The following findings are based on the results of ZipRecruiter’s first Annual Employer Survey, providing an in-depth look into the challenges, motivations, and latest hiring practices of employers across the U.S.
Top takeaway: Employers report that they’re still facing a tough labor market—talent acquisition teams report struggling to find suitable candidates, connect with them before it’s too late, stave off competition from other employers, recruit more diverse talent, navigate complex and poorly integrated technology systems, and keep pace with the latest industry advancements, including the emergence of generative AI.
Employers might have expected hiring conditions to ease as the pandemic waned, and then later as the Federal Reserve raised interest rates to restrictive levels. However, many employers report that they still find themselves in a tough labor market. In a new ZipRecruiter survey of 2,000 employers conducted in Q3 2023, talent acquisition contacts with responsibility for hiring at small or medium-sized businesses (SMBs) or major enterprises detailed the following 10 key challenges they are facing in an ever-evolving job market.
- Talent Shortages. When asked to list their top three recruitment challenges, 57% of employers said they lacked qualified candidates, and 46% of employers said they had too few candidates of any kind. Of course, optimizing job advertising campaigns and offering more attractive terms of employment draws in more quality candidates, but talent acquisition professionals operate under constraints. 41% said they had failed to fill a vacancy in the prior 6 months because the candidates available wanted more pay than they were able to offer. Perhaps surprisingly, given their resources, the share was even higher among major enterprises at 44%.
- Difficulty Recruiting Diverse Candidates. With so many employers simply struggling to fill vacancies at all, it is perhaps unsurprising that so many are finding it particularly difficult to expand workforce diversity in the process. 50% of employers bemoaned a lack of underrepresented candidates in the talent pipeline, 43% noted a lack of applicants of color, and 42% a lack of female applicants. When asked about the most important barriers to diversity, 56% noted a lack of diversity in employee referrals. Even when TA teams do succeed in finding diverse candidates, 53% cite hiring manager inflexibility regarding candidates’ backgrounds, and 44% cite outright bias or discrimination as barriers to recruiting them. 48% say that a lack of diversity among existing employees, which makes it difficult to assure candidates from underrepresented groups during the hiring process that they will feel a sense of belonging at the organization.
- Missed Connections. Even when TA teams find the right candidates for the job, they frequently struggle to connect with them. 44% of employers listed “not getting responses from candidates” as one of their top three recruitment challenges. Employers also estimated that candidates ghost interviewers from their organization about 37% of the time, on average. When candidates go off the radar, employers often have little insight into the reason why—whether the candidate was never really interested in the role in the first place, or whether the TA team was simply too late and the candidate was already hired elsewhere. That leads to the fourth challenge.
- Competition. The labor market remains highly competitive, with 40% of employers saying that competition for talent from better-known companies is among their top three recruitment challenges, and 40% listing competition from companies that pay more or offer more benefits. Competition with other employers on reputation and pay are major reasons for the first two challenges listed above. Competition translates directly into unfilled vacancies when candidates hold out for more pay elsewhere, and to ghosting, when candidates accept alternative offers and suddenly stop engaging.
- Time Pressure. The competitive landscape adds time pressure to the hiring process. The chart below reports the average time employers say it takes them to respond to potential candidates. 84% of SMBs and 71% of enterprises say they respond within a week of receiving an application. Companies have achieved these rapid response speeds through process improvements and the adoption of TA technology tools. For example, 44% of companies said they have created processes for reviewing applications and responding to candidates within a set time, and 41% said they had automated responses to applicants in their applicant tracking systems.
- A Burdensome Process. Employers feel pressure to connect with candidates and present offers quickly, but the hiring process remains a burdensome slog and can only go so fast. Despite process improvements and new technologies, many TA tasks still take too much time and money, as far as employers (and job seekers) are concerned. 37% of employers said having too little time to spend on recruiting was among their top recruiting challenges, and 35% listed having too small a recruiting budget. The chart below shows the share of employers who listed the relevant tasks as among the three most time-consuming parts of the hiring process.
- A Complex Landscape. Despite resource constraints, employers struggle to simplify the hiring process because so many different factors matter to the outcome. Instead, employers face pressure to walk and chew gum. The first chart below lists the share of companies listing the relevant factor as their most important differentiator in hiring. While pay clearly has the greatest impact, company culture, and benefits, leadership, flexibility, and employer branding matter too. The second chart shows the share of employers who say that the relevant perk has a large positive impact on recruitment, as opposed to only a small impact or no impact at all. It is difficult to focus on doing a few things well when everything matters. Since job seekers are all different and all care about different things, employers feel pressure to compete on multiple fronts.
- Relentless Modernization. As candidate expectations evolve and recruiters’ technological possibilities expand, employers continue to modernize their hiring practices. 80% of employers said they had made process improvements to help their recruitment efforts in just the past year. 44% said they created processes for reviewing applications and responding to candidates within a set timeframe. 41% said they set up automated responses to applicants in their applicant tracking system. 37% said they improved their mobile application experience. 37% said they optimized their job descriptions. 27% said they increased their use of proactive sourcing. 21% said they added a new job search site or job board to their sourcing strategy. With so many companies constantly finetuning their talent acquisition processes, pressure is mounting on the remaining employers to follow suit or get left behind.
- TA Tech Overload. The modern talent acquisition landscape is saturated with an array of specialized software and platforms. From applicant tracking systems (ATS) and candidate relationship management (CRM) systems, to video interviewing platforms and social media sourcing tools, there is a tool for almost every aspect of the recruitment process. For example, 85.6% of employers said they are currently using a hiring site, 50% video interviewing tools, 45% scheduling software, 43% candidate skill assessment platforms, 33% resume screening tools, and 14% virtual recruitment event platforms. One significant challenge employers face is the lack of integration among these tools.
- AI’s Uncertain Impact. While working to optimize their hiring processes and refine their tech stacks, employers are also keenly aware that generative AI (GenAI) could soon unleash a transformation, unlocking new capabilities and efficiencies, but also presenting new dilemmas. 68% of employers said they agree that GenAI will become a larger part of the hiring process, and 66% said they agree that GenAI tools will streamline the recruitment workflow and increase productivity. 59% said they are already using GenAI to help write job descriptions, and 47% said they are using it to help make hiring decisions. Employers are under no illusions that GenAI will benefit only them. Two in three employers said they are open to job candidates using GenAI tools to help write resumes, cover letters, and job applications—a sign that employers are soberly accepting emerging challenges and adapting their strategies accordingly.
The overall takeaway from the survey is that employers are clear-eyed about the challenge of ongoing labor shortages. They have gained practice adapting to difficult and unexpected situations over the past three years and are generally doing so with flexibility and resilience. Evolving job seeker expectations and competitive pressures will keep them vigilant and receptive to better ways of hiring should emerging technology solutions open up new possibilities.
Survey Methodology: ZipRecruiter conducted a national online survey between July 7 and August 1, 2023, to explore employer attitudes toward recent hiring trends and their experiences of current U.S. labor market conditions.
The survey was administered to a Qualtrics panel of 2,000+ verified talent acquisition professionals and hiring managers, each of whom has considerable responsibility for hiring processes and decisions. They were drawn from businesses of various sizes across a wide range of industries.
In addition to standard screening and demographic questions, respondents were asked about their recruiting, hiring, employment, and retention practices, as well as their expectations, desires, and requirements for future talent acquisition activities.