What's the best way to forecast the supply and demand for talent at your organization?
Make sure you are using fresh data for accurate results. Request a demo of PayScale Insight
to see how having a comprehensive, up-to-date tool can make forecasting quick and efficient.
But let’s rewind back a few years to the late 1990’s and early 2000’s. Do you remember what it was like to fill positions when the unemployment rate was below 4% and the growth of your organization fueled an aggressive recruiting plan to fill all of those critical open positions?
Experts may disagree on how serious the future labor shortage will be. But, despite the debate and disagreement, one fact remains. There are approximately 78 million Baby Boomers (born between 1945 and 1960) and they are aging. How will you replace not only the workers who leave when they retire, but the expertise and skill they provided to you? Many of you may already be experiencing this since the oldest of the Baby Boomer generation, those born in the late 1940’s, have already reached retirement age.
So, let’s take a break from the doldrums of our current economic recession and consider the potential effect a mass exodus of workers may have on your organization and how the relationship between employer and worker will be different in the case of a future labor shortage. Then, you will be able to know what you need to do plan and prepare for the future labor shortage ahead.
Increasing Labor Costs
Remember your economics 101 class? If you have a low supply and a high demand, labor costs will increase. Fewer people to fill positions will drive salary costs up. Base pay and other forms of compensation will have to be redesigned. More compensation will be tied to company performance and driven by the fact that workers will want to see the direct alignment of their performance with the success of the business and expect to be paid for their contribution.
How to Avoid Labor Shortage at Your Company - Tapping Into Alternative Labor Pools
The difficulty in finding people will drive the need to tap into alternative labor pools. There will be more job opportunities for non-conventional types of workers such as part-timers and temporary workers, “stay at home” moms, prison labor, etc. There will be more alternative ways of working such as telecommuting, piecemeal or project-based assignments, virtual office buildings, and consulting and labor outsourcing. Also, there will be more opportunities for the retired. You Baby Boomers don’t start planning that retirement just yet! In the case of a future labor shortage, your employer may offer you a sweet deal to stay on another 5 years. You just might get an offer you can’t refuse. This, coincidentally, works out well for those who have seen their retirement portfolios recently erode; an effect that may work to an employer’s advantage in the future because older workers may be willing to stay on and retire later than previously planned.
Since it will be more difficult to find highly skilled people, it will be increasingly necessary to find alternative methods of acquiring the employee talent. Look for more people with specialized skills to trade-in their jobs as captured employees and starting their own consulting firms and offering their services to organizations.
Organizations will need to ensure they have well planned-out strategies for effective college and trade school recruiting programs. Not only will there be more opportunities for college and trade school students, employers may seek out students for internships while they are still in high school or maybe even younger.
More Older Workers
Healthier and longer life spans mean more older workers remaining in the workplace well past their 70’s and 80’s. Think of the positive affects a business will receive when their younger workers will have the opportunity to work side-by-side and be mentored by older workers and all that wisdom is being transferred.
Employee Recruiting Will Be An Integral Business Development Strategy
The more competitive the labor market, the more valuable the recruiter. An organization with a competency to successfully hunt and mine the labor pool for the best job candidates will be extremely valuable. The ability to find people will become one of the organization’s most critical corporate objectives. The people who do this well will be nicely compensated.
Avoiding Labor Shortage - It’s the Culture
Let’s say that I am a “hot” job candidate and you offer me a position to come work for your organization. You really want me but I also have three other job offers – a likely scenario in a labor shortage. What will be the deciding factor for me taking your job over the other job offers?
From your organization’s perspective, what will it take for the candidate you really need to pick your job over the others? Will it be salary? You won’t be able to buy them. Remember, labor costs are already going to be very high and other companies who want the candidate just as badly as you do will certainly be willing to at least match your offer. Benefits? They’ll be competitive too. The physical work environment? A great facility might be attractive to a job candidate but probably not the most important factor. Commute distance, job title, work schedule flexibility will also be factors. But, in and of themselves, they may not be the single most important decision maker.
Your company culture will be the greatest selling feature your organization will have to fill jobs with the best candidates. It will be your dynamic and high-performing work environment that will be attractive to the best candidates. It will draw them to your organization even before you have an opening. Most importantly, it will be your hiring managers who are known for instilling exciting and high-performing work environments that inspire people. In the future labor shortage, organizations with the best cultures will win the battle for the best talent.
It makes you want to start right now to generate the improvements your company will need to be the employer of choice, doesn’t it? It may not be the best time right now to be thinking about it with unemployment rates high, a labor shortage seems so far off. But it may be too late to start your cultural improvements when the labor shortage hits. Even if the looming labor shortage of the future is not as serious as some believe, it still makes good business sense to create a culture that attracts workers. Remember, there will always be a labor shortage for the most highly skilled and sought after people. No matter what type of economy we’re in, a high-performing culture with a dynamic leadership team will always be the employer of choice for the very best and brightest workers.
Founder and President, Sporleder Human Capital
Do you have any salary range topics you would like to see covered here on Compensation Today? Write us a email@example.com.
Are you doing a salary review or compensation benchmarking project? PayScale provides up-to-date, external salary market data you can use right now. And, it is specific to the education, skills set and experience your employees. Give a PayScale demo a try.