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2021 Hiring Benchmark Report
2021 Hiring Benchmark Research Report
About the Report
Every year, Criteria surveys hiring professionals from across all industries to learn more about how they attract, hire, and retain their teams. For our fourth annual report, we explore the state of hiring in 2021, a year characterized by a turbulent hiring landscape. The ongoing COVID-19 pandemic has reshaped the very foundation of work itself, changing the way organizations attract and hire talent. With higher turnover, fewer applicants, and talent shortages across several industries, one major theme emerges: hiring is harder in 2021.
This report dives deeper into the trends that are shaping HR and hiring today. The results in this report are based on a survey of over 400 hiring professionals across organizations large and small, and across a wide breadth of industries. Responses were collected in August 2021. The 2021 report surveyed a global audience, with the majority of respondents hailing from the United States, Australia, and Canada.
6 Key Insights from the Report
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Hiring is more challenging than ever. 2021 is a candidate-driven market. 66% of hiring professionals say that hiring is more challenging this year than in 2020, and 38% say that their organization experienced increased turnover.
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Applicants are harder to find. 56% of hiring professionals say they are getting fewer job applicants than they did last year, and 70% say that applicant volume is a challenge, up 51% from the prior year.
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Organizations have no plans to slow the pace of hiring. On average, respondents expect to increase their hiring volume by 5.1% in the next 12 months, suggesting that the talent shortage is anything but over. The Technology and Staffing/Recruiting industries anticipated the most hiring growth.
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Companies plan to invest big in order to achieve hiring goals. On average, respondents expected HR budgets to increase by 6.9% in the next year, an uncharacteristically high increase YoY. They plan to invest the most in increasing both the quality and quantity of candidates.
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Remote work is here to stay. 71% of respondent organizations changed their remote work policies since COVID-19. A combined 60% of organizations currently operate either remote or hybrid work models.
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Hiring professionals are still cautious about AI. Just 13% of hiring professionals intended to incorporate more AI-driven hiring into their processes; 44% were on the fence, and 43% simply said no.
The Hiring Landscape
Hiring is more challenging in 2021
Since the start of COVID-19, the hiring landscape has been on a rollercoaster ride. What started with mass layoffs and an economic recession in 2020 quickly transitioned to mass resignations and a talent shortage in 2021.
The result is a candidate-driven market where organizations are having a harder time filling their open positions. Over 66% of hiring professionals say that hiring is more challenging in 2021 compared to 2020. 29% say hiring is about as challenging as last year, while just 5% say it is less challenging.
Applicants are harder to find
With multiple industries facing talent shortages, one consequence is that employers are seeing fewer applicants per job opening. 56% of hiring professionals say that they are receiving fewer job applicants compared to last year, with 30% getting about the same volume, and just 14% enjoying more job applicants.
Hiring growth is up, but not in every industry
The perceived talent shortage is largely driven by too many job openings combined with not enough job seekers. According to our survey, this shortage is unlikely to end any time soon. Hiring professionals expect to hire 5.1% more employees in the next 12 months compared to the last 12 months, suggesting that new job openings will continue to flood the market at a rapid pace.
The anticipated growth in hiring volume varies widely between industries. Technology and Staffing/Recruiting expect to see the biggest increases in hiring next year, while Wholesale/Distribution and Transportation/Logistics expect to see the biggest decreases.
Organizations are struggling to find both quality and quantity of candidates
Compared to last year, more hiring professionals are saying that it’s a challenge to both get enough applicants and to find high quality ones.
The number of hiring professionals who are struggling to find high quality job candidates increased 19% from 2020, while the number who aren’t getting enough applicants increased by a massive 51%. Employee turnover also surfaced as a bigger challenge this year, with 27% more hiring professionals saying this is now a challenge.
Turnover is impacting more organizations
The Great Resignation. The Turnover Tsunami. Whatever you call it, the recent upheaval in the job market has encouraged job candidates to leave for greener pastures or entirely new career paths.
A full 38% of hiring professionals say their organization has experienced increased turnover in the last year, with 53% saying it stayed about the same and just 9% experiencing lower turnover in 2021.
Confidence in hiring is down
With all the challenges facing hiring professionals this year, it’s no surprise that confidence has suffered. When asked how confident they are in their current hiring process, just 30% of hiring professionals felt very confident, down 28% from 2020. 47% felt a little confident, 15% felt neutral, 7% felt not very confident, and 1% felt not at all confident.
Money Matters
HR spend is rising – a lot
With the many challenges facing hiring professionals this year, organizations are more willing to increase HR budgets in order to meet their hiring needs. On average, budgets are projected to rise by 6.9% in 2022.
Organizations plan to invest in their most challenging areas
Our previous surveys have shown that HR budgets rarely “budge” from one year to the next. This year is an exception. With overall spend projected to increase 6.9%, this year organizations are more willing to invest in areas of the business that are presenting the most challenges.
For example, 59% of organizations plan to increase spending on “finding high quality job candidates,” up 49% from last year. Similarly, 53% of organizations plan to increase spending on “getting enough applicants,” up 71% from last year.
Wages on the rise?
The tougher the competition for talent, the greater the need to offer higher compensation. Right?
A majority (52%) of hiring professionals anticipate that wage growth will need to be higher in the next 12 months than in years past. 46% expect wage growth to be about average, while just 2% think wage growth will be slower than in past years.
How Companies are Hiring
The fundamentals of hiring remain the same
While the hiring landscape in the last 2 years has been nothing short of volatile, hiring practices remain largely the same. Resumes, assessments, and interviews continue to be used by almost all the surveyed organizations.
Video interviews, which exploded onto the scene in 2020, have also continued to hold a place in the hiring process for the majority (53%) of organizations.
Video interviewing is here to stay
Video interviewing experienced a meteoric rise in usage thanks to the rapid transition to remote work last year. With most companies adopting a hybrid or remote work model in 2021, it’s no surprise that video interviews have solidified their place in the hiring process.
When it comes to actually conducting video interviews, the vast majority (93%) of organizations are using a general video tool rather than a tool dedicated to video interviewing. Because video interviewing is relatively new to most organizations, it’s likely that many hiring professionals simply used whatever video or virtual meeting software they already had access to.
As technology evolves and video interviewing becomes more engrained into the hiring process, we expect more organizations to start using specialized tools for interviewing job candidates.
AI is increasingly part of the conversation
Artificial Intelligence (AI) in hiring is a polarizing issue. AI can be a powerful tool to enable better decision-making when it is used in a transparent and ethical way. But when AI is applied without oversight or transparency, it can lead to some catastrophic (and publicly embarrassing) hiring mistakes.
When asked if they planned to introduce more AI-driven hiring into the process, just 13% of respondents said Yes, 44% said Maybe, and 43% said No. AI in hiring may still be in its infancy, and it will be interesting to observe how the opinions of hiring professionals change year over year with regards to AI.
Remote Work
Work models are changing for good.
2020 was the year that cast remote work into the spotlight. But the big question was if remote work was a temporary fix for the quarantine era, or if it represented the new normal for work. We found that 71% of organizations have changed their policies on remote work since COVID-19. Currently, 16% of organizations are now working mostly remotely; 44% are operating with a hybrid model, and 40% are still mostly in-person.
The hybrid model comes with its own challenges
While 44% of respondents have adopted a hybrid work model, organizations are still in learning mode when it comes to making the most of it. Of those respondents who now operate in a hybrid work model, 69% feel that employee engagement is a challenge, while company culture, fostering collaboration, and onboarding and training are also challenges for the majority.
Diversity
Diversity continues to be a priority when hiring
In 2020, the conversation around diversity reached a boiling point, with worldwide protests and greater demand to see progress on DE&I at work. Now that a year has passed and organizations are faced with a much tighter labor market, is diversity at work still a priority?
According to our survey, diversity in the workplace is still a top priority for 24% of organizations, with 37% saying it’s somewhat of a priority, 28% saying it is neutral, and just 11% saying it is not a priority.
To achieve diversity goals, organizations leverage a variety of initiatives
Organizations that prioritize workforce diversity are more likely to adopt various initiatives to achieve their diversity goals. The majority of companies (53%) are writing more inclusive job descriptions in order to attract a more diverse applicant pool. 46% proactively source candidates from underrepresented groups; 39% provide diversity training for hiring managers; 35% form diverse hiring teams; 25% establish DE&I teams; and 21% are using some form of blind hiring.
Survey Respondents
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