Getting Through a Labor Shortage: 5 Techniques
There’s no doubt Nevada has felt the pain from the labor shortages that have been nagging at the U.S. economy and affected just about everyone during the challenges of the last few years. Statewide, labor participation stood at just 61% in early 2022, according to Nevada Business — a reduction of 99,000 workers in the labor force compared to 2020.
In Northern Nevada, we’re seeing the same trend. And while our more diversified economy is likely a good thing for our future stability, it’s brought with it more than 6,000 fewer jobs in leisure and hospitality. That trend means our workforce is shifting, and sometimes those shifts have a significant impact on businesses.
As a business owner or manager, you may struggle with the balance of keeping customers satisfied and achieving your goals in a tough labor market. These suggestions can moderate the pain of recruiting and retaining workers in a competitive market:
1. Always be recruiting. So many excellent workers find organizations through word of mouth or other forms of relationships. Recruiting teams may find it helpful to reach out proactively to great candidates 365 days a year (passive recruiting). People who are not yet actively looking for a job may be more willing to talk candidly about what they want and need. Then, when a perfect fit appears, you’ll be poised to make an offer and get them on board.
2. Consider making investments that reduce labor needs long-term. Your banker can help evaluate your opportunities and financing options to build more profit into your business’s framework. Retailers, for instance, have converted empty space to dark stores or micro-fulfillment centers. Meanwhile, Restaurant Business has reported that, for chains like Chipotle and Dunkin’, a $70,000 investment to add a drive-thru can raise profits by $300,000 per year, with minimal added staffing needs. And Eater Las Vegas called 2020 “the year of the ghost kitchen,” virtual restaurants built for delivery only. All of these locations serve consumers faster, with a lower workforce. They may also appeal to employees who prefer to work without much face-to-face customer contact.
3. Assess your pay scale. Evaluate your budget to consider if you are on track with local pay trends – and if you might be able to increase pay and benefits. Paying someone a bit more per hour than the competition pays might keep them loyal to a well-known routine and colleagues. Of course, to support higher wages, some businesses may have to raise prices, but consumers may be more understanding than you expect, especially in an environment where the Consumer Price Index rose 7% for all items in 2021.
4. Structure your finances to take advantage of technology. Your banker can assess your treasury management strategies and recommend new ways to increase efficiencies and strengthen your cash flow position. Automating deposits, utilizing sweep accounts and streamlining payroll and accounts payable processes can provide breathing room. The latest technology saves significant time over old, manual methods. New solutions could free up employees’ time for other needs as one tool to mitigate the labor shortage. Your banker may also have insights from their expertise in your industry — from ideas about equipment leasing to automation.
5. Embrace flexibility. In Northern Nevada, the industries hardest hit by the labor shortage employ customer-service workers. In other lines of business, too, employees have joined the “Great Resignation,” quitting at record rates, according to The Wall Street Journal. One way to hang onto valued employees: Listen to what they want. Today’s labor force feels freer than ever to ask for what works for them. Depending on your staff, that may mean a well-equipped break room and a flexible spending account (FSA) plan to pay for child care with pre-tax earnings. Or it might include days off for birthdays and serving the community, a demonstrated commitment to equity and diversity, or other appealing lifestyle benefits.
For insights into how your banker can assist in building flexibility in the face of the labor shortage, contact your First Independent Bank relationship manager, or learn more about our bank’s approach to working with the community management industry.