The U.S. workforce is facing a critical moment of talent stagnation, marking a shift away from the disruption of The Great Resignation. Today, employers say they are struggling to fill limited open roles due to a lack of well-qualified applicants, meaning less new talent is coming into the fold. Meanwhile, workers are now looking to stay and grow with their current employers, in contrast to the “free agent” mentality so many had in the pandemic era labor market. However, the workforce feels easily replaceable in their current roles due to the current economic environment, and they strongly believe that their company does not offer the upskilling and reskilling required for internal mobility.
These trends have been illuminated by the University of Phoenix Career Institute®, which annually surveys more than 5,000 adults and 500 employers across the U.S. on their sentiments regarding their careers, including their concerns, their challenges, and the degree to which they are optimistic for the future. The findings of the 2024 Career Optimism Index® indicate that in focusing efforts on external recruitment, employers are overlooking significant potential to skill and elevate their existing workforce to solve business needs, hindering progression for both workers and organizations.
Stagnation Through the Lens of Employers
With tightened budgets and growing economic uncertainty, employers are hiring fewer workers. The Career Optimism Index finds that a majority of companies (62%) have experienced slowed or declining growth over the past year, citing hiring freezes, layoffs, and restructuring as primary reasons. When companies do have the opportunity to hire in this landscape, it’s critical that they find candidates with skills that are a perfect match to meet their needs. However, many are struggling to find the right fit, with 44% saying that their top hiring challenge in the past year has been a lack of well-qualified applicants.
By prioritizing outside, highly skilled talent that doesn’t exist in the capacity business leaders currently need, these leaders are overlooking immense opportunities to leverage their existing workforce. These workers are eager to advance and acquire the skillsets employers seek to fortify their personal career paths and best serve businesses for the future.
Stagnation Through the Lens of Workers
Notably, the last year of layoffs, strikes, and economic uncertainty has caused tension for workers. In a major shift from The Great Resignation where workers held most of the labor market power, the Index finds that 42% of workers today are worried about losing their job due to a bad economy. What’s more, they are facing salary stagnation—38% say their salary has not increased at the same rate as inflation. This is compounded by the fact that 30% of workers say they don’t feel recognized by their company’s leadership for their contributions, further creating a divide between the workforce and their employers.
Considering these factors, workers do report a strong desire for growth. The majority of workers (74%) say they need to continue learning new skills to stay ahead in their career and most say if their company did more to upskill (66%) or reskill (65%) them and gave more opportunities to apply new skills (69%), they would be more likely to stay at their current organization throughout their career.
The Index reports that opportunities provided by employers in this space directly impact workers’ career outlooks. Workers are more likely to feel that they do not have the ability to advance in their career at their current job when their company does not provide a mentorship program (49%), skills development opportunities (55%), internal mobility (55%) or career path guidelines (53%).
Disconnect Between Employers and Workers
There is a wide disconnect between employer perceptions of the career support they offer their workers, and the realities workers are experiencing within the workplace. According to the Career Optimism Index, 62% of employers say their company currently offers opportunities for internal mobility; however, only 36% of workers agree. What’s more, 90% of employers say their company provides workers with opportunities for career development, but only 69% of workers agree.
What Employers Can Do to Bridge the Gap
By providing clear and more flexible opportunities for their existing workforce to advance internally, employers can develop the skilled, dynamic talent they are seeking from within. In doing so, leaders can advance workers’ career ambitions, as well as their own business objectives, improving the overall strength of their organizations.
Key actions to accomplish this include:
- Emphasizing a culture of internal growth: Given the vast disconnect between employer perceptions and worker realities regarding opportunities for advancement, employers must create an environment which recognizes and rewards those managers who build their staff’s skills so that they can pursue internal opportunities. With clear, consistent means of communication,managers and people leaders should prioritize sharing positions as they become available internally and encourage existing employees to apply for these positions for which the person has or is close to having all the skills. Organizational leaders should commit to a regular cadence of communication around programming to upskill, reskill, and receive and provide mentorship to ensure workers are taking advantage of all mobility opportunities available to them.
- Investing in low-cost, high-impact tools and resources: A statistical modelling analysis conducted as part of this year’s Index reveals that helping employees to achieve their career goals through specific low-cost tactics including career pathing support, skilling programs, and mentorship, employers can save up to $6,521 through increased productivity, $916 through decreased turnover, and $616 through decreased healthcare costs per employee per year. Developing a targeted and personalized skilling program that implements these types of tacticsshould be a top priority for employers to invest in during tight economic times to continue driving organizational progress. Additionally, leveraging specialized technology to help develop targeted upskilling internally could provide overall cost savings and improved productivity for companies.
- Creating a More Personalized Workplace Experience: The Index finds that workers and employers can benefit from enhanced job performance and career opportunities when their workplace experience offers flexibility for the ways they want to work and learn. In fact, 78% of workers feel more productive at their job when they have more flexibility.
Employers must consider how they can tap into their workers’ interests and skillsets to drive engagement and productivity, and in turn, improve business results.
Raghu Krishnaiah is chief operating officer for University of Phoenix, where he is instrumental in the transformation of the University and responsible for all operating strategy and results. As part of his responsibilities, Krishnaiah oversees all student academic, financial aid, enrollment, technology and career advising; corporate, tribal and community college relationships; product development; operational analytics; regional campuses; and business innovation.