Almost every month, I hear someone talking about low unemployment, and more jobs available than people to fill those jobs. While that is great if you are in the market for a new job, it creates new problems for business owners. Previously, I wrote on this topic from an employee engagement standpoint. Today I am going to discuss some of the business impacts of low employment economy.
Business Impacts of Low Unemployment
The realities of low unemployment on a business can be a struggle. To stay in business, you have to continue to increase demand for your products or services. However, you may struggle with maintaining the proper staffing. Hiring is a challenge, because talented people already have a job. Productivity is another issue, because you must do more with less, or at least more with the same. So, you either invest in hiring someone and covering another salary, or your people are working overtime. Either way, employee costs are increasing. Let’s look at each of these troubles individually.
I am hearing ads on the radio saying that hiring companies must target individuals that already have jobs. The reality is the talent you need to drive your business forward is already working. If your recruiting, you probably need to woo talent from your competition. Well, this means your competitors are probably actively recruiting YOUR employees! Now your recruiting problem is compounded by a retention problem.
Do you have a strategy in place that focuses on employee attraction and retention? Why would your employees want to work for you if their competitor is offering them similar benefits but maybe more pay?
The sad truth is you are probably looking at ways to do more with less. I can’t count how many times, when I was a project manager, I was asked if we could take on another project with the same amount of people. I really had no way of knowing. I’d do some analysis of how many hours my team was working each week, and forecasted the future workload to determine if I could do it. But I didn’t really have a way analyzing how to improve productivity and efficiency.
Obviously, employee retention impacts productivity. Losing an employee impacts the work that person was doing, but now others are required to “pick up the slack” until a replacement is found and trained. In the mean time people are not as effective as they could be with their primary responsibilities. Losing employees has a ripple effect on the team and organization through lost productivity, decrease in morale, and eventually profits.
Higher Labor Costs
Supply and demand dictates that when supply is less than demand that prices will increase. Talented, highly skilled people are in high demand, and the supply isn’t sufficient. There are some industries where this gap is even getting wider. So as your company grows, and you do have to hire, the cost of that talent is increasing. Salaries are going up! Your recruiting costs are increasing. Salaries are increasing, just so you don’t lose your top talent. Resulting in the cost of your services or products to increase.
As your costs increase, do you pass along the cost to your customers? Reduce profit?
This Week’s Challenge
This week, to address the business impacts of low employment economy, I recommend focusing on developing a strong employee retention strategy. Focus on employee development and engagement. When you create a company that develops and engages employees you will see improvements in productivity (do more with less), you’ll have a higher probability of retention, and will build a reputation as THE EMPLOYER OF CHOICE attracting desired candidates to your company. If your pay, benefits and culture is “competitive” in the market, how can you expect to dominate? Let them compete while you dominate!
If you would like to discuss more ways to help your business grow or if you feel you have a specific problem that needs to be addressed, please reach out to me.