In 2021, more than 47 million workers quit their jobs in search of an improved work-life balance and flexibility, increased pay, and a healthier company culture.
While some have called this ‘The Great Resignation’, a closer look led analysts to describe it as ‘The Great Reshuffle’ – since hiring rates have actually outpaced quit rates since November 2020. Many workers are quitting their jobs and then being re-hired elsewhere.
In this article, we’ll discuss what ‘The Great Reshuffle’ means for key professional service industries, and how to use pre-employment testing to address the issues of staff shortage and retention.
Table of Contents:
- ‘The Great Reshuffle’: Finding New Opportunities in the Labor Shortage
- Accounting Resignations Fuel Financial Reporting Risks
- Law Firms Struggling with Staff Shortages
- Insurance Industry Wrestles with Retention and Recruitment
- Evaluating Candidates Beyond the Resume with Pre-Employment Tests
‘The Great Reshuffle’: Finding New Opportunities in the Labor Shortage
‘The Great Reshuffle’ represents the shift in the job market caused by a sharp change of employees’ priorities. For example, the option of flexible work hours and the opportunity to work remotely, according to surveys, are being valued over salary.
If handled properly, ‘The Great Reshuffle’ can create new opportunities for organizations. By focusing their recruiting efforts on contract hires, companies can open themselves up to a vast market of new candidates that would’ve otherwise fallen through the cracks.
This poses new challenges for existing hiring processes. As both workforces and workplaces become more remote and distributed, long-established recruiting practices, like interviewing potential candidates face-to-face, are more challenging than ever to pull off.
Not surprisingly, more organizations are using pre-employment tests to fill the candidate assessment gap left by the shifted focus on remote and contract hiring.
Accounting Resignations Fuel Financial Reporting Risks
Reports show that accounting staff was in short supply even before the pandemic hit. Since its peak in 2012, the number of accounting graduates has dropped nearly 7%, according to the 2019 report from the American Institute of CPAs.
With more work put on their shoulders without the help of a higher headcount, accounting teams are pressured to find affordable and skilled candidates to hit deadlines. This led to a record number of resignations in 2021, as an increasing number of accountant staff started re-evaluating what they wanted from their career.
The Public Company Accounting Oversight Board is closely following the turnover in the accounting industry. The board has urged auditors to up their game in the face of unprecedented market risks, while SEC enforcement officials have warned companies to ensure their internal controls are up to date and can deliver trustworthy results to investors.
As hiring struggles to keep pace with resignations, companies have shifted their operations and spending to more project-based, technology-driven processes that require more contract workers. This has led to a whole set of new challenges.
First, companies had to re-adjust internal controls to address new risks surfacing from the shift to contract-based, remote work practices. The safety checks are designed to ensure accurate reporting and often require multiple people to complete one task, which can add more strain to shorthanded finance teams.
Another challenge has been posed by the need to change established recruiting processes that run counter to remote work practices. Simply put, interviewing candidates face-to-face has become more challenging, and won’t cut it in an environment that requires higher-than-ever flexibility from organizations.
Law Firms Struggling with Staff Shortages
Staffing firm Robert Half’s regional director Thomas Vick shared that it’s been “a struggle across the board” for companies to fill positions. The case is much the same across the US legal industry.
“As they saw their business continue to pick up and hire more attorneys, firms have struggled to keep up with backend support,” Vick said.
A major contributor to this issue is the candidates’ re-evaluation of career choices and work conditions in a post-pandemic job market. More often than not, new work preferences run counter to established processes within many law firms (ex: required in-office work each day).
In short, law firms are no strangers to the applicants’ increasing demands to work remotely with more flexible hours. These demands will only rise in years to come, and leading law experts see the need to adjust to this “new normal'' to keep up.
According to Trish Lilley, chief marketing officer at Stroock & Stroock & Lavan, “Firms will need to be more flexible. They have always [made] ‘special arrangements’ for remote working, but this is an institutional change. They are going to have to learn to manage remotely.”
This means that law firms need to shake off long-held beliefs as to how work should be done. In this ever-changing work environment that emphasizes flexibility, coming into the office, even if it’s just for a couple of days per week, won’t cut it for most people anymore.
“Most firms are asking for two to three days per week,” says Lilley. “But over the last two years, if someone has been working their butt off and getting everything done and is then told they need to come back into the office to do the same job, they likely feel like they are mistrusted. Flexibility and trust are directly related.”
Considering this greater need for flexibility, law firms face a major challenge in updating their hiring practices to match with a contracted remote workforce. To keep efficiency at a high level, there is an increasing demand for firms to filter through the best candidates even before the first job interview.
Insurance Industry Wrestles with Retention and Recruitment
The insurance industry is also bracing for the impact of ‘The Great Reshuffle’.
Brad Whatley, the managing director of the Jacobson Group, said at the 2022 Life Insurance Conference that “insurance industry unemployment is at 1.5%.” For reference, the national unemployment rate for all industries is 3.6%.
The two major issues the insurance industry is facing? Retention and recruitment.
Whatley explained that retention is crucial for business survival, as the average estimate of replacing an employee is 1.5–2 times their salary.
“So, if you’re paying somebody $100,000 in salary, that’s $50,000 to $200,000 it’s going to cost you to replace them,” Whatley added.
Another hurdle the insurance industry must overcome is the challenge of effective recruiting, with nearly two out of three life/health insurance companies planning to add staff in 2022.
The question is, where will those additional employees come from? And how will you know if they will be a valuable addition to your team?
Evaluating Candidates Beyond the Resume with Pre-Employment Tests
With the rise of remote and contract work, pre-employment tests have established themselves as a key tool in the hiring toolbox.
Aberdeen research said that organizations using pre-employment assessments report a 39% lower turnover rate. Additionally, companies that include testing in their hiring process are 24% more likely to have employees who exceed their performance goals.
These stats shouldn’t come as a surprise. Pre-employment assessments give a detailed picture of your applicant, and not just of their skills and knowledge levels, but also behavioral tendencies which can tell you if they will fit into the company culture or rise to the demands of their role.
If you’re looking into adding pre-employment testing to your hiring process, EmployTest offers a variety of assessments – from measuring candidates’ soft skills, checking industry-related expertise, to personality tests.
To learn more about how it works and get a free sample test, explore our test list or contact us today.