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The Great Hiring Shortage of 2021

July 15th 2021,

What is it? How did it happen?

So… If you’re gainfully employed or an employer with a full staff, then you may be wondering what I’m talking about. What I’ve come to call “the great hiring shortage of 2021” is another negative thing to happen in a long line of fallout from the COVID-19 pandemic. Basically, we have a massive number of businesses either reopening or going back to normal operations all at once in conjunction with the additional stipend being offered for unemployment. I’ve received so much feedback from individuals who are unemployed that say they have never made this much money before and “Why would I go back to work just to make less?” This is having a huge impact on the delicate balance of our employment environment. It doesn’t seem to matter if workers were either furloughed or laid off, the company went out of business, or any other scenario that led to the individual to stop working. Businesses are finding it harder and harder to fill their desperately needed positions. I have contacts who work in the HR department of a large corporation who are not only reopening but expanding and they have been reporting much higher than average instances of applicants not returning phone calls, ghosting on scheduled interviews, and turning down offers of employment. So much so that we are starting to see the power shift to the employee when negotiating for salary and benefits.

What are the implications on business owners?

A smaller employee pool to choose from can have a cascading effect on your business, whether it’s a behemoth like Amazon or the mom-and-pop diner on the corner. Not having the right person in the right place at the right time with the right skill set (which I call the 4 R’s of the perfect employee) can jeopardize your business operations and potentially halt or stunt any growth potential. At the end of the day, your employees are a direct reflection of you and your business. Training, coaching, and developing will only get you so far. You need the right people to reflect your brand, vision, and culture. As the options get slimmer you may be forced to compromise where you never needed to before. Maybe that’s base pay, education or experience requirements, certifications, personality, attitude, etc. Maybe you focus on hiring people with no experience and increase your training programs temporarily. The fact of the matter is, the old way of hiring doesn’t work right now and to maintain your business infrastructure you will have to adjust your approach.

How can business owners pivot from the old hiring process to a new approach?

Depending on the scale of your business, industry, employment needs and many other variables your approach to this crisis will be completely different. The small business owner who manages a workforce of 1-10 and holds complete autonomy of the operations will have MUCH more flexibility in this area. He or she can simply reach out to many individuals seeking employment, schedule a day of interviews, and go into them anticipating hiring them on the spot. The only thing they may need to adjust with their approach is how much you’re offering as a base pay. Also, consider including a 90 day “evaluation period” where the employee is offered a pay increase after “proving” that they were the right higher. Long gone are the days of “hire slow, fire fast” at least for now. The biggest shift for small businesses would be to consider the exact opposite approach and “hire fast, evaluate, fire if needed, try again.” This could be more costly than the former option but unfortunately owners don’t have that luxury right now.

Larger organizations that have policies and procedures to follow have a much bigger challenge. More hoops to jump through with hiring an individual makes the process much slower. They must deal with tons of paperwork, background checks, multiple interviews with different members of the organization etc. From what we’re seeing, the slower the process the harder it is to get someone in the door. So, what do you do? You can’t just snap your fingers and change policy like a smaller business can. The bigger the business the slower change happens. And you don’t want to just change your hiring process permanently just to fix a temporary problem. My advice would be to get the main decision makers together for an emergency meeting to put in place a temporary shift in the hiring policy to empower your management team to make the initial decision when hiring, set up a 30 minute training course to ensure they know how to do the proper paperwork to get them in the doors legally and efficiently and then have your old systems take over on the back end to ensure all the T’s were crossed and I’s were dotted.

What to do, what to do. Well… in conclusion I would like to offer some surface ideas on how to handle this. In a word... Pivot, adjust, be flexible, consider new ideas, empower your team to have ideas and make suggestions. Maybe you accept the cost of hiring many new individuals in the hopes that a small percentage of them work out. Hire on the spot when able to, adjust your training programs temporarily, shift your processes to take place after the employee is hired by adding the caveat “hired pending a background check” or whatever. Speed up the process where you can. Think outside the box, offer referral bonuses to current employees, have fun hiring events where it’s more of an invitation to a party with the possibility of finding employment as a secondary draw. Other ideas may work too, such as adding a pop-up on your website, deliver door-hangers in your neighborhood, start accepting credit card tips, if possible, add a bonus structure or add potential tips to your now hiring ads. One idea I have noticed a lot with big box employers includes a creative hiring bonus that includes a new iPhone, food vouchers or large amount of cash upon completing a 90-day evaluation.

Just remember that this world we live in is ever changing and it’s important to pay attention to everything around us. Don’t be resistant to change. Just because it worked yesterday doesn’t mean it will work tomorrow. Amazon started out as an online book retailer, Netflix used to mail DVDs to its customers, Blockbuster used to exist. Things change, people change, the world changes… do your best to keep up.

-Alex Wasserman

President of Business Operations

In Your Business LLC