"There could be a worker shortfall of one million jobs by 2020."
Conference Board of Canada
"Even if Canada brings in 500,000 immigrants every year, it won´t solve the worker shortfall."
Hon. Joe Fontana, Minister of Labour, October 31, 2004
"The demand for labor through to 2013 will exceed supply by 35 million jobs."
Heldrich Center for Workforce Development
"By 2020 U.S. manufacturing firms will need as many as 10 million new skilled workers."
National Association of Manufacturers
In the United States and Canada the signs are clear and ominous. The ratio of worker supply to job demand is about to reverse.
For as long as anyone can remember supply has been greater than demand. But in the next few years it will be the other way around. And the implications of this shift will be profound.
Because worker supply has been consistently greater than job demand for so long businesses have adopted certain practices that are supported by excess supply. Repeated exercise of these practices has led to assumptions that in turn support the practices. Chief among these assumptions is this one:
"If my employees resign I can always replace them."
This assumption can be valid only as long as there are more job seekers than there are jobs available. But the quotations at the top of this page give fair warning of the coming reversal.
When there are more job openings than there are people to fill them the assumption will be false and will cease to support the workplace practices that it supports today. What practices are these?
- Recruiting functions organized to replace employees who leave
- Relatively low value placed on people leadership and management
- Treating all employees the same regardless of performance
- Treating employees like commodities, replaceable parts
- Ascendancy of the "command and control" management style
- Overemphasis on rules, regulations, and compliance as companies attempt to coerce behaviour out of employees
- Employees who leave are assumed to have left for good
- Under emphasis on recognition for good performance
None of these practices will be viable when there aren´t enough workers to fill the jobs available.
From Replacement to Retention
Before the supply/demand ratio changes managers at all levels will need to undergo a mind set shift. They will need to stop thinking in terms of replacing departing employees and start thinking instead about keeping the talent that they already have.
Everybody knows that there´s a cost associated with replacing an employee who leaves. There´s a consensus that puts that cost at 150% of the employee´s salary. Let´s do some math and see where this takes us.
Company A and Company B are competitors. One year Company A replaced ten managerial/professional employees whose average salary was $90,000. The cost to replace was $1,375,000 ($90,000 x 10 x 150%).
In the same year Company B had to replace five such employees. The cost to replace was $675,000, half that of Company A.
I don´t know of very many companies that can afford to begin a fiscal year saddled with a $675,000 competitive disadvantage.
As if this weren´t bad enough, suppose that replacing these employees turns out to take much longer than forecast. As the supply/demand ratio reverses, we can (and should) expect this to happen. The cost to replace will soar beyond 150% of salary!
So instead of staying with the old ways, managers need to focus on retaining the employees that they already have. And the way to do this is to provide each employee that you want to keep with an engaging employment experience.
Engagement Defined
An engaging employment experience is one in which the employee feels attracted, committed, and fascinated: attracted (I want to do this), committed (I´m going to do this successfully and well), and fascinated (I can´t believe they pay me to do this!). The person who´s responsible for providing such an experience is the employee´s immediate manager.
This doesn´t mean that organizations have no role to play in setting up engaging work environments. The more the workplace as a whole is engaging, the better the manager´s chances of creating and sustaining engaging employment experiences. But the manager still has the responsibility whether or not the organization is helpful.
Managerial Types
Since the manager plays a crucial role in fostering engagement, it follows that the more the manager is engaged, the better he will be at creating and sustaining engaging employment experiences. There are four basic types of managers, viewed in terms of their own engagement.
Survivalists are engaged with neither the work nor the people. They´re focused on getting through the day with nothing bad happening.
Taskoholics are engaged with the work but not with the people who do the work. They tend to view employees as cogs in a machine.
Need You To Need Me managers are engaged with the people but not with the work. They tend to create needy employees.
These three types have a hard time engaging their employees, because of gaps in their own engagement.
Integrals are engaged with the work and with the people. They have the best chance of providing engaging employment experiences.
The Path to Engagement
What do engaged managers do that makes for engaging employment experiences? Here´s what:
- Communicate the Big Picture
Link what employees are doing to the organization´s Mission and Vision. Create a clear line of sight from daily tasks to larger goals.
- Provide Flexible Working Arrangements
Get clear of "9 to 5" thinking. Technology makes employees productive from remote locations at all hours of the day.
- Promote Individual Learning
Besides corporate training facilitate learning experiences such as mentoring, skunk works, and cross-functional team membership.
- Differentiate Performances
Use your performance management system as it was intended to be used. Rate performances according to productivity and results. Resist the temptation to rate everybody the same.
- Banish Command and Control
Abandon any need to be arbitrary, to be obeyed no matter what. Demilitarize the work environment. Place less value on loyalty and obedience.
- Recognize Achievements
Provide informal forms of recognition when someone accomplishes something meaningful. Managers have a great variety of ways to do this. Employees will remember recognition long after they´ve forgotten bonuses and raises.
- Coach
Guide your employees through the discovery process that is coaching. Share your experience. Give up the "doing" part of your job to them so you can concentrate on managing their performances.
8. Listen
Turn off the power and listen to your employees. Understand how they view issues. Your decisions will be accepted more readily if employees believe that they´ve been heard.
9. Accept that Employees Will Leave
You can´t keep everybody. Sometimes employees leave for reasons that the employer can´t do anything about. Focus on the things that you can do to keep the people that you need to keep.
The engaged manager is the most important factor in retaining key employees. People will stay in environments where they feel challenged, recognized, and are contributing to something that´s bigger than the company.
These and other elements of workplace engagement are the subject of Getting Engaged: The New Workplace Loyalty, a trend-setting new book by Dr. Tim Rutledge, lead partner on the retention practice at IQ Partners, and Director of the Centre for Employee Retention and Engagement Services. This is the book that points the way for organizations to navigate in a world of ever scarcer good talent. To obtain your copy of this book, please follow this link.
