Offers in the time of talent crunch: Firms battle for top talent retention

As the white-collar hiring pool shrinks, every resignation triggers a contest to match compensation, job profile and flexibility to help work-life balance

Talent crunch was mentioned prominently across sessions at a recent banking and financial services summit organised by this newspaper in Mumbai. In fact, experts and top executives raised it as one of the biggest concerns facing the industry at this point. Besides the talent crunch crisis, the future of work powered by artificial intelligence (AI) resonated throughout.

 

While these are early days for AI and its full impact  on employment and the job market is yet to be determined, the talent crunch is real and immediate, cutting across sectors, and more so in some industries. It has hit companies so badly that every resignation, at whatever level, feels more worrisome than it actually is. That, in turn, has strengthened the position of the employee who’s looking out for a better opportunity, whether in another organisation or perhaps in a completely different industry.

 

And for some, it’s a chance to step up and get a higher pay rise within the same organisation. When an employee comes with the line “I have an offer,” with sort of a winner’s swag, it is meant to immediately start a matching contest — for compensation, job profile and flexibility to help work-life balance! In a job market, so devoid of talent, this contest plays out frequently across organisations to retain an employee, even when they may not be the best fit for the role, as recent conversations with people from varied backgrounds reveal. There’s a reason for this.

 

The reason any organisation tries to retain an employee is that the exercise of hiring from another company has become more tedious and time-consuming than it ever was. It’s quite likely that the knowledge of the talent crunch in the job market reached jobseekers long before experts began flagging it at marquee conferences and summits. That knowledge gives jobseekers courage, confidence and power that those from earlier vintage lacked.

 

How times have changed, any old-timer would say. Earlier, one would go discreetly for that rare job interview or a meeting that might translate into a job prospect. The meeting place would be handpicked to ward off all risks (read, keeping the boss or that nosey colleague out of the picture). In contrast, now job interviews, like offers, are to be flaunted. There’s no fear anymore of being spotted in another organisation. It’s even better if the information is passed on to the current boss, who, in a desperate attempt to retain talent, will possibly offer a hike and a promotion. The jobseeker will then go to the new employer and bargain. And so on…. Whether an aspirant will settle for the new employer’s offer or the current one’s counteroffer is a question with no straight answer. It’s, however, clear that in most cases it’s the candidate who closes the deal, not the other way round. What starts with “I’m open to a conversation’’, could end with “I’m not looking for a change’’ many weeks later.

 

Why has the white-collar hiring pool shrunk so much in some professions? It’s tough to pinpoint the exact reasons, but a recent report by Michael Page, a recruitment firm, gave out some telling numbers based on a talent trend survey of over 3,000 respondents from across seniority levels and industries. It found that 34 per cent of organisations in India are struggling to spot the right talent and almost a third of them are trying hard to retain their employees. According to the report, even among those happy with their current salary, 94 per cent are open to new roles. So the assumption is that an employee needs more than just competitive salaries, and factors such as work-life balance, manager relationships, clear promotion paths, and recognition are crucial for making retention easier.

 

A Gartner HR survey last year focused on the reasons why an employee stays back in an organisation and why a candidate rejects an offer. In a survey of some 3,500 candidates globally, Gartner found greater flexibility (59 per cent), better work-life balance (45 per cent) and higher compensation (40 per cent) were the top drivers. The 2023 survey also showed that 50 per cent of the respondents backed out after accepting a job offer. In 2022, 44 per cent of the respondents had backed out after accepting offers, the earlier Gartner numbers revealed. In pre-pandemic times, the back-out numbers were lower. In 2019, for instance, 36 per cent of the respondents had backed out after accepting an offer.

 

As Korn Ferry, a prominent organisational consultancy firm, says, there are too few candidates for too many jobs, a trend that took off during the great resignation wave in 2021. Against this backdrop, organisations have to finetune their workplace dynamics, so that hiring and retention of talent become more meaningful.