Earlier this week The Boston Globe published an article discussing the current jobs market as “a giant game of musical chairs” with workers across industries changing jobs at an alarming rate as the pandemic wanes. While the theme of the article was accurate, we’d argue that the timeline for such pandemic-related job-hopping already ran its course months ago for the most part, at least when viewed through our lens within the financial services industry. As we wrote about in an earlier blog post, there was intense movement by candidates in the industry throughout the second half of 2020 which continued into the early part of this year. Our firm fielded staggering numbers of reach-outs from job-seeking candidates, many of whom hadn’t considered a job change in the years leading up to the pandemic. We were also seeing candidates in our network receive multiple job offers from different companies while getting regular notifications from LinkedIn alerting us that people were starting positions at new firms.

The torrid pace of the job market continued into the second quarter of 2021, however has recently taken an interesting and unforeseen turn.  Job openings have continued to grow steadily throughout the course of the year, with many clients embarking on multiple areas of headcount expansion which has led to a record amount of open job requisitions in the market currently.  While it is a terrific development to see such a healthy job market, the unfortunate challenge is that there is a shortage of available candidates to fill many of these roles.  Hiring managers are reporting that they are seeing a decline in applications and resumes from candidates and lower production from their internal staffing teams and third-party recruiting firms.  Our team has seen a similar decline in interested candidates.  It is easily the tightest labor market conditions that we can recall.

We attribute the sudden gap in available talent to a few different causes. First, with so many candidates having changed jobs over the past year it is unlikely that many of those same individuals would consider another job move at this point, having just stepped into a new role and taken time to get up to speed, many of them continuing to work remotely from home without ever having met their colleagues in-person. In our view, that scenario makes it difficult for workers to be unhappy in their current role for the typically-cited reasons of work/life balance issues, compensation dissatisfaction, organizational culture concerns, or eventual progression/career growth challenges. Second, having just come out of a year-plus period of lockdown time in recent months, workers are looking to get back to seeing extended family/friends and traveling which wasn’t an option last year.  With a focus on those priorities, seeking a job change is not top-of-mind at the moment. Lastly, with many workplaces looking to bring their employees back into the office post-Labor Day, workers are still awaiting confirmation from their employers around future work structures, whether required to be present in the office five days a week or moving to a hybrid remote structure where they would need to be in the office three or four days a week and working remotely from home the other days. Those conditions appear to have created a pause of sorts where workers are looking to understand those future operating structures first prior to thinking about a potential job change.

For job candidates that are feeling bold enough to look outside at potential career opportunities, it’s definitely a seller’s market. The pace of the hiring process is the fastest that we can recall, with high-quality candidates sometimes receiving multiple offers in a matter of weeks. Not unlike the housing market, compensation for many roles has generally seen a boost as a result of that thirst for talent. The opportunities for women and people of color are especially abundant in today’s marketplace, with companies looking to increase the diversity of their workforce and add new perspectives. Institutional investors have also continued to play an important role in compelling companies to hire people of different backgrounds.   It is noteworthy that the tight labor conditions are especially true with regards to experienced diversity talent within the asset management industry given the smaller population size and the industry’s focus on pursuing talent within that population. It is our hope that the gap narrows in the years ahead as more diversity talent enters the industry given the immense opportunities available.

For companies looking to hire talent, it is a challenging time but patience is crucial. While there is a need to fill roles quickly and take on new headcount to ease overburdened staff, the current conditions are likely to persist throughout the summer and will hopefully ease headed into the fall as people return to the workplace.  One alternative, while not ideal, would be to consider hiring contract talent or interns to fill gaps where possible.  We’d advise against getting into bidding wars for average talent as we’ve seen several cases where firms are “overpaying” for talent.  When you see interest from high-quality candidates, there is a need to act swiftly to move them through the vetting process.  The historical practice of taking months to decision a candidate is a non-starter in today’s market.  Also, offering employees some degree of hybrid remote work option will likely be the new norm so without it companies may find themselves challenged to retain staff in some cases.  Finally, consider which constraints or qualifications about the role are critical vs. nice to have.  The “unicorn” candidate is more elusive than ever so if there are any areas of flexibility within the job description it could prove helpful in broadening the candidate pool.