We have been watching and sharing our ideas about the changing labor marketplace for years. Two of the biggest trends that we watch closely are the shrinking availability of employees and their increasing costs. If you believe that labor is still abundant, this statistic should disabuse you of that belief.
Right now, there are 1.2 people available for every open position in the United States. That means if you have 5 open positions, you need to select those 5 from an applicant pool of 6 people.
Let’s unpack this a little. First, this assumes that all 6 candidates have the requisite skill sets, and we know that there is already a skills gap. Second, it assumes that the 6 candidate are all enticed by your employee value proposition, and that they would be willing to accept your job offer. Third, it assumes that the people you need to hire are found close enough to where you are to even be considered. Finally, it assumes that all 5 of the 6 you hire are a good cultural fit.
Most economists consider 5% as full employment. After that number is reached, things start to tighten up. As this is being written, the US unemployment rate is 4.2% (October 24, 2017). We predict it will drop below 4% before the end of 2017.
Welcome to the labor shortage.
If you want to improve your results, you need to first look at your employee value proposition.
- What is it that the employees you need want from an employer?
- What differentiates you from the many other companies—and opportunities—that are competing for the pool of people you need?
- How do you attract the attention of the candidates you need to operate your business successfully?
One of our favorite quotes here is from retired Army General Eric Shinseki: “If you don’t like change, you are going to like irrelevance even less.”
If you’d like to see a copy of our Employee Preferences Survey for ideas about what employees value in an employer, send us a note here on our contact page, and we’ll share some helpful ideas with you.