Trend #5: Talent Attraction and Retention in a Candidate-Driven Market

2023 4th Quarter Update

The unemployment rate was 3.9% in October, a slight increase since August (U.S. Bureau of Labor Statistics, 2023). Influenced by the recent strikes across industries (The Associated Press, 2023), we will likely see the year ending with an unemployment rate in the 4.0% range as forecasted by The Conference Board.  

The Consumer Price Index remained unchanged in October after an increase in September (BLS, 2023). However, current events, such as worker strikes in the manufacturing industry and increases in employment costs (BLS, 2023), could be fueled by the economic inflation from several months ago. These macroeconomic factors will continue to influence availability in the labor market, especially for hourly workers that are in high-demand (Rahman, 2022). 

For salaried population, return-to-work policy has been implemented in many large companies. The challenge is in the enforcement and compliance with this mandate. One company factored return-to-office compliance in employees’ promotion decision (Palmer, 2023). Beyond the need to foster strong team bonding, whether employees are returning to office impacts the commercial livelihood of a city and people’s work-life styles (Kelly, 2023).

On the topic of four-day workweek, one organization is accelerating the adaption of this new work arrangement. The public school system has considered similar arrangements for students. By mid-year this year, twenty-four states have at least one school district using a four-day school week schedule (National Conference of State Legislatures, 2023). The change of school schedules will likely impact how people choose their employers.  

Specific to the future of talent attraction and recruitment, a LinkedIn report made some predictions based on a survey of recruiting professionals. Two of the most impactful and immediate ones in my opinion are that (1) employers will hire more contract workers as a hedge against uncertainty and (2) Generative AI will let recruiters focus on the human part of hiring.

In addition, a Harvard Business Review article also offered some bold ideas, such as hosting open hackathons to assess talent, leveraging tech-based and AI-based talent assessments, tapping into “hidden” populations, such as the newly retired and previously incarcerated individuals, and talent-sharing with other companies. 

Rounding up the year, we started with a lot of uncertainties in the macro environment: “the great resignation,” ongoing layoffs, slowdown of the economy, inflation, and return-to-office mandates. The labor market steadily stabilized toward mid-year. Throughout the year, HR leaders and consultants emphasized the need to strategize around competitive pay and benefits, internal mobility, remote work, and employer branding campaigns. In 2024, we should see advances in these topics, particularly, progress in the four-day workweek initiative and the leverage of generative AI in hiring practices

2023 3rd Quarter Update

The unemployment rate remained relatively stable at 3.8% despite the small increase of 0.3 percentage points between July and August (U.S. Bureau of Labor Statistics, 2023). A forecast from The Conference Board shows that we could be ending the year with unemployment rates in the 4% range (The Conference Board, 2022), higher than the monthly unemployment rates in 2022 in general.

With a minor but steady growth in job openings and wage, economists are no longer concerned about a possible recession (DePillis, 2023). In general, the labor market seems to be slowing based on trends observed in June 2023, but are staying resilient overall (Maurer, 2023). This means that employers will continue to face competitions in talent.

Return-to-office continues to be a highly discussed topic. While many large companies have asked employees to come into the office a few days a week, many employees are not sticking to the 9am-to-5pm tradition. Rather, the new pattern is to work partly at the office and partly at home in a given day depending on needs such as in-person meetings and team building activities (Bhattarai, 2023). While employers prefer employees to spend more time at the office, it is unclear how they will enforce the rules and how setting strict rules will impact employee retention and talent attraction.

We are seeing more progress being made toward the four-day workweek option. More employers and employees are ready to try a four-day workweek option. Some states are also exploring policies related to a reduced-hour workweek (Gurchiek, 2023). Although a four-day workweek could be an effective strategy in talent attraction, employers are still worried about how this will impact business operations and growth (Laker, 2023).

Internal mobility hasn’t been utilized as much as it should have been. Employees often have concerns about how role explorations will be received by their current manager, especially after an unsuccessful role transfer. On the other hand, negotiations between managers over a team member can also be uncomfortable (Quen, 2023). Hiring managers may also have doubts about reasons for an internal candidate to switch roles and may prefer to bring outside knowledge. These blockers will continue to impede progress on internal mobility unless HR professionals develop tactics to address them.

Staying ahead of the trends, strategies such as offering in-office flexibility, a four-day workweek option, and well-streamlined internal mobility practices can distinguish employers from their talent competitors. As HR professionals, the impacts that we make in business operations and industry labor policies will further demonstrate our importance to organizations and to the greater society.

2023 2nd Quarter Update

In the April and May timeframe, we saw a small increase in job openings and unemployment rate while the hiring rate remained relatively unchanged (U.S. Bureau of Labor Statistics; The White House). Despite news of layoffs, the Bureau saw a minor drop in the rate of layoffs and discharges on a national scale (U.S. Bureau of Labor Statistics). It is possible that new job opportunities are offsetting job losses. For example, without digging into details of job types, the 283 thousand average job gains per month (The White House) may be offsetting the 207 thousand job losses in the tech industry (Layoffs.fyi). On the global scale, LinkedIn reported a decrease in hiring rate when compared with the 2022 baseline. Overall, we can summarize the talent market in Q2 2023 as “not as bad as a pessimistic person would think, but definitely not blooming.”

Return-to-office and internal mobility stood out as the two key topics since my last update. In Q2 2023, the number of companies with a hybrid arrangement has edged up while both the fully-in-office and fully-remote model have decreased (Semuels, 2023). Employers seem to have found their preference, but some have received push-backs due to reasons such as relocation needs and reduced flexibility (Mayer, 2023). We expect to see more companies adopting the hybrid model given the demand from workers.

Internal mobility continues to be one of the top strategies. When executed well, it could improve retention and engagement, lower recruitment costs, and encourage innovation (Timmes, 2023). Different types of internal mobility, such as lateral moves, job rotations, and job swaps, increase variety in jobs and roles for employees without employers having to pay the cost of hiring. Yet, this strategy is often underutilized (Maurer, 2022). One noteworthy finding about internal mobility is that people leaders are twice as likely to move internally as individual contributors, indicating that there may be differences in the commitment to or availability of opportunities at organizations across job types (LinkedIn).

The World Economic Forum reported that employers could be facing a sizable labor structure churn in the next five years, further highlighting the need in upskilling; it is predicted that the creation of new jobs may not be enough to offset the jobs that will be eliminated. As job crafting (Dutton & Wrzesniewski, 2020) and “self-authorship” of career paths (George, 2022) become prevalent in the post-pandemic era, it is critical that companies build and maintain a strong employer brand and address worker demands such as flexibility and wellness in their hiring and retention practices.

2023 1st Quarter Update

Several questions came to my mind as I think about talent attraction and retention in Q1 2023. Is the market still a “candidate-driven” market, given the recent and ongoing layoffs at large companies? Is the “great resignation” tapering off now that we are better adapted to the COVID pandemic?

For the most part, the number of hires and total separations remained relatively stable as of January 2023 (Bureau of Labor Statistics, 2023). Many (e.g., DePillis, 2023; Tarki, 2023) were optimistic about the U.S. job market despite concerns with layoffs and inflation. An article in The Wall Street Journal said that staffing in one sector (e.g., hospitality and transportation) could be making up for job losses in others. With a low unemployment rate and new jobs being added, U.S. employers are still facing fierce competition in attracting and retaining talent (see Steemers, 2023; Dennison, 2023).

Some of the most talked about trends are policies and strategies around competitive pay, the possibility of a four-day work week, remote and hybrid work, upskilling, internal mobility, and employee experience (see resources from Indeed and Glassdoor, Gartner, Kornferry, and Mercer). Those from the academics have also talked about opportunities around corporate reputation and employer branding. More specifically, they discussed how an inclusive and considerate workplace can offer an advantage in the talent attraction and retention space.

We are seeing news of additional layoffs, slowdown of economy, and bank system failing in the last month of Q1 2023. This leaves us with a lot of uncertainty about the job market and talent practices. We may see people holding on to their current jobs. We may see employers being more selective over talent. We may see prosperity being shifted from one industry to another industry. As we move into 2023, we will learn more about these trends and see where they take us in the world of work.