How Are You Hedging Against Labor Shortages?
How Are You Hedging Against Labor Shortages?
According to data from the Society for Human Resource Management (SHRM), nearly 90 percent of their respondents said they were struggling to fill open positions, and 73 percent noted a decrease in applications.
This data is indicative of the pain most companies are feeling—they need workers, but struggle to find people to work for them.
While sectors like food service, hospitality, healthcare, and manufacturing are hardest hit, this is something that businesses across sectors are feeling right now. Many companies are struggling to increase wages and step up the benefits they offer, but not everyone has the resources to handle this right now.
As a result, you may be at a loss as to the best ways to hedge against these current labor shortages. In this post, we’ll walk through some steps you can take to keep your company growing, even if hiring is a challenge.
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What is Causing Current Labor Shortages?
As with any economic event, labor shortages have many causes. Here are some of the factors that seem most prominent in the Great Resignation:- The shock of the pandemic has forced many workers to reevaluate their work-life balance priorities
- Many aging workers chose to retire early during the pandemic, exacerbating a growing skilled labor gap
- Employees who work in crowded environments are hesitant to return to work and risk contracting COVID-19
- High unemployment benefits enable workers to still meet basic needs without returning to work—in many cases they are spending the time seeking job opportunities in other fields
What You Can’t Do
Before we dive into the best ways to respond to these shortages, let’s talk about some options that shouldn’t be on the table. Many companies have just decided to throw in the towel, and limit the services they offer. While it may seem like “battening down the hatches until the storm passes” is a good option, that assumes that this “storm” is a short-term phenomenon. While COVID-19 concerns may abate soon, other economic factors may not. What if these dynamics continue for multiple years? Companies who will succeed over the long term adapt to challenges, not shirk away from them. Another bad idea is to expect to achieve sizable growth without growing your team. While adopting automation and technology can help make this possible (more on that later), expecting one team member to do the jobs of two or three right now will just lead to burnout, and people will leave. As a result, if you want your business to grow, bringing on more talent is a key part of the equation.How to Hedge Against Labor Shortages
Here are a few of the actions that leading companies are taking to hedge against current labor shortages. Let’s look at a few of these tactics.1. Raise salaries and offer better benefits.
We’ve all seen the fast food restaurants offering $12-15 an hour (some even more) for new employees. That’s because the most obvious thing to do when you’re having trouble finding talent is to offer more compensation:- Higher salaries
- Signing bonuses
- Education subsidies
- Free subscriptions (e.g. Spotify Premium)
2. Promote company culture.
As people’s lives re-shift after the third (or fourth, depending on how you count) COVID wave, people are going to be even pickier about the companies they work with. Simply put: culture matters now more than ever. Employees want a culture that values their contribution, provides the necessary freedom for work-life balance, and provides opportunities to grow in their career development. Valuing employees as human beings goes a long way to both attracting and retaining top talent. Be sure to put culture front and center in your hiring materials, social media posts, and online content. Let potential candidates know that you’re a company that people want to work for, not have to work for.3. Build a talent funnel.
In today’s candidate-driven market, most companies are rolling out the red carpet during the hiring process, hoping that it will entice top talent to work with them. If you want to build a reliable talent funnel, then you need to start doing some of these things:- Be quick in your response times (automation can be a real help in this area!)
- Engage in remote hiring, both to expand your talent pool and improve accessibility
- Keep candidate information in a centralized database so you don’t re-ask the same questions
- Work with a reputable recruitment firm who can handle much of these details for you
4. Upskill your current employees.
Promoting from within is almost always more cost-effective than going out to hire a replacement. So if you have some excellent employees who are interested in taking their career to the next level, you can offer training opportunities for them to do so. Of course, this has a two-fold effect: it creates an in-house talent ladder to hedge against potential resignations, and it also keeps these employees engaged so they don’t feel the need to go work somewhere else.5. Invest in automation.
We mentioned this earlier but it bears repeating. There are a variety of devices, software, and systems that can increase productivity and output without increasing the cost of labor. An obvious example is the self-service kiosks or mobile apps for fast food restaurants, but there are other types of automation that can help engineering, IT, healthcare, automotive, and other companies:- Chatbots that automate the front lines of customer support
- Email marketing automations to personalize and automate customer communications
- Productivity workflows and project management software
- Employee analytics tools to gauge the productivity of each team member, and identify opportunities for improvement
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