2021 Talent Shortage: Is It Affecting Your Workforce?

Small business owners with open positions may find that jobs are especially hard to fill these days. That’s in part because organizations — including small businesses — are currently facing an acute talent shortage. At the end of April, there were over 9 million open jobs in the United States, which was a record high.

The shortage is driven by a number of factors — including baby boomers aging out of the workforce — and it’s gotten even worse during the COVID-19 pandemic. Now, there are more open jobs than there were before the pandemic, plus fewer people in the workforce. Many workers have opted out due to health and safety concerns about COVID-19 or to stay home with children who are in virtual school.

Other workers who got a taste for more flexible work situations during the pandemic are realizing they want permanent flexibility. They’re putting well-being first and aren’t willing to accept employment without flexibility. In 1 survey, 8 in 10 respondents said they wanted an improved work/life balance going forward.

The global talent shortage

Global talent shortages are at a 15-year high, according to a 2021 study by ManpowerGroup, with more than 1 in 3 U.S. employers noting they’re having a hard time filling jobs. CEOS are concerned. One study showed that 80% of CEOS are worried about accessing the skills they need to run their business.

“The talent shortage is unprecedented and it’s hitting everyone,” says Patricia Carl, president of professional training and coaching company Highland Performance Solutions and a former chief HR officer. “Folks want something different from their work life, and they’re willing to make a change to get that. It’s all about, how does this role fit into my life and not the other way around.”

For small business owners, now is the time to fully understand the talent shortage, especially since it isn’t expected to disappear anytime soon. A recent report from Korn Ferry finds that by 2030, more than 85 million jobs might go unfilled with not enough skilled people to take them. Once you better understand why it’s happening, then you can take concrete steps to both attract and retain the best workers.

“Folks want something different from their work life, and they’re willing to make a change to get that. It’s all about, how does this role fit into my life and not the other way around.”

What does “talent shortage” mean?

A talent shortage means there currently aren’t enough skilled workers available to fill the number of open jobs. Because of this, companies are competing for talent more than ever and they’re finding they have to pay more for new talent — while also offering more money and benefits to existing talent to prevent them from leaving.

Why is there a talent shortage?

Multiple factors figure into the current talent shortage. For one, baby boomers are retiring and the number of skilled, younger workers that will replace them just isn’t big enough or growing at a fast enough clip to keep up with demand. Around 10,000 baby boomers turn 65 every day and that’s a trend that will continue for the next 9 years.

The COVID-19 pandemic has only added to demand. Pent-up demand to finish projects delayed during COVID has increased the need for skilled workers. That’s especially true for areas related to digital transformation, which has seen a renewed focus. At the same time, workers aren’t willing to sacrifice as much as they were before in terms of lifestyle and health and well-being. They’re choosier about where they’ll work.

Is there a global talent shortage?

Yes. The talent shortage is affecting businesses around the globe.

It’s been especially hard for countries like Japan and some European nations that have also struggled for decades with low birth rates. By 2030, Russia could come up short some 6 million workers while China might see a shortage double that, according to a new report on the “Future of Work.”  Japan and Brazil could see shortages of up to 18 million skilled workers, while the U.S. may fall short by 6 million.

The U.S. could lose some $162 billion worth of revenues each year unless it’s able to find more high-tech workers.

These shortages could have major implications; for example, eroding the U.S.’s position as a technology leader. The U.S. could lose some $162 billion worth of revenues each year unless it’s able to find more high-tech workers, and India — which could have a surplus of highly skilled workers — could take its place as the next tech leader.

How do you deal with a lack of talent?

Small businesses may not be able to compete with the inflated salaries that many larger organizations are now offering. But there’s still plenty you can do to both attract and keep skilled workers. Follow these 7 ways how.

Increase flexibility 

Offer employees the option of job splitting or sharing. Let them work flexible schedules when possible, including working from home either full time or on certain days of the week. This is especially important for working parents during the pandemic. “Kids are back to school in many areas, but none of us know if that’s going to stick,” Carl says. “Things are very tenuous and we’re not out of the woods yet. Employers have to be very willing to allow remote work and manage to deliverables and outputs and not whether someone’s in front of their computer from 8 to 5.”

Help with transportation 

For some workers, transportation costs can be prohibitive, including insurance, gas, and tolls. Consider offering employees reduced or free public transportation passes or free car service rides. Another option, if feasible, could be to open a satellite location to make the office more accessible to more people.

Assist with childcare costs 

Many parents of young children struggle to balance their work and home schedules. Helping out with childcare can be a very attractive perk for these employees. As an employer, you might partner with a daycare provider or an after school program and offer your workers discounted rates.

Add to professional development offerings 

More and more workers want a job that’s connected to a broader purpose and one in which they’re constantly growing and learning. Consider starting a mentorship program, offering funds for employees’ professional development and continued education, or connecting workers with and paying for an executive coach.

Reach out to and support older workers 

Older workers are underemployed and they were impacted more by pandemic-related layoffs. Many offer vast knowledge and experience, and in some cases they’re even more productive than younger workers. Keep this in mind as you’re sifting through resumes for open positions.

Accommodate other cultures 

Another way to widen your applicant pool is to make sure your workplace is friendly toward non-English speakers. You might hire a bilingual supervisor, create signs in multiple languages, or invest in translation software. As an extra perk, pay for workers to take English as a Second Language classes.

Enhance COVID-19 safety 

Many workers are hesitant to return to workplaces they’re concerned may not have adequate COVID-19 mitigation measures in place. There are plenty companies can do to enhance safety when it comes to the pandemic, including improving ventilation, putting employees on a rotating schedule, and requiring masks.

How long is the talent shortage expected to last?

The talent shortage will eventually improve as demand weakens and companies push past the pent up demand. But experts don’t anticipate the shortage abating any time soon as baby boomers continue to retire.

“It will continue to ebb and flow,” Carl says. “But what may not go back to pre-COVID days is the demand for flexibility, empathy, and support.” That’s why it’s so important to act now and make changes that will attract and keep high-skilled, talented employees.

Carl adds that if workers have the choice between meaningful, lower-paying work that’s flexible with a supportive leader or another less flexible job that pays more, most will take the flexible option. And that’s become exacerbated with COVID.

“It’s quality of life that people are after,” she says. “Employers have to be willing to lean in to creating a meaningful connection with their employees and letting them bring their whole selves to the workplace. That’s how you attract and retain talent.”