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30 Oct There are 3 ways companies can attract the workers they want

By Jim Weaver, COO of The Ōnin Group

The war for talent has come right here to the proverbial heartland of the U.S. economy, and it’s not going away anytime soon.

With the unemployment rate at a 16-year low of 4.3 percent in May, the labor market is tight, and light industrial businesses that manufacture, move or process material are being hit especially hard as entry-level and mid-skilled employees are becoming increasingly scarce. Add a labor participation rate of less than 63 percent and the absence of a South and Central American immigrant contingency to ease the tight supplies of workers in entry-level positions, and the labor situation starts squeezing pretty tight.

To find quality people in this difficult market, we must first take a close look at your local employment market and see how our company stacks up.

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I’m going to shoot you straight: with such a low unemployment rate, people who aren’t currently working probably have issues that prevent them from being consistently employed full-time. There’s a real reason they are currently unemployed when so many job opportunities are available. Meanwhile, the “quality” workers are already employed, and if you want these quality people to join your team, you’re left with one option: stealing people. Your future employees are working somewhere else right now, and we need to present an opportunity good enough to get them to quit what they are doing to join your team. To make this happen, we’ll need a recruiting plan to get our opportunity in front of the right people.

So, what are your options for attracting these people?  We have three essential levers to pull to deal with this tough employment environment:

1. Increase Compensation
Increasing pay is a sensitive subject, as many of our business models are built around certain labor price points. I am not someone who believes in just throwing money at problems.

Throwing money at problems is usually a shortcut for critical thought, but at the end of the day, regardless of how great the work environment or opportunity, a pay rate that is in the lower 35th percentile based on the job requirements is VERY difficult to overcome. Sometimes the solution is, in fact, a matter coming off the money. Simple economics of supply and demand apply to the workforce too: When supply is low, we end up paying more.

In a competitive market when pay rates really need to be increased – the company that goes first wins.

Think about it. If you are the first or second employer in your space to raise rates, you will have the pick of the litter as you steal employees from your competitors. If you are one of the last ones to raise rates, then you need to go higher than the first movers to steal folks to your facility. Most latecomers will match new rates or barely beat them, and so as long as the early movers couple higher pay with a good work environment, the early movers should be able to hang onto most of their team when the latecomers finally start playing ball.

2. Unique Opportunity, Environment or Benefit
Creating unique opportunity and a truly exceptional environment is the most time consuming and complex way to draw talent, but it’s also a long-game strategy. That said, effectively promoting it to the labor pool is challenging. It takes years of planning and innovating to creating a unique career opportunity for our teams, and there is indeed a cost to creating great work environments.

This is also an area where we can easily operate in a state of delusion, thinking our environment and opportunity are something special when they really aren’t. For example, simply having a “temp to perm” opportunity and getting consistent hours is not a unique opportunity.

This option also requires strategic marketing. Building an employment brand and then taking that brand to market takes work and will cost some money, but if we have something special that no one knows about, we are like the tree that falls in the forest with no one around. For this option to be effective, your work environment must be genuinely exceptional, and you must make sure it’s well known in your job market.

3. Unique Exceptions or Flexibility
Some of us have financial constraints leading to below market pay, and/or we don’t have the time or the resources to create the opportunity or environment that will attract people. For light industrial businesses in the making, moving or processing sectors, there is immense pressure to get to market fast and cheap. If this is the case, a more flexible approach to screening or scheduling is a way to increase the number of potential candidates without necessarily increasing the pay rate or compromising the quality of work done.

These are somewhat controversial compromises to consider, like hiring ex-felons or people on probation, but something must give, and if we are unable to pull on the compensation or opportunity levers, this is the one we are left with.

If we are expecting people to work at a wage that is below the living wage threshold, we must understand that there is a reason a person is willing to work at that pay rate. Perhaps they are just getting started in the working world and that is the reason their “market value” is below the living wage level or even at the poverty level, but in most cases, folks in the lower strata of the workforce come with some constraints or even “baggage.” Hear me out. Clearly, I am not talking about someone’s value as a human being; I am talking about market value – what they can command for their time in the marketplace.

If I am going expect to run my operation with a pay-level somewhere between the poverty level and the living wage threshold, I need to take a hard look at my “must-haves” and be willing to compromise on my “wishes” if I want to keep production going.

The bottom line

Of course, the other option is to change nothing at all and wait this trend out. Speed is so significantly impacted in this tough recruiting environment that many employers have perpetual unfilled openings. There certainly is a cost to falling short of required staff-levels – overtime, lost production and burnout, to name the most obvious. It is difficult to make the changes outlined above, so most employers have chosen the “wait it out” option, but at what cost?

This labor shortage challenge can certainly be overcome. We have partnered with several of our more progressive customers to objectively face the brutal reality of this recruiting environment and we have adapted new recruiting strategies based on both the external and internal realities of their businesses. The companies who are willing to do what it takes, are winning the war for talent.

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