I recently read, with interest, The CEO Confidence Index Report, authored by Joe Galvin of Vistage and found it to be most informative. Vistage, for those of you who may not know, is the world’s largest CEO coaching and peer advisory organization for small and midsize business leaders. Suffice it to say, I believe the article speaks to businesses of any size as everyone is affected by current market and hiring trends.

The report looks at several factors causing uneasiness among CEO’s including supply chain issues, inflation, and the looming talent shortage. Our excerpts focus on the talent shortage and you can access the full report HERE. Now on to the excerpts

Overview:

The anticipated surge and unexpected spikes of 2021 have left CEOs unsure about the economy and marketplace in 2022 but quite certain about their ability to grow their business — provided they can find enough people.

The talent wars that were intensifying at the beginning of 2021 have only escalated as CEOs look to add people to fuel growth potential and raise wages to be competitive in the increasingly shrinking talent market.

What is certain is that the talent wars will go to “DEFCON 1” with retention and hiring of people dominating CEOs’ challenges, testing their resolve and driving their decisions.

Three areas of concern for CEO’s regarding talent are, Employee Costs, Employee Retention, and Employee Development.

 

Employee Costs:

One factor not going away is the increased costs for people. 76% of CEOs said they were planning on increasing headcount in the year ahead, an all-time high since the Vistage CEO Confidence Index survey began in 2003.

Hiring is critical to meeting customer demand; 71% of CEOs reported that hiring challenges are impacting their businesses’ ability to operate at full capacity. The result is increasingly aggressive recruiting with escalating wages and salaries.

Seventy-eight Percent (78%) are increasing wages as a result of hiring challenges and 29% are offering hiring bonuses. The rapid escalation of the talent wars is evident when 56% of respondents reported they were increasing wages in Q2; 69% reported in Q3.

Raising wages is a delicate proposition. Increasing pay to attract new workers will create exposure with existing workers who may have been hired at a pre-talent wars rate

 

Employee Retention:

Workers at all levels are in demand with more jobs (12.0 million) than there are people looking for work. Workers have to come from someplace

The 4.5 million “quit rate” in November, an all-time record on top of the 4.2 million quits in October, suggests the workforce revolution is on and the employee migration is in full swing.

This is further evidenced by the corresponding decline in employee retention rates.  Looking at changes across the course of 2021, the proportion of CEOs reporting decreases in retention has grown 12 points to reach 29%, while the proportion reported improving retention rates has fallen by half, reaching 14%.

Retention becomes critical in this increasingly competitive environment. Losing any employee ,even a “C” player, is a major setback in productivity and morale, leading to increased costs to recruit, hire and train a replacement. It now takes longer and costs more to get a less experienced person.

 

Employee Development:

Employee development has become the CEO’s go-to strategy for retaining and attracting people.

In Q2, 50% of CEOs identified employee development as a strategy to attract workers. That number jumped to 70% in our Q4 survey as CEOs increasingly recognize the importance of investing in their people as a retention tactic and demonstration of their culture.

The development program then becomes a strong competitive benchmark when potential employees evaluate opportunities. Employee development directly impacts retention, the ability to attract, and improved performance.

As a consultancy with a strong portfolio of assessments, tools and process, Kellen James will give you more insight into your prospective new employee than you could glean in six months working with them; before you hire them! We focus on DOING the job, not simply GETTING the job and will show you how to create “extreme clarity” for any role in your organization.Want to improve your hiring performance? We can help! Call us @ 602.499.4341 or Email to jim@kellenjames.com.

 

Jim O’Hara is a veteran executive and former agency firm owner. He is President of Kellen James – Performance Advisors, an Advisory and Diagnostics consultancy that assists organizations to hire more accurately, lead more effectively and get results more efficiently. Connect with Jim on LinkedIn or email him at jim@kellenjames.com.