By Leigh Chaban and Ash Athawale, Senior Group Managing Directors, Retained Executive Search Practice, Robert Half
Labor shortages are a top-of-mind concern for senior executives this year. A recent survey by The Conference Board found CEOs expect labor shortages to be a top disruptor to business operations in 2023. And research from Chief Executive Group shows two-thirds of CEOs think labor shortages will persist for the next three years.
Without question, the current labor market in the United States is exceedingly tight. Going into 2023, the national unemployment rate was 3.5%, according to the December 2022 jobs report from the U.S. Bureau of Labor Statistics (BLS). The rate was lower for college-degreed workers — just 1.9%. Other data from the BLS underscores employers’ hiring struggles: The agency reports about 10.5 million jobs in the United States were sitting open at the end of November.
BLS data also shines a light on the ongoing problem of resignations. It’s estimated about 50 million U.S. workers left their jobs voluntarily in 2022. That’s on top of the 48 million who quit in 2021. However, not all of these workers are seeking new positions. In a November 2022 speech, Federal Reserve Board Chair Jerome H. Powell noted the United States is facing a labor force shortfall of roughly 3.5 million people and said “excess retirements” might account for more than 2 million of those missing workers.
Straightforward solutions that require ongoing commitment — starting at the top
That’s an overview of just some of the complex dynamics working against employers’ efforts to hire and retain skilled talent in the current market. Now, let’s talk about solutions. Following are four strategies that can help companies meet the challenge of labor shortages head-on by increasing their “talent stickiness” — that is, their ability to both attract and retain in-demand talent:
1. Prioritize employee wellness
The COVID-19 pandemic and its many impacts on health and overall well-being have amplified the importance of wellness benefits for many workers. That includes perks and benefits designed to promote physical health, mental health, financial health, stress management and more.
Dismissing this trend could put an employer at a competitive disadvantage when hiring. Research conducted for Robert Half’s 2023 Salary Guide shows many companies are expanding wellness offerings. For example, 36% have added mental health benefits, and 33% have instituted wellness programs in response to the challenging hiring market.
2. Embrace flexibility
We emphasized in a previous Chief Executive article that businesses need to embrace flexible work arrangements to some degree — hybrid work, a four-day workweek, alternative schedules, flextime, etc. — for the long term. Most employees want that flexibility. In fact, a recent Gallup survey found 60% of employees want to work a flexible hybrid schedule, and 34% would prefer to work remotely full time.
For employers, the negative impacts of trying to enforce pre-pandemic work models include higher turnover and the spread of “quiet quitting” (i.e., purposeful disengagement). To the extent they can, business leaders should strive to make flexible work foundational to how their organization operates. When managed well, it enhances employee productivity and engagement, boosts retention, and more. It also helps with talent recruitment, including at the executive level.
3. Invest in professional development
A shortage of skilled workers in the hiring market makes it more essential for employers to grow the talent they already have. Investing in the professional development of all employees, from C-suite executives to entry-level hires, strengthens the workforce in multiple ways, not only by equipping workers with relevant skills but also by making employees feel valued.
Showing workers how they can advance in the organization and helping them reach those goals through clear career mapping are vital measures for retention. According to Pew Research, the lack of opportunity for advancement has motivated many workers to take part in the Great Resignation.
4. Step up succession planning
Research from global consulting firm Protiviti, a Robert Half subsidiary, and NC State University’s ERM Initiative found business leaders around the globe are worried that succession challenges and the inability to attract and retain top talent in a tightening talent market may limit their organization’s ability to achieve its operational targets. It’s more than a fleeting concern: Executives see this issue as a top risk for their company not only for 2023, but looking out to 2032, as well.
Many companies push succession planning to the back burner during uncertain times, but this is a mistake. Given that many professionals are eyeing early retirement — even well before they are close to retirement age, in some cases — the business could be caught flat-footed if critical leadership positions suddenly became vacant and there were no clear successors ready to assume those roles.
The year 2023 is an ideal time to step up succession planning. Business leaders know which employees went above and beyond to support the organization during the pandemic. Now is the time to recognize those workers by providing them with the opportunity to take their careers to the next level if they choose.
These strategies for increasing talent stickiness are all straightforward, but that doesn’t mean they’re easy to execute. Their success hinges on ongoing commitment by employers — which starts at the top of the organization. And given that nearly half of U.S. employees plan to seek a new position in the first six months of 2023, there’s no time for companies to waste in putting these strategies to work.
Leigh Chaban and Ash Athawale are senior group managing directors for the retained executive search practice at global talent solutions firm Robert Half. The practice assists businesses in building superior, diverse leadership teams with expertise, especially C-level and VP-level roles. With more than 30 locations worldwide and remote capabilities, the team can expedite the hiring process and ultimately help find the best available executive match for a company.
Learn more about Robert Half's retained executive search service here.
