Just like that we have gone from the media worrying about jobless rates being high, to worrying about tightening job markets making it tougher for small businesses to compete for workers.
From Inc.com:
On Thursday, the Bureau of Labor Statistics reported that initial jobless claims fell by 4,000 the previous week, data that may indicate strong demand for labor, especially in the small business sector.
William Dunkelberg, an economist with the National Federation of Independent Business, said that small businesses have been having a harder time finding the employees they need to grow. Earlier this month, the NFIB found that 21% of businesses surveyed have job openings they cannot fill. Seventy percent have encountered difficulty finding qualified people.
Looking forward, the NFIB survey found that 20% of businesses plan to increase their workforce. “There’s no question that labor markets will stay tight,” said Dunkelberg.
Most of the current economic expansion is taking place due to small businesses. Many have started over the past couple of years and have not had experience in hiring in tighter job markets.
So here are a few things to keep in mind:
1. Keep Staffing Forecasts Current. Even if you are a small business, you need to think down the road for the next two or three years to anticipate what your hiring needs may be. Forecasts should be updated every few months to adjust for changing conditions and the changing state of your business. Keep your eye on long term trends within the labor market segments you will need to be hiring from. Some types of employees will be particularly hard to find, so extra effort will be required.
2. Base Staffing Plans on Milestones, not on Time. Never tie your staffing plans to the calendar. The passing of six months is not what will require you to hire new employees. Know what the triggers are in your business that will necessitate more employees. For example, it could be things like a certain number of clients, sales levels, or production levels for employees. More managers and supervisors it should be based on the number of first line employees each can effectively supervise. And don’t forget the needs of support staff in areas like billing and sales. As labor markets tighten, you may need to move these triggers up earlier in time. It takes time to get employees up to speed. Know how long it will take to recruit, hire, and train new employees for each position you are planning to hire so they can be ready to work when you really need them. If you could hire and train workers in 60 days a year or two ago, you may now need to plan on a lead time of 90 or even 120 days in a competitive job market.
3. Measure Your Employment Triggers. Work with your bookkeeper or controller to give you quantitative reports on your key employment milestone triggers, and insist that you get these reports regularly. You need to have the timing of the hiring process accurate, so the chances of not having staff to support growing demand are minimized.
4. Never Just Hire Warm Bodies. Hiring someone just for the sake of hiring rarely works. Mediocre hires make mediocre employees. This will only postpone hiring the right people and force you to get rid of the dead wood you just hired before you can hire the people you really need. This will actually hinder your ability to grow.
5. Keep Current on Wages and Salaries. Tighten job market will put some upward pressure on pay due to supply and demand. Stay competitive in your pay, and plan on pricing increases in advance to cover any increases in labor costs. Don’t let your pricing lag too much or cash flow will become a major issue as you grow due to shrinking profit margins.
6. Don’t Forget to “Close the Bank Door”. The single best staffing tool you have is retaining the good employees you have right now. Create a culture that makes good employees want to stay with you. You may have to pay a little more that you’d like to, but it is much more cost effective that constant hiring and training. And staff shortages can be very costly in terms of lost revenues.
And to those who have made the sudden shift from worrying about no jobs in the economy to worrying about not enough workers? Lighten up! This is a good problem!