your staff, enabling them to perform their jobs more effectively and efficiently.

By harnessing the potential of automation, organizations empower their talent, streamline operations, and foster a healthier work environment. Embracing these technologies is a proactive approach to maximizing productivity and ensuring long-term success in the face of talent shortages.

Conclusion

When faced with challenges in finding and retaining talent, consider implementing the abovementioned strategies.  By proactively implementing these strategies, you can navigate the talent shortage and position your organization for long-term growth and stability.

If you have any queries or questions, feel free to contact Skill-Lync. We’d be happy to assist you!