The past few years have been anything but mundane for contingent workforce managers. From layoffs to on-site Covid testing to remote work to talent shortages, it has been a dynamic — and difficult — roller coaster ride for many sectors, especially industrial. Programs in the sector that best adapt to the changing landscape and take advantage of workforce opportunities will come out on top when it comes to securing the best contingent talent.
Industrial Talent Challenges
Demonstrating the turbulent environment, SIA’s “Industrial-Staffing Growth Assessment June 2022 Update” report found that revenue for the light industrial segment of the staffing industry grew by 15% in 2021 to a new high of $36.5 billion after declining by 9% in 2020. And further growth of 10% is anticipated in 2022, with the market expected to reach $40.2 billion.
Of particular importance to enterprise buyers of staffing services, the report found an increasing trend over time in pay rates and bill rates.
“Covid was an experience for sure,” Tyler Hagood, Southwest’s manager of talent acquisition, told SIA. The airline scaled back hiring and released most of its contractors when Covid first hit; however, it started hiring again in April 2021 and been “hiring with a vengeance for a while now,” Hagood says.
In the first two quarters of 2022 alone, Southwest hired 10,000 people across all of talent acquisition — including perm placements and hundreds of contingents — and it is on pace to hire 20,000 by the end of the year. To provide some context, prior to Covid, Southwest’s largest hiring year ever was close to 6,800 for a total year.
“TA has done more volume this year just in the first two quarters than we have in the history of hiring here, so I think we are doing great,” Hagood says.
Initially, the airline was most deficient and behind in hiring for roles in ground operations and those that directly interact with the airplane and interface with customers. After getting that under control, Southwest doubled down on internal corporate positions.
“Pay and bill rates appreciated meaningfully as the US neared record-low unemployment during 2018 and 2019,” the report states. “In 2021, pay and bill rates dramatically expanded, reflecting a tight labor market caused by extreme labor demand, as well as elevated inflation.”
While labor force participation continues to “ebb and flow” with pandemic waves, this impact is decreasing over time, the report states. Persistent labor shortages in client industries see average sales difficulty remain low at 2.38 on a scale of one to five, with five indicating the greatest level of difficulty. Recruiting challenges are less severe than in early 2021 but remain elevated with an average value of 4.03 out of five.
“Long Covid may prolong these challenges, and supply chain disruptions from China’s ‘Zero Covid’ policy and the war in Ukraine threaten production activities across manufacturing industries,” the report warns.
Attracting and Retaining Talent
When it comes to these essential and critical workers, many organizations are realizing it is not just the hourly rate of pay that is going to attract and retain them, according to Dawn McCartney, SIA’s VP, Contingent Workforce Strategies Council.
“They have had to educate their employees, many times the line manager, that the way in which they interact with the workers is even more important,” she says. “Little things from learning their names and thanking them for coming into work can go a long way.”
Labor participation rates fell in many, if not most, sectors when the pandemic hit, including industrial.
“Depending on where you looked, it felt like we had a three-to-one ratio of we had to do three times as much work as we used to do to get the exact same amount of hires, no matter what you looked at,” Tyler Hagood, Southwest’s manager of talent acquisition, says.
Wages that attracted workers in 2019 had no draw in 2021. Justification, research and market analysis is needed to change policies and get wages where they need to be to attract workers in different roles.
And while the talent shortage has softened a bit and it’s becoming slightly easier to manage the market, biting the bullet when it to comes to offering competitive wages and adjusting quickly to meet market demands will be important to filling both temp and perm roles in a timely fashion.
Southwest’s time-to-fill was 23.75 days for temp roles in the first quarter of 2022, which saw 131 starts.
“Even though in 2021 it was extremely difficult, the climate was crazy, wages were all over the place — it feels like the pendulum is shifting a little bit back to where it is not impossible to get people to apply for jobs,” Hagood says. “Our time-to-fill is getting faster and our quality is not too bad.”
“We have also seen organizations provide other benefits and perks such as company provided meals, the ability for the worker to select their own schedule and some are even providing paid training for skills that align to higher paid roles,” McCartney says.
Another way to lure talent into industrial jobs in to offer gateways to perm roles and market your organization as a destination to build a career. SIA research finds that a large percentage of contingent workers would take a permanent role if it was offered, and that many use a temp role to get a foot in the door. Offering such a pathway, and promoting it in your employer brand, will help sway applicants in your direction.
Job requirements are another area to examine. Are there outdated and unnecessary roadblocks for applicants to land a position? Review policies regarding education and certifications, age requirements, industry experience and more. Are they relevant to the role, or simply policies that have always been in place?
In addition, consider offering a training or apprenticeship program that could fill in the gaps and provide candidates with any missing skills needed to be successful in a role.
Because Covid pushed the work-from-home movement light years ahead, work/life flexibility and remote work options now rank at the top of workers’ must-haves lists. And if you want to compete for the best talent, consider if this is something you can, or should, be offering if the positions allow for it.
War for Talent Easing
The number of job openings decreased by 605,000 to a nine-month low of 10.7 million on the last business day of June, the US Bureau of Labor Statistics reported Aug. 2. The decline was the biggest since April 2020, Bloomberg reported, and the level of openings was lower than all but one estimate in its survey of economists. Despite the drop, the number of vacancies remains elevated as demand for workers broadly outweighs supply. Employers continue to report difficulty attracting and retaining workers.
Hence, industrial organizations must continue to innovate and push their established protocols to keep a solid pipeline of contingent workers.
“If we think the demand and struggle to fill these roles has been difficult to date, let’s not forget we are entering what has always been the most challenging time — the holiday season!” SIA’s McCartney says.
Southwest’s Hygood compares the hiring challenge to straightening a bedsheet: You move one part and then another is not right. It takes continued adjustment and evaluation.
“I think with every single challenge we faced — and I’ve seen a lot of them — we take them all case by case, diagnose what is stopping us from getting there, and then start challenging ourselves, ‘What could we do?,’” he says. “How could we remove this thing? Why is this thing here? Do we need it? Is it a risk, or is it just something we’ve always done?”