Cracking The Code of a Tight Labor Market

By: Execs In The Know

With renewed optimism as the world starts to open back up, it is great news for all industries. Restaurants are full again, people are resuming their travels, and unemployment is falling. Per the chart below, U.S. unemployment reached a high of 14.8% in April 2020, but as of May 2021 it improved to 5.8%. 559,000 jobs were added to the US economy in May 2021, compared to just 266,000 in April 2021. This job growth is slower than many economists and leaders had expected but this is indeed an indication that things are headed in the right direction.

 

With this positive news comes some perplexing trends and challenges reported by all industries; one of which is that although jobs are being added, they are not being filled at the pace expected, thus creating a labor shortage in many industries. In fact, employers reported 9.3 unfilled jobs in April 2021 according to the Bureau of Labor Statistics.

The contact center industry is not escaping the challenges of hiring and retaining qualified candidates. The industry is most certainly in unchartered territory, and no one has a crystal ball to know how long this will continue or what additional dynamics may surface. It is important to understand what is happening at any given time and be nimble enough to take measures that mitigate challenges as they occur.

This article will explore some of the theories behind the labor shortage, specifically how it is impacting contact center hiring and retention, and what organizations can do to mitigate the challenges.

Possible Root Causes of Labor Shortage and Hiring Challenges:

There are several factors potentially causing these hiring challenges, but all of these are still evolving on a daily basis.

• Continued reluctance due to COVID-19: According to the Center for Disease Control (CDC), about three in 10 working age Americans were fully vaccinated as of mid-May. This number continues to increase, but some workers are still wary of the risks associated with returning to a physical site. Therefore, for centers either recruiting for on premise positions or conducting training in-person, they may find some percentage of qualified candidates who are not ready to re-enter the workforce due to lingering COVID-19 concerns. As more workers get vaccinated or feel more comfortable about potential risks, some of this angst could decrease.
• Unemployment benefits and stimulus packages: There is some belief that continued unemployment benefits and stimulus packages provided to unemployed workers have caused some to delay their return to the workforce for various reasons. Whether this is true or not, these benefits will soon be expiring, and some states have ceased them earlier than their original expiration date.
• Continued childcare and school issues: A large percentage of U.S. mothers were forced to leave the workforce during the pandemic to care for children and homeschool due to school closures. In January, around 10 million U.S. mothers were not actively working, which is 1.4 million more than the prior year according to S. Census Bureau data. As fall approaches in the U.S. and schools reopen, it could reverse this trend. The risk for some is the fear that more outbreaks will occur, forcing school closures again.
• Reassessment of career goals: While out of work during the pandemic, many have reassessed the kind of work they want to do. The pandemic obviously had a negative impact on the workforce, but it also gave workers the opportunity to re-evaluate what is important to them and what they want to do. In fact, Pew research revealed that 66% of unemployed workers “seriously considered” changing their field of work. Some are taking their time to explore new opportunities or educating themselves in a new field of interest.
• Holding out for previous (or better) job: Many workers are reportedly optimistic that their “pre-pandemic” job will become available. Or, related to the previous point, they are hoping a “better” job will become available. Since they may still have unemployment benefits, they believe the longer they wait, the better off they will be in the long run.

Impact to Contact Center Hiring and Retention:

In talking with leaders and researching these dynamics affecting the labor market, there are several ways the contact center is being impacted by these dynamics:

• Volatility of applicant volume: On one hand, with increased competition for highly skilled workers, some organizations may experience fewer applicants than expected. On the other hand, with more applicants considering a switch in occupation, organizations may receive more applications from workers who were previously working in other industries. And for centers offering more work-from-home (WFH) positions, this could open applicant floodgates. While organizations may receive more applications, it also means recruiters must filter out more applicants who may not meet minimum requirements.
• Competing compensation: Since other industries are also struggling to find qualified candidates, higher salaries and even hiring (or retention) bonuses are being offered. This is making it even more difficult for both in-house and outsourced centers to compete with, from a salary perspective. There is typically little room for sweeping compensation increases in contact centers, so organizations face the added pressure of attracting and retaining skilled agents while struggling to compete based on compensation.
• Lower acceptance rates: Due to the competing demand and compensation, companies may be making offers for contact center positions, but receiving fewer than expected acceptances. Additionally, because of the competitive nature of the current market, speed becomes important. Recruiting teams must be fast to screen, interview, and make offers or they risk losing an applicant to a competitor or another position.
• Increased training “no-shows”: Companies are reporting an increased number of “no-shows” for training. A candidate may accept an offer, but before training begins, they receive what they consider to be a “better offer.” They then accept the competing offer, leaving organizations in a bind before training even begins. This forces organizations to make offers to more applicants to ensure they meet required headcount.
• Increased attrition during training or early in the agent’s tenure: Many leaders are experiencing a situation in which candidates accept a position and they complete training, but they do not intend to stay for long. They are either waiting for their previous job to become available again, or they receive what they consider to be a better offer after the fact. So, the company spends time training and upskilling employees, only to lose them to another company before they are fully productive.

At the end of the day, the overarching impact is increased recruiting effort and costs, decreased training effectiveness with higher costs, damage to morale and culture, and ultimately a negative customer experience.

What Leaders Can Do to Minimize the Risk:

Given the ever-changing dynamics of the labor market and these challenging implications, there are several steps organizations can take to mitigate these risks.

• Understand the market: First, it is important for organizations and recruiting teams to stay abreast of the market. The labor market next month will likely look different than it does this month as the economy continues to recover from the impact of the pandemic. Understanding the complexion of the market and potential applicants is critical to responding appropriately. This means knowing what the competition is doing beyond direct competitors. As discussed above, contact centers are currently competing with other industries, so a holistic view is needed to make appropriate decisions.
• Reimagine the recruiting profile: Even though centers are experiencing recruiting challenges, there are also opportunities. Because a higher percentage of WFH is here to stay for most organizations, this potentially opens new markets for contact centers if they are willing to expand beyond the proximity of their physical sites. Also, the minimum skills required of the ideal candidate should be reconsidered. Because applications may be received from candidates who would not have previously applied (and who may not have contact center experience), they could have attractive skills that translate from one industry to another. In other words, companies may have a larger pool of applicants with critical skills that prove even more important than previous contact center experience.
• Leverage technology for the recruiting process: Due to the competitive nature of the current market, recruiting teams may need to turn to more automation and artificial intelligence (AI) solutions to optimize the recruiting process. This technology exists and would allow for faster screening and ability to navigate the entire process faster, so no applicants are lost due to a lengthy recruiting process.
• Offer more flexibility: Given the reluctance that some of the workforce has with returning to physical centers, or even a typical 8-hour schedule, flexibility in scheduling could be attractive. Offering staff the ability to choose their shifts, work split shifts, or easily switch shifts with colleagues when needed could be perceived as a competitive benefit to prospective workers.
• Reassess compensation/benefits: It is not going to be possible in all cases to increase salaries, but this is a time to reassess the packages offered for the skills required. The complexity of transactions handled by agents is increasing, so the minimum skills required are changing as well. This could mean compensation adjustments should be considered. However, organizations should be sensitive to this especially if working with outsourced suppliers and recognize that offering higher wages is not always realistic. Getting creative with benefits and focusing on the organization’s culture and development opportunities becomes even more important.
• Strong and flexible partner agreements: Business process outsourcing (BPO) suppliers are perhaps more important to organizations than ever before. As such, it is critical for organizations and suppliers to be transparent and work together through these unchartered waters. More flexibility and a spirit of partnership on both sides is critical.
• Rethink training approach: Due to the current transient nature of incoming employees, organizations need to do anything they can to decrease training time. This could involve choosing to train new hires on specific skills until they reach a certain tenure. Or it could involve using a blended training approach which is part self-guided and part instructor led. Most importantly, leveraging technology that allows trainees the capability to practice with “real life” simulations. Additionally, continuing to expand the use of AI and related technology to support agents can shorten the learning curve. Providing real-time, automated tools and resources, like virtual assistants, that guide them through customer interactions to the right resolution will ensure consistency and get agents up to speed faster.

Summary:

It is difficult to predict the future in these uncertain times, and the situation is evolving almost daily. This makes it challenging to make long-term decisions to address labor market issues impacting hiring and retention. The underlying priority for organizations should be focused on flexibility enabled by processes, tools, and strategic partnerships. Even though these dynamics will likely resolve themselves over time, any actions organizations take now to address these issues will not be wasted. Taking action to improve recruiting effectiveness and efficiency, reduce training time, and improve retention through attractive policies will serve organizations well now and into the future.

Sources:

https://fas.org/sgp/crs/misc/R46554.pdf

https://www.bls.gov/news.release/pdf/jolts.pdf

https://www.census.gov/library/stories/2021/03/moms-work-and-the-pandemic.html