The talent shortage isn’t temporary: How leaders can build resilience now

Let’s start with the reality many leaders are already feeling: the U.S. talent shortage is not a short-term disruption. It’s a structural challenge that will continue to put pressure on organizations for years to come. Open roles have become harder to fill. Experienced employees are retiring faster than they can be replaced.

Skill requirements are changing faster than traditional hiring pipelines can keep up. And for many organizations — especially nonprofits and middle-market employers — compensation alone is no longer enough to attract or retain talent.

The bad news? You likely won’t “hire your way out” of this problem.

The good news? While labor market factors are largely outside your control, don’t overlook tremendous opportunities within your control: how you develop your employees, how you plan for workforce transitions and how intentionally you prepare for the future.

Organizations prioritizing strengthening their talent strategies will emerge more resilient, more capable and better positioned to deliver on their mission or growth goals, especially in a constrained labor market.

Why the talent shortage requires new workforce planning strategies

It’s tempting to view the talent shortage as a human resources (HR) or recruiting challenge. In reality, it is a business-wide risk with direct operational and financial consequences. When critical roles remain vacant, productivity declines, service levels are impacted, innovation slows and remaining employees carry unsustainable workloads. Over time, this situation erodes employee engagement and accelerates turnover, creating a compounding talent problem.

For nonprofit organizations, the stakes can be even higher. Workforce instability can disrupt programs, strain grant compliance and limit an organization’s ability to serve its community.

For for-profit organizations, talent constraints can stall growth, delay innovation and weaken competitive positioning.

Eventually, this can lead to a vicious cycle: fewer people doing more work, contributing to disengagement and attrition, which further deepens the talent gap. Yet the common thread is this: talent shortages expose organizations that lack strong development pipelines, succession plans and workforce foresight.

What’s really driving the talent shortage?

While every organization’s situation is distinct, several consistent factors are shaping today’s labor market:

• Demographic shift: Many baby boomers continue to exit the workforce, taking institutional knowledge and leadership experience with them, particularly in leadership, technical, and operational roles. Without strong succession pipelines, organizations lose not just bodies, they lose capabilities.
• Evolving skill requirements: Technology, automation, and digital tools have changed how work gets done –– and what skills are required to do it well –– which has raised the bar of baseline competencies.
• Shifting employee expectations: Employees expect growth, flexibility, and purpose. Organizations unable to offer clear development plans (and paths) will struggle to retain talent.
• Misalignment between education and workforce needs: Degrees alone don’t always translate into job-ready skills, increasing the burden on employers to develop talent internally.

In this context, organizations must embrace strategic workforce planning and talent development as central pillars of their business and mission strategies.

How organizations can adapt and build stronger talent pipelines

To address current shortages and prepare for the future, organizations — whether for-profit or nonprofit — should adopt a holistic people strategy centered on development, mobility, and planning, which will require doing more than just doing the same. But, rethinking how talent is grown, deployed and sustained and the speed at which it’s done.

Below are some best practices for growing and developing talent:

1. Shift from “hiring roles” to “building capabilities”

Many organizations still plan talent around job titles and headcount. Leading organizations plan around skills and capabilities.

A skills-based approach helps reframe the conversation, and you answer critical questions like:

• What capabilities are essential to delivering our strategy or mission?
• Where are our biggest skill gaps today — and tomorrow?
• Which skills can we realistically build internally versus hire externally?

This shift unlocks flexibility. It empowers organizations to redeploy talent, reskill employees and pivot more quickly as needs change, instead of constantly chasing the next hire.

2. Treat workforce planning as a core leadership responsibility

Workforce planning should not be a once-a-year exercise or a spreadsheet owned solely by HR. It’s an ongoing leadership conversation that should be woven into your strategic planning. It means:

• Identifying the roles that keep your organization running and the ones that pose the biggest risk if left vacant.
• Knowing where turnover and retirements could hit hardest — before they happen.
• Assessing whether your internal talent is ready to step into tomorrow’s critical roles.
• Reviewing your talent investment against your long-term priorities and confirming they’re not just short-term fixes.

Organizations that treat workforce planning this way are less likely to be blindsided by talent gaps, because they’ve already mapped the road ahead.

3. Invest in development as a retention strategy

In a tight labor market, development is one of the most powerful levers organizations can pull. Employees are far more likely to stay when they see a future, not just a job. That future comes to life through clear career pathways that show employees where they can grow, leadership development opportunities at multiple levels, and stretch assignments that let people build new skills while contributing in meaningful ways. It includes offering cross-functional experiences that broaden perspective, as well as coaching, mentoring and feedback that reinforce growth every step of the way.

For more budget-conscious organizations, development can be a game-changer. When compensation flexibility is limited, offering growth opportunities and purpose-driven leadership experiences often tips the scales in favor of retention.

4. Make internal mobility the norm, not the exception

Internal mobility is one of the most underused — and most powerful — talent strategies. Organizations that promote from within fill roles faster, retain institutional knowledge, boost employee engagement and reduce recruiting costs. Yet despite its benefits, internal mobility often stalls because of organizational silos, limited visibility into opportunities or managers’ hesitancy to let go of or share top performers.

Breaking down those barriers isn’t optional anymore. It’s essential for building a resilient workforce. Best-practice organizations most commonly address this by:

• Making career opportunities transparent
• Holding leaders accountable for developing talent
• Supporting lateral moves as meaningful growth paths

Using talent reviews to actively match people to future needs

5. Prepare for retirements and leadership transitions

Succession planning can’t wait until someone announces their retirement. Proactive planning is about readiness, not just replacement. It means asking critical questions like: Which roles would cause significant disruption if they suddenly became vacant? Who within the organization has the potential to step into those roles? And what development is needed now to help prepare them for when the time comes?

By planning ahead, you create stability during transitions and maintain momentum toward your goals. This includes transferring institutional knowledge. Mentoring, thorough documentation and cross-training help ensure institutional knowledge doesn’t disappear when someone walks out the door. Organizations that treat succession planning as a strategic priority, and not an afterthought, position themselves to thrive through change.

6. Strengthen your employee value proposition

In today’s labor market, employees are evaluating the entire experience, not just the paycheck. A compelling employee value proposition (EVP) goes beyond salary and benefits; it tells a story about why people should join and stay with your organization.

That story starts with meaningful work by connecting employees to a bigger purpose. It includes opportunities for employees to learn and grow, whether through career pathways, leadership development or hands-on projects that stretch their skills. It’s demonstrating trustworthy leadership and reinforcing transparent communication to build employee trust and engagement. Flexibility and support for well-being matter, too, from hybrid work options to resources that help employees thrive personally and professionally.

Employer branding also plays a critical role. When your EVP is clearly communicated and consistently reflected in your brand, it amplifies awareness and attracts talent that aligns with your mission and values.

Organizations that are articulate and deliver on this promise don’t just attract talent; they attract the right talent. They reduce turnover, strengthen engagement and build a reputation as an employer of choice.

Turning talent challenges into long-term advantage

The talent shortage is a defining challenge of this decade. Organizations that respond defensively will continue to feel constrained. Those that respond strategically by developing their people, planning intentionally and preparing for workforce transitions will foster a sustainable advantage that outlasts any single labor market cycle.

The path forward requires leadership commitment, disciplined planning and a willingness to invest in people as the organization’s most critical asset.

How Wipfli can help

Navigating today’s labor market challenges requires more than best intentions — it requires a clear HR and talent-focused strategy along with experienced guidance. From organizational structure redesigns  and succession planning to leadership development, skills strategies and employee experience design, Wipfli’s people consulting teams partner with for-profit and nonprofit organizations to turn talent challenges into long-term competitive advantages.

Whether you’re navigating workforce constraints today or planning for what’s next, we help organizations strengthen their people strategy for the future. Contact us to learn how our organizational performance practice can help you develop a sustainable advantage.

Develop a people strategy for the future

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