When it comes to finding and hiring the right people, the list of obstacles companies face seems to be growing every day. From high turnover rates and labor shortages to a persistent lack of employee engagement, hiring managers are contending with a wide range of forces that have conspired to make their jobs especially difficult. However, this unprecedented situation has also spurred action.
According to Criteria’s 2021 Hiring Benchmark Report, which is based on a survey of over 400 hiring professionals across a wide range of industries, companies have been taking a variety of steps to reorient their focus on more robust hiring and retention strategies.
In particular, organizations anticipate record spending on HR over the next year as people strategies become more of a board-level priority. Additionally, companies are revising their strategies to account for remote work.
From the tight labor market to the unmet demand for high-skill workers, economic conditions are far from ideal for hiring managers. Indeed, employers anticipate that their overall hiring volume will increase by 5.1% over the next year. A majority of companies (52%) also expect wage growth to be higher over the next 12 months than in past years.
The good news is that companies recognize how vital it is to increase their HR investments if they want to build a stronger workforce. The benchmarking report’s research found that hiring professionals in the United States expect their HR budgets to increase by 6.9% over the next year, a dramatic spike from last year.
Investments in certain HR goals are exploding. For instance, the proportion of companies planning to spend more on reducing employee turnover increased by 39%, a number that jumps to 49% for finding high-quality candidates and 71% for getting enough applicants.
We expect these investments to take a lot of forms. When it comes to reducing employee turnover, the results suggest that organizations are planning to increase investment in employee-engagement tools. And with the majority of companies expecting pay to grow faster this year, employers are likely to increase compensation in order to retain top talent.
For finding high-quality candidates, we can expect organizations to invest in better, more accurate employee-screening tools. And to increase the number of applicants, organizations may be more willing to hire external recruiters or expand their sourcing efforts into new areas. For example, 46% of companies are proactively sourcing candidates from minority groups through new sourcing channels.
These projected investments reflect several of the most pressing concerns companies have about talent acquisition and retention as we approach 2022. The investments are directly related to high levels of anxiety over workforce issues, but they will likely spur a reconsideration of people-management strategies over the long term. While fast-growth companies in dynamic fields like tech have long recognized the value of investments in HR, it’s clear that companies in a wider range of industries are making workforce development and management core priorities.
We’re well into the pandemic, and it’s clear that remote work is still integral to most companies’ operations: 60% of organizations say they’re either mostly remote or using a hybrid strategy. As employees continue to demand hybrid work arrangements and company leaders recognize that employees don’t have to be in the office five days per week, hybrid work will remain the norm for the foreseeable future.
However, this comes with a host of challenges. The report found that 69% of companies consider employee engagement difficult under a hybrid work structure, while 63% say the same about maintaining a healthy company culture.
These concerns are particularly troubling considering the fact that just 36% of employees say they’re engaged at work, while more than three-quarters consider a company’s culture before applying for a job. Additionally, 56% say that culture is more important than salary. One key cultural demand (especially among younger workers) is diversity, but we found that less than a quarter of companies say increasing diversity in the workplace is a top priority.
At a time when hiring and retaining employees is more demanding than it has been in years, companies have to embrace shifts in employee attitudes and expectations. Whether this means giving employees more autonomy or focusing on diversity and inclusion, organizations have to make decisions with the potential effects on culture and engagement in mind.
While the learning curve for all of these issues will continue to be steep, many companies have renewed their commitment to their people — a shift that will have dramatic implications for the strength of their workforces in the coming years.