How to attract and retain employees in a shifting job market

Five ways to stay ahead of the curve as the economy recovers and businesses compete for top talent in a more flexible job market.

By Principal®

July 14, 2021

Quick takeaways

Even if monthly jobs numbers fluctuate, a tighter labor market is the likely long trend.
Growing businesses may not want to hesitate to hire because they may be only busier and in more need of workers a year from now.
Compensation and culture are among the fundamental factors that can give you the hiring edge.

Ready to grow your business? Think ahead about how to better recruit and retain employees as the economy regains momentum.

Because the competition for top talent is likely to intensify.

Employment fluctuates among a long-term ‘upward trend’

The unemployment rate in the last year has more than halved, from 15 percent to about 6 percent. Vaccines are spreading. One popular online employment platform’s job postings have surpassed pre-pandemic levels by about 5 million. And with the rise of hybrid work, many professionals roam the map for a broader array of remote jobs.

Even so, the labor market can seem fickle.

In April of 2021, a record 44 percent of small business owners were unable to fill jobs—a metric that reflects the scramble to find employees.

But then April’s report from the Bureau of Labor Statistics tallied “only” 266,000 new jobs—normally a large number but 800,000 below expectations in what was the biggest shortfall since 1998, triggering widespread reassessment of the economic recovery.

What can you take away from the dizzying numbers? The consensus seems to be that while the pandemic’s historic challenges are hardly finished, a tighter and more competitive labor market remains likely in the long term. Seema Shah, chief strategist for Principal^® Global Investors, considers the April shortfall “an anomaly in a generally positive upward trend.”

Stay focused on the big picture as you optimize your business for growth.

Attract employees and keep them happy

Though you may be reluctant to hire in the face of conflicting short-term data, Mark West, national vice president of business solutions for Principal^®, says growing businesses may want to act sooner rather than later. “You may need to find time to hire and train or you’ll still be having the same conversation a year from now,” he says. “Your business will have grown even more, and you’ll only be busier.”

One way to focus on strategies that help your business compete in a hiring boom—whenever and however it arrives—is to remember five fundamentals, with just a few updated twists, West says.

Checklist: 5 factors that help businesses and employees stick together

Compensation: Some industries (such as skilled trades) may need to pay higher wages, while remote work may complicate compensation for employees with different regional costs of living. Owners of professional firms may want to offer incentive compensation sooner and to younger employees, West says. This helps them feel more like co-owners as they work their way toward partner status. “You want employees to be focused on your business growth, so they’re encouraged to make the right decisions to help get you there,” he says.
Benefits: More business owners are looking to employee benefits overall to improve recruitment and retention—65 percent of them in our latest Business Owner Insights survey. While retirement savings and health insurance tend to be the main benefit magnets for employees, West says, the last year has reminded us of the value of different types of employee protection (think life and disability insurance). “Virtually everybody knows of someone who passed away at a young age or has suffered a disability in the last year,” he says. “There’s a heightened awareness that we’re not invincible.”

Culture: Many workers shaken by the existential crisis of the pandemic now crave a greater sense of purpose from their jobs and employer. “People are making decisions from their heart,” says Peggy Shell, CEO and founder of Colorado recruiting firm Creative Alignments, a Principal client. A recent survey found that most unemployed adults (66 percent) have considered changing occupations. “They feel more empowered to leave a job or industry that doesn’t match their values,” she says. Meanwhile, interest in inclusive candidate pools (race, gender, culture) has increased tenfold in the last year among her business clients.
Individual fit: If you compromise too much on hiring the right employees for the right roles in a desperate rush to fill openings, you may compound problems with higher turnover.
Flexibility: “This one has grown exponentially,” West says. Today’s more global and virtual workplace tends to prioritize productivity over presenteeism, so flexibility is becoming standard for more roles. But don’t let employees forget that flexibility runs both ways—you may need them to work the occasional weekend, for instance—or you may sacrifice business productivity.

“Even with relatively high unemployment, the actual rate may be much lower for your industry,” Shell says. “This remains an employee-driven market, and it’s potentially harder than ever to find the right talent.”

What’s next?

Try our Principal^® Benefit Design Tool: See how your benefits stack up against other organizations of your size, industry, and region. Are you competitive?

Creative Alignments is not an affiliate of any company of the Principal Financial Group^®

The subject matter in this communication is educational only and provided with the understanding that Principal^® and its employees are not rendering legal, accounting, investment or tax advice. You should consult with appropriate counsel, financial professionals, and other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.

Principal Global Investors leads global asset management and is a member of the Principal Financial Group^®.

©2021 Principal Financial Services, Inc. Insurance products issued by Principal National Life Insurance Co (except in NY) and Principal Life Insurance Co. Plan administrative services offered by Principal Life. Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc. Securities offered through Principal Securities, Inc., 888-774-6267, member SIPC and/or independent broker/-dealers. Referenced companies are members of the Principal Financial Group^®, Des Moines, IA 50392.

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Read the original article on Principal.com here.

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