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How Clients Can Prepare for the Talent Shortage

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The COVID-19 pandemic has inspired many people to consider their next career move and resign from their current jobs. One of your small business clients' top priorities is attracting and retaining top talent, so how can they do that during a period that's seeing a record talent shortage? Mark Pierce offers some tips to help clients financially prepare for the deficit.

Oct 29th 2021
Attorney Cloud Peak Law
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Talent is in short supply these days. Forbes mentions that talent shortage in the US is at a 10-year high. There are several reasons this has happened, from a lack of adequately trained employees to take over from retirees to simply not enough good remuneration packages. Talent shortage might not seem like a big deal from the financial perspective. Some companies even see it as a boon because they don't need to pay salaries. However, the actual cost of this talent shortage for companies is in their competitiveness and efficiency. Many individuals required to fill these roles simply don't have the real-world experience necessary to take up the job. For those that do, finding a company that suits their needs is at the top of their list of wants. For the most part, companies that have these vacancies have to hire new employees and train them to suit the role. Theis hiring method is not ideal.

The Financial Impacts of Talent Shortages

Many places that dispense advice to employees online talk about how it's an employer's market when hiring new workers. However, the global talent shortage has seen many companies realize how little control they have over who they hire. There are some significant costs associated with hiring new employees in a talent shortage, including:

Candidates with Selective Tastes: An employer can still hire bottom-of-the-barrel talent for a song, but you get what you pay for. The real talent in the market knows how valuable they are and won't settle for anything less. Thus, it's less about the employer weighing the potential hire in an interview and more about the tables being turned. Employees can be more selective about the companies they work for.

Expensive Onboarding: Hiring a new employee incurs a massive cost to the business. However, in a contracted talent market, these costs go up many times over. Additionally, companies need to balance the costs of the new hire with the company culture and existing employees. Established employees might feel it's better to look for a new job.

Higher Turnover: With so many available jobs out there, established employees might start seeing opportunities they want, leading to employee churn. High turnover numbers in traditional hiring conditions usually mean the company is unattractive to work for. Some employees might take this message and avoid the company altogether, worsening their chances of landing major talent.

How to Avoid The Talent Shortage Crunch

Accountants should be giving their clients advice on how to deal with this hostile hiring environment. How does a business remain profitable when it has to bid for the best talent and ensure that they are happy? Accountants can offer their clients the following potential solutions to ensure that they remain competitive and hire the best talent they can find:

Reskill to Close the Skill Gap: As businesses continue to expand, there are many skill gaps within the workforce. However, several redundant positions might also happen as a result of technology upgrades or process changes. Reskilling those employees keeps their loyalty and removes the cost of onboarding a new hire. Businesses would do well to pivot their employees towards new areas in the company rather than letting them go.

Build a Recruitment Pipeline: Some businesses already have agreements with trade schools or universities. Now would be the best time to leverage connections there to develop an in-depth internship program. This arrangement could reduce the costs of onboarding, as the school may help with those. Additionally, it makes it easier to spot talent as soon as they get out into the world of work, giving the company an edge in snapping up talent.

Revisit Work Culture: Most potential employees no longer look that closely at benefits or think about becoming corporate long-termers. Instead, they look at the culture of the company they're joining. Corporate culture can go a long way towards making or breaking a company's competitiveness in the hiring pool. Built-In mentions that over 40 percent of job seekers cite company culture as a reason for deciding to choose a company to work with.

Decentralize the Hiring Process: Instead of using the company as a flagship for hiring, establishing a separate brand aside from the company specifically for scouting talent might be worth it. It may also help to manage the costs of locating and onboarding new talent.

What This Means for Clients

As accountants, we understand that many directors and CEOs focus on the bottom line without much thought for how it gets there. It's up to us to reinforce how and why their hiring practices need to be revamped. The amount of time and money a company loses from hiring bad talent adds up over time. Companies need to take stock of what they can do to ease their employee happiness and narrow the talent gaps that keep opening within the organization. These tips may go a long way towards helping them get hold of the best talent on the market and keep them interested.

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