Dive Brief:
- As the U.S. labor market remains tight, employers are likely to continue facing gaps between their hiring intentions and available workers, according to a Jan. 25 report from professional services consulting firm RSM U.S. Nearly all (97%) of the 403 senior execs from middle market businesses (MMB) who responded to an October 2023 survey said the lack of available qualified workers will be problematic in 2024; 66% anticipate some difficulty staffing open positions, the report found.
- To address these challenges and help sustain productivity amid fluctuating market conditions, businesses need to follow a comprehensive strategy that encompasses “digital transformation, compensation and benefits, and human capital management,” RSM stated in a press release. MMB execs recognize this: The survey revealed they’re deploying the three-pronged approach, starting with technology. Almost 6 in 10 of the respondents said they plan to or are considering investing in automation or IT in the next year, with 85% of those aiming to increase employee efficiency or productivity. Only 12% said they intend to use automation or IT as a substitute for labor, “likely because much of the work that can be replaced by technology already has,” RSM noted.
- MMB execs are also using a variety of recruitment and retention tactics to bolster human capital management, with compensation and benefits topping the list, according to the report, which RSM presented in partnership with the U.S. Chamber of Commerce. Roughly 52% of the survey’s respondents said they increased compensation in Q3 2023, and 68% expect to do so in the next six months. Execs anticipate offering an average wage increase of 5.5%, the survey found.
Dive Insight:
In 2024, the economy will be defined by a shrinking labor force, and this will “remain a key challenge for businesses for the foreseeable future,” Curtis Dubay, the Chamber’s chief economist, noted in the release. Businesses of all sizes and sectors are adapting by investing in “new technologies like automation and AI, as well as upskilling and reskilling,” Dubay said.
Companies are also “embracing flexibility, and filling open roles by hiring overlooked talent such as veterans and military spouses, formerly incarcerated individuals, individuals with disabilities and retirees seeking to re-enter the workforce,” the economist added.
The new year delivered a little more certainty for employers on the talent front, according to a recruiting expert. Fears of a recession — which led some companies to pause hiring in 2023 — are waning, the expert recently noted, forecasting that Q1 2024 may see a bit of an uptick. The latest Job Openings and Labor Turnover (JOLT) Survey from the U.S. Department of Labor’s Bureau of Labor Statistics, released Jan. 30, suggests that might be the case.
A tight labor market gives employees and job candidates bargaining power, according to one chief people officer — and job seekers have become more discriminating about where they submit their applications, a December Workforce Report from iCIMS found. Job seekers are looking for workplaces that reflect their values and respect autonomy and flexibility, the CPO said. They’re also doing their due diligence and scouring career sites before applying, according to the iCIMS report.
Job seekers prioritizing flexibility might find their match: 47% of the MMB execs who responded to the RSM survey said they offer flexible scheduling. Additionally, 60% said flexible work models positively affected their organization’s culture, up from 39% a year ago.
The data also indicated companies have been able to successfully mitigate the negative affects of remote work, with execs reporting that mental health issues of remote workers decreased from 64% to 47%, RSM said. Although fewer companies reported having employees in remote or hybrid arrangements, down to 27% this year from 36% last year, the current segment reflects a normalization, RSM added.
