Employers are still struggling to get up to the productivity levels of pre-recession days. However, there is a major obstacle that threatens current and future revenue: a skills shortage. After the financial collapse, workers were laid off and now that the economy is picking up again, companies have been working to fill in these gaps. When there’s a skills shortage, employers need to consider the factors that not only go into recruiting talented workers but also keeping them. With the impact of a skills shortage threatening productivity and business growth, companies should ask themselves what tools they need to be prepared to tackle this problem and whether their existing performance management solutions will cut it.
Patterns in a skills shortage
In a 2011 survey by human resource consulting firm Manpower Group, the jobs that were the most difficult to find qualified candidates were skilled trades and sales representatives. This is still true today. It is not surprising occupations in skilled trades, such as those needed in the manufacturing sector, and sales representatives are ranked highly in this survey because they are demanding jobs that require talented individuals. With the labor market still recovering, employers will have to step up their recruitment efforts.
“It is imperative that these stakeholders work together to address the supply-and-demand imbalance in the labor market in a systematic, agile and sustainable way,” said Jonas Prising, president of the Americas for the ManpowerGroup. “There may also be an increasing imbalance between employers willingness to pay higher salaries in what is still a soft general labor market compared to the salary expectations of prospective employees, especially those with skills that are in high demand.”
Financial impact of a gap in labor
A recent survey of manufacturing companies conducted by consulting firm Accenture and the Manufacturing Institute found that many companies were concerned about the financial impact a skills shortage may have on their revenue.
Without their top workers, employers may see decreases in productivity, resulting in slower business growth. According to the survey, manufacturers in the U.S. might see financial losses up to 11 percent of net earnings each year due to the skills shortage and rising costs of production. The report also found skills shortages have several negative effects, including increased downtime and costs of overtime.
Focus on retention and incentives
In addition to the impact to companies that skills shortages have, employers should also consider the effects on their workers. Working more hours could put workers at higher risk of burnout, especially when employees are expected to work more hours and pick up the slack left by the lack of reinforcements in the workforce. To ensure companies are able to bounce back after a labor shortage, they should make sure to provide a competitive salary and benefits.
To attract qualified candidates, companies can consider restructuring their incentive compensation programs to account for expansion and increase retention. Although having an incentive compensation plan in place is a good start, employers also need to increase their support for workers and analyze their performance to optimize productivity. By investing in sales performance management solutions, companies can accurately measure the progress employees are making in meeting business goals while allowing managers to better recognize workers who are the most deserving of rewards.
A solution that is automatically set to alert managers to employee achievements makes it easier for higher-ups to implement their reward and recognition programs, which is crucial when they need to increase retention during a skills shortage. Through recognizing and praising workers, companies can increase their employee retention to avoid being short-staffed while they are expanding their business.