The United Nations expects us to have 95 million fewer people in the labor force by 2050. Even during an economic recession, Europe will be 44 million people short.
It’s hard to believe that, while heading towards or even already being in an economic recession, a lack of talent is the number one challenge that keeps businesses from growing and innovating, according to KPMG. Also in Indeed & Glassdoor’s Hiring & Workplace Trends Report 2023 the tight labour market is mentioned as the number one long-term challenge.
In this blog, you’ll learn how and why the Talent Shortage has become so big, as well as how to overcome the Talent Shortage in 2023 to prevent the labour market from killing your business.
4 causes of the largest Talent Shortage in history
The enormous Talent Shortage we’re facing (and will keep facing over the next decades) is the result of multiple changes in society and the economy coming together.
- Low fertility rates. Fewer babies are being born, meaning that fewer people are entering the labour market.
- Aging workforce. The workforce is getting older. Companies with a lot of older employees will be confronted with an enormous gap to fill when these employees will retire in the same time period.
Changing work (preferences)
- Digitalisation. The trend of digitalisation has created a demand for 20 million to 50 million additional jobs globally by 2030.
- Part-time workers. While at the same time a lot more Gen Zs prefer working part-time compared to millennials.
2 ways to overcome The Talent Shortage
Alright, so The Talent Shortage is real, even in times of economic recession. To overcome The Talent Shortage, we have to radically change our view on talent & hiring. The following practices will be a necessary starting point.
Broaden your perspectives & tap into overlooked talent pools
When there are not enough people out there, you simply have to broaden your perspectives on what to look for in your next hire in order to tap into hidden talent pools that did not come to the surface before. Educational background and previous work experiences have always been the most prominent job requirements, while their predictability of work performance is painfully low. The Talent Shortage now forces companies to shift their focus from experience to potential, which not only widens up your talent pool, but also significantly improves your hiring success. Research has shown that, in contrast to someone’s past, a person’s cognition (i.e. ”intelligence”) and behaviour are the best predictors of work performance.
A great example is LinkedIn. Their CEO recently announced that LinkedIn will no longer hold on to any educational requirements for their job openings, meaning that everyone can now apply for a job at LinkedIn, regardless of their degree. This a very fair, simple, and smart way to widen up your talent pool – especially since education and intelligence are not correlated at all.
Hire for transferable skills rather than job-specific skills
The most comfortable and easy way to ‘fill’ a gap in your organisation would be to fill this gap with an existing employee who already knows everything about your business, your goals & your challenges. However, not everyone can switch jobs internally as easily as I make it sound now.
This second point actually reflects back on the thing I mentioned above, namely the need to hire for potential rather than experience. Because someone’s potential will reveal whether or not they master transferable skills. A transferable skill is an ability or expertise which can be used in a variety of roles or occupations. Examples are learning ability, problem-solving, and flexibility. Transferable skills help you land a new job much faster and easier, so the more transferable skills your employees have, the easier it will be for you as an employer to turn internal mobility into your safety shield against The Talent Shortage.
Keen to see how Equalture’s game-based assessments can help you assess a candidate’s transferable skills and overcome The Talent Shortage? You know where to find us!