Written for and published by Training Industry.
Long-term trends point toward an ongoing shortage of people, independent of short-term economic cycles. Dive into any research report and the story is the same —retirements, working age population declines, declining immigration, market shifts, climate-induced challenges — all of these forces and more have, and will continue to, create shortages of critical talent. Once the rumored inflation recession fades (if it ever happens) the shortage will come roaring back.
A 2022 study of 504 occupations published by The Conference Board notes that except for some science, technology, engineering and math (STEM) occupations (where there has been a significant long-term increase in recruiting and educational funding), most industries will experience significant skills shortages at least through the end of the decade.
Most companies are grappling with this problem. One approach is to attract people through compensation and other benefits. The thinking is that if you pay more than the competition, build climbing walls, improve the food in the cafeteria and provide other incentives, people will beat a path to your door. That only works to a point.
Paying people more is not a bad thing. But paying the highest wage has the same endpoint as fighting a low-cost producer battle. Only one company can pay the most, just like only one company can charge the least. And, in this new, and perhaps permanent age of remote and hybrid work, the climbing wall and cafeteria become irrelevant.
Turnover is painful. The average cost of recruiting and hiring a replacement can be more than 30% of a team member’s salary. The hit to productivity, project execution, and customer relationships is expensive, on top of the replacement cost. No matter how brilliant your strategy, turnover costs are one of the most significant challenges to your ability to achieve your business goals ... READ MORE