An update on the tough labor market

The majority of North American companies expect that their current struggles to hire and keep workers will linger into 2022. That’s the conclusion of a survey of 380 employers by Willis Towers Watson. In response, employers are implementing initiatives that include boosting salary budgets, increasing workplace flexibility, placing a greater focus on diversity, equity and inclusion, and enhancing the employee experience.

The survey, conducted from August 4 to August 9, found nearly three in four employers (73 percent) are having difficulty attracting employees. That’s nearly three times the number (26 percent) that reported difficulty last year — and up from the 56 percent that reported difficulty the first half of this year. Roughly the same percentage of employers (70 percent) expect the difficulty to persist in 2022.

Retaining employees is just as challenging. Six in 10 respondents (61 percent) are having a hard time keeping workers and also expect the problem to linger into next year. Only 15 percent of employers reported having difficulty retaining employees last year.

The survey found the catalysts creating these problems vary by position, career level and industry. Postponing their return to work and collecting unemployment is the most commonly cited driver of attraction and retention difficulties for hospitality and restaurant employees (72 percent) and warehouse and distribution employees (62 percent). High-wage expectations among digital employees are creating challenges for nearly half of respondents (48 percent). And over half cited work-from-anywhere policies as the main challenge for attracting and retaining managers (54 percent) and professionals (57 percent). Organizations with work-from-anywhere policies have been able to increase significantly their geographic area of recruitment, creating more competition for talent.

“Employers are in the middle of an intense war for talent that’s not likely to let up anytime soon,” said Adrienne Altman, managing director and North American head of Rewards, Willis Towers Watson. “The challenge of hiring and keeping employees has now spread from isolated industries and skill sets to most industries and workforce segments. To compete, it’s imperative for employers to take strategic actions and find ways to differentiate the value proposition they offer to current and prospective workers.”

Employers scrambling to offer more. One move that employers are making to help attract and retain employees is boosting salary increase budgets for 2022. Three in 10 respondents (30 percent) now say they will increase their budgets from earlier projections. Many are doing so due to tight labor market concerns (75 percent) and anticipated stronger financial results (41 percent).

Employers are also planning or considering other initiatives to help find workers. The most common actions are raising starting salaries (43 percent), improving the employee experience (39 percent), making changes to health and wellbeing benefits (36 percent), and increasing workplace flexibility (33 percent). To help retain employees, about half are planning or considering making market movement adjustments (49 percent) and giving larger raises (49 percent). About one-third (35 percent) are planning or considering changes to their health and wellbeing benefits. These percentages are in addition to those that have already taken action in these areas.

“Sign-on, recruiting and retention bonuses can help employers get the upper hand in the short term, but those initiatives are temporary,” said Lesli Jennings, senior director, Talent Management and Organizational Alignment, Willis Towers Watson. “If employers are serious about hiring workers with critical skills and keeping their top talent, they need to implement sustainable programs and policies that will enhance a powerful employee experience, reimagine career opportunities and flex to the needs of their increasingly diverse workforces. It’s an opportunity for a ‘great awakening’ on the employee experience.”

Source: Willis Towers Watson.

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