The White-Hot Demand for Engineering Talent Is Cooling, but ...

For most manufacturers, the ability to recruit and hire talented engineers is central to their long-term growth. From research & development to manufacturing and maintenance engineering, a company is only as good as the products or processes it is able to design and make.

As many companies know, the market for hiring engineers has become very intense in recent years. Competition was fierce, and companies were all fighting to hire from what seemed to be a limited pool of engineers. More than ever before, the talent was in the driver’s seat and they knew it. Engineers were suddenly demanding ridiculous sums of money and they were getting them.

We were seeing salaries jump as much as 50% to 75% when engineers changed employers. Controls engineers working in automation who had historically made $90,000 to $110,000 were taking jobs that paid $150,000 and up. It was starting to get out of control, and we knew it was unsustainable.

Wright Technical Services is a national engineering and IT Recruiting firm. In early 2023, we began tracking the demand for engineering talent. How our firm measures demand is simply based on the total engineering openings at a point in time in relation to how many total engineers are actively looking for new jobs. We look at the total openings across the leading job boards and then the total engineering candidates who have been active on those boards within the last 30 days.

The first time Wright recorded this data was the week of March 24th, 2023. At that time, the data showed seven job openings for every one engineer actively seeking new employment. During that time, some of the largest manufacturers in the world were feeling hopeless as it related to recruiting.

A human resources executive at a big three automotive manufacturer said to me, “For forever, people would beg for the opportunity to come to work at our company. Now we find ourselves doing the begging for people to come work at our company”.

Fortunately, demand has consistently trended downward since that first recording and little by little we’re to point where the demand ratio is four open jobs for every one engineer looking for a new position. More specifically, the most recent measure on February 15th was 3.43, which was even down from two weeks prior, 4.24.

That doesn’t mean competition for the best engineers has gone away. There are still not enough good engineers to go around, and all manufacturers need a comprehensive recruiting strategy. But what we are seeing is a rebalancing of the demands engineers are making when changing jobs. The compensation expectations have come back down to reasonable levels. Pay is not as low as it was pre-pandemic, but many would argue that engineers deserved a jolt in compensation. The pullback in the last six months has all but eliminated the ridiculous pay packages companies had been throwing at engineers.

The demand metric has hovered around 5 to 1 for the past few months, and it is projected to stay there for the foreseeable future. We publish these numbers weekly at workwithwright.com.

With salaries coming back down to earth, we recommend manufacturers consider the following to give them the advantage over the other four or five roles an engineering candidate may be considering:

Streamline the interview process. Work hard to limit the number of interviews to three, and complete them in less than a week or two. Only include the managers and people who absolutely must be part of the interview process. We consistently see companies whose interviews exceed three and take more than two weeks completely lose candidates. Every extra day in your process is another day that another company can hire that engineer before you do.

Have a Plan B. This is the most common mistake we see manufacturers make when interviewing. They choose a top candidate and halt all other interviews. Candidates will tell you that your company is their top choice. Candidates are not always honest about this and are typically actively interviewing with two to three other companies. If they take another job and you haven’t continued to interview other candidates, you may find yourself starting the recruiting process all over again. We recommend having three candidates in play for every job so that you always have a backup candidate, or a plan B.

Look at benefits and perks. Compensation aside, ensure your company is offering the benefits that engineers want. Hybrid work schedules remain the top benefit for engineers. Due to the nature of the work, most engineers often need to work on-site and require regular access to the lab or shop floor. However, on the days when an engineer only needs to be in front of their computer, allow them to work from home.

Retain and develop your best engineers. Nearly 60% of Americans say they plan to look for a new job in 2024. It is always less expensive to retain your top engineers than it is to recruit and train new ones. Ensure your best engineers are feeling the love, that they are engaged and are fully aware of how much you value their contribution to the company. If you’ve been putting off a promotion or a pay bump, don’t wait until it’s too late and you’re receiving that valued engineer’s two-week notice.

Josh Healan is the president and owner of Wright Technical Services, a national technical recruiting firm that helps manufacturers fill specialized engineering and IT positions.