There’s a perfect storm brewing for employers, and it’s likely that the companies who weather it best will attribute their success to the stewardship of their Human Resources executives.
The storm began last November, when the unemployment rate in the U.S. dropped to 5%, which is the magical threshold when labor becomes scarce. Sure enough, in that same month real wages in the U.S. increased 0.1%, a clear indication that employers were competing for the best people. The following month, real wages went up again -- this time by 0.2%, or twice as much as the month before.
In January, the rate of increase doubled yet again -- and unemployment dropped below 5% for the first time since before the recession.
February numbers haven’t been released yet, but it really doesn’t matter if the trend continues at this pace or not.
What’s clear is that these U.S. statistics reflect a problem that is growing worldwide. Even where unemployment is still a probem, there's a shortage of skilled workers.
In fact, in the Conference Board's CEO Challenge 2016 report, released in January, the 600+ CEOs surveyed worldwide said that “overcoming a critical shortage of talent globally” was their second biggest challenge.
Second biggest? If finding people to fill open positions only ranks second, what ranks first?
This does: “Improving organizational capabilities to drive better business results and inspire innovation.”
Two Birds with One Stone
Those top two challenges are intimately related, and both demand leadership from Human Resources executives.
Competitive pressure in practically every industry requires your company to develop ever more sophisticated products. Which, of course, can only be created by ever more sophisticated employees. You have to attract them -- and you have to retain them.
The C-suite clearly needs you to step up and proactively provide solutions. And they need you to do it right now, before the competition for the best people gets even tougher -- and, especially, before your competitor steals away your most capable talent.
One reason the CEOs need to “drive better business results” is so they can afford the employees they need to stay competitive.
From their point of view, it’s all about timing. They need to drive innovation to expand market share. They need to do it cost effectively so they can pay to keep the talent that’s driving the innovation. And they need that success to attract new talent.
The only way to meet interwoven challenges like these is to present a solution that’s just as interwoven.
In fact, in their list of their top-five most important challenges, the CEOs hinted at significant parts of that solution. They know they need to “align their organization” by means of “effective, enterprise-wide communication.” And they know they need a “strong organizational culture.”
Interwoven Employee Human Nature
Alignment, communication, attracting and retaining talent, innovation -- that’s a lot to handle. But it’s exactly where human resources can make a substantive contribution.
This may be especially true at smaller businesses where initiatives can have a substantial impact on everyone simultaneously. And, at smaller companies, the “human resources department” usually has a broad set of operational responsibilities that make it easier for them to tackle challenges such as these.
The first step involves a frank understanding of human nature.
If your number one objective is alignment, then a study by the Society for Human Resources Mangement (SHRM) indicates that the first step is making sure employees feel respected.
If communication is your second most important objective, consider that SHRM found that after respect, “trust between employees and senior management” mattered most to employees.
And if attracting and retaining talent is on your “to do” list, consider that only 33% of the people SHRM interviewed felt that they were treated respectfully, and only 28% felt that there was trust between them and management.
That means two thirds of employees don’t feel respected, and three-fourths don’t trust management.
There’s a huge opportunity to solve your talent problem by being the best employer in your industry and community. If you create a culture based upon alignment, communications, and trust, then you can help your company become the one that retains and attracts the talent you need to achieve your last objective, innovation.
Your Human Nature
In our twenty-plus years of experience helping businesses do exactly that, we’ve found that the solution always begins with you and the other managers at your company.
To give your employees the respect, trust and communication they desire, you first need to give yourselves the same.
Start with this question: Why does your business exist? What’s your plan to help your customers, your industry, your community, and the world?
When you have a solid answer, which may take considerable soul searching, you will command respect, and you can easily show it to employees who admire what you’re doing.
When you communicate the answer to them, optimally by sharing your strategy and keeping it central to every meeting you hold, you make it easy for employees to align their efforts and to innovate.
To tie it all together, according to another study by SHRM, when you recognize employees who live up to your lofty ideals, it has a radically positive impact on their engagement, their happiness, and their relationships.
Employees in a work situation that affects them like that don’t leave. In fact, they brag about their job and they bring people to you.
In a world where talented employees are as scarce as they are vital, those are the companies that will succeed. Make sure you’re one of them.