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These are the top challenges employers face when hiring
People waiting for a job interview indoors.
As the economy recovers from the height of the COVID-19 pandemic, more employers are finding it difficult to hire new employees compared to before the pandemic, according to the Federal Reserve Banks.
just business reviewed the Fed data Small Business Credit Survey 2022 Worker Hiring and Retention Report to identify some of the most common challenges employers face when trying to fill their ranks. The segment of the report citing this analysis is based on 2021 survey responses of 5,654 small businesses that reported difficulty filling open positions. The survey questions based on the respondent’s experience in the previous 12 months covered the time period from approximately September-November 2020 to September-November 2021.
The 2021 survey shows that 44% of employers said hiring new workers was very difficult, compared with 27% of companies that said the same in 2018.
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#1. Too few applicants
A person who fills out a job application form.
A small pool of applicants was the most common challenge, with more than 3 in 4 employers (78%) saying they received too few applicants for open positions. In 2018, nearly two-thirds of employers (63%) faced that challenge. Not having enough applicants was especially pronounced in the leisure and hospitality industry, where nearly 9 in 10 employers (86%) reported facing that challenge in the 2021 survey.
Most hospitality and leisure employers attempted to address their hiring challenges by raising wages, increasing the workload for current employees and the owner, and reducing hours of operation or services.
The survey indicated that the real estate and professional services sector had the lowest proportion of employers needing more applicants. Still, at least 2 in 3 employers in that industry (67%) said they wanted more candidates.
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#2. Applicants lack specific skills, education or experience for the job
Hands holding resume application.
In 2021, the survey indicated that more than half of employers (56%) found many applicants to be unqualified, up from 52% in 2018. Two-thirds of employers in professional services and real estate had difficulty finding applicants with the right skills, education or experience – one of the highest rates compared to other industries.
Unable to find suitable new hires, more than half of companies (52%) in the real estate and professional services sectors increased the workload of other workers, often including the business owner. Other common tactics were raising wages, which about half of employers (49%) in the industry did, and offering remote work and flexible hours, which 46% of employers did.
Finding candidates with specific skills, education or experience for the job was the least common reason for hiring difficulties reported in the survey by the leisure and hospitality industry, but nevertheless 37% of employers had such a problem.
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#3. Competition from other employers
Close-up of a person’s hands during an interview.
In 2021, 2 in 5 employers in the survey said that other companies’ hiring efforts presented a challenge, just slightly less than the 45% who said the same in 2018.
Competition affected approximately half of employers (49%) in the professional services and real estate industry, the highest rate of any industry. In the retail industry, 35% of retail employers said competition from other employers was a challenge. Most employers in the retail industry responded to hiring challenges by raising wages and increasing the workload of existing staff and owners.
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#4. Difficulty retaining newly hired workers
Rear view of two employers sitting in an office and shaking hands with a young woman.
According to the 2021 survey, at least 3 in 10 employers (31%) found it difficult to retain their new employees. This was most prevalent in the leisure and hospitality industry, with 42% of employers saying they had difficulty retaining newly hired workers. The real estate and professional services industry was the least affected, with nearly a quarter of employers (23%) saying employee retention presented a challenge. Overall, 71% of employers surveyed said it was somewhat or very difficult to retain workers in the past 12 months.
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#5. Applicants who cannot pass a background check, credit check, or drug test
Close-up of the hands of a person working on a laptop.
Approximately 1 in 6 employers (16%) reported in the survey that applicants had difficulty passing criminal background checks, credit or drug tests. That’s less than 24% in 2018, though one reason may be that fewer companies are testing potential employees for drug use.
For those companies that do, drug testing can be complicated by both the law and biology. Recreational and medicinal use of marijuana is legal in some states, but not under federal law. Drug tests can return positive results weeks after a person uses marijuana.
The trucking industry has been particularly affected by zero-tolerance marijuana policies. The Department of Transportation reported that more than half (56%) of the 126,043 drug violations by commercial drivers from January 2020 to March 2022 involved the use of marijuana. Those drivers are at least temporarily taken off the road, contributing to labor shortages and hiring challenges.
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#6. Hiring issues aren’t the only challenges businesses can face
Applicants sitting in queue preparing for interview.
Survey responses also indicated that there were other hiring challenges, which 8% of employers reported facing.
Numerous factors affect the ability of employers to attract qualified candidates and bring them on board. The changing employment landscape in the wake of the pandemic has changed people’s attitudes about work, and employers may need to revise their strategies to successfully attract and retain employees.
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#7. Other processes
Two women in a meeting discuss hiring.
In addition to the hiring challenges discussed in the Federal Reserve report, some other difficulties companies may face typically include setting up employment processes and benefits like 401(k) plans, insurance packages, and workers’ compensation.
This story originally appeared on Simply Business and was produced and
distributed in association with Stacker Studio.
