ADP® Meeting of the Minds 2022 brought business and talent leaders together to highlight last year’s successes and strategize on tomorrow’s opportunities. In my discussions with numerous business leaders, I saw two themes repeatedly raised at this event — macroeconomics and people challenges. Let’s take a look at both of these items individually and determine their impact on talent acquisition strategies for the remainder of 2022.
What Are the Most Pressing Macroeconomics Challenges for Talent Acquisition?
On the macroeconomic front, most discussions revolved around tight labor supply and a disbelief over candidate salary requests. It doesn’t take a Ph.D. in economics to understand that in this tight labor market, candidates can, and are, requesting what feels like a king’s ransom.
So how did we get here? For the past six months, Fed-reported job openings are at or near all-time highs, while labor force participation rates have yet to recover to pre-Covid levels. This means the demand for labor has never been greater and the supply of labor is below where it was just a couple years ago. Lower labor force participation isn’t solely a Covid-driven event as labor force participation has steadily declined over the past 20 years.
The imbalance in the supply and demand for labor has led to larger salary requests and talent leaders are asking, “should I pay a king’s ransom to hire?”. Given the past 20, 30, 40 years of sanguine wage increases, it’s understandable that a 20% wage increase feels high. However, it’s important to understand how inflation changes the math on the attractiveness of a 10% salary bump.
Price inflation in February 2022 was running at nearly 8% — 7.9% to be precise. This means that a dollar in February 2021 had the purchasing power of just $0.92 in 2022. Doing some easy math, let’s say a candidate is looking for a 10% increase in salary to make a move. Not accounting for inflation, a 10% salary bump provides only a 2% increase in their real income. When accounting for inflation, that candidate may now be asking for a 18% increase over what they were making in 2021.
While a 20% increase may feel like a large amount to employers, from the candidate’s perspective, it’s a little over a 10% bump in their purchasing power. So, what does this mean to your business? Should you pay up for new talent? If inflation continues to run high, and your business has the ability to adjust prices, there is less risk in meeting these wage demands. Why? Because inflation will erode the power of these wage increases. Second, your business will pass along the increased labor costs.
The next question I am repeatedly asked is, “will inflation continue, or will I be caught holding a bag of expensive salary increases?” Let me start by saying that I can’t see the future, nor do I own a the proverbial crystal ball. That said, zooming out and looking at what’s transpiring across many sectors, general inflation is noticeable across many segments of the economy. Whether you focus on labor or raw materials or sectors like housing, food, services, apparel, and transportation, price increases are occurring pretty much everywhere right now.
Furthermore, these price increases are expected to continue. The March London-based ICE Benchmark Administration (IBA) found expected one year price inflation to top 5%, compared to 3.5% in February.
Inflation and consumer expectations are a big ship, and it takes time to turn big ships. With prices ratcheting up across many areas of the economy, coupled with expectations that tomorrow’s prices will be higher, I believe inflation will be with us for the short-term, and, therefore, moderate the impact of today’s wage increases.
Next, What Are the Primary People Challenges in Talent Acquisition?
Switching gears, the second most discussed topic at the Meeting of the Minds event was focused on people. People challenges came in one of two flavors: inexperienced hiring managers and a lack of recruiters.
While business news highlights the 3 to 4% turnover rate, savvy recruiters and HR professionals focus on how newly minted managers impact the ability to attract new talent. It’s fantastic that turnover has created the opportunity for many to take on new roles as hiring managers. However, many new managers lack experience in hiring.
New managers can create a DE&I nightmare from a lack of awareness over legal boundaries during innocent conversations about things like kids, marital status, gender, race, religion, and other areas. Make sure your hiring managers are aware of off-limit topics, run your job descriptions through tools like Jobvite’s Job Description Grader, and have access to tools such as Bias Blocker to protect both new managers and your business.
The 2022 Job Seeker Nation Report found that while money is the top reason candidates look for new jobs, improving the candidate experience and increasing the speed to offer are perhaps the best levers recruiters have in appealing to candidates in a tight labor market.
It’s critical that new hiring managers understand the hiring process and expectations on timelines. Don’t forget that new managers may also present an opportunity to identify legacy, often unnecessary steps or lend insight into job requirements. Finally, with some candidates leaving new jobs in the first 90 days, according to the Job Seeker Nation Report, it is more important than ever to make sure new managers understand how to effectively onboard new hires.
This year, it is also important to recognize recruiters are just as much the hunted as the hunter. This means most talent and HR organizations are faced with:
- Doing more with less
- Focusing on ways to improve recruiter experiences alongside candidate experiences
- Struggling to attract enough talent and keeping their existing talent
Talent organizations recognize that success depends on doing more with less. And successful organizations are doubling down on automation and AI to add speed to the process and improve recruiter experience. Specifically, we see recruiters gravitating toward tools like Intelligent Messaging, automated scheduling, Zero-Click Intelligent Sourcing, and career site chatbots that improve both recruiter and candidate experiences.
Focus On What You Can Control and Find Out Where to Improve
In summary, I would encourage talent teams to control what they can. First, don’t be consumed with predicting what tomorrow’s macroeconomic picture will look like. Focus on what it will take to succeed in today’s environment and have a contingency plan if things change.
Second, ask yourself how can your organization improve recruiter, hiring manager, and candidate experiences? I would encourage every organization to complete the free, online Evolve Talent Acquisition Framework Assessment. It takes just 10 minutes and will help you assess, prioritize, and take action to optimize your talent acquisition efforts. Because knowing where your organization can improve experiences is the first step in getting better.
Looking for more information on how talent teams are transforming the recruiting experience? Take time to watch our latest webinar on The Talent Acquisition Experience Trifecta to learn how you can prioritize the candidate, recruiter, and hiring manager experience. Or subscribe to the Jobvite Blog and Resource Library for the latest in recruiting technology and strategy.