The “talent shortage” is something that recruitment teams and market analysts have been discussing for years. In 2024, a Manpower survey showed that more than 75% of employers globally were struggling to fill roles – in virtually every industry.
But the idea that the market is short of skilled workers is difficult to believe at a time when news about widespread layoffs and AI systems replacing human employees seems to be dominating the headlines. The truth is that companies are struggling to access the right talent with the specific skills they need to thrive. However, the “talent scarcity” these organisations aren’t just a result of a complete lack of access to skilled professionals.
The companies struggling most with talent shortages, more commonly, are dealing with deeper issues linked to poor recruitment, retention, and workplace management strategies.
Here, we’ll explore the real story by the current “skills gap” and show you how you can implement strategies to future-proof your growing engineering team.
Market Reality Check: The Current Situation
The current engineering job market is a complicated place, shaped by evolving economic uncertainties, constant technological disruption and changing workplace dynamics. On the one hand, companies have access to more talented professionals than ever before.
Not only are new generations of candidates entering the market, but by embracing flexible and remote working opportunities, employers can source candidates from a wider range of environments. Even with access to AI and automated tools that professionals fear will lead to future job displacement, countless employers are expecting to hire more team members this year.
However, across industries, business managers are still struggling to find the talent they need. This “talent shortage” is affecting everyone. According to the Manpower study mentioned above, 71% of companies with fewer than 10 employees are facing skill shortages, and 77% of businesses with up to 5,000 employees are facing the same issues.
There are numerous reasons for this. First, economic issues are making it harder for companies to offer talent the renumeration and benefits packages they’re looking for. Secondly, countless engineering employers are fighting for candidates with the same skills.
Today, every employer wants professionals not just with new technical skills, like digital literacy, familiarity with AI, but also specific soft skills: such as a strong capacity for communication, problem-solving, and adaptability. The result is an environment where countless companies are battling it out for a specific “sub-group” of candidates, rather than tapping into a wider range of opportunities.
Overcoming the Talent Crunch: Strategic Moves
As engineering businesses grapple with a tightening talent market, success lies in adopting innovative, multi-faceted, and updated strategies for talent acquisition. The key is to rethink how your organisation not only sources and attracts talent but also develops and retains its existing workforce, paving the way for future growth.
Here’s how companies and hiring managers can gain an edge in 2025.
1. Widening the Talent Pool: Updating Sourcing Strategies
The talent shortage is real, but employers are actively aggravating it with the wrong approach to talent sourcing. Traditional talent sourcing strategies naturally deliver a narrower talent pool to choose from. Exploring alternative routes ensures access to more opportunities.
Look at working with engineering recruitment companies on sourcing strategies that tap into candidates from different generational and geographic groups. Consider options like apprenticeships, return-to-work programmes, and partnerships with vocational schools.
Similarly, underrepresented groups, such as individuals with disabilities, veterans, and career changers, bring valuable perspectives and untapped potential when given the right opportunities. With access to cloud-based technology, you can even consider hiring remote employees from different regions worldwide—expanding your talent pool beyond your local area.
Taking a broader approach to sourcing talent will not only give your company more potential candidates to choose from but also help improve the diversity of your team. Remember, McKinsey found that diverse teams are 36% more likely to outperform their peers financially.
2. Skills-Based Hiring: Taking a New Approach
Adopting skills-based hiring offers a transformative solution to the talent shortage. Rather than focusing your attention exclusively on candidates with specific credentials and certifications, consider their abilities that can benefit your engineering team.
A skills-based approach to hiring further widens your talent pool, by allowing you to recognise the value of non-traditional candidates. You can even tap into the experts with transferrable skills currently working in other industries.
With industries like retail and hospitality contracting, organisations are finding that workers with skills in customer service, problem-solving, and adaptability can transition seamlessly into new roles in technology, logistics, or healthcare.
Once again, skills-based hiring will increase your access to diverse talent and could help improve your chances of making successful hiring decisions. Studies show that assessing skills is five times more effective at helping companies predict a candidate’s future job performance than focusing on work experience or credentials alone.
3. Improving Your Employer Value Proposition
In 2025, if you want to hire the best engineering candidates, you need more than just a competitive salary. Attracting and retaining talent requires an investment in a unique, compelling employer value proposition (EVP), that resonates with the priorities of the current workforce.
Right now, employees are searching for more meaningful, purpose-led work, greater flexibility, and a sense of belonging in their companies. They’re also looking for more diverse benefits and opportunities for continued growth and development.
When developing your EVP, combine a competitive salary with a comprehensive benefits package that covers everything from traditional perks like retirement plans to mental health support, childcare options, flexible work, or adjustable schedules.
Concentrate on building a company culture focusing on work-life balance, employee wellness, and continuous training and development. Offering employees access to everything from courses to training programs and mentorship can make your workplace more appealing. Plus, focusing on employee development also helps you to enhance the value and potential of your existing team members – which takes us to our next point.
4. Making the Most of Your Team: Talent Development
In a complex talent landscape, finding employees with the specific combination of technical skills and soft skills you need can be extremely difficult. However, training your existing team members and helping them to develop new skills is often much easier.
Building robust development pathways for your employees will ensure you can fill skill gaps much faster, while fostering ongoing loyalty and engagement.
Cross-functional training is a practical starting point, enabling employees to acquire skills beyond their immediate roles. By investing in programs that encourage transferable skill development—such as leadership, communication, and problem-solving—companies can prepare employees for varied positions. Combining development strategies with succession planning is equally important.
Identifying high-potential employees early and mapping clear paths for advancement ensures that businesses have capable leaders ready to step up when needed. You could even ask existing engineering leaders to act as mentors, giving newer employees the leadership skills and insights they’ll need to thrive in future roles.
Investing in growth and learning will help you to unlock full value of your existing employees, improve your employer brand to attract new talent and increase retention rates.
5. Optimising Employee Retention
Finally, speaking of retention, holding onto your top talent is just as important as being able to attract new candidates in a skills-short engineering market. An effective retention strategy will reduce the number of “gaps” you need to fill in your team, and reduce the cost and disruption caused by regular turnover.
Investing in the development of your team members and offering access to both competitive salaries and strong benefits is a good way to boost retention. However, there are other strategies you can explore too. Foster a culture of recognition and appreciation.
Regularly acknowledging and rewarding your employees for their contributions helps to build loyalty and morale. Prioritise the wellbeing of your employees, by taking a proactive approach to fighting against burnout, helping them handle stress, and giving them flexibility in their roles.
It is also crucial to create an inclusive workplace where everyone on your team feels supported and appreciated regardless of their role or background. Transparent communication, regular team-building exercises, and diversity training can be helpful here.
Building a Resilient Recruitment Strategy
The talent shortage in the engineering industry is real. But it’s up to you how much it affects your recruitment strategy. If you continue to rely on the same old-fashioned methods to attract, source, and acquire talent, and fail to invest in the retention and development of your existing employees, then you’re going to struggle to grow.
Alternatively, if you expand your sourcing pools, look beyond traditional recruitment strategies, and commit to building an environment where employees naturally grow and thrive, you’ll stay one step ahead of the competition.
The job market has changed, don’t harm your future by leaving your recruitment strategy in the past. Adapt, and evolve, and your workplace with thrive.
All the best
Steve
At Coalesce we have been partnering with engineering businesses for over 28 years; if you would like our input into how to win the war for talent, then give us a call on 07512 821708 or email us here.