7 Most Pressing Staffing Industry Challenges in 2024 and How to Solve Them

But it’s not just economic uncertainty that’s been making recruitment so challenging in recent years.

Hiring teams are also navigating a highly competitive and complex recruitment landscape, marked by significant skills shortages and candidate demands that can be difficult to fulfil.  

The good news is, the economy is in recovery, and staffing leaders are speaking about 2024 as a year of “cautious growth”.

But there are still a number of major staffing challenges that are likely to get in the way of the industry reaching its full potential.

The first step to overcoming these common staffing challenges is to know what they are. Let’s take a look at some of the biggest staffing issues the world of work is experiencing right now, and what hiring businesses can do to try and overcome them.

Challenge #1: Attracting new clients and increasing revenue

In one study, staffing leaders cited attracting new clients to increase revenue as the #1 challenge for staffing agencies going into 2024. 63% said attracting new clients would be their top organizational priority this year and improving client retention came in second.

When demand slows overall but particularly in some sectors, competition increases in others as agencies diversify to survive.

But there are some things staffing agencies can be doing right now to overcome this challenge:

• Use data to analyse trends - Use a combination of your own available data and sector-specific staffing industry benchmarks to better understand where demand is and where to target your business development efforts.  
• Focus on strengthening current relationships - When competition for new business is tough, the most productive thing you can do is to focus on the strong client relationships you already have. This strategy can also result in more client referrals, which are continuously cited as the best way to acquire new business. If you provide a great service, your clients should be happy to recommend you to others.

• Update your service delivery model - When the market is tight, recruiting is not just about hiring candidates. How can you repackage your services to support clients in overcoming some of the other challenges in this article? For example, could you re-productise your services to offer clients additional services, like compensation package design or onboarding, too?

Challenge #2: Ongoing skills shortage

Talking about a skills shortage in periods of slow business growth might sound contradictory. But the challenge lies in that it’s very specific skills that are in demand, which complicates things.

In one study by Leoforce, tight talent pools were cited by staffing agencies as the biggest challenge they were facing, and by a mile (61% vs 37% who said ‘uncertainty over economy’ was the biggest challenge).

The reason for these shortages depends on which skills you’re looking at. For example, the current shortage of healthcare workers is due to reduced immigration and stricter immigration policies.

The shortage in IT-related skilled workers has occurred because of the huge advancements in new technology (mostly due to the impact of AI) which require skills we’ve never seen before and don’t know how to train for yet.

So what can hiring teams do to try and overcome the current skills shortages?

• Upskill and reskill existing workforce - You already have employees who are the right cultural fit and work well within the business. By focusing on supporting them to upskill in new areas, you’ll save on recruitment resources and improve employee retention as staff benefit from the development opportunities.
• Partner with educational institutions - By partnering with universities and colleges, this puts you in close contact with the fresh new talent that haven’t entered the job market yet.
• Attract talent from non-traditional backgrounds - When dealing with skill shortages, it can be extremely beneficial to look outside the box when recruiting new hires. Do this by redefining the job requirements so they focus more on skills rather than qualifications and use AI-powered interview assessment technology to hire candidates based on skills rather than experience.

Challenge #3: Highly competitive market

When certain skills are in high demand, this makes competition within those particular sectors, and for those particular skills, really tight.

As a result, hiring companies have started offering high signing bonuses for the best talent, making it even harder for smaller businesses to compete.

It’s fair to say that there’s also been a shift in candidate expectations that’s making competition for talent that bit harder. A good salary is no longer enough — candidates want a good work-life balance and a flexible work environment too. This is a new type of competition that a lot of staffing strategies haven’t caught up with yet.

Advanced technologies like AI have also certainly raised the bar in terms of improving the candidate’s experience of the hiring process. If you want to keep reaching the best candidates before your competitors, you need to be using the same technology they’re using — or better.

Here are some things you can do to remain competitive in the current landscape:

• Offer compelling compensation and benefits packages - Again, it’s not just about salary anymore. Now is the time to rethink your benefits package: What are you offering that will stand out to job seekers? For staffing agencies, this is about working with your clients to help them develop more competitive compensation packages that will make their roles more attractive to the best candidates.
• Focus on employer branding to attract top talent - If the only way job seekers are finding your vacancies is on over-stuffed job boards, you’re roles are never going to stand out to the best candidates. Investing resources in employer branding will help you stand out online as an attractive employer to work for.
• Streamlining the recruitment process to improve candidate experience - using recruitment AI automation tools, you can speed up the hiring process and make it a better experience for everyone involved.

Challenge #4: Attracting qualified candidates

Attracting qualified candidates is a staffing challenge that hiring businesses and agencies will be facing in equal amounts right now.

In the State of Staffing Report 2024, 15% of staffing agencies said that attracting qualified candidates is already their biggest staffing challenge in 2024. Sourcing was cited as the most time-consuming stage of the recruitment process right now, and respondents also said candidates expect a lot more from the hiring process than they used to.

For example, job seekers nowadays expect a highly personalised experience. They want to have any questions they have answered fast and to receive constant updates as they move along the recruitment pipeline. Keeping up with candidate expectations can be a job in itself!

Tackling this staffing challenge is about creating a situation where you provide the best candidate experience possible to keep the best candidates engaged, while at the same time having a process in place that disqualifies candidates who don’t have the right skills early on.

Here are a few solutions you can try:

• Use AI screening technology - It’s not just about attracting as many candidates as possible, but the right candidates. Using a recruitment chatbot and automated interview technology, you can let candidates ask questions about the role and use the technology as a screening tool. This helps you find the right talent while creating a fun and engaging application experience for them too.  
• Automate candidate communications - Trigger personalized but automatic email and SMS messaging to go out to candidates when they reach a new stage of the recruitment process in your ATS.
• Leverage AI technology - There’s so much new technology on the market right now that can help you with sourcing candidates and providing the best interview experience for them too.

Challenge #5: High expectations of flexible work

Since the pandemic, candidates’ priorities regarding flexible work arrangements have changed a lot. The pandemic proved that most roles can be fulfilled at least partially outside of the office, and candidates don’t want to let go of that privilege.

The pandemic also brought to light the importance of employee wellbeing - including a good work-life balance and positive company culture. Quite simply, any business that doesn’t show they prioritize these areas will really struggle to recruit candidates nowadays.

Hiring businesses can overcome this challenge by rethinking how they work and what they can realistically offer. Staffing agencies can also work closely with clients to help them reassess the kind of flexibility they can offer.

For example:

• Implementing flexible work models (remote, hybrid).
• Highlighting work-life balance initiatives in your employer branding.
• Emphasizing company culture that supports flexible work.

Challenge #6: Lack of candidate commitment

It’s one thing attracting qualified candidates to your open positions, and another keeping them engaged in the process right up until start date.

For candidates with certain in-demand skills, they know they’re gold dust right now. This means that naturally, they’re going to be juggling a few job offers and interest from recruiters simultaneously.

The result of this is that candidates often drop out of the recruitment process early, or worse - disappear without a trace. If you’ve ever been ghosted by a candidate, you’ll know just how frustrating that can be!

For some companies, the commitment issue doesn’t become apparent until after the candidate is hired. In these situations, they drop out of the role before the end of their probation period, resulting in high turnover rates.

So the challenge here becomes: How do you attract right-fit candidates who will feel committed to the opportunity from day one?

• Use a thorough screening process to assess candidate fit - If your business is suffering from high turnover rates, a large part of this will be that you’re hiring the wrong people.
• Set clear expectations during the interview process - By giving candidates a true idea of what the role and company will be like day-to-day, this will give them the information they need to decide if it’s really the right job for them.
• Create a positive candidate experience throughout the hiring process - keep in touch with candidates regularly and streamline the recruitment process as much as possible so the candidate doesn’t drop out early.
• Foster a positive company culture that retains talent - High employee turnover isn’t always just down to the candidate. What are you doing as an employer to ensure you provide a positive work environment that keeps your employees happy and loyal?

Challenge #7: Increasing recruiter efficiency

Improving recruiter efficiency and productivity was another top challenge staffing firms said they’re facing already in 2024.

Candidate sourcing, screening, interviewing and the onboarding processes were all flagged as the most time-consuming stages of the recruitment process.

The admin workload of being a recruiter is heavy enough that it gets in the way of some of the most important parts of the job, like nurturing better relationships with clients and providing a good candidate experience — both of which you need to provide in order to create revenue.

So what can you do to help your recruiters work more efficiently?

• Leverage AI technology - A whole load of new AI-powered recruitment technology has emerged on the market  in recent years that can support your recruiters with the workload involved all these time-consuming stages of the recruitment process. For example, Carv can take over all of the admin that like comes with interviews, so recruiters can focus on providing a good experience for the candidate. Investing in software that supports recruiters in these areas will make your recruiters much more efficient.
• Recruit from your existing talent pools - Instead of spending all your resources searching for candidates on job boards (which 53% say have become much less effective nowadays), look to your existing talent pools first. Recruiters that use their ATS in this way (which is what it’s been designed for!) will hire more candidates in less time.
• Learn from your data - Track your recruitment metrics at all stages of the hiring process so you can easily identify areas that are slowing your recruiters down and target intervention.

Conclusion

With these substantial staffing challenges on the horizon for 2024, you’d be forgiven for thinking the outlook for 2024 isn’t so positive. But luckily, you can see that for every challenge, there are multiple solutions — and a lot of them overlap.

By implementing just a few of the core solutions mentioned in this article, like leveraging AI technology and focusing on improving your relationships, you’ll find that you can overcome a number of these challenges at the same time.

To find out how Carv can handle all the admin involved in candidate interviews so recruiters can focus on engaging and hiring the best talent, try it out for free today or book a demo below.