Fighting back against the labour crisis

Abstract

With unemployment rates at an all-time low and resignations at an all-time high, business leaders are facing a labour crisis which is negatively affecting profits, service levels and even their ability to keep the doors open.

To address these market shock businesses must take an aggressive and proactive approach to ensure they are not left at the back of the long queue for workers. In this article, we set out three approaches that can mitigate the impact of labour shortages and set businesses apart from their competitors in attracting and retaining talent.

Background

Businesses across Queensland and indeed the nation are facing a perfect storm of factors resulting in acute and enduring staff shortages. This labour crisis is not just creating operational inconveniences but also limiting opening hours and shuttering businesses.

On the labour supply side, workers previously affected by Covid lay-offs and lockdowns are reassessing their professional priorities and taking on non-traditional forms of employment, retiring early, starting their own businesses, or simply choosing to take a break. Conversely, global pent-up demand fuelled by government stimulus has left business owners with the conundrum of a growth in volumes that they simply can’t scale to meet. But the problem is significantly worse than mere missed opportunities, executives at the coalface are trying to ensure that tomorrow’s shifts are filled whilst at the same time trying to develop longer-term strategies to secure future labour supply.

Labour-intensive businesses such as hospitality and retail have been some of the most heavily impacted, not only because these industries have people at the centre of their customer value proposition, but also because their staffing structures endured the greatest disruption during the Pandemic.

Fighting back

[1]Companies that are able to attract and retain talent better than their peers will be able to create a genuine and compelling competitive advantage in being able to serve their customers. There are three broad areas where employers can act to change the game in their favour: bring a more diverse set of people back into your workforce, fast-track automation and build a differentiated workplace experience.

Bring a more diverse set of people back into your workforce

A quick glance at the historically low unemployment rate should persuade executives that fighting over the labour market scraps is likely a losing game. As an alternative, companies should target the untapped talent who don’t necessarily consider themselves part of the labour force: retirees, full-time students, stay-at-home parents, and unpaid caregivers are just some of segments not currently participating in the workforce. In many cases, it is not that these groups do not want to work, but rather that they have competing life priorities which are typically incompatible with traditional full-time work. Innovative employers can however take advantage of this by designing flexible roles and aggressively targeting non-workforce segments to come back to work.

Queensland Unemployment Rate Graph

Uber was perhaps the first company to scale the model of targeting “non-workers”. It is always surprising to get into an uber only to find a retired doctor, ex-engineer or former business owner driving you around the city for what equates to less than minimum wage. [2] What Uber offers a non-participating workforce is “uber flexibility” – the ability for employees to schedule work around their other life priorities. Other employers are also leveraging this idea, designing work around the obligations of the non-participating workforce in order to unlock hidden labour. For example, one retailer located in a student-rich area altered its stocking shifts from overnight to 4 – 8 a.m. to better match university student schedules.

Insight-Employement-2

Leading companies are also re-examining job requirements to broaden the range of potential candidates. Workers without degrees, younger employees and those with disabilities have disproportionately larger candidate pools. This is encouraging companies to rethink their age limits, educational requirements and other arbitrary criteria which may be potential barriers to attracting employees. Mining adjacent industries is also proving to be a fertile hunting grounds for new staff. The hospitality, retail and childcare industries are particular examples of where skill sets can be successfully moved across industry borders.

Finally, adopting a “never-say-goodbye” policy is important. Companies should think of the exit process as the first step in a continuing effort to cultivate a connection with potential future return employees. This connection can be nourished through ongoing company updates, alumni discounts, referral payments or alumni networking events.

Build a differentiated workplace experience

Poor employee experience is to blame for much of today’s attrition. While compensation and flexibility are the leading factors for entrance and retention, these are closely followed by concepts of inclusion and belonging. Organizations should make work more fulfilling by tapping into a sense of purpose, creating meaningful work, and ensuring that employees feel valued by their organization and boss. In “deskless” roles, such as manufacturing and hospitality, employers will need to do more to demonstrate employees a compelling career path if they are to set themselves apart in terms of hiring and retaining staff.

The great resignation has brought new relevance to the concept that employees don’t leave companies, they leave bad bosses. Whilst this means that businesses must invest more in leadership selection and training, it also means that staff retention and satisfaction should be reflected as a core KPI for individual managers. Companies must act to re-assign managers who are unable to nurture subordinates – regardless of how individually brilliant they might be.

Fast-track workplace automation

All businesses have plans to become more efficient and more automated, although implementation is typically delayed due to a mix of technological complexity, high-investment cost, and cultural resistance. The increased pace of change in a post-Covid world should allow businesses to re-start and supercharge these initiatives under the rationale that they are imperatives to survive and prosper in a labour-scarce world. Technological investment should be redirected to the most labour-intense parts of the business, typically front-of-house tasks that require frequent customer interactions. Online ordering portals, QR codes and self-service kiosks will continue to become ubiquitous, but the most innovative companies will critically analyse each employee touchpoint to understand how it can be automated by technology or replaced by new processes (e.g., cashless policies). Badly affected by the labour shortage, the hospitality industry is rapidly testing a broad range of solutions to liberate their scarce resources. Digital room keys, automated guest messaging, digital concierge, mobile check-in, AI-optimised housekeeping and automated billing are just a selection of digital tools hotels are trailing to ease the hiring burden and liberate existing staff to do more value-added tasks.

Maintaining rigorous hiring processes

In response to the labour shortages many companies are making hiring processes such as interviews and testing more streamlined or are removing them altogether. Whilst understandable given the current macro-economic situation, this approach is flawed. An open-door hiring policy typically results in culturally misaligned workers, greater management burden and higher levels of churn amongst both new and existing employees. The financial consequences of a wrong hire are estimated at around $20,000 per worker[3]. Instead, new hires should continue to pass through vigorous hiring processes which in turn breed employees with greater affinity to the company, appreciation for the opportunity and potential to stay for an extended period.

Closing thoughts

Businesses are facing a new and historic set of macro-economic challenges that are likely to be present for the foreseeable future. Companies who take this opportunity to transform their hiring practices, improve the workplace experience and develop better automation will put themselves at the front of the queue for top talent whilst ensuring a well-skilled workforce for the future.

Insight Employment

 

[2] A study by the Australian Economic Review found that Uber drivers earn on average $21 per hour after costs, below the national minimum wage of $21.38 per hour.

[3] CareerBuilder

Meet the authors

Luke.png

Luke Ingles
Managing Partner
luke@barcley.com.au

Sanuri

Sanuri De Silva
Consultant
sanuri@barcley.com.au

About Barcley Consulting

Based in Queensland, Barcley Consulting is a boutique management consulting firm, focused on helping corporations and government with strategy, innovation and execution. For more information on their other publications, please visit www.barcley.com.au

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