Students looking to be recruited, rejoice! U.S. companies are looking to hire qualified workers now more than ever.
A lack of qualified workers in the current labor market is the main reason companies are postponing investments aimed at corporate expansion, according to a new study from the Fuqua School of Business. The research comes from the latest release of the Duke CFO Global Business Outlook, a quarterly study conducted by Fuqua in collaboration with the Boston-based research firm CFO Publishing.
“Firms are having a much harder time finding the right managerial talent, and a somewhat harder time hiring rank-and-file workers,” said John Graham, D. Richard Mead Jr. family professor of finance at the Fuqua School of Business, in a press release.
An analysis from Fuqua's global study found that an overwhelming 89 percent of CFOs do not plan to continue with planned projects aimed towards increasing the value of their companies. Around half of surveyed companies attributed the cause of delayed growth to their firm's inability to attract and retain qualified employees.
With the U.S. unemployment rate currently hovering about 4.3 percent, employers’ demand for labor is outpacing the amount of people looking for work. The survey suggested that in order to attract much needed workers, employers are expected to offer more competitive pay packages, leading to wage growth as salaries increase across all industries.
As part of this strategy, U.S. companies may be forced to pay higher wages over the course of the next 12 months, the study showed. Although the number of job openings this quarter has hit an all-time high, the hires-to-openings ratio is trending lower, suggesting that companies are having trouble finding qualified workers.
Executives in the survey reported feeling that current prospective managers lack industry-specific work experience, technical knowledge, critical thinking abilities and leadership skills. Along similar lines, the pool of candidates for rank-and-file positions was characterized by a lack of basic writing and arithmetic skills, position-specific technical skills, work ethic and determination.
“In the past, CFOs were worried about macroeconomic trends and spending, but in this case, it is a switch to [the lack of] talent,” explained Christopher Schmidt, director of research and custom content for CFO Publishing.
Aside from attracting qualified employees, the study suggested that other top concerns for U.S. businesses included the cost of employee benefits, regulatory and government uncertainty, data security and access to capital.
The group's research also found that American CFOs are not alone in their hiring struggles—companies across the world are facing similar struggles as their U.S. counterparts. For the first time in the history of the 20-year survey, the top concern among European CFOs was attracting and retaining qualified employees.
In Asia, difficulty attracting employees was the second largest concern, following uncertainty about macroeconomic conditions.
In contrast, CFOs in Africa and Latin America did not see labor shortages as a predominant challenge, listing economic uncertainty, political volatility and weak demand as top concerns. While optimism—measured on a 100-point scale in the study—in Europe, Latin America and Africa has risen in the past quarter to 63, 57 and 52, respectively, the index fell slightly to 60 in Asia, as a result of cooling economic growth.
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Despite the challenges American companies are currently facing in attracting labor, the study revealed that the U.S. economy remains by far the largest and most crucial economy in the current era of globalization. The CFOs surveyed showed signs of optimism about the future—the optimism index remained six points higher than its long-run average of 60.
Some of this forward thinking may be linked to changing global policy, Schmidt noted.
“There’s still a certain amount of optimism in the world that’s driven by the prospects of corporate tax cuts,” he said.