October 18th, 2021 | Vincenza Caruso-Valente, General Manager, Retail and Staffing, Sterling

Answers to 6 Common Questions on the US Labor Shortage

As the US starts to reopen and adjust to a new world, certain industries are struggling to get workers in the door.

The pandemic has prompted people to think more deeply about where and how they want to work, which has forced many companies to take a look in the mirror. It’s become evident that company culture is what will attract and retain employees, especially in industries experiencing labor shortages. Your organization’s company culture is shaped by the people you hire, so you really need to know who they are and make sure their values are aligned with yours.

As a valued partner to our clients, we at Sterling have received numerous questions around the labor shortage and shifts in the workforce. Below we provide you with the answers to six of the most common questions we’ve seen.

What is currently happening with the US labor shortage?

As stated above, the pandemic has changed the way in which individuals think about work. This comes after millions were forced out of work in industries like hospitality and manufacturing. Today, the US is in the process of reopening and organizations are frantically looking to fill positions, but they are having difficulty finding qualified candidates right away. One factor in this challenge is that with the Covid-19 relief plan, individuals are not jumping back into the workforce immediately and instead taking time to understand what type of work they want to do, who they want to work for, and where they work, especially with the rise of remote work opportunities. This, plus a variety of other factors, has contributed to the current US labor shortage.

What is the impact on organizations preparing to manage hiring needs as they go into peak seasons while navigating the effects of Covid-19?

The process of reopening happened quickly. Organizations were not as prepared as they thought they would be. Not only do they have to think about the amount of people they need to hire immediately, they also need to make sure that these workers feel safe, especially in roles where in-office or on-site work is required. 

There are many ways to make employees feel safe when returning to work. For example, Sterling offers flexible, end-to-end Covid-19 testing and tracking to help organizations focus on their business while we oversee, administer, and coordinate all the complex testing elements. Along with that, our screening and identity solutions support modern workforces and can be tailored to your organization’s needs. We will discuss these options in more detail later in this blog post. The goal is to arm yourself with partners who help set your organization up for efficiency and success.

What changes are we seeing in the workforce?

A major takeaway from the pandemic is that shifts in the workforce are constant, and organizations need to be ready for anything. One of the biggest changes we are seeing now is upscaling the current workforce. With candidates taking the time to understand where they want to work, organizations are in a war for talent and need to attract top workers during recruitment and onboarding. Candidates are now asking questions like, “how do you recruit?” and, “how will I be trained and developed once you hire me?” This has created a shift in how organizations are recruiting and hiring.

There is now a new framework for how organizations are hiring and maintaining their workforces, whether hiring in-person, remote, or hybrid; full-time, part-time, consultants, or contingent workers; in one country or all around the world. Some examples we have seen include organizations providing the opportunity for hourly employees to turn into full-time employees, and other organizations revisiting minimum and hourly wages. In fact, according to SIA’s North America Temporary Worker Survey 2021, 90% of temporary workers said pay rate was among their top three criteria and nearly as important as location of assignments, working conditions, work/life balance and more.

 What is a contingent workforce?

A contingent workforce comes into play when an organization’s need for employee hiring follows an in-demand timeline. These workers include contractors, vendors, consultants, freelancers, and other types of positions that are not full-time. A prime example of an industry that takes advantage of a contingent workforce is the retail industry, which ramps up contingent worker hiring during peak seasons.

The labor shortage has had an impact on contingent workforce trends. Because organizations are having a hard time filling full-time roles, we are currently seeing an “always-on” peak season across industries who are looking to staff rapidly.

It’s important to note that even though workers within a contingent workforce are not full-time employees, they still might have access to restricted areas or sensitive information, and can also impact your company culture by being in positions of trust and representing your brand. Performing thorough background checks on these employees can protect your business and other employees. Conducting background screens on contingent workforces can blend seamlessly into HR teams’ hiring workflows, such as with Sterling’s mobile-first Contingent Workforce Screening Portal.

Do background checks delay the hiring process?

It is a common misconception that background checks will significantly delay the hiring process. In order to make employee hiring a process that increases safety for your organization and strengthens your company culture, organizations must run thorough background checks on candidates. Turnaround times vary for the type of background check being conducted, the third-party that is conducting them, and how quickly candidates can provide required information, however they can take as little as one hour. In fact, Sterling conducts more than 75 million background checks annually, closing 70% of criminal searches within one hour and 90% within one day. We are helping clients bring on new employees as quickly as possible without sacrificing trust in the people they’re hiring. Kristen Fulton of Heniff Transportation Systems LLC tells us that within the transportation industry, “Turnaround time is absolutely a necessity when it comes to getting people in as quickly as possible. We are right around 90% [in a single day].”

In this current hiring climate, we understand that both employers and candidates want the quickest possible turnaround times. We recently ran a poll on LinkedIn where we asked our audience, “Is losing good candidates between the offer stage and day one of employment due to lengthy processes a problem for your organization?” 60% of respondents said this is a frequent problem, 20% said it is an occasional problem, and 20% said it is not a problem. The results show that organizations are finding a drop-off in candidates who do not want to go through a lengthy hiring process.

While we understand this concern for candidates, it is important that employers continue to run both thorough and accurate background checks. This helps mitigate potential risk at a later date and increase the likelihood that employees will positively reflect the value of the company from day one.

Is it ok to not run full background checks or remove the screening process entirely?

At Sterling, we want all of our clients to feel confident in those that they hire and stress that no sacrifices need to be made in order to get people hired quickly. You can have a thorough and end-to-end background screening and identity verification program that is both quick and effective.

Now more than ever, it is crucial to fully understand background checks and how to use the information within the check. Using an individualized assessment approach will help your organization in hiring the right people for the right roles. Background screening is not just about finding a criminal record on a candidate; it’s about getting a complete picture of your candidates, which ultimately helps with time-to-hire, fulfillment, and increasing confidence in your workforce.

While some new hires might not be the right fit for your organization, some may have the intent of causing harm to your business and brand. Identity-related fraud is on the rise, and with remote hiring continuing to be on the rise, it’s critical to know the true identity of all new hires before they join your team. Verifying a candidate’s identity should be the first step in the hiring process, before the background check begins. Sterling Identity Verification is designed to help mitigate this risk. Our exclusive partnership with ID.me brings a unique identity verification solution to the US, allowing candidates to verify their identity anywhere, anytime.

The Cost of a Bad Hire

The hiring and onboarding process can be costly for organizations. It is costly to work with new hires and to fully onboard them. Now imagine if you hire the wrong individual – how much would that cost your organization? “Off-boarding” a bad hire can be costly and will escalate if the departure is not smooth. In addition, adding the cost of recruiting and hiring a replacement also needs to be factored in. The Consumer Sentinel Network Data Book 2019 states that 19% of new hires are considered fully successful by employers, and by 18 months on the job, about 46% of employees are actually considered failures by the business. To see the potential cost of bad hires, you can view a top-level calculator located in our HR’s Guide to Onboarding Guide.

How Sterling Can Help

Sterling has helped our 40,000 clients around the globe build strong workforces and company cultures on a foundation of trust and safety. Organizations can navigate shifting workforces by developing a background screening program that addresses unique requirements, compliance needs, speed, and future uncertainty.

Don’t be an employer of last resort. We understand navigating the current workforce can be challenging, but we are here to help. Contact us to find out how we can create a program that works for your needs.

Sterling is not a law firm. This publication is for informational purposes only and nothing contained in it should be construed as legal advice. We expressly disclaim any warranty or responsibility for damages arising out this information. We encourage you to consult with legal counsel regarding your specific needs. We do not undertake any duty to update previously posted materials.