Labor Market Tightening The Workforce Is Restless

June 1, 2006
Is it difficult to recruit the workers you need? Is your employee turnover picking up? Is your stable workforce becoming less dependable? You're not alone.

Is it difficult to recruit the workers you need? Is your employee turnover picking up? Is your stable workforce becoming less dependable?

You're not alone. The workforce is restless… and we see the effect in almost every field. Recent research reveals that 35 percent to 40 percent of employees surveyed are actively looking for a different job. Another 35 percent to 40 percent are passive lookers — they would consider the right opportunity if it came along. Bottom line, the surveys are coming up with consistent results that about 75 percent of workers might be changing jobs over the next year or so. That's huge! Imagine the impact.

What's causing this volatility in the employment market?

During the go-go years of the late 1990s, an economic boom period, employee turnover was high. Workers had plenty of choices, with employers practically bidding for their services. Employees got lots of attention from employers-owners, executives, supervisors who were sensitive to the intense competition for good people.

When the economy slowed, many employers became complacent, taking employees for granted. Job dissatisfaction has been brewing for more than five years. Now the economy is picking up, more jobs are available, and disgruntled employees are seeking better opportunities. They're hunting for employers who will offer them the same treatment they enjoyed in the late 1990s.

In today's labor market, we're also dealing with the most severe shortage of skilled workers in history. We simply don't have enough people who have the training, experience and qualifications to get the work done. Labor analysts forecast that by 2010, we'll have 167,754,000 jobs looking for the most suitable talent. However, the labor pool isn't growing as quickly as the employment market. Projections show only 157,721,000 skilled workers available. Nationally, by 2010, we may be 10,033,000 people short!

The shortage is already here, but most employers are still in denial. If turnover or unfilled vacancies haven't hit them yet, they don't see the problem. What they don't realize is that many employees today are cocooning — waiting until the right time to make their move. In a phenomenon we call “warm chair attrition,” they've already left psychologically, even though they show up for work every day.

Most employers are vulnerable. If they haven't treated their employees well, many errant employers will be surprised during the coming months as valued employees leave for greener pastures. With most companies running with minimal staffing today, even one talented worker leaving could have a serious impact.

What to Do

Wise employers will change the way they do business to better prepare for these shifting employment conditions. Here are actions to take now.

First, improve the quality of leadership in your organization. Traditional management is no longer enough. Strong, visionary, engaging leadership is essential. Expect managers to learn more about leadership techniques and practice them. Invest resources to develop your future leaders.

Second, examine your systems — the way you do business. Look for ways to become more efficient. Explore opportunities to do more with technology, so you will be less dependent on people. Seek methods to accomplish tasks more quickly; challenge each aspect of your operations.

Third, determine just how many people you need now. What kind of work should they be doing? What are your standards of performance? If you are not getting the performance you need, invest in training, education and coaching to achieve your desired results. If you have people who are not performing at or above your standards, now is the time to clean house and bring in people who can do the job.

Fourth, concentrate on employee retention. Understand why people would want to work for you and assure they're getting full measure. Remember that money is no longer the major motivator in attracting and holding top talent. While the really good people expect rewarding pay, they also want flexibility, challenging work, learning opportunities and other “soft” benefits.

Fifth, plan for where you want your company to be in the future. Think at least three years out, maybe longer. Put your strategy on paper; otherwise, your ideas are merely a dream. Your people can't relate to a dream; they need to see where you'll be in the future — and where their place is in that picture. Engage employees in this process; people support what they help to create.

Sixth, determine what your team of people will look like at that time in the future. How many people will you need? What kinds of education, training and experience should they have? Plan deliberately to move your staffing strength from where you are now to where you need to be in the future. Start the process of upgrading now, so you will be ready to achieve your future objectives.

There is no way to avoid the labor shortage. But with good planning and effective leadership, you can position yourself to come out on top while your competitors risk extinction.

How Effective Is Your Employee Retention?

Check your vulnerability to uncontrolled turnover.

What's your exposure? Pause for a few minutes to give this question some serious consideration. Engage your fellow leaders in a focused conversation about the stability of your workforce. Look realistically at each and every employee — full-time, part-time and even occasional.

Next, talk with your people. Conduct private meetings as if they were hiring interviews. Ask questions about what people look for in a job, what they like best about their job and what they'd change if they could. Listen to their words; be alert to body language and emotions. From these interviews, you'll gain a good sense of the stability of your workforce and what opportunities you might have to improve employee relations.

Why People Leave

You can improve your employee retention if you have a higher sensitivity about why people leave their jobs. Here are five principal reasons that we've gleaned from our ongoing research.

  1. It doesn't feel good around here. This is a company culture issue in most cases. Workers are also concerned with the company's reputation; physical conditions of comfort, convenience and safety; and the clarity of mission. Do all your employees agree about their shared purpose and values as members of your team?
  2. They wouldn't miss me if I were gone. Leaders value employees, but they don't tell them often enough. If people don't feel important, they're not motivated to stay. No one wants to be a commodity, easily replaced by someone off the street. If you regard them as expendable, they'll leave for a position where someone will show their appreciation.
  3. I don't get the support I need to get my job done. Contrary to opinions heard all too often from management, people really want to do a good job. When frustrated by too many rules, red tape or incompetent supervisors or coworkers, people look for other opportunities. Check your systems: Is everything working smoothly? Ask for suggestions on how you can make it easier to work together to serve your customers. You can accomplish this through group brainstorming.
  4. There's no opportunity for growth. People want to learn, sharpen their skills and pick up new ones. They want to improve their capacity to perform a wide variety of jobs. Call it career security. If workers can't find training and development opportunities with one company, they'll seek another employer where they can learn.
  5. Compensation is often the last reason most people leave. That's a brash statement, but it's true. Workers want fair compensation, but the first four aspects must be strong. If they're not, but money's high, you'll hear people say, “You can't pay me enough to stay here.” Even with these values in place, many employees do feel they can better themselves just by chasing more income. Loyalty is weak with such mercenaries.

Your employees are your most valuable — and most volatile — resource. Give them the care they deserve!

Strategic Business Futurist Roger E. Herman is an internationally known specialist in workforce trends. He is coauthor of Impending Crisis: Too Many Jobs, Too Few People (Oakhill Press). Roger is CEO of The Herman Group in Greensboro, NC. Contact Roger at [email protected]. Subscribe to his free Herman Trend Alert, a weekly e-advisory, at