With the eventful first months of 2021 behind us, the world of work carefully starts to emerge from the pandemic. What methods will be left behind as we reopen and what are the lessons we bring forward into the rest of 2021? We have identified 9 trends in the US market that will impact decision making across organizations in the US.
As the US economy emerges from the pandemic, the US GDP is estimated to grow by 8%. A contrast to the 2-3% average we have seen in the last 15 years. Predicting progress and optimism merely a year after a labor-market catastrophe might seem early, but the US is setting the example of how rapidly jobs can return against the backdrop of increasing vaccination rates.
In the early spring of 2020, the unemployment rate in the US came close to 15%. Today, it is standing at 6%. Even in Europe, currently combatting a third wave of infections, the labor market is beating forecasts as the economy starts to adapt to our new way of life and virus-containment measures. Moreover, the public perceptions of how easy it is to find a job have reached levels that previously took over a decade to recover after the financial crisis.
1. Competing for talent
The projected growth, the recovered confidence and a carefully optimistic market are likely to lead to a previously unseen competition for talent. Recruiters are likely to notice this trend first, particularly in blue-collar jobs and shift worker positions. A continued rise in demand for delivery service workers, the return of retail, hospitality, restaurants and supply chains benefiting from unspent lockdown savings and stimulus checks are all competing for the same pool of talent.
The first response to a competitive race for talent is an increase in wages to attract people into an organization. While some companies manage to respond with one-off incentives such as sign-on bonuses, others have no choice but to raise their remuneration. On average, workers who switch jobs can now expect a 13% pay rise, while many employers are paying their existing employees 4 to 7% more than they did a year ago.
Despite the willingness to pay more, nearly half of all American businesses have reported finding it challenging to fill vacancies. Whether there is a reluctance to return to work because of feared health risks or generous unemployment insurances, salaries may have further to rise in 2021.
2. Increasing hiring costs
Regardless of industry and market, business leaders can expect an increase in hiring costs following the soaring competition for talent. Increasing hiring costs entails more than needing to make more expensive offers to candidates to compete. It can also be attributed to the conversion rates of job advertisements in times when job supply outweighs job demand, causing talent to look at more job advertisements while applying to less. This, in its turn, means lower conversion rates, higher costs per click and more expensive advert placements. As a result, LinkedIn, ZipRecruiter and Indeed will become more expensive, and the cost per applicant for an organization is projected to rise as far as 10-30%.
3. Continued importance of employer branding
One way in which an organization can respond to increasing wages and costs is to make sure it positions itself as the employer of choice within its market or industry. Leaders in the recruitment industry agree that employer branding has a significant impact on hiring and will continue to be an increasing area of focus. More than 90% of candidates seek out at least one resource to evaluate an employer’s brand before applying.
Employer branding can help reduce costs per hire and time to fill in a competitive talent market while improving engagement and employee retention. The pandemic has shifted the mindset of many employees and applicants, causing organizations to have to answer questions about wellbeing, their handling of the pandemic, diversity & inclusion goals, stance on societal issues and flexible working options.
A strong employer brand starts internally by nurturing an organization’s internal culture. In a year of uncertainty and social unrest, one in five Americans have left a job due to poor company culture. 77% of applicants consider a company’s culture before applying and more than half of them consider the culture more important than salary when it comes to job satisfaction. Find out more about employer branding and how it can support your recruitment process here.
4. A strategic drive towards DE&I
With company culture, Diversity, Equity and Inclusion (DE&I) are key and will be a continuing area of focus for organizations in the US. Applicants are making decisions based on their assessment of an organization’s commitment to DE&I, as 70% of them have reported wanting to work for a company that demonstrates this.
Against the backdrop of 2020’s social movements, an increasing number of North American companies and executives in the US use or are considering using DE&I metrics in their incentive plans to drive and measure progress towards their goals. Click here to read how DE&I metrics can help your strategy.
The role of the recruiter in attaining these goals will grow. Not only are they the first point of entry for diverse candidates, but they also advise hiring managers they support, build diverse interview panels and drive data-driven reporting against diversity goals.
Additionally, organizations will invest in the right recruitment tools to help build diverse teams. One of these latest tools is the programmatic job ad: buying, placing, and optimising a job advertisement by software rather than people. A software-only approach prevents people from bringing their own beliefs of preferences into the hiring process or the placement of their advertisements. So far, programmatic job advertisements have shown 23% more candidates from underrepresented groups and 7% more women than the US online benchmark.
5. Focus on wellbeing
Apart from a commitment to DE&I, applicants also look for employers who recognize the need for a work environment that prioritizes wellbeing. Over the pandemic, the mental health conversation in hiring became more common. In 2020, organizations increased wellbeing offerings and increased internal communications and social interactions to prevent a social disconnect.
Many organizations in the US are currently making the shift to a holistic view on wellbeing rather than focusing on cost reduction, resources and insurance costs alone. Especially the younger generation that is about to enter the workforce is aware of societal issues and has the drive to be part of solutions. Happiness at work being limited to the time spent in the office is over as work-life balance changes with remote working. Wellbeing is increasingly considered to be the opportunity to give back, having a clear purpose and mission as drivers for inspiration and energy at work.
6. Internal mobility
Since the start of the pandemic, internal mobility has increased by nearly 20%. Companies will continue to catalogue employees’ current skills and tie internal opportunities to relevant L&D sources that will help employees fill any qualification gaps. Internal mobility programs can lower recruitment budgets, but when done right also increase budgets for learning, development and resources. This can change the role of the recruitment function, aligned it more closely to HR to lead and build internal mobility programs and development initiatives.
Another change for recruitment is the way they assess potential candidates. With more internal mobility opportunities, many organizations will move away from static roles in departments and shift to agile project-based and cross-functional structures, allowing employees to shift to new projects if business needs change. With this, an applicant’s potential and transferable skills like adaptability and problem-solving increase in importance and benefit an organization. According to a LinkedIn survey of over 1500 talent professionals, the number 1 skill for recruiters to embrace in 2021 is adaptability.
7. Leadership changes
With an increased focus on internal mobility, wellbeing, DE&I, comes a change in leadership styles. Alongside the debilitating effects on work-life balance, the pandemic has taught us that flexibility and empathy are essential for employee retention. More than ever, board rooms have focused on mental, physical, financial and emotional health in relation to work performance.
Regardless of industry, soft skills are growing in value. Talent that can lead to change and work and manage a team with flexibility and adaptability is valuable to an organization in unpredictable times. As a result, applicants with technical knowledge combined with management, leadership and project management are overtaking others in demand.
Taking center stage in this change in leadership is the millennial generation, who are now ready to take on management positions as the baby boomers begin to enter retirement. Millennials bring digital knowledge and experience, but simultaneously exhibit a practical understanding of how to apply their knowledge to bring about change. Currently, 91% of millennials say they seek leadership roles and 83% of them would prefer to work in an organization with fewer managerial layers.
8. Social media newcomers
Even before the pandemic, the use of social media in recruitment was common practice. Almost 85% of American companies say they use it with success. However, the realm of social media changes quickly, as do the platforms that recruitment functions need to adapt to. Soon, advertising on LinkedIn may no longer be enough.
The world of social media is moving away from the traditional resume and shifting towards a more creative and personal way of pitching one’s work experience. For example, the video platform TikTok is now testing a tool that can help brands recruit new employees. The tool is mainly targeted towards the Gen-Z audience, allowing them to post a TikTok video resume that can look much like an elevator pitch of work experience summary.
This is not the only way in which TikTok is transforming the applicant experience. GenZ’ers also use TikTok to share career advice in short videos, ranging from application advice to interview tips and negotiation skills. The hashtag #careeradvice gained momentum in the first half of 2021, totaling more than 80 million views.
Another newcomer is the platform Clubhouse, an invitation-only social networking app that aligns well with the increasing interest in audio content such as podcasts and webinars. Clubhouse allows users to get together in moderated rooms to listen to selected speakers, live and unrecorded.
Clubhouse is rumored to be a trend to keep an eye on for the business-to-business industry and a new way to source candidates based on their profile, contributions, and attendance in Clubhouse, for example, in exclusive business events or live virtual recruitment fairs.
For the remainder of 2021, organizations will have to adjust their sourcing and hiring methods to stay viable in a competitive market, meaning investments in technology and automation. For example, traditional hiring processes can be upgraded by applying programmatic job advertisements, predictive analysis, automatization of processes like DocuSign and applicant tracker systems (ATS).
AI-powered chatbots are also becoming commonplace as organizations start to use them for the first phases of applicant screening and look for ways to make the application process easier to improve the candidate experience. Many applications are submitted through mobile devices, a 20% increase from 2019 to 2020.
Related to AI is Natural Language Processing (NLP), referring to the ability of software to understand spoken and written language. NLP can help identify candidates quickly, without the need for lengthy manual screening processes. NLP also has the potential to be combined with voice recognition to facilitate faster review and analysis of job interviews and equip chatbots with personalized responses.
In an everchanging and competitive landscape, an RPO partner can help your business navigate and advise your best route to market to find your most important asset – people. If you have any questions or would like to find out more, get in touch.