A recent Federal Reserve study found increasing labor shortages nationwide, not just in the white-hot technology sector, but in industries ranging from construction and manufacturing to healthcare and retail. Thomas Lee, managing partner and head of research at Fundstrat Global Advisors, projects that the U.S. will face a shortage of 8.2 million workers through 2027. This ongoing talent crunch slows productivity and hits companies in the pocketbook. Extended job vacancies cost HR managers an average of more than $800,000 a year, a CareerBuilder survey found. And companies continue to spend on incentives and retention after filling vacancies. For some, the job market has become an expensive arms race requiring ever-higher salaries and a poach-or-be-poached attitude toward competitors.
It doesn’t have to be that way. Though the labor problem may be caused by the immutable forces of demographics and exacerbated by supply and demand, employers can go a long way toward solving it with a little creative thinking. Here are five things they can do to set themselves apart from competitors.
1. Consider nontraditional sources of talent
Employers often begin their searches online, scanning resumes for specific keywords to match needed skills. But other employers are fishing from the same pool. Try looking farther afield. Dropping requirements for degrees or specific skills opens new vistas. Older workers, parents returning to the workforce, veterans, members of minority groups and rural workers – applicants often overlooked in traditional searches – can become valuable employees.
“There is hidden talent across the country, but corporations have difficulty understanding how to find and assimilate it,” explained Art Langer, founder and chairman of Workforce Opportunity Services, a nonprofit that hires underserved minorities and veterans and trains them for jobs in IT, finance, project management and office work. Langer’s organization has teamed up with companies such as Prudential, General Electric and Johnson & Johnson to determine in-demand skills for the current labor market and develop corresponding training programs. It also helps trainees with soft skills like communications and business etiquette.
According to Langer, nontraditional candidates who are offered opportunities are more motivated and loyal than others. The retention rate for Workforce hires is 90 percent after the first year. A Hewlett-Packard study[i] of its Workforce-trained technology workers found that they added value to the company twice as fast as traditional hires. The company also saved $150,000 in hiring expenses.
2. Use better incentives
Raises and bonuses retain workers in the short term, but over time their effectiveness fades.
“Your competitors are doing the same thing, and it becomes a zero-sum game,” said George Elfond, CEO and cofounder of enterprise training company Rallyware and a speaker and author on employee retention. Employers need to consider a wider range of incentives. “Recognition at a department meeting can be more effective than a five percent raise,” Elfond noted.
Employees value help with career development. They also appreciate opportunities for remote and flex-time work. Gym memberships help keep sedentary workers healthy and provide networking opportunities if the facilities are on-site. Offering employees volunteer time earns their respect, especially if you let them choose and lead projects. You can also use your company’s expertise to create perks. SunTrust Bank developed Momentum onUp, an online “financial wellness” program for its employees. It’s been a hit – and the bank now offers the program to clients.
3. Automate your business processes
Nothing discourages workers like performing dull, repetitive tasks, especially if they can be automated.
“We’re constantly looking for ways to invest in technology to improve the experience for teammates and clients,” said Julia Harman, market president of the Dallas-Fort Worth region for SunTrust Bank. The bank revamped its customer relationship management software to make it more user-friendly and adopted a new loan origination system allowing bankers, underwriters and office workers to collaborate throughout the process. “It frees our bankers to invest more time in meaningful work and drive further business,” Harman said.
Automation also provides an efficient way to give personalized feedback. Elfond’s company has software that provides training based on performance. If a salesperson has trouble selling a particular item, an online module explains how to better convey its benefits. A customer service representative whose rating drops gets advice on handling specific problems. An employee who wants to learn a new skill can get training with the click of a button. Results are tracked to show whether the instruction helps.
“Training is traditionally seen as a cost center,” Elfond explained. “But with automation, you can tie it to specific company achievements.”
4. Develop a talent pipeline
Focusing efforts on current needs turns companies into corporate versions of Alice In Wonderland’s Red Queen, running as fast as they can just to stay where they are. Instead, businesses should think of the future and develop relationships with strong candidates even when they have no appropriate openings.
“I engage with candidates long before a specific need arises,” Harman said. “We’re building a team. It’s very different from a plug-the-hole mentality. As the business evolves, you want to have your bench ready.”
According to Elfond, planning for future needs means looking for qualities like passion, agility, and fit with company values instead of seeking specific skills.
Building a talent pipeline is a long-term process. In her first six months on the job, Harman developed a list of 100 qualified bankers and met with 75. She has hired two so far.
“It’s an investment in time that can compete with other priorities in the short term. But in the long term, it builds highly effective teams that provide companies with the greatest return,” Harman said.
5. Make a good first impression
Elfond’s research shows that 58 percent of employees are more likely to stay with a company if they have a good experience during their early days and weeks on the job, a period human relations professionals call “onboarding.” Instead of handing new hires a fat binder of information, employers should create a sequence of steps employees need to learn the first day, the first week, and the first month. With a mobile app, employees can log on to find the tasks they need to accomplish on a given day.
Elfond also advises companies to assign a mentor – a team member may be a good choice – to each new worker. A mentor can explain where to get resources and introduce new employees to people who can help. Having mentors allows new employees to feel included in their work communities and teaches them to solve problems on their own. It also shows them the company cares.
Finding and retaining good workers isn’t easy in today’s competitive job market. For better results, companies should rethink their hiring strategies, considering future needs instead of focusing on specific jobs and skills. Initiating policies around mentorship and employer expectations early on can have a lasting impact. And searching for talent off the beaten track and experimenting with automated processes can make a company stand out to candidates and build the groundwork for a solid future.