Are You Ready For The Skills Gap?"The National Association of Manufacturers is forecasting a "skilled worker gap" beginning in 2004."
Is your company ready for the impact of the projected surge in employment next year and for the longer-term demographic changes that will create an unprecedented shortage of skilled workers over the next decade?
Recent economic indicators suggest that the U.S. job market is getting stronger - in particular, the September results of the 2003 Leadership Pulse, a research project conducted by the University of Michigan Business School, indicate that four-in-ten companies plan to increase the number of employees over the coming months, especially in companies with less than 100 employees.
The highest rates of anticipated growth are from Web-based technology and information technology firms, indicating that the technology industry is on the comeback.
As more employment opportunities emerge throughout 2004, this will invariably lead to rising turnover rates. What strategies does your organization have in place to retain your most valuable employees?
Increasing pressure on keeping employees is will not only come from the immediate prospects for the economy but also as a result of longer-term demographic trends. Over the 2000-2010 period, total employment is projected to increase by 15% according to the Bureau of Labor Statistics, with professional and service occupations growing most strongly. As well, eight of the 10 fastest growing occupations are computer-related, specifically information technology occupations.
More importantly, a recent white paper issued by the National Association of Manufacturers is forecasting a "skilled worker gap" beginning in 2004 and growing up to 5.3 million workers by 2010, simply based on the assumption that the economy will return to its long-term growth rate of 3.0 to 3.5% per year.
The primary cause of this upcoming labor shortage is due to the aging of the baby boom generation, since the succeeding generations are not large enough to replace them. The employment shortage is expected to be most severe among management and skilled workers.
With these prospects, maximizing employee satisfaction and implementing effective retention strategies will become even more critical. However, two-thirds of managers are unable to quantify the cost of turnover in their companies. Estimates of turnover costs range from 25 percent to almost 200 percent of annual compensation. Costs that are more difficult to estimate include customer service disruption, emotional costs, loss of morale, burnout/absenteeism among remaining employees, loss of experience, continuity, and "corporate memory."
Knowing the cost of losing and then replacing an employee can help companies determine how much they can afford to invest in keeping them.
Surprising statistic: In the midst of the worst recession in a generation or more, with 13 million people unemployed, there are approximately 3 million jobs that employers are actively recruiting for but so far have been unable to fill. That's more job openings than the entire population of Mississippi.
Sound like good news? It's not. Instead, it's evidence of an emerging structural shift in the U.S. economy that has created serious mismatches between workers and employers. People thrown out of shrinking sectors such as construction, finance, and retail lack the skills and training for openings in growing fields including education, accounting, health care, and government. At the same time, the worst housing bust in decades has left the unemployed frozen in place. They can't move to get work because they can't sell their homes.
If you are in one of these industries, even in the middle of a deep recesssion, employee retention is vital. You need to keep your best performers. Period. We have a short article on this subject here .
Fast forward to 2015 and the problem is worsening.
An astounding 40 percent of employers in the U.S. report difficulty filling certain positions, according to a recent talent shortage survey from ManpowerGroup. If you’re lookingg to hire engineers, sales managers and sales representatives, admin assistants, or accounting and finance staff, it's very clear that qualified candidates are hard to find. According to the survey these roles are among the top 10 hardest-to-fill U.S. jobs. Consequently, hiring managers are facing some difficult questions.