Ten years ago, I remember talking to the CEO of a Fortune 500 company. I asked if his organization had a five-year financial plan. Of course, they did—they were a publicly traded business. But when I asked if they had a five-year talent plan, he looked confused. Ironically, he had begun by saying that “people were their most important asset.” Payroll is the largest expense for most businesses, often 15-30%, and yet, most businesses don’t give much consideration to this need. They are often only worried about the next three months of hiring needs, instead of planning for their long-term future workforce. That’s a lot of money at risk that no one is thinking critically about.
Some businesses have been waking up to this reality and have formed “People Analytics Groups” to make sure that they have an acquisition and retention strategy for their workforce. The problem with these efforts is that most people’s analytic work is focused on the internal workforce, not the potential talent pools outside of the business.
Businesses often fail to pay attention to metrics beyond their immediate world.But if you’re hiring new employees into your business, then you will need to know where they are coming from and how to connect with them. It is the Wild West out there; the market of available people is governed by its own laws of supply and demand which can often be affected by factors beyond our immediate control.
For example, economists have predicted a labor shortage for a long time, primarily because of the decades of dwindling birth rates in the United States. Meaning, we won’t have the workers necessary for businesses in the U.S. to grow and thrive.
COVID-19 threw a wrench into business operations because companies could not predict what shutting down the economy would mean for their inventories, profit margins and more importantly their workforce. The pandemic was one of the many contributors to The Great Resignation. Suddenly, work-life balance became life-work balance. For example, parents who spent the majority of time away from their families due to long commutes and long workdays, were home again! Combined with the universal shutdown of schools, this return home drove many parents to forgo two streams of income in order to homeschool their children. At the same time, millions of baby boomers opted for early retirement during the pandemic. These decisions impacted a significant segment of the workforce as workers reevaluated their priorities and decided that their jobs were no longer their primary focus.
What can companies do about this? These five suggestions are a good starting point:
- Invest in your employment brand. Have a vision larger than yourself and tell your team and the world about it all the time. Elon Musk is constantly talking about how his companies are saving the human race. Whether you believe him or not, Tesla and SpaceX have very strong employment brands and have far less trouble finding people. Inspire your employees and future employees if you want to win in this labor shortage.
- Build joy at work. Kill office politics at your company. When your employees know that they are not going to be stabbed in the back, they will be freed up to simply focus on their work. People like to work; people don’t like to watch their backs all the time. When I ran companies with minimal to no office politics, we saw a marked increase in retention and employee referrals. Your current employees, if they love the environment, are your best recruiting strategy for new employees.
- Know your people. If you don’t have one, spool up a people analytics function within your company. When Amazon first started working on people analytics, they found that they had people ready to leave simply because they were not the right fit. After some skills-based analysis, they found that some of the people in the AWS group were actually a better fit for their Alexa group. Caring about their people and putting them in the right spot for their skills significantly increased employee retention.
- Get your marketing department involved in your recruitment and retention strategy. Recently we’ve seen companies like Fed-Ex and UPS put marketing dollars into their recruitment strategy. Simply talking about compensation will not cut it anymore. You need to point out how Christmas will be saved and delivered on time for the entire country if you come and work for Fed-Ex. Talk about your north star as a company, talk about how much fun it is to work there, and talk about how you take care of your people.
- Focus on personal freedom. Big Tech companies have transformed into a bastion of political activism. Employees want to know that they can be themselves, that they can have opinions, and that their ability to feed their families won’t be affected as a result. Professional workplaces should not be making personal decisions for their employees or coercing decisions that should rightfully be left to individuals. Let people speak their minds, and even respectfully push back against their boss or co-workers. Your employees talk about you on social media and to all their friends; how you treat them will have a significant impact on your future talent pool. Freedom is attractive and will help you win the war for talent.