It’s hard to miss all the headlines about the labor shortage. Restaurants are scaling back hours, switching to carry-out only, and even closing for good because they can’t find people. Grocery stores shelves are empty and almost every main street storefront sports a “Help Wanted” sign.
Research shows that consumer demand isn’t to blame: Retail sales are rising at the fastest annual rate on record, and outside of non-residential construction and automotive production, all segments of the economy are pointing up. These trends are expected to continue through mid-2022, slow down in 2H 2022 and rev up again in 2023 — concerning small business owners across the board who struggle to find workers.
According to the Wall Street Journal, there are 5,000,000 fewer Americans employed than before the pandemic, and 3,000,000 have left the workforce. But the number of Americans unable to work because their employer closed or lost business due to the pandemic dropped 600,000 in August. Covid cases declined by a third in September, and many industries unaffected by the virus failed to add workers. The demand for workers is high — 67% of small businesses reported hiring or trying to hire in September, and 42% raised compensation. However, 51% still have openings.
Republicans might suggest that vaccine mandates and government assistance are to blame, and Democrats might disagree. However, for the business owner, politics are not what’s important. What’s most important is what you are going to do about it.
For starters, do what you can to hold on to the employees you have. With wages up 8-10%, consider giving raises to your current employees. If that sounds like a lot of money, consider how much it would cost you to replace them. Make sure they know they are appreciated. Now more than ever, bosses need to be proactive in making employees feel appreciated through benefits, feedback, and recognition. If you are in a service business, look for ways to keep your team engaged and looking to the future through programs like a quarterly bonus program based on meeting mutual KPI goals.
Remember, your competitors are having the same labor supply issues that you are, and they (or the recruiters they hire) are coming after your people. For key employees, that means exploring long-term compensation strategies like phantom stock or other incentives to make it easier for them to stay with you.
Remember that finding new employees in this environment will take more than just posting jobs when recruiting. Consider referral bonuses for current employees who bring you new hires. Make sure the prospective employees get a good feeling about your company culture from profiles and posts in places like LinkedIn and Facebook. Ensure your candidates fully understand the benefits offered beyond straight compensation.
However, resist the urge to overreact to the labor shortage. Even though it’s hard to find people, be careful about lowering your standards to the point of jeopardizing the safety of your workplace. For example, don’t stop drug testing for jobs that involve operating vehicles or dangerous equipment. Don’t wait it out. All indicators are that this situation is going to continue through the next few years. Act now to shore up your people and make sure you do everything possible to bring promising new people into your organization.
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