Mark it down as a problem that businesses had before COVID that has only gotten worse in the pandemic: finding and retaining workers. As a result, a lot of businesses are having to think creatively about their operations from start to finish to figure out how to handle this challenge. We were recently asked about how to do just that and summarized a few thoughts below:
Rethink your job profiles. We are seeing an increase in employees who want to work a less-than-40-hour week schedule. While it increases your transaction costs to have two employees each working 20 hours/week rather than 1 employee working 40 hours/week, if you can find two great part-time employees, then that is what you may need to hire. We have also seen job postings that list degrees or qualifications as requirements when the employer really does not require those, they just prefer them. Listing things as requirements when they really are not is a major deterrent to people thinking of themselves as potential hires for you.
Invest in labor-saving devices and equipment. The current labor challenge is leading a lot of businesses to look fresh at ways to be efficient with fewer people. Take a look at the cost associated with these investments and how many labor hours it will save, which should include the total cost of hiring/managing.
Increase pay or hours. You should use this opportunity to show your existing employees that they are valued within your operation. Consider implementing raises or giving bonuses. You might also consider giving bonuses to new hires that are triggered after a certain amount of time on the job or after they hit certain marks (i.e. showing up for all their scheduled hours in a given time period). To do this, run cash flow projections for your business to make sure that the additional burden on payroll can be accommodated and impact on the cost of production.
Do a review of your staffing footprint. Make an org chart of your current employees, their responsibilities, and reporting lines. Run your payroll reports and look at your Labor/Sales ratio, which measures how much your payroll costs are changing in comparison to your sales. We have seen labor-to-sales ratios that made no sense: The labor cost was going up as sales were leveling or even decreasing. You need to know what direction you are going on these numbers.
Make the tough decision to “kill” the lower margin/higher relative staffing activities of your business. For some businesses we have worked with, it’s certain hours of the week that are just dead, but that the business keeps because they always have. For others, it’s certain product lines that require a lot of staff time. Now is the time to make some of those hard calls to improve your margins. Customers are hearing about the labor crunch, seeing signs of it all over, and are probably primed to be more understanding when you have to make changes to your business.
Sit down with your current employees one-on-one to get their suggestions and gauge how they are feeling about the business right now. Don’t have enough time? The cost of hiring/training a new employee is going to be more expensive than the value of the time you spend doing this check-in with your current employees. The fact is that employees are leaving their current employers at record-high rates, so make time to sit down with folks before they start looking. You want to make sure that your employees feel valued and that you are creating a work environment that they enjoy.
Think outside the box when looking for employees: Look for alternative sources of labor such as students, recent retirees, etc. Talk to similar businesses to see where they have luck finding good employees.
Keep in mind that the only way you grow your business is to hire people, become more efficient with the people you have working, or clone yourself and your family. Since that last option is not yet scientifically available, we have to focus on the other two. If you want to talk with KCARD about your business and your staffing footprint, give us a call at 859-550-3972 or email us at kcard@kcard.info.