How to address a workforce shortage in a tight labor market

Jun 25, 2023
Human capital Business strategy

Your businesses may be facing a common collection of challenges: You are shorthanded, orders are piling up, customers are complaining and you’re behind on project goals. You know you need more employees to address these issues, but day after day you hear about the challenging labor market.

You’ve run ads on multiple job boards, but the number of applicants is low and those that do apply are not qualified. You manage to find a few people to interview, but they are unmotivated or do not follow through and complete the full process. You’ve reached out to recruiting firms, but they don’t return your calls. You continually hear that there are more jobs open than there are people to fill them. How will you ever make this work?

There is more than one solution

When a business grows, and employees simply can’t keep up with the workload, the instinct is to hire more employees. But is that the only solution? Have you exhausted all other means of keeping up with demand, answering enough phone calls and checking projects off the list? Consider the following alternatives:

Improve retention to avoid empty seats

All companies experience some level of turnover. Employees leave for a variety of reasons, and not all are preventable. However, if the loss of an employee will mean a challenging gap in your workforce, putting energy into retention is key. What is the cost of having positions unfilled for a month, a quarter, a year?

Retention can be improved by building a workplace that supports the needs of employees in three different ways: policies, perks and picnics.

Policies establish a reliable organizational structure that gives employees clarity and peace of mind. They outline acceptable behavior across the organization, minimize disruptive disputes and enable employees to focus on their core responsibilities.

Improved retention reduces the number of open positions and can help prevent a workforce shortage.

Perks provide employees with value through compensation, benefits, bonus programs and incentive pay. Examples include free lunches, snacks, merchandise or event tickets. Review your strategy and ensure your offerings reflect the demands and preferences of the current labor market and that your programs align with the demographics of your company (i.e., tickets to the symphony won’t likely resonate if most of your employees are from Gen Z). It’s also crucial to understand the tax implications of all forms of compensation and benefits so you can gauge their value in serving your workforce objectives over the long term.

Picnics is a word that reminds us of the importance of employee engagement. How does an employee benefit from their association with your company beyond pay and benefits? Employees value a sense of connectedness. They need to understand why they’re there, and what they are going to accomplish either for their own career or in support of the company’s mission. It is important to be intentional about helping employees relate to one another personally and professionally.

Improved retention reduces the number of open positions and can help prevent a workforce shortage.

Focus on training and development to increase productivity

If business activity is up 20%, what steps would be necessary to enable your current staff to handle a 20% increase in workload? What if increased technical skills enabled support reps to find answers faster and take more calls? What if improved communication skills enabled customer service personnel to resolve issues faster, thus minimizing product returns? What if leadership skills were improved, enabling teams to work better together and deliver projects more efficiently? 

Today’s training tools are easier to access and less expensive than ever before. Upgrading existing employee skills improves productivity, which can delay the need to hire additional staff. In addition, it shows commitment to your current workforce and promotes increased engagement and motivation.

Another benefit of focusing on employee training and development is to reduce the chance of business disruption. If an employee leaves unexpectedly, cross training can ensure that another employee can easily step into the gap. If an employee is promoted or retires, development and succession planning efforts can ensure that no gap is left for long.

Upgrade and modernize hiring practices

There are times when the above strategies are not enough, and the only option is to hire, but many companies can improve their chances of success by upgrading their approach. Move beyond the usual Indeed and LinkedIn post and seek out new candidate sources. There are literally tens of thousands of job boards, so consider what others might align with your needs. One of the most effective ways to get the word out is through an employee referral program. Turn your employees into recruiters as well and provide incentives for introductions that result in new hires.

Ensure that your job ad is not just a copy and paste of a job description. Job descriptions are internal documents designed for organizational and compliance purposes. A job ad however is an important recruiting tool that should entice a prospective employee to apply for the position. A job ad should inform an applicant about what the company is, how they can make an impact, what opportunities they will have, what skills they need to be successful, what technologies are used and what the application process looks like.

Hiring managers are often the first point of contact that an applicant will have with someone at your company. Ensure that they are well trained in how to conduct a proper interview. Gone are the days when hiring managers could sit back and select from a dozen qualified candidates. Hiring managers need to sell applicants on why they should come to work for your company. In addition, when applicants are in short supply, the hiring manager may need to make tradeoffs. Applicants may not have all the desired skills, but that doesn’t mean they can’t be trained to fill the gaps. It might be better to hire someone with 80% of what is needed and train them on the rest as opposed to letting a position sit open while you wait for that perfect candidate.

Taking a new approach to staffing challenges

There is more than one way to address a workforce shortage. While hiring more staff is the obvious choice, today’s challenging environment means employers need to look for other options. Improving retention and improving the skills and productivity of existing staff can go a long way toward closing the gap. In addition, upgrading and modernizing hiring practices can help boost a company to be a candidate’s first choice which is critical when competing in the war for talent.

RSM’s experienced human capital consulting advisors can help you determine which of these solutions can help you address your staffing concerns. Contact us today to learn how we can help you optimize your hiring and retention processes.