Currently, U.S. companies (as well as businesses in other parts of the world) are having trouble finding enough skilled labor to meet demand.  In the U.S., there are several factors contributing to a rising war for talent.  First, the unemployment rate dropped to 4.6% or 7.4 million people in October 2021. That is down considerably from the high of 14.8% at the end of the February-April 2020 recession.  While it is still about 1% higher than the 3.5% rate prior to the pandemic in February 2020, unemployment is much improved.  It is expected to get down to 3.5% by end of 2022.  People are getting back to work.  And yet there continues to be a shortage of skilled workers.

This is evidenced by the disruption in the supply chain.  Retail is having trouble getting enough finished goods and automotive can’t get enough parts.  Meanwhile, logistics, manufacturing, hospitality and service companies can’t find and retain enough employees to fully return to normal.  That’s because, while unemployment has dropped, so has the labor force participation rate.  It stands at 61.6%, which is 1.7% lower than in February 2020, and significantly lower than the all-time high of 67.3% in January 2000.  This is true despite the fact that population has increased in the last 20 years.  The U.S. population was 282 Million in 2000 and is now almost 333 Million as 2021 winds down.  So, while there aren’t as many “unemployed” people, this number is deceptive because many people have simply dropped out of the workforce and aren’t looking for work.  They don’t get counted as part of the “unemployed.”

Given that the labor participation rate has been on a steady 21-year decline, it is clearly not related to Covid.  Some of it is due to the retirement of Baby Boomers, which was a huge segment of the population.  That is definitely affecting the construction industry, where a large portion of subcontractors – such as electricians, plumbers, carpenters, stone masons, etc. – were Boomers who were already retiring in large numbers and then the pace accelerated when Covid began.  But it is also the result of low-skilled workers, who upon losing their jobs to outsourcing or automation, could not find new employment and gave up.  The declining unemployment rate combined with a reduced workforce is making it harder for businesses to find skilled laborers to fill openings.

Supply chain shortages are causing the price of goods to escalate.  For example, in the history of automotive sales, never has the price of used cars appreciated…. until now.  The shortage of semiconductor chips for new cars is so severe that automobile manufacturers have slowed production because there is no place else to pile up the new cars that cannot be sold because they lack a semiconductor chip.  This shortage is hamstringing the production of all kinds of products, not just cars.  It includes everything from appliances to electric toothbrushes.  And the shortage is expected to continue well into 2022 and perhaps even 2023.   Part of that is due to a shortage of manufacturing in the U.S., and part to an inability for existing manufacturers to staff up to increase production.  It doesn’t stop there.  Logistics companies are so short of truck drivers that they are unable to get goods that are being shipped from around the world distributed to retailers.  FedX and Dominoes Pizza are both reporting driver shortages.

The War for Talent is waged with Creativity

Finding and paying for workers is one of the biggest challenges businesses are facing now.  It is causing inflation as companies increase wages and salaries in order to lure talent.  And, it is expected to continue for the foreseeable future.  What’s a company to do?  There is no one-size-fits-all solution.  Companies are getting creative, though, in what they do to attract and keep talent.  They are adopting strategies that may seem unimportant to businesses that have always used traditional incentives such as paid time off, health insurance, 401Ks, HSA accounts, etc.  But with Millennials and, especially Zellennials who are just starting to enter the workforce, it’s things that may not seem to matter that matter most.

The Greatest Fringe Benefit:  Respect

Case in point.  Aloft Hotels is a chain owned by Starwood / Marriott International.  The Aloft brand is definitely aimed at Millennials and Zellennials.   According to them, “Aloft Hotels caters to today’s modern traveler who craves jet-setting style and a vibrant social scene at an affordable price. Urban-inspired design, accessible technology and innovative programing centering on music and F&B (food and beverages) make Aloft unique to the traditional hotel landscape.”  For consumers, it is a hip and trendy hotel that offers clean design, tech-friendly accommodations and the kind of environment that feels like a cross between a swanky dorm and a European hostel.  It’s brand is minimalist, modern, affordable and fun, but also clean and safe.  And the brand is growing.  Currently, the company has 203 open properties with 33,415 rooms.  And there are 110 additional properties in the pipeline that will add 18,029 more rooms.  They are clearly doing something right.  But how is Aloft handling staffing shortages?  The answer may lie in how they treat their people.

How Aloft speaks to its other important constituents — namely, its employees – may be the real lynchpin in their brand’s success.  All of their staff are valued.  At Aloft hotels, the area on each floor where linens, toiletries, supplies and equipment are stored has a sign that reads:  “Talent Only.”  Not “Housekeeping” or “Employees”.  The maintenance staff is referred to as Talent.  It might seem like such a little thing, but when it comes to brand, language matters.  And referring to workers — who not so long ago were called “Maids”—as Talent communicates a level of respect for front-line workers that says “we value you.”  Aloft’s management saw an opportunity to build up their people.  In the war for talent – when many companies are battling it out by increasing wages – there is something that resonates even more deeply:  esteem.   Does it take the place of a living wage?  No.  But, all things being equal, maintenance staff may feel more valued and be less likely to change jobs when they are paid a living wage at a place where they feel valued.

And if we’re looking at how to communicate to staff that they matter, here is another case in point.  Walt Disney knew that language mattered, back when companies still thought logo and brand were synonymous.  Walt Disney made sure people who visited Disney theme parks were referred to as Guests, not customers.  Whereas customers are being sold a product, guests come for a visit and enjoy the experience.   And, of course, Disney’s employees who took care of those guests were referred to as Cast Members, who were instrumental hosts playing an important role in that show and experience.  This approach has served the company well for 70+ years.

And, we don’t have to look at Fortune 500 companies to see evidence of how brands that value their people do well.  At Savannah Bananas, they see themselves as a “team: through and through”.  Many companies may talk the talk of “team”, but few walk the walk.  At Savannnah Bananas, they refer to their employees, from the part time staff and interns to the full time employees and senior level leaders as Teammates or Team Members.  From the top down, they do not accept having anyone being called “the boss” or having anyone say that they work “for someone”.   From the CEO to the most recent entry level intern, people work “with” one another and work together.  No one works “for” someone else.  That requires that everyone check their egos at the door and requires a culture shift.  How companies treat their people, recognize them and build them up matter more now than ever. It starts with the simple language used and the attitude employed… and it all boils down to respect.  In the war for talent, respect is the ultimate secret weapon.

The Next Best Fringe Benefit:  Genuine Concern

Another way that a business can win the battle to attract and keep the best talent is to build a healthy career support system for employees.  This takes HR to a whole other level.  At companies that are doing this right, a team of individuals work with each new hire to identify that individual’s career goals and then help the person achieve those goals, whether those goals are related to the business or not.

For example, a new hire brought on board at an online ecommerce company might be working part-time at their Customer Service Center.  But, in working with the HR team, they might learn that she is actually getting a Bachelor’s degree in Accounting and her real goal is to transition to a job in her field.  The team maps out a plan for her to get an Internship in the Accounting Department next year when she is a Senior, and then eventually hire her as a full time Staff Accountant the year after that.  And, with the right mentoring and experience, the goal is for her to get an Accounting Manager position within two years after that.  This is an example of a company focused on growing its team, helping each individual spot opportunities for advancement in that direction.

Hewlett Packard does just that.  HP’s management philosophy is focused on allowing employees to grow and learn at their own pace.  They encourage each employee to seek out and take advantage of any opportunities that interest them in order to gauge what their ultimate goals are for the future.  By doing this, managers are able to help guide career paths that are right for each employee and allow them to advance their career.  Why would any employee leave HP if they know they are encouraged to advance?

Optoro does something similar. Optoro encourages its employees to participate in conferences, organizations, and learning programs that will keep them at the top of their field.  Those who cannot attend such programs are exempt, but given a professional development budget to use throughout the calendar year on other growth endeavors. Employees work with their manager and department head to determine what programs are appropriate for their development while also providing business impact. In addition to professional development budgets, Optoro provides internal management training through an intense 10+ week class.

Companies that want to win the war for top talent need to do some research on what other companies are doing to motivate, engage and grow their staff.  Figure out if any of those activities work for their business and staff.  And then ask staff what would make them happier to work there.  By developing programs that employees want and make them feel valued, businesses will recognize that keeping top talent is about more than just money.

Quote of the Week
“Train people well enough so they can leave, treat them well enough so they don’t want to.”
Richard Branson, Founder of Virgin Group

© 2021, Keren Peters-Atkinson. All rights reserved.