Labor & Recruiting - 4th Qtr into 2024 - Indiana perspectives

 Every October for the past few years, I have attended a presentation by a PhD Economist who discusses the global, national, and local economic outlook.  He’s a partner in ITR Economics, a national team of economic analysts.  I’ve seen his presentations for several years in a row now and seen how relevant they are.  

A major part of his presentation includes the labor market.  He summarized the labor and recruiting outlook this way:

•Disinflation on wages late in 2023 and in 2024 (rising salaries will level off)

•Tight labor market for years (no solutions for systemic labor problems)

•It is all about the culture (attracting next generation talent requires “caving in” to them)

Because Career Solutions Group’s business is “Indiana centric” but also works nationally, I wanted to gather some additional perspective from very experienced corporate recruiters to gather their input on Indiana’s labor and recruiting.  All are based in Indianapolis and include:

•Director of Recruiting for a global consulting financial services with thirty years of experience. (A)

•Talent Acquisition Manager for a national engineering & industrial automation corporation including manufacturing operations with thirty years of experience. (B)

•Vice President & Recruiting Director for a team with a regional banking asset management division, also with thirty years of experience. (C)

Although based in Indianapolis, each represents a very different part of the labor market.  Financial services consulting (tax & audit) does reach across all industries, but the nature of consulting makes the business very responsive to economic changes and progressive in terms of culture.  Engineering and manufacturing is a big part of the Midwest, and especially Indiana, economy and very impacted by upturns and downturns.  And banking / investment management might be the most stable and conservative work environment.

I asked each of them to comment on what they were seeing in their recruiting worlds.  Did they agree with the summary points of the economist and did they have any unique insights.  Here are their responses.

Disinflation on wages late in 2023 and in 2024

“Given the on-going demand and decreasing talent pool of current and future CPA’s I don’t see our traditional audit and tax practices experiencing any wage disinflation.  Raises and performance based bonuses may slow, but that’s about it.  “ (A)

“The demand for technical talent is high and supply is shrinking in some majors.  For example, we’re seeing fewer Electrical Engineering graduates each year.  I don’t see salaries coming down because of high demand.” (B)

“I agree.  In fact, we have already seen this happening. “ (C)

COMMENT:  Some differing answers here based upon industry.  The banking / investment area may be affected by rising interest rates which have cooled off portions of their business.  But shortages in talent exist for all  long term.

Tight labor market for years

“Yes, we are concerned as a profession for our traditional audit and tax practice because of the continual decline in accounting majors and number of CPA’s that have left the profession at historically high rates in recent years. “(A)

“Our need for Engineers and technical talent is causing us to look internationally.  And because visa quotas in the US have not adjusted to allow for more aggressive immigration of talent, we have been forced to become more creative in how we’re finding talent.  The TN visa which came out of NAFTA has allowed us to look at candidates from Canada and Mexico to broaden out technical talent pool.” (B)

“My team recruits for Asset Management and most of the positions require specific experience.  We do primarily passive recruiting and agree the market is tight. “ (C)

COMMENT:  The shortages in talent we are seeing now nationally and Indiana were predicted as far back as 2008, prior to the Great Recession.  The retirement of the Baby Boom generation has been prolongated by economic crises.   But now, post pandemic, the shortages are clear in that there are not enough X Gen workers to replace the Boomers and the Millenials aren’t quite ready for some senior roles.

It is all about the culture

“We knew 10+ years ago that over 85% of our workforce was going to be millennials by now and took the appropriate steps to future proof against ‘caving in’ as much as we could.  I would say from my seat we achieved our objective and learned some valuable things along the way.  People in professional services want to work hard, be recognized for their contribution, be a good team member and be given life long learning opportunities all while staying connected to the community.  Not unlike any other generation, they just want it packages differently and have a different order of priorities.  I would also say Covid really forced us to accelerate any unfinished business we had to help this group of future leaders thrive. “ (A)

“You can't recruit for this industry unless you can really explain to someone what they'll be doing. Recruiters paint pictures.  And as we have been forced to expand out reach in search of talent, it is leading us to greater diversity and that creates a more attractive culture.” (B)

Culture is still so important.  I am a little worried about the “back to office” philosophy.  Many people want to continue working from home.  But I think most financial institutions agree it is time to get back to the office.   There is a lot more to culture than “remote work”, so we will focus on really caring about the employees with work environment, great managers and benefits.” (C)

COMMENT: All three describe culture in their companies differently.  And, you would expect the heads of recruiting for these organizations to be able to describe their organizations to differentiate from their competitors for talent.

While there are a few differences in the responses of these seasoned corporate recruiters, they seem to agree with some of the economist’s assessments.  But while salary and wage increases may be leveling off currently, I do not get the impression that these corporate recruiters expect that long term.  There is no solution to the shortages of talent across all industries and disciplines though.

Culture does seem to be the solution to the recruiting challenges that all employers are seeing.  Each company defines its own culture differently.  It’s the recruiter’s job to explain, convince, persuade, and ultimately help find the right fit for the right company culture.