The ongoing difficulties for businesses finding talent to occupy openings or new positions within their company are partially the fault of the employer, according to a Harvard Business School professor.
Joseph Fuller, who oversees the Managing the Future of Work school research project, presented findings of a recent report March 3 at the Small Business Development Corp.’s annual meeting. The event drew roughly 450 people to the Oasis Hotel & Convention Center, according to Springfield Area Chamber of Commerce officials. The SBDC is the economic development arm of the chamber.
Fuller and Manjari Raman wrote the 72-page report, “Hidden Workers: Untapped Talent,” which was funded by Harvard Business School and global consulting firm Accenture. The authors conducted their research with a survey of over 8,000 workers dubbed “hidden” and more than 2,250 executives across the U.S., Germany and the United Kingdom.
At the event, Fuller said “hidden workers” are not people hiding from work. Instead, they are a large and growing group of individuals who are unemployed or underemployed, eager to get a job or increase their working hours. However, they remain effectively “hidden” from most businesses by the very processes those companies use to find talent.
“These are people who are hidden from the view of prospective employers because of the process you use to look for workers,” he said. “There are a lot of them.”
The report estimates there were roughly 27.4 million hidden workers in the U.S. as of March 2020. Of that total, 63% are “missing hours,” 33% are “missing from the workforce” and 4% are “missing from work.” Hidden worker examples include those caring for children or the elderly, veterans, people with mental health challenges, and those previously incarcerated or with a history of substance or alcohol abuse.
Hidden workers tend to fall into one of three employment narratives, Fuller said. Those who are missing hours work at least one part-time job but could or would like to work full time. People missing from work have been unemployed for a long time but are still seeking employment. Those missing from the workforce are currently not working and not actively seeking employment but could be convinced to seek work if they believed the right circumstances could present themselves.
Chamber President Matt Morrow told attendees the low unemployment environment nationally and in Springfield is great for those looking for work but difficult if you’re hiring.
“It’s especially difficult when you’re trying to attract new expansion to the area, and they need to know how they’re going to find their talent pipeline,” he said.
Morrow noted his staff frequently hears the same comments from employers in the area about workforce challenges.
“The first is that employers repeatedly describe their sense that we seem to all be chasing the same relative handful of good employees from one employer to the next,” he said, adding the other frequent comment asks a rhetorical question of where are the people they’re trying to hire.
Missouri’s unemployment rate in January was 3.8%, according to the Missouri Economic Research and Information Center, slightly below the national rate of 4%. Fuller said the rate, which is also known as the U-3 rate, only counts unemployed persons who are actively seeking jobs.
However, he said the U-6 rate, which includes the unemployed, workers employed part-time for economic reasons and those marginally attached to the labor force, is a more relevant one to track. Missouri’s U-6 rate was 7.5% at the end of 2021, according to the U.S. Bureau of Labor Statistics. The national U-6 rate was 9.4%.
“It captures people on the fringes of the labor market or people who are in part-time work and want to be in full-time work,” Fuller said.
Fuller said one reason workers are hidden is because of an applicant tracking system, also known as ATS. It helps organizations manage and track the pipeline of applicants in each step of the recruiting process. In the hidden workers report, research found that 99% of Fortune 500 companies use an ATS.
“It looks for employment gaps in your resume,” he said, referring to it as a continuity of employment filter.
Almost half the companies surveyed weeded out resumes that presented a work gap of more than six months, meaning they went unseen by prospective employers. As a result, candidates who left the workforce for over six months for reasons such as a difficult pregnancy, a severe illness of a spouse or other loved one, or relocation of a spouse in the military, would be eliminated from consideration and remain hidden.
The report makes several recommendations to employers in the approach to talent acquisition. Those include refreshing job descriptions and targeting segments of hidden workers best suited to the work of your organization.
Shari Reaves, vice president of human resources at O’Reilly Automotive Inc. (Nasdaq: ORLY), agreed with Morrow that the current labor market has companies pursuing the same talent pool of qualified candidates. But she’s intrigued by the idea of taking a closer look at candidates that may be hidden – such as internal part-time employees looking for full-time work.
“O’Reilly has a very strong promote-from-within philosophy. We’re always looking for individuals within the organization to promote,” she said. “Being intentional and getting them the skills and knowledge that they need to move to the next level, all companies are going to have to take that strategy.”
Navigating hiring challenges the past couple of years hasn’t been an issue at Community Foundation of the Ozarks Inc., said president Brian Fogle. The organization is fully staffed at 27 people. However, he acknowledges it is an issue for nonprofits in general, particularly when competing with private industry for employees.
“In some aspects, it’s probably worse in that in the nonprofit sector there’s unfortunately always been this expectation that you can’t pay your people market wages like you can in the private sector,” Fogle said. “We attract a lot of folks who just love the appeal of working and making a difference. That’s been our kind of secret weapon to combat the wage issue.”
Fogle, who also attended the SBDC event, said the 27 million hidden worker total was “astounding.”
“There’s long been talking about hidden workers, so I was familiar with the concept but not to that extent,” he said.
One new way CFO is aiding workers, including those considered hidden, is with transportation. In late January, the organization issued $275,000 in first-round grants for the Let’s Get to Work Fund. CFO announced the fund in December to assist workers and job seekers who face transportation barriers that affect their ability to get hired or maintain their current jobs.
SBDC, Community Partnership of the Ozarks Inc., the Drew Lewis Foundation Inc. and Monett-based Coalition of Charities were among grant recipients, according to CFO officials.
With hiring issues likely to persist for the foreseeable future, Reaves said it’s vital for employers to quickly identify individuals who share the culture that could make them a good fit in the organization.
“The early bird gets the worm,” she said. “The longer you take in terms of engaging those individuals who are looking for employment, the more likely you are to find out they’ve gone to work for another company.”
The Bureau of Labor Statistics reported in May the all-items inflation index surged 8.6% over the past year, the highest increase since 1981.