Hiring Crisis

Human Resource Management System

The current hiring crisis in the United States represents a serious barrier to our economic recovery and unfortunately, small businesses are again hurting the most as a result. While many factors contributed to this situation, employers increasingly find themselves in a higher wage environment with more job openings and less hiring. The hiring crisis is the result several post-covid factors:

  • Government policies like Covid unemployment benefits are keeping workers out of the workforce by providing a better financial situation by staying home than working (perhaps the government should help incentivize more unemployed workers to enter the workforce);
  • If the government continues with policies that provide a greater financial benefit from staying unemployed versus working exists, then workers may choose to stay home & may allow workers to be more selective with the jobs they choose…taking time in doing so);
  • People have also left the workforce due to the availability of affordable childcare alternatives;
  • People also remain afraid of going back to work in some industries due to health safety (government lacks a consistent health safety message).

So why is this talent crisis different: the formula for recruiting and retaining talent has changed. The post-pandemic talent crisis is unlike anything we’ve seen before, and companies will either get on board or be left behind. According to The Wall Street Journal, McDonald’s will hire 10,000 people in its corporate stores in the next three months. Amazon announced a $1,000 sign-on bonus for drivers. Uber has more riders than it has drivers. The Labor Department announced that wages rose 21 cents last month to $30.17, or 11% (annually adjusted). The labor market is hot. This talent crisis is vastly different from the last. Government subsidies and unemployment are feeding an imbalance at the bottom of the market. While pre-pandemic saw a shortage of skilled labor, this shortage reaches into the pool of low-skilled, minimum wage workers. A resurgent leisure and hospitality market is now competing with a resilient up-cycle in construction.

According to a Prudential study, one in three workers would not want to work for a company that requires them to work on-site full time. One in five have already changed jobs, and another one in four will search after the pandemic. According to ZipRecruiter’s Julia Pollack, “Many candidates won’t accept a job if it’s not a remote position.” In particular, the labor participation rate of women fell during the pandemic. According to a National Women’s Law Center analysis, 80% of those who dropped out of the job market in January were female. Women are more likely to care for children and elderly parents. While 70% of men find their work-from-home jobs productive, only about 40% of women feel they can get work done at home. Employers are not as enthused about remote work as their employees. According to PwC, 68% of employers believe workers need to be in the office at least three days per week for their culture to survive.

Here are some thoughts about how to become an employer of choice in the world of the hybrid office:

  • Go to where the applicants are. — The recruiting playbook is broken. Too many employers rely on job boards. Employers need to proactively target employees they want to hire with tools like LinkedIn. For hourly workers, employers are building mobile recruiting stations, such as wrapped vans outfitted to visit soccer fields and laundromats in their communities.
  • Re-evaluate non-financial rewards. — Recognizing shifts in worker behavior, employers are deploying novel new benefits such as mental days off and increased vacation days. Employers are demonstrating more empathy for workers dealing with health issues and family matters.
  • Offer childcare. — Childcare is a crisis for many employees, especially women. Juggling homeschool and work was untenable for many employees during the pandemic. Parents want to have a space for work and home.
  • Modify your meeting cadence. — Citigroup CEO Jane Fraser banned internal video calls on Fridays to help her staff have a healthier work-life balance. We have been helping our clients calibrate the “perfect schedule”, which generally includes reducing the number of Monday morning and Friday afternoon meetings and scheduling in-office meetings mid-week.
  • Re-evaluate the purpose of your workspace. — Companies will have to reconfigure their offices. Many noted the failings of communal, hoteling type environments where employees kept their heads down and their headphones on to mask distractions. Companies will need safety monitoring, traffic flows and separate spaces for small groups and large groups. Some teams will work in pods.
  • Spoil workers with constant communication. — An important lesson of the pandemic was the need for frequent communication, especially with younger workers. They want to feel “in the know.” It’s important that every company have an internal communications strategy and frequency, with the level of interactivity found in social media. The ability to engage has been a pillar in the implementation of collaboration software. Ensure your workers are using it as a tool to communicate more and not less.
  • Reward employee referrals. — It has always been true that the best source for new employees is existing employees. This is because both the referring employee and the new hire have greater incentive to ensure success–they have a vested interest in the outcome.
  • Flex your offer. — Some employees may not want a 40-hour work week. It may be mutually advantageous to offer employees alternative schedules such as 4/10 (four 10-hour days and three days off), or 9/80 (eight 9-hour days, one 8-hour day, and one day off in a two-week period). Employees want the freedom to choose. Appeasing workers with Fridays at home won’t cut it. To succeed in this environment, employers need to shift their thinking and create flexible environments where their employees can thrive. We should be thinking less about what yields the optimum productivity, and more about how we can provide an environment for our employees to be the best version of themselves.

Summary: Saddled with both a hiring crisis & a higher wage environment, small businesses need to employ even more creative & aggressive strategies in both hiring and retention. Here are two thoughts:

  • Focus on Targeted Recruiting
    • Contact employees that were laid off or left the work force during Covid & hopefully use pre-Covid goodwill & post-Covid benefits to entice employees back.
    • Focus recruitment efforts on those groups particularly hurt during the pandemic in terms of employment who may be more eager to rejoin the workforce. According to a recent McKinsey & Company study of the US Census Current Population Survey of November, 2020:
      • Women have accounted for nearly 56 percent of workforce exits since the start of the pandemic, despite making up just 48 percent of the workforce;
      • Black & Hispanic workers faced 1.6 to 2.0 times the unemployment rates of their white counterparts.
  • Use Size to Your Favor for Retention
    • While small businesses may not be able to match the wages of Amazon or Wal-Mart, the benefits outside of money of working at a small business should be communicated & capitalized on. For instance:
      • “We may not be able to pay Amazon wages, but we’ll do more for you in the long run by using such things as the LLCEDC Education & Workforce Development events”;
      • “You may not start at a competitive wage, but if you stay with us for 6 months or more, we’ll invest in you, and there are far more job opportunities with us than at Amazon.”
    • Because of sheer size, small businesses can integrate a more personalized approach to the working environment.
      • “I know all my employees by name.”
      • “We cater to our employees individual personal growth needs.”
    • Although it may be tempting to think in the moment of what your business needs, look at where your recruits/employees fit within the life of their career to know where to drive motivation. Someone going through the early stages of parenthood might be motivated by more time off to be with family or daycare perks. On the flip side, a fresh graduate showing up for day one at the office might be motivated by the opportunity for a promotion, to travel for business, or to lead a project. When you know where your employees are in their careers, it’s easier to pinpoint what will inspire them to do great work.
    • I’ve learned to understand recruits/employee’s short and long-term goals and even bucket-list dreams. Sustained motivation goes deeper than occasional bonuses and annual raises. Take the time to identify this, and see how your recruiting and business grows.

The more that small businesses can integrate & communicate this type of long-term & personalized approach to employee satisfaction & progression, the more that employees may see the benefits of choosing a smaller employer even if initial wages are less competitive. In the meantime, before the government addresses this problem with a revised policy response, the onus is on small businesses to continue to exert the same level of creative energy to solve this people problem that was used to survive an unforeseen global pandemic and economic shutdown. Unfortunately, the ending of one crisis for small businesses is only leading to the beginning of another.

For more thoughts on human resource management, view the free video entitled Human Resource Management.

Copyright ©John Trenary 2021

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