You can get good help today — but it’s far from easy. A combination of economic and societal factors has turned hiring staff into one of the trickiest propositions companies face.
Most companies are optimistic about their long-term financial prospects, so they have a great need for new blood in the workforce. The mindset is perhaps intentionally opposite from the one that prevailed during and after the Great Recession almost 15 years ago. Many companies that had laid off workers timidly delayed ramping their staff back up — and paid the price for it when sales came back faster and stronger than expected.
Among 180 senior finance executives at mid-sized and small-market companies, polled in July by CFO, almost three quarters said they anticipate facing “critical hiring needs” in this year’s second half. (See chart below.)
However, many companies find themselves doing a tightrope walk at a time when the United States is experiencing nearly full employment — the unemployment rate in July was 3.5%. They’re trying to fill their staffing needs through highly competitive offers while not blowing a budget that inflation is straining to the brink.
CFOs Face Tough Hiring Challenges
Companies have been challenged on the talent-acquisition front for years, but the present dynamics can turn what had been merely difficult into something that barely seems possible. Simply providing above-market wages and employment terms is not necessarily a viable solution.
“After working virtually during the COVID-19 pandemic and afterward,” one CFO wrote in his survey responses, “there is an unrealistic expectation from current employees and candidates that employers should give in to every request for flexibility and pay top dollar for talent. That model is not sustainable.”
Another respondent lamented growing pressure to “increase wages to match the inflationary environment while dealing with a slowing of the economy.”
That pressure is acute, judging by data released last week by the U.S. Bureau of Labor Statistics. BLS reported labor unit costs in the nonfarm business sector leaped by 12.7% and 10.8% in this year’s first and second quarters, respectively. At the same time, productivity fell off by 4.6%.
“After working virtually during the COVID-19 pandemic and afterward, there is an unrealistic expectation from current employees and candidates that employers should give in to every request for flexibility and pay top dollar for talent. That model is not sustainable.”
The resulting, heightened need for financial rigor in the crucial discipline of talent acquisition and retention dictates that senior finance executives must be heavily involved. Among those surveyed, 41% strongly agreed their organization’s CFO plays a substantial role in supporting talent strategy development across the enterprise, while 36% somewhat agreed.
Finance Speciality Skills in Short Supply
CFOs are, of course, particularly attentive to staffing needs within their finance organizations, where specialized skills are in critical demand. Exactly half of the survey respondents identified data analysis as the skillset they’ll be most looking for over the following 12 months. That beat out accounting, which was second at 42%, and project management at 16%.
Again here, though, given the current economic environment and thin human capital market, many CFOs remain cautious about hiring even within their own departments. Almost one-fifth (18%) said they are not looking to hire new finance staffers within the following 12 months.
To whatever degree companies are pressed by inflation to float better offers to employees and candidates, they’re buoyed by a surprising ally: inflation, which is steering not only cost cuts but also price hikes for goods and services.
But jacking up prices to compensate for rising labor costs may be easier said than done. One finance executive noted the challenge of “balancing price increases to at least cover cost increases from wages and suppliers.” Another pointed to the long-term contracts the company is locked into, noting that while price increases are needed, they’re mostly not possible at the present time.