How Companies Can Prepare for America’s Demographic Drought

The Great Resignation is only the beginning of a much longer-term labor shortage.

America’s labor pool is drying up. A host of economic, social, demographic, and political trends are causing the size of the country’s labor force to shrink, and there is precious little that can be done to avert this reality in the long term. The ‘Great Resignation’ is a harbinger of what’s to come, and employers must get used to operating in a perpetually tight labor market.

Businesses who are capable of attracting and retaining employees in such an environment will be able to thrive, while those who cannot will struggle. To succeed at this endeavor, employers need to create compelling places to work that not only meet employee’s physical needs for a job and a paycheck, but roles and workplaces that are compelling and inspiring on all levels.

What Are Employees Looking For?

• Purpose Driven and Trustworthy Organizations.

  Today’s workers will join and stay with organizations where they trust the leadership and find meaning and purpose in the work. The mission and vision (beyond just financial goals) as well as the core values are key in decisions employees make to join and stay with an organization. Employees are also looking for transparency and alignment with the way the core tenets are communicated, modeled by leadership, and “lived” within the company’s culture.

• Healthy and Equitable Workplaces.

  Especially in this post pandemic era, companies need to operate with “people first” principles that address employee wellbeing holistically: physically, emotionally, financially. Strong and multi-dimensional benefit offerings, including wellness and mental health options, have become a differentiator. Companies that create positive and supportive company cultures that value and take action to ensure they have a diverse team, and that people feel cared for, have a sense of belonging, and are psychologically safe, will capture the hearts and minds of team members which will drive performance and support retention. Today’s workers want to know that business practices, including compensation and rewards are fair and equitable.

• Human-Centered Leaders.

  The top-down traditional leadership model is outdated and unappreciated by today’s professionals. Today’s successful leaders ensure their team members have a positive experience by listening, having empathy and awareness, collaborating, influencing rather than directing, and demonstrating accountability rather than their absolute power. Employees want and expect leaders who “serve” the people on their teams by providing regular feedback, coaching, mentoring and opportunities for growth. Companies are called on to shift as much decision making as practical to employees to increase empowerment, job satisfaction and retention.

• Professional Growth and Development.

  A frequent “area for improvement” in engagement surveys and a common reason people cite for leaving a company is a lack of growth opportunities. The organizations that win in this war for talent are those who provide people the tools, resources and manager support they need to succeed where they are now, as well as where they want to go with their careers. Organizations will need to invest in learning and development and build talent marketplaces internally that enable people to discover opportunities by engaging in assignments, projects, mentoring, committee roles, and ultimately making relevant internal career moves. This mentality of optimizing talent internally and enabling mobility needs to be embraced in the company culture, and then woven into the onboarding, development, and talent management for roles. Companies that master this complex challenge will attract and retain strong talent.

How can you be sure your organization thrives in the Demographic Drought?

• Assess your current state.

  Start with first principles such as culture, leadership model, operating model, and business goals. Think through the current employee value proposition as described above. Where are you with regards to your culture? How about your leadership model and styles? What is your current employee value proposition? How aligned or misaligned are you with what people are looking for in a “great place to work” today? What are your business goals? What talent can you develop internally and what talent do you need to hire to achieve your goals? It’s important in this assessment phase to learn everything you can from people who have left the organization, and to regularly survey the engagement levels of those currently on the team.

• Develop a holistic workforce strategy.

  Everything we have described that will lead to success in this Demographic Drought fits together. Recruitment, engagement, productivity, and retention each play a role in driving your “people” success, which in turn drives your overall success. All of these factors are highly integrated and need to be addressed holistically. Think of it as building a strong foundation to a house. Once that’s done the rest of the house comes up easily, and you can remodel (iterate) to keep it “fresh.” So, look at it all with fresh eyes given the changes in the demographics and dynamics of the workforce, and build a strategy from the ground up. In this way you can transform your organization into one that will be a compelling place to work, now and into the future. It is important to act now. Those who take this workforce threat seriously will create stable, long term, fulfilled workforces, and those who continue with a “throwaway employee” mentality will face endless short staffing challenges and turnover.

• Build and execute a multi-dimensional approach.

  Once you have the big picture (foundation) re-visioned, build out the supporting strategies, actions and approaches that will weave the culture and value proposition through all aspects of your “people” experience: recruiting (who do we want to attract and how?), onboarding, employee engagement, talent management. Be sure you have an attractive and competitive benefits strategy and offerings, strong compensation philosophy and practices, effective leaders and managers who are trained in coaching, feedback, mentoring. Hold your leadership accountable for people skills and success with retention. Have a clear plan for how you will keep people continuously learning and growing in their roles, and how you can architect internal talent agility and mobility.

• Seek outside expertise and strategic advisors.

  Some companies may have the internal expertise to make the foundational and long-term changes needed to contend with the shrinking workforce. However, this often requires a lot of time and energy, and is a daunting scope of work for most teams. Thoughtful and experienced outside expertise can often save time and money while leading to more impactful and successful outcomes.

OneDigital is uniquely positioned to support organizations through this Demographic Drought with experts across all aspects of human capital management. Our multi-disciplinary teams’ partner with organizations to take a holistic approach towards creating environments that enable people to do their best work and live their best lives, which optimizes business results and successful outcomes.

For an analysis of how a shortage of available workers is already affecting American businesses, check out this blog post: Why a Weak Economy Isn’t Stopping the Great Resignation.