If 2020 was defined by crisis, 2021 was all about adapting to the challenges that followed: burnout, remote work, and unprecedented turnover.
Daniel Zhao, senior economist and lead data scientist at employer review aggregator Glassdoor, thinks 2022 will be defined by the new normal and skyrocketing employee power within a historically tight labor market. The companies to find success in the new year will be the ones who “embrace the opportunities to rethink old ways of hiring, employee engagement, and how business is done.”
“2021 was really about scrambling to figure out what the new normal would look like; 2022 is going to be much more about making forward-looking plans and actually dealing with that new normal,” Zhao told Fortune on Wednesday. “We’re no longer just figuring out how to adapt to the new crisis of the week; that was what really captured the zeitgeist of 2020 and 2021.”
Employers have spent the past two years trying to respond in the moment to whatever the latest issue was, Zhao said. “We don’t know what the 2022 pandemic trajectory will be; we may have more surprises,” he added. “So ultimately it’s about making sure you have a pulse on what employees are feeling and what they want, and responding to that compassionately, transparently, and nimbly.”
On Wednesday, Zhao shared Glassdoor’s Workplace Trends for 2022, the company’s sixth installment, which drew from its database of millions of employee reviews, salaries, and conversations. The list outlined four key trends those insights predict will take hold in the new year; Zhao told Fortune how leaders can best meet them.
Trend 1: Hiring challenges abound
2021 saw the coining of the term Great Resignation, a pithy reference to the labor shortages that hamstrung countless industries. As lockdowns lifted and customers returned to businesses in force, many employers found themselves consistently short-staffed. Substantial competition for skilled workers only exacerbated the problem, sinking retention rates.
Employers shouldn’t assume the tight labor market was just a yearlong anomaly; Zhao says it’s a template for what’s to come. Employers can expect “a slow grind of trying to pull workers from the sidelines back into the labor force rather than snatching up available laid-off workers.”
This is because the factors that drove the labor shortage persist. The pandemic is still raging, many retirees and parents are still staying home, and customers are still returning to businesses in numbers impossible to keep pace with.
Zhao says there’s “simply no silver bullet” to fix labor shortages. But there are nonetheless some key things managers can instate that may help.
First: Don’t overlook incentives. Hiring woes aren’t going anywhere, and employers need to think long term. Instead of offering temporary bonuses, raise wages.
Second: Offer those same perks to current workers to keep them around; employee engagement is critical to reducing churn.
Third: Expand hiring criteria. Remote workers, recent retirees, workers with disabilities, and previously incarcerated workers could all make compelling applicants, regardless of job description, so long as the search includes them.
This trend underpins all the rest, Zhao said. “It affects every industry. Change has been the constant, and the companies that will succeed in 2022 are the flexible and nimble ones.”
Trend 2: A stronger, but costlier, talent pool
In pre-pandemic times, companies who could offer remote positions had access to the best talent, regardless of from where they’d be logging on. But now that the practice is dominant, that recruiting advantage has been diluted.
Employers need to respond to the upped competition for remote workers, often in pockets of the country with lower costs of labor, by upping their offers. Namely, Zhao said, this means higher salaries—permanently.
“If Amazon and Microsoft are competing for the same software engineer in a lower cost-of-labor market, will they insist on paying a location-adjusted salary, or will they offer a higher salary to prevent top talent from going to a competitor?” Zhao questioned, citing companies like Reddit and Spotify, which have both committed to standardizing pay across locations.
The remote-first shift has also hurt employers unable or unwilling to offer remote work. “Just as many cities experienced a surge in housing prices with the influx of cash-rich remote workers during the pandemic, the labor market could experience a similar phenomenon, with local employers having to pay more to compete with major companies coming in to scoop up local talent as remote workers,” Zhao wrote.
Glassdoor data backs Zhao up. Over one-fifth (20.4%) of employers hiring locally in October 2021 are competing with remote-first jobs—an almost twofold increase from October 2019 (10.3%).
As a result, 2022 will likely see more employers increase their location-based pay as they compete with other employers, and local employers can expect competition from remote jobs to only grow.
“The undercurrent for the job market in 2022 is the fact that workers have more power, which means they can demand things like better benefits, higher pay, remote working arrangements, and more investment in DE&I,” Zhao said. “These demands are enabled by the hot job market. Workers have more leverage, so their employers can either meet the demands, or workers will vote with their feet.”
Trend 3: Diversity, equity, and inclusion (DE&I) accountability becoming a must
Last summer sparked a wave of employees, job seekers, and broader society demanding action from companies on their diversity, equity, and inclusion (DE&I) efforts. Most companies answered the call, outlining material ways they would improve upon their processes and work toward a more inclusive, activist workplace. But we’ve now reached an inflection point: In the new year, employees are expecting to see progress on those pledges.
“The fact of the matter is, people are more willing than ever to call out companies when they see something wrong, so it’s important for leaders to get ahead of that,” Zhao said.
The desire for transparency doesn’t appear to be abating. A survey of users on Glassdoor’s professional social networking site, Fishbowl, found that 58% of respondents report that their employers shared DE&I goals, but only 38% report receiving any updates on progress. Just 37% report feeling confident that company leadership is truly holding itself accountable to their stated goals.
Transparency around DE&I plans and progress are key to deepening the conversation around such issues as the gender pay gap and underrepresentation in the workforce, and can provide the tools to discuss and learn more about potential solutions.
In a September 2020 Glassdoor survey, over three-quarters (76%) of employees and job seekers said a diverse workforce is an important factor in their evaluation of a company. Ultimately, Zhao said, corporate investments in DE&I are “both a social good and a critical part of workforce management strategy—a particularly salient consideration at a time when finding and retaining talent is so difficult.”
Trend 4: Workplace community transcending company walls
Over the past decade, employers have increasingly competed for talent by emphasizing employee engagement and workplace experience, Zhao said. But the pandemic has complicated the ability to connect. Though few employees miss a full-time in-office setup, nearly half (48%) of those surveyed by Glassdoor said they’ve felt isolated this year. Enhancing employee bonding over a dispersed workforce is possible; it just requires employer buy-in.
But the story doesn’t end at the watercooler. Social media sites such as LinkedIn and Twitter have enabled connections with professionals at different companies around the world. This fills a vital need: 56% of workers in Glassdoor’s survey said they wanted a community where they could get career advice, and 64% wanted a way to talk and ask questions with peers in their industry.
Employers should recognize their workers may seek out professional communities outside their home company; they can capitalize on this by asking their team how they can support them in doing so.
Going forward, employees will use their power to examine their companies closely and push them to improve on their weaknesses. And while employers can’t control what their teams will want, they can lap the competition by recognizing that many employees want not just a job, but a meaningful career and engaging community.
