- Most companies face headwinds in hiring and retaining workers that they expect will persist into next year, according to a Willis Towers Watson (WTW) survey that underscores the strains on employers from a pandemic-induced labor shortage.
Nearly three-out-of-four employers (73%) have trouble attracting employees, an increase from 26% last year and 56% during the first six months of this year, according to the Aug. 4-9 survey of 380 U.S. and Canadian companies. Three-out-of-five employers have a hard time retaining workers, an increase from 15% last year.
“Definitely, there is a continuing war for talent,” according to Lesli Jennings, senior director of talent management and organizational alignment at WTW. “We do not see this letting up anytime soon.”
CFOs and their C-suite colleagues face one of the harshest labor shortages in decades. The number of U.S. job openings rose to a record high of 10.1 million at the end of June, according to an Aug. 9 report by the U.S. Bureau of Labor Statistics tracking information dating to 2000.
Jobs have gone unfilled because of fears of the coronavirus, the appeal of comparatively generous unemployment benefits and the decision by some parents to stop working during a lockdown in order to care for their children, according to government and private-sector economists.
The Biden administration plans to allow emergency unemployment insurance to expire in many states on Sept. 6. Still, some workers may not want to rejoin the labor force because of the spread of the Delta variant of the coronavirus.
The obstacles to hiring and retention “vary by position, career level and industry,” WTW said. For example, the appeal of unemployment benefits is the biggest impediment for restaurant, hospitality, warehouse and distribution workers, WTW said.
In contrast, “digital employees” have expectations for higher wages, WTW said.
“Those who are in the labor market are holding out for higher wages and oftentimes getting them,” Jennings said.
Some companies have expanded their geographic footprints with “work-from-anywhere” policies that have sharpened competition to hire and retain managers and professionals in some regions, WTW said.
In an effort to attract and hold on to workers, 30% of companies say they will increase their budgets for salary increases for next year, with 41% citing stronger financial results, WTW said. Many firms have sought to improve their staffing prospects by starting or expanding diversity, equity and inclusion programs, Jennings said.
To increase hiring, 43% of companies say they plan or will consider raising starting salaries, improving health and wellbeing benefits (36%) or increasing workplace flexibility (33%).
In order to retain workers, 49% of companies say they are planning or considering making their compensation more competitive, WTW said.
“There are longer term consequences of some of these short-term levers that organizations are pulling,” Jennings said.
“CFOs have to be very careful about the financial decisions we’re making now,” she said. “If these are temporary and we’re moving quickly, we need to be very careful about what the longer term implications will be.”