Workforce Shortage Crippling Many Industries
Gregory P. Smith
We do not have enough quality people equipped with the right skills to
fill all the jobs available, and it's going to get worse--a lot worse very
soon.
Many of these worker shortages are found in the skilled trades such as
heavy equipment mechanics, construction, truck drivers, healthcare, and
certain jobs in the IT sector to name a few.
Most healthcare organizations face critical staffing shortages. The
national nursing vacancy rate is approximately 13 percent. Enrollment in
RN programs has declined by 50,000 or 22 percent. Finally, the average age
of a RN is 43 years old.
The beginning of IT shortages is starting to emerge. Just this year,
Google announced it was unable to meet their growth expectations because
they could not find enough qualified technicians. As the economy grows
many more shortages will develop.
The United States has always been a beacon for skilled talent coming here
from overseas. Over the past years, fewer people have requested
educational visas, and in turn international student enrollments are
decreasing. Part of this is related to September 11, but more
significantly other international cities are becoming more economically
vibrant and are attracting top talent away from the U.S. For example, New
Zealand, which only has a population of approximately 4 million people,
now provides a home to over 40,000 Americans.
Shortage of Workers. The aging workforce is an issue businesses need to
address. The simple truth is this country is not having enough babies. The
growth rate of the workforce has been steadily declining since the 1970s.
Both the U.S. Census Bureau and a report from Accenture Consulting
indicate the workforce will begin to experience a negative growth rate
beginning in the year 2015.
Consider the 45- to 65-year-old workers, who census figures show is the
fastest growing demographic. Estimates indicate by year 2020 one out of
every two people in the U.S. will be older than 50. These older workers
are willing to stay in the workforce longer or even reenter it after
retirement. Yet most businesses continue to cater to rapidly diminishing
younger workers. A survey conducted by the Society of Human Resource
Managers shows 65 percent of companies surveyed exerted no effort to
recruit older workers for open positions. Eighty-one percent did not have
benefit plans designed with older workers in mind.
Unwanted Employee Turnover. As the economy grows, employee turnover will
rise significantly. Research my company has conducted shows a large
portion of the workforce is getting ready to "abandon ship" as the economy
improves. Employees are looking for better benefits, career advancement,
and greater job satisfaction.
The retention survey conducted by Chart Your Course Internation is
available at this link:
Another survey conducted by SHRM, Society for Human Resource Management,
showed "83% of employees said it was "extremely likely" or "somewhat
likely" they would actively seek new employment once the job market and
economy improves."
Trouble comes in pairs. There are two key issues associated with employee
turnover. First is cost, and the second is the loss of productivity.
The Cost of Turnover Costs More Than Most Realize
The cost of attracting, recruiting, hiring, training, and getting new
people up to speed is tremendously more costly as well as more wasteful
than many realize. This equates to allowing your house to burn down when
you could have purchased an inexpensive smoke detector. Prevention is
always less expensive and wiser use of your resources.
Labor costs are the most expensive aspect of running a business. Even
though all businesses measure profit and loss, they rarely consider how
much turnover is actually costing them. Just consider--the annual turnover
costs of a typical healthcare system range from $14 million to $27 million
per year according to Unifi Network, a subsidiary of Price Waterhouse
Coopers LLP.
Studies show it costs $7,000 - $9,000 to replace an hourly low-wage
employee and up to $45,000 to replace a mid-level salaried employee. One
Silicon Valley company estimates the cost of replacing the average
employee is over $125,000. The Saratoga Institute and Hewitt Associates
estimate the productivity cost of replacing employees can cost 1 to 2.5
times the salary of the job opening.
Second, productivity is directly tied to retention. Companies with high
turnover are at risk for low productivity. Studies from the Gallup
organization show employees who have an above-average attitude toward
their work will generate 38 percent higher customer satisfaction scores,
22 percent higher productivity, and 27 percent higher profits for their
companies.
In spite of the staggering cost of turnover, the majority of most
businesses do not have a formal retention program. It is bad business when
good employees depart, but stupid not to try to improve it. .
As our labor pool shrinks, employers must focus on creating an environment
that lets people work productively and effectively and makes them feel
good enough to stay.
-
Improve your hiring process to create a better match between the
individual's talents and job requirements.
-
Improve the work environment. In its National Study of the Changing
Workforce, the Families and Work Institute showed earnings and benefits
have only a 3 percent impact on job satisfaction. "Job quality" and
"workplace support" have a combined 70 percent impact than earnings and
benefits.
-
Improve workforce participation rates by providing the environment and
benefits attractive to an older workforce.
-
Provide time to hire and train those managers to understand what leads
to higher retention and greater job satisfaction.
-
Hold managers responsible for
retention in their departments.
-
Start measuring the cost of turnover.
-
Focus more energy on the key jobs that have the most impact on
profitability and productivity.
-
Show people the big picture. Help them understand how their job
individually impacts on the overall company mission.
-
Promote managers whose behavior is consistent with the organization's
values and philosophies.
-
Terminate or reassign managers/supervisors whose behavior is
inconsistent with the organization's vision and values.
Greg Smith
is a nationally recognized speaker, author, and business performance
consultant. He show businesses how to attract, retain, and engage their
workforce. He is the author of Here Today Here Tomorrow:
Transforming
Your Workforce from High Turnover to High Retention. He has been
featured on television programs such as Bloomberg News, PBS television,
and in publications including Business Week, Kiplingers, President and
CEO, and the Christian Science Monitor. He is the President and "Captain
of the Ship" of a management-consulting firm, Chart Your Course
International, located in Atlanta, Georgia. Phone him at 770-860-9464.
Contact us if we can help you with
reducing turnover and helping you find skilled talent.
