Beat the Labor Shortage With Higher Quality Employees

In a June 6, 2018, USAToday article, Jeff Cox writes about our current labor shortage, “there are now more openings than there are workers.” He later shares, “there were just shy of 6.7 million open positions in April, “ and then, “As of April, the total workers looking and eligible for jobs fell to 6.35 million, a decrease from 6.58 million the previous month. The number fell further in May to 6.06 million.”  In other words, we have a labor shortage that is growing.

Further, in the article, he shares, “Given these trends, the sluggish wage growth rate is even more perplexing,” said Cathy Barrera, chief economist at ZipRecruiter, an online employment marketplace. “If employers want to fill these 6.7 million job openings, they are either going to have to raise wages or find more clever and creative ways to recruit workers off the sidelines.”

Raising wages is something that not all businesses can do, especially direct wages.  However, creating an environment where you have higher quality employees who are rewarded for increases the business achieves as a result of the efforts of the higher quality employees could be an answer that any business can do.  In essence, you can create a process that eliminates any perception of a labor shortage.

What Can You Do About it?

To have a higher quality workforce, and retain them you will need a workforce strategy.  It doesn’t have to be complex and can be rather simple.  A key element of a successful workforce strategy is differentiation of your workforce.  In other words, treating your workforce much like an investment portfolio where different dollars are used in the portfolio based on their contribution to the overall plan.  This is where your HR function most often will become apoplectic because this is not about everyone is the same or is treated the same in all things. They will need to change their perspective and get on board.

A differentiated workforce strategy creates a strong differentiation between High and Low performers ensuring that your high performers are retained, and your low performers become more likely to leave.   It ends or curtails the practice of overcompensating low and even average performers.  This workforce strategy must be internally diverse.  Different parts of your business will use different strategies.  A differentiated workforce strategy will provide you with the following:

  • A workforce strategy directly linked to your business strategy
  • A recruiting and retention strategy that focuses on the employee of choice instead of being the employer of choice
  • Improved business performance in the areas of productivity, profitability, and shareholder value.

What Does HR Do About It?

Commonly your HR approaches the workforce as something to be treated with “sameness.”  Treating all employees the same regardless of their level of performance is the customary approach used. An example would be annual pay increases.  Everyone may well receive the same cost of living increase.  Merit increases may differ by a single percentage point; 3% for high performers and 2% for average as an example.  How does that truly reward high performance?  Further, HR focuses the bulk of its energies on improving low performers instead of supporting high performers.  It is estimated that Managers spend almost 26 percent of their time focusing on low performing employees, according to a recent Robert Half survey.  That cost is tremendous.  HR also focuses its measurements on transactional and easily managed activities such as turnover, time to fill, cost per hire and so forth.  These are lagging metrics and offer little help in determining true value-added performance improvement or projections.  Because the focus has been on cost containment, HR is not focusing on the skills to drive workforce excellence.  They need to focus on those skills

There must be a strong differentiation between High and Low performers.  If low differentiation your high performers are more likely to leave while low performers, or even average ones, could be overcompensated and less likely to leave.  What this means is simple.  Start with one part of your business, perhaps the part that has the greatest impact on your business performance.  Then:

  • identify those key roles in your business,
  • place high performers in them,
  • and reward them greater than your other employees based on their accomplishments.

That is a simplified description. The identification of key roles and recruiting of high performers will take time.  You also need to develop the appropriate performance metrics and rewards for achieving and even exceeding them. Those will take time.  But, as you recruit high performers and become known for fostering a rewarding environment, they will both attract and recruit other high performers.  The time will be a strong investment as performance, productivity and profitability begin to increase.  Once completed your workforce success strategy has created a brand for your business that no one can duplicate.  Your business is now experiencing a level of success it had previously only dreamed of.


You can download our free ebook “Workforce Planning for Workforce Success to learn more about how YOUR BUSINESS can achieve success through a strong workforce strategy.