Getting Through a Labor Shortage: 5 Techniques
As just about everyone seems to know, from the consumer anxiously awaiting a delayed package to the manufacturer asking workers to put in overtime, labor shortages have nagged at the U.S. economy for years. Even before the difficulties of the last several years, we felt it in Nevada. According to Nevada Business, statewide labor participation was just 61% in early 2022 — meaning we had 99,000 fewer workers in the labor force than in 2020.
In Southern Nevada, we’re seeing major shifts in the labor picture because of our region’s dependence on hospitality and tourism. The U.S. Bureau of Labor Statistics reports that while 292,000 people worked in leisure and hospitality in Southern Nevada in February 2020, that number plummeted to 127,000 in summer 2021 before beginning to improve steadily. Economists forecast that 40,000 of those jobs may never return. Yet Nevada gained 22,000 transportation and warehousing jobs after the pandemic.
Those shifting workforce trends can have a significant impact on businesses. As a business owner or manager, you may struggle with the balance of satisfying your customers and achieving your goals in a tough labor market. These suggestions can help you chart a path toward success amid a labor shortage:
1. Raise pay if you can. Money talks, and it’s what plenty of workers are pushing for these days. Offering higher pay than the competition — or at least staying in step — tells workers they matter to you. If you need to raise prices to raise compensation, some experts recommend being upfront with customers, who may be more understanding than you expect.
2. Give the people what they want. Southern Nevada businesses that employ customer-service workers and blue-collar personnel have been hit hardest by the labor shortage. But in all types of companies, employees have joined the “Great Resignation,” quitting at record rates, according to The Wall Street Journal. One way to hang onto valued employees: Listen to what they want. Today’s labor force doesn’t hesitate to ask for what they want. Depending on your staff, that may mean a well-equipped break room and a flexible spending account (FSA) plan to pay for child care with pre-tax earnings. Or it might include days off for birthdays and serving the community, a demonstrated commitment to equity and diversity, or other appealing lifestyle benefits.
3. Have a continuous conversation with candidates. For many companies, a useful technique is passive recruiting, or reaching out proactively to candidates 365 days a year. People not yet actively looking for a job may be more willing to talk candidly about what they want and need. Then, when a perfect fit appears, you’ll be poised to make an offer and get them on board.
4. Update financial strategies for greatest efficiency. With your banker, you can assess your treasury management strategies and identify new ways to increase efficiencies and strengthen your cash flow position. Using sweep accounts, automating deposits, and streamlining payroll and accounts payable processes can free up resources. New solutions may even make some employees’ time more available for other needs — reducing the strain on your labor force. Your banker may also have insights from their expertise in your industry — from ideas about equipment leasing to automation.
5. Consider investments that reduce labor needs long-term. For restaurants, since 2020, drive-thrus have skyrocketed in importance. Restaurant Business has reported that, for chains like Chipotle and Dunkin’, a $70,000 investment to add a drive-thru can raise profits by $300,000 per year, with minimal added staffing needs. Some restaurants are building “ghost kitchens,” virtual restaurants for delivery only, while retailers convert empty space to dark stores or micro-fulfillment centers. Your banker can assist you in evaluating your opportunities and financing options to build more profit into your business’s framework.
For insights into how your banker can assist in building flexibility in the face of the labor shortage, contact your Bank of Nevada relationship manager, or learn more about our bank’s approach to working with the community management industry.