The Global Recruitment Crunch: Are Candidate Shortages Likely to Continue?

The worldwide talent shortage is growing, with recruiters anticipating that it will continue for years. This is confirmed by recent research I conducted via my LinkedIn network. It revealed that 71% of recruiters expect a candidate scarcity to be an issue for at least another year, and 37% think it will last for two years or more. Why are there so few potential candidates? And what can companies do to minimize the effect on their businesses?

Firstly, let's look at why candidates are limited and why that's likely to continue to be the case for some time. Then we'll examine some solutions that businesses might take to address the problem and how likely recruiters think each of these actions will be accepted.

First and foremost, let's discuss candidate shortages, which are influenced by several issues:

The Impact of the Great Resignation

During the Covid-19 pandemic, we noticed a surge in people wanting to work from home. Now that the pandemic is leveling off and businesses are urging employees to return to the workplace, we're seeing a significant increase in resignations.

So why is this? From our perspective, the pandemic has caused people to reconsider their work-life balance and what they desire from their jobs. For many individuals, a 9-to-5 office job no longer meets expectations. Many employees would like to have more flexible working options, greater control over their time, and a bigger say in where they are required to do their jobs.

Businesses have been slow to react to these shifting employment trends, as demonstrated by the push for people to return to the office. As a result, many are losing excellent employees who don't want to go back to how things were.

Skill Shortages

Even before the pandemic hit, businesses had difficulty finding candidates with the right talent. However, economies have seen significant changes in recent years, indicating that skills required to fill vacancies have evolved — and the talent gap has expanded.

For example, the pandemic has accelerated the shift to digital and online business models, especially those that see businesses now delivering to the home things formerly bought in person. Therefore, the jobs created need different skills than many of those being laid off currently have. As a result, there is a skills shortage.

More Attractive Career Choices

That's an issue on the supply side, but there's also a demand problem: people don't want to do specific jobs anymore. Why is that so? Across the economy, far more businesses are now willing to hire remote employees than ever before. This has made a lot of jobs far more attractive to job seekers who might once have been put off by the inflexibility of office-based work or the geographical location of that role.

To put it another way, people don't have to be in Silicon Valley to enjoy a successful Silicon Valley tech job any longer - they can live and work just about anywhere. Now apply that to every sector and position where remote working is now feasible. This is a significant shift in the jobs market!

The influence is twofold. To begin with, this has a significant impact on where people want to live and work, which affects the roles they will apply for. It's also making it more difficult for firms to hire staff since they are competing with other businesses worldwide for the same talent.

Completely Changing Career Direction

Another thing the last years have brought about is a substantial shift in mindset towards changing careers.

It's no longer frowned upon to completely alter career direction or even decide that your profession requires a pause. People who might not have chosen to entirely change careers in 2019 are now much more likely to do so - and to feel supported rather than alienated when they do so.

However, this only adds to the pool of people leaving the sectors they once worked in, making it harder for businesses to find and retain staff.

The above are just a few reasons why candidate shortages are currently being experienced, and they are expected to last for many years. None of them looks like a factor that is about to go into reverse - and so it's reasonable that recruiters expect candidate shortages to continue.

What Steps Can Businesses Take to Address the Longer-Term Candidate Shortages?

Companies might take several actions to cope with this period of increased applicant shortages:

☑️ Extending the geographic candidate pool

☑️ Being less selective about the "must-haves" candidates need to exhibit to make it onto the shortlist

☑️ Choosing starting salaries and comp packages will need to be increased

☑️ Acknowledging that timescales for making hires may need to be lengthened and hiring deadlines missed

I put the first four of these to my network in a poll to again see which recruiters thought was most likely to be adopted as a solution. Let's go through them one by one.

Extending the geographic candidate pool (46% of respondents): This is the compromise/action step recruiters believe employers will ultimately choose to solve recurring candidate shortages.

With more individuals now open to working from home, businesses have access to a far larger geographic pool than they previously could. Simultaneously, line managers within firms have opened their eyes to the fact that remote workers can be far more effective than once feared.

When you add these two elements together, organizations are no longer restricted to hiring from a small region and can employ people from anywhere in the world. As talent shortages continue, expect recruiters to start taking applicants from further afield into account.

Being less selective about the "must-haves" candidates need (26% of respondents): Insisting on a comprehensive and rigid list of skills and experience has always meant that companies have missed out on lots of qualified candidates. However, society has begun welcoming diversity more willingly and has accepted that strict hiring criteria can result in less diverse companies.

As a result, companies are beginning to understand that focusing on a candidate's potential and ability to learn new skills rather than their past experience may be more beneficial. A willingness to consider removing some of the "must-haves" from their hiring criteria is one way that companies can expand their available talent pool and counter lasting candidate shortages. LinkedIn has had success with this strategy in a recent trial which you can find written up here.

Increasing starting salaries and comp packages (21% of respondents): With businesses now having to compete for candidates with other companies worldwide, it's becoming increasingly standard for them to have to offer increased starting salaries and compensation packages to even be in the running to make hires. This is now so standard in some industries that it's difficult to see this as part of the solution for a business, rather than just what's needed to be in with a shot of making a hire.

This, of course, can lead to conflicts if new employees are being paid more than existing staff who are performing the same task. Furthermore, it's not sustainable for any organization wanting to retain its current employees. It risks a domino effect of current employees quitting to get a pay rise at another organization.

Acknowledging that timescales for making hires may need to be lengthened (7% of respondents): I thought it intriguing that only 7% of you felt this was the compromise employers would most likely accept. Hiring timescales, it seems, aren't something that employers will countenance compromising over. The cost of a delayed hire is seen as being worse than the cost of a bad hire appears to be the message here.

To counteract this, I'd say that taking a little longer to make a hire in many situations can lead to finding a better applicant. After all, if companies are willing to wait for the ideal candidate, they're more likely to discover someone fully dedicated to the position. It also gives their recruitment partners additional time to find suitable candidates from a larger pool, increasing the likelihood of finding your perfect match.

Final Thoughts

If my poll of hundreds of recruiters is anything to go by, we should all be ready for the candidate shortages that have been hindering business growth to persist for the foreseeable future. For recruitment agencies able to deliver on client needs, this spells a bumper period for money to be made and new markets to be entered. If you're worried that you don't have the groundwork to succeed, feel free to book a time for a call, I'd be happy to talk it over with you.