Tight labor markets will be top business challenge in 2020
The labor markets have been tight for several years, and it’s only going to get worse in 2020. The latest reports from both large corporations and small businesses show increasing challenges retaining and recruiting employees. Looking to 2020, the companies that will thrive understand employee retention and recruiting. Businesses that tolerate poor managerial performance will not keep good workers, will pay more for poor performers, and ultimately fail in this environment.
Small businesses are suffering according to the latest report from the National Federation of Independent Business. “Finding qualified workers … remains the top issue for 26 percent” of respondents.
And the cost is high for big business, too, according to The Conference Board’s study of blue collar labor. Gad Levanon and Elizabeth Crofoot note that blue-collar employers are having more difficulty recruiting than white-collar companies. Not only are they operating with unfilled positions, they are paying more overtime, they see lowered morale and employee engagement, and increased attrition. That increased attrition risks a downward spiral: a few good people leave, the remaining employees are overworked and then look for another job, causing even more overwork among the fewer remaining employees. A desperate hiring decision worsens the problem by adding a poor employee to an overworked team.
The labor market challenge has worsened even though economic growth has slowed a bit in 2019. Demographics drive the problem. The scariest chart about the future shows virtually no growth in the working age population in the decade from 2020 through 2030.
But it’s even worse than the scary chart shows, because businesses have been hiring the least-attractive job applicants: those without diplomas, without work experience, and with prison records. These are not the preferred applicants, but they are available. Most of these new hires will turn out to be good employees, but many will not hit the ground running with high productivity, reliability and customer service. This means that many of the people who will be available in 2020 are even less attractive than those who got jobs in 2019.
The good news is that companies can get an upper hand in the competition for good workers through some simple steps, which I’ve detailed in a series of Forbes articles on leadership in the tight labor market. Begin with top leadership making employee retention a priority goal. That means goals and monitoring of performance. The most critical activity is for first-level managers to spend time with each employee, understanding the person’s motivations, hopes and fears. First-level managers tend to have plenty of work already, so senior leadership must ensure adequate time available for these conversations.
Senior leadership must also ensure that the conversations continue regularly and are not a one-time event. Finally, recruiting well is important to strong employee retention. Identifying candidates who can do the job is only half the solution; the other half is finding employees who will want to keep doing the job in the years to come.
The tight labor market will define business success and failure in the coming decade. The best companies are already hard at work on the issue.
This article was written by Bill Conerly from Forbes and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.
