How Top CHROs Are Surfing The Talent Tsunami

The coronavirus pandemic upended the world of work, and now heads of human resources are pulling out the stops to win the war for talent.
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The coronavirus pandemic has already changed the world. The human tragedy is almost unfathomable, and its economic impacts continue to reverberate. Virtually overnight in March 2020, millions of workers shifted to entirely remote ways of working, and businesses that depend on frontline workers—from retailers to restaurants to factories—were forced to implement layoffs and new safety measures in the face of a raging virus and economic downturn.

Now, with the advent of vaccines, businesses of all stripes find themselves in another pitched battle, only this time it isn’t against the virus—at least not directly—but against each other to attract and retain the talent they need to thrive once more in a roaring economy.

Silicon Valley Bank Head of Human Resources Chris Edmonds-Waters

Everyone has seen the help wanted signs, both physical and digital, and heard the complaints about how difficult it is to hire. The anecdotal evidence of a war for talent has been there for a while, from overwhelmed bartenders to overheard conversations about fruitless searches for full-time employees and surge pricing from consultants and contractors alike. There’s hard data now too. By April 2021, The Conference Board was already reporting that 25 percent of companies in industry and manual services were finding it “very difficult” to recruit qualified workers, up from just 4 percent pre-pandemic, and 9 percent of professional and office-based organizations reported “very difficult” circumstances, compared to 3 percent before the pandemic. The situation has only intensified since then. “We need to acknowledge the dystopian reality we’re all living in with this pandemic,” says Silicon Valley Bank Head of Human Resources Chris Edmonds-Waters. “The rules have changed, and all of the assumptions have been shattered.”

New research out on August 25 from Willis Towers Watson indicated that 73 percent of 380 employers surveyed were struggling to attract new employees—a threefold increase from the number who reported hiring difficulties a year prior, and an almost 20 percent increase from the first half of 2021. Further complicating matters for CHROs, current employees seem to be increasingly looking for the door, with the research indicating that more than 60 percent of companies are struggling with retention. Those trends aren’t expected to let up anytime soon, either. “They reaffirmed that they think this going into 2022,” Willis Towers Watson Managing Director and North American Head of Rewards Adrienne Altman says. “It really is a war for talent.”

Willis Towers Watson Managing Director and North American Head of Rewards Adrienne Altman

Yet while there is broad agreement that something unusual is happening in labor markets, there remains a lot of conjecture about the origins of the problem. Altman attributes the talent tsunami to several root causes. On the one hand, as the economy has roared back and vaccines become more prevalent, the demand for new employees in some positions has surged—but the total number of employees capable of doing the job remains the same, with demand far outstripping supply. “For example, with sales reps, we don’t necessarily think the supply has changed, but for whatever reason, companies have upped the ante and are saying, ‘we need more of them,’” she says.

For other positions, such as frontline retail, production or warehouse workers—hourly employees, in other words—the demand may have remained about even compared to pre-pandemic levels, but the supply of workers has been depressed by various factors, according to Altman, potentially including health pressures, lack of childcare or elevated unemployment benefits providing low-wage workers with a greater cushion and more of an ability to seek better wages or benefits.

“As the economy began to rebound from the pandemic earlier this year, it was natural that we saw an increasingly competitive hiring market as employers across industries began to staff up,” says McDonald’s USA Chief People Officer Tiffanie Boyd. That increased competitiveness has been further exacerbated by cyclical factors, including tax season and the return of summer workers to school.

The digital economy is experiencing a different sort of crunch, Altman contends, because there was already a shortage of workers before the pandemic. The shift to remote work and digital life engendered by the pandemic has increased the need for these workers, even as their supply has remained constrained. “For a long period of time, the employee value proposition focused on terms and conditions: What do I get paid? What are the benefits? And that was kind of the contract between an employer and an employee,” says IBM Senior Vice President and Chief Human Resources Officer Nickle LaMoreaux. “The employee value proposition has been evolving, and it’s been accentuated during the pandemic and it now has new components. Terms and conditions are table stakes.”

Taken together, these shortages are a tidal wave that has not even begun to crest yet. Savvy CHROs at some the world’s biggest public companies are moving quickly to shore up their workforces and build new tools for attracting the talent their companies vitally need.

Know What Your Workers Need

McDonald’s, which directly owns 650 locations and franchises another 13,000 restaurants in the United States, has been faced with labor pressures as many businesses have. In June 2021, McDonald’s increased pay an average of 10 percent at its company-owned locations, with the goal of raising entry-level wages to $15 per hour by 2024, and while that change may not directly affect the 800,000 employees at its franchise locations, “many franchisees are doing the same,” says Boyd. The company is also “exploring expanding benefits like paid time off and backup child and elderly care.” And even though “it’s definitely a competitive market right now,” the company is “starting to see a life in applications” as a result, according to Boyd. The moves come during a period of surging sales, with second quarter 2021 same-store sales increasing 25.9 percent over the previous year (and 14.9 percent over 2019).

McDonald’s USA Chief People Officer Tiffanie Boyd

Finding and keeping employees in today’s job market takes more than just raising wages, however. Employees have to see long-term benefits from jobs. “We see pay and benefits as table stakes to get people in the door,” Boyd says, with “skills building, training and education programs” being key for retention. McDonald’s recently collaborated with the American Association of Community Colleges (AACC) to try and understand the best traits of a first job (countless Americans have started out flipping burgers in high school).

After surveying almost 2,000 workers across industries, including food service, retail, manufacturing, education and healthcare, they found the most important benefit of first jobs was the opportunity to learn key soft skills such as responsibility, teamwork and responsiveness. McDonald’s touts itself as encouraging these traits in its employees at a higher rate than the national average and found that people who had a first job at McDonald’s were 40 percent more likely to “have a feeling of financial security” and 50 percent more likely to have a job with benefits such as health insurance later in life. And the company’s Archways of Opportunity program provides assistance to workers in learning English, completing high school or earning their college degrees, deploying more than $130 million in tuition assistance since it was founded in 2015.

In a recent survey of more than 5,000 employees and managers, McDonald’s found that employees considered pay and benefits, flexibility, community and family, and training and growth to be most important to them. “I think if those critical needs are met, employees are much more likely to be engaged at work and stay in their role for longer periods of time,” Boyd says.

More Than Money

Tech giant IBM has more than 345,000 employees spread out across more than 175 countries working on everything from AI development to high-tech manufacturing to consulting. This scale, and the diversity of work IBM employees do, is part of the company’s enduring strength but also a huge challenge in today’s labor market. “Even pre-pandemic, there was a massive shortage of technology skills,” says LaMoreaux. “We were already in a war, in a race, against those skills.” Across every industry, companies have had to accelerate their “digital journeys” due to the pressures of the pandemic and what she calls new “virtual ways of working.”

IBM SVP and CHRO Nickle LaMoreaux

That shift to virtual ways of working will have longer-term consequences that CHROs are just beginning to grapple with. Once employees and managers discovered that virtual work was not only an option, but in some cases preferable to in-person work, it fundamentally altered the calculus around what many digital workers are looking for in their careers. “Employees are reevaluating where and how and candidly even why they work,” LaMoreaux says. “Even if a company has those technology skills, they’re really having to double down on retention” as a result. Employees who previously may have been happy in a job are increasingly willing to look elsewhere for greater flexibility and meaning.

The companies that are struggling to find and retain digital talent fall into several traps, according to LaMoreaux. Too often companies focus on where employees work, rather than what employees are actually doing or when they need to do it. “This starts to get into your workflow,” LaMoreaux says. “Maybe it’s not 9 to 5. Maybe we come together for just this hour…. But then, what about the jobs themselves?” HR policies have to be tailored to how and why specific employees are working. Consultants, for example, need to be suitable to their clients, while coders may rarely or never need to physically be in an office. Engineers and those working in advanced manufacturing, on the other hand, may need to be in physical proximity to one another almost all the time. A one size fits all policy will not only fail to succeed, it may risk alienating otherwise happy employees. “We need teams that come together more dynamically to solve higher order problems, so it’s not just about doing the job I was doing before, but how do you band together, then disseminate, then come together again? It’s a totally different dynamic,” says LaMoreaux.

At Silicon Valley Bank, which serves many of tech’s top startups, “a blended model of working in-person and remotely is where we’re at,” says Edmonds-Waters. “Breaking bread together, having a glass of wine, talking about family is so important.” Compensation and flexible work alone aren’t enough to keep employees connected to a company. “People have to see themselves as part of the solution for the corporation. We draw a huge distinction between orientation and onboarding. Orientation is getting your laptop and learning who your boss is. Onboarding is divorcing from your previous company and marrying your new company. It’s finding a resonance of spirit with the community.”

The resonance of spirit, how a company creates its culture and communicates its purpose in the new era, is key for success. Previously many companies could rely on bringing all their employees into an office where management and executives communicate purpose in a top-down way. In such a system, many companies simply copied the purpose statements from their competitors. Yet a diffuse, digital workforce behaves differently. Now, with workers increasingly concerned with the type of work they do and the environment they do it in, rather than simply the terms and conditions of their employment, they are looking for companies that offer not just a distinct business model, but a distinct culture and purpose. “You can’t say at headquarters that ‘this is the employee value proposition,’ and then have employees experiencing something completely different,” LaMoreaux says. “You also can’t say here’s our employee value proposition and it’s just like company A, B or C, because then it’s not an employee value proposition.”

One solution for this is to have a “kick ass marketing team,” Edmonds-Waters says. “People need to be able to answer what the heartbeat of the company is just like that. For us, our entrepreneurs are making magic happen every day. Moderna is one of our clients. They’re a company saving lives right now with the vaccine. Our entrepreneurs in life sciences are creating opportunities for people to conceive babies. Who doesn’t love babies?” Getting that information out to employees, regularly and consistently, is key to retaining the talent you have and enticing the talent you don’t. And there’s a final ingredient for creating a sense of purpose within a company: leadership. Edmonds-Waters cites SVB CEO Greg Becker as a huge factor in generating a sense of purpose within the company. During the 2020 George Floyd protests, for instance, Becker opened and closed three rounds of listening circles about issues around race, equity and inclusion with the bank’s 3,000 employees. “He’s the epitome of humanity,” Edmonds-Waters says. “We also have a de facto no jerks rule at SVB. If you’re a jerk at our company, that gets found out, and you don’t last long.” Those kinds of intangibles are what encourage people to stay in the long run, and the executive team reports employee engagement scores directly to the board of directors.

No Break in Sight

With businesses expecting the current hiring trends to continue into 2022 at least, waiting is not an option for CHROs, and there’s little chance that things will ever return to the way they were pre-pandemic. Right now, there are more open positions in the U.S. then there are people looking for jobs. That means the pressure is on for CHROs to not just win new talent but keep the employees they have. Part of that is because people’s expectations for their jobs have fundamentally changed. But part of it is because the changes upending the hiring landscape today were already in motion before the pandemic. Covid-19 accelerated the shift to digital, the embrace of remote work and workers’ focus on meaning and purpose, but it didn’t create those trends. They were already there.

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