While the entire world chomps at the bit to get back to “normal,” there is still something holding back small- and medium-sized businesses from making a great return – a severe labor shortage. According to the U.S. Chamber of Commerce, for every opening, there are about 50% fewer potential employees available as there have been on average over the past 20 years.
Some of the hardest hit sectors – including that of restaurants – are having difficulty getting servers and the like back in the door, despite a surge in demand from customers.
While part of this trend is a result of unemployment benefits still in circulation, it is also a result of both:
- Increased competition – While wages are one element of the puzzle, companies are not only going up against their typical competitors, but they are also at odds with industries wherein employee skills are transferrable. For instance, the childcare industry continuously struggles to retain skilled workers because those workers can often earn more money as teachers.
- Non-wage issues – Non-wage issues are becoming an increasingly large source of competition amongst companies post-COVID. COVID has made many people re-evaluate what’s important to them, and it’s broader than working from home – it includes flexible working arrangements, benefits such as sick leave/healthcare plans, holiday allowances, parental leave, etc. These extra benefits can sometimes price small businesses out against big businesses, but if small businesses think outside the box, there are plenty of non-monetary and inexpensive benefits that can be implemented.
With all of this in mind, how can businesses help themselves secure and retain talent, particularly during a labor shortage?
First, from an internal standpoint, work to train and upskill your existing employees. Is the role you’re hiring for specific to a certain title, or can an internal executive master the skills in the interim? While this may be a temporary fix, this can not only benefit the company, but the employees as well. Employees whose companies exhibit trust and confidence in them are often the most positive, productive and loyal members of the team.
Second, from an external standpoint, there are a few key routes that can be taken:
- Hire contingent workers (e.g., freelancers, consultants and contractors). Again, while this may serve as a temporary fix, the immediate solve makes it a popular choice.
- Take another look at who and how you’re recruiting. If you’re looking for the perfect fit, this may be a time where you need to hire the best option and help them reach your internal goals.
- Ensure you’re a flexible employer. In order to increase attraction and retention, make sure you’re a workplace that’s changing with the times. This includes flexible work hours, working from home possibilities and PTO/leave options.
- Develop a succession planning process. Knowing that the talent market is volatile, ensure you’re prepared for any team member to exit or join the company at any time. The onboarding process should be quick, seamless and effective in order to lose the least amount of value in between hires.
- Consider spot bonuses. Particularly during an ongoing talent war, salaries and wages are king (though they’re almost always king, regardless). Consider providing long-term employees spot bonuses so they know you’re appreciative and value their work.
While the labor shortage should raise a red flag for every employer, the best companies to work for will address the issue head on, and keep every single employee in mind throughout the turbulence. This is an opportunity to highlight your business as one that cares about your staff’s safety, their mental health and wellbeing, and how they’re being taken care of from a monetary and compensation perspective.
Latisha Carter is Head of Partner Services at Xero. Latisha oversees a team focused on regional and enterprise partner consulting, practice tools implementation, and voice of customer and industry evangelism. Prior to joining Xero, Latisha spent 19 years at Sage where she held different positions across marketing, sales and professional services.