Companies Must Rethink Old Ways of Hiring to Succeed in 2022

The commercial real estate market has hardly been immune to the Great Resignation. Hotels and retail stores have been clamoring, often to little avail, for more workers. The impact is being felt in other ways as well, such as higher CRE loan servicing costs due to turnover at mortgage servicers. 

Companies should expect a continuation of these tight labor market trends in 2022, according to a new report from Glassdoor. 

Here are three trends it highlighted among its findings. 

Hiring won’t be easy in 2022

Labor shortages defined the 2021 job market. As customer demand roared back to life, employers faced acute hiring challenges as workers trickled back into the labor force. The increased competition for workers has made it exceptionally difficult to both hire and retain employees. Employers may be ready to write off the tight 2021 labor market as a pandemic-era anomaly, but they shouldn’t. Instead, 2021 should be a template for what to expect in 2022.

Unlike past recessions, the US has largely skipped the phase of the recovery where employers have a large pool of unemployed workers to hire from. Employer reliance on furloughs kept the pool of available workers relatively small throughout the pandemic. There are only 0.74 unemployed Americans for each job opening, as of September 2021. This is well below anything seen in previous recessions. When the quicker-than-expected rebound in worker demand arrived in spring 2021, the pandemic-wary workforce caused the ratio of job openings to available workers to become even more skewed.

“We are now in the expansion phase of the recovery where employers should expect a slow grind of trying to pull workers from the sidelines back into the labor force rather than snatching up available laid-off workers,” according to the report.

What made hiring difficult in 2021 is unlikely to disappear in 2022: (1) A lingering pandemic that will not disappear overnight, (2) reduced availability of retirees and parents, and (3) a quicker-than-expected recovery in customer demand. 

So, what lessons of 2021 should employers take into 2022? First, incentives matter. If difficulty in hiring will persist for years, then employers need to think long-term—for example, shifting from offering temporary hiring bonuses to permanent wage increases. Second, not only is it difficult to hire, but record numbers of workers are quitting too. 

Employee engagement therefore is critical in retaining the workers that employers do have. Last, the late 2010s taught us that employers who think creatively can unlock new talent pools by seeking out overlooked workers like remote workers, recent retirees, workers with disabilities or impairments, or previously incarcerated workers. 

All-in-all, employers should expect a long period of tight labor markets and it will be the most creative employers who are best able to hire and retain in this environment.

Remote work will boost access to top talent, but at a higher price point

Before the pandemic, remote work was a secret superpower for employers who could offer it, enabling access to a wider talent pool, especially for workers in traditionally overlooked regions. But the pandemic released the remote work genie out of the bottle: it’s now an almost-necessary tool for many employers, which in turn has diluted the recruiting advantage remote employers previously had. Now, many more employers are looking at how to expand their talent pools through remote hiring.

This increased competition means employers need to provide more attractive offers, with many turning to boosting salaries. But having to raise salaries runs headlong into the location-based pay policies many employers have established. 

As competition for talent—remote or not—increases, will employers stick to their guns? If Amazon and Microsoft are competing for the same software engineer in a lower cost-of-labor market, will they insist on paying a location-adjusted salary or will they offer a higher salary to prevent top talent from going to a competitor? 

This also has implications even for employers not offering remote work. Workers who may previously have been plentiful locally now may be swept up by the wave of remote opportunities, which tend to be at larger companies that can afford to offer top dollar. 

Already, employers are seeing an increase in competition from companies hiring remotely. Based on Glassdoor data, 20.4 percent of employers hiring locally in October 2021 are competing against remote jobs, up almost double from 10.3 percent in October 2019.

While the consequences of this increased competition will take time to play out as remote work spreads, two tangible implications should start to show up in 2022: First, more employers (especially in tech) will walk back or reduce location-based pay adjustments as they compete against other employers for top talent. Second, local employers are likely to see rising competition for workers in jobs that can be done remotely, as far-flung employers compete more aggressively for local workers.

Workplace community will expand beyond company walls

The employee-employer bond has intensified over the last decade. Employers increasingly compete for talent by emphasizing employee engagement and workplace experience. The pandemic, however, has made staying connected with increasingly dispersed coworkers and peers more difficult. Many companies previously leaned on the physical office to facilitate this sense of community, offering attractive in-office perks. But what employees miss now is not the office. At a time when the flexibility offered by remote work is valuable for employees, maintaining and enhancing employee connection and community requires special attention from employers.

Forty-eight percent of employees have felt isolated from coworkers during the pandemic, according to a recent Glassdoor survey of US workers. This desire for community stretches beyond the company, reaching others in the industry and profession. The advent of social media has enabled deeper connections with professionals from around the world. This fills a need for employees: 56 percent of workers wish they had a community where they could get career advice for how to deal with problems at work and 64 percent wish they had a way to ask questions of industry peers. 

As the pandemic drags into 2022 and more employees, especially new ones, navigate a remote or hybrid workplace, employees will increasingly turn to coworkers or industry peers to seek out community and get more transparency into their companies and industries.