Businesses across a spectrum of industries are contending with a significant labor shortage. Job openings now outnumber people looking for one, with 10 million unfilled positions and 8.4 million unemployed.
Despite the wide availability of ready workers, many companies are struggling to hire or retain staff. This shortage comes from a mix of various factors, and as a result, businesses have found multiple potential solutions.
Here are eight of the most common strategies that are helping address the labor shortage.
1. Wage Increases
While it may seem overly simplistic, raising wages has proved effective for several businesses. McDonald’s raised pay by 10% across its corporate-owned locations and has since almost returned to normal staffing levels. The company has urged franchised locations to take similar action after seeing this success.
Increasing worker pay can come with some drawbacks. Most notably, the higher operating costs can lower businesses’ profit margins. Still, that doesn’t necessarily mean that companies will make less money after raising wages.
Higher pay can reduce turnover, which can be a considerable expense. It costs six to nine months’ salary on average to replace an employee. Consequently, businesses can offset potentially slimmer profit margins by improving retention.
2. Hiring Perks
Similarly, some businesses have turned to offering enticing perks to new hires. In June, 20% of all openings on ZipRecruiter included a sign-on bonus, up from just 2% in March. These bonuses start around $500, but some companies, like some Burger King locations, offer checks as high as $1,500.
Sign-on bonuses aren’t the only way companies appeal to prospective employees through hiring perks. Some businesses have started offering programs that help pay for college tuition or train workers in professional development courses.
Incentives like these appeal to applicants’ long-term goals, while bonuses help serve their immediate needs. In either case, it can help attract and retain workers.
3. Self-Serve Technology
Another way some companies are maximizing what they can do with less staff is using self-serve systems. With today’s technology, retail and foodservice businesses can let customers order, check out, or even serve themselves without interacting with employees. This frees workers to focus on other tasks, completing more orders in the same time.
Technology that enables self-checkout, self-ordering, or similar processes was growing even before the current labor shortage. In a 2019 study, 88% of surveyed businesses believed self-serve technology would be the fastest-growing customer service channel by 2021. While they couldn’t have foreseen the pandemic, their guesses about the utility of these technologies seem to have been right.
In some industries, businesses can offset labor shortages by introducing artificial labor into their operations. While many people worry that automation will take jobs from human workers, current labor challenges show its virtue. Instead of replacing workers, businesses are using automation to improve the productivity of the workers they do have.
Customer service automation has grown more than any other department, increasing by more than 290% year-over-year. Chatbots and similar automated tools have helped businesses process customer needs while human workers focus on other, more value-adding tasks. As a result, they can become more productive despite not being able to find new workers.
5. Relaxed Hiring Requirements
The labor shortage’s persistence has inspired some businesses to reevaluate their hiring requirements for some positions. In the current labor market, some hiring managers have realized they may have more success growing specific talents instead of looking for them. By relaxing their requirements and emphasizing upskilling, these companies open themselves to a wider talent pool.
Among those most affected by labor shortages, 41% have lowered requirements for prior experience. Another 34% have relaxed their required skills and competencies listed for job openings. While this trend may seem to compromise quality work, it can be an effective strategy with the right approach.
These companies aren’t lowering their standards but rather approaching them differently. If businesses can find capable workers with transferable skill sets, they can grow and refine the specific skills they need. When they can’t find qualified employees, they create them.
6. Improving Working Conditions
The COVID-19 pandemic has revealed to both workers and employers how many working conditions are less than ideal. Consequently, businesses can attract more workers by making their workplaces more pleasant.
Taking steps to improve worker safety and health are among the top concerns in this area right now. Workplace environment changes like making it easier to report harassment or other mistreatment can also yield positive results. Many current job seekers lost their jobs amid COVID-19 and may feel mistreated from that transition, so making them feel valued is key to getting them back.
While companies like Goldman-Sachs have announced a return to in-person work, some businesses have continued to enable remote work. Now that these more flexible arrangements are common, job seekers may expect them.
7. Nontraditional Employment
Some businesses have changed how they approach employment entirely. When the search for long-term, full-time workers yielded disappointing results, they turned to nontraditional employment. Hiring part-time workers, freelancers, or outsourcing some tasks has helped companies remain productive despite a smaller full-time workforce.
The gig economy has reached new heights amid the pandemic. According to a 2020 Upwork survey, freelancers now account for 36% of the workforce and contribute $1.2 trillion to the economy. As more people pursue these careers, businesses have realized they can thrive off of them instead of looking for traditional employees.
8. Optimized Recruiting Processes
Not all labor shortage solutions require dramatic changes to companies or their workforce. Businesses have also adjusted their recruiting and onboarding processes to make it easier to find and train new employees. Employee referral programs have become one of the most popular of these changes.
Referrals save $7,500 and 15 days in filling an open position on average compared to traditional methods. These workers are also more likely to stay, helping companies find long-term solutions to the labor shortage. Other hiring process improvements, like automated recruiting software and increasing social media efforts, have also become more popular.
Labor Shortages Are Troubling but Manageable
The current labor market is concerning for businesses trying to balance COVID-19 recovery and rising demand. While these issues are complex and widespread, companies can and have addressed them successfully. These eight solutions have shown excellent early promise and could sustain businesses into the future.
It’s uncertain how long the labor shortage will last or how it will evolve from here. If businesses adopt strategies like these and assess why they’re having trouble finding workers, they can overcome these challenges.