Finding Employees May Become Harder in Years to Come
by Don Houghton
An article in USA Today recently reported that the top priorities of today’s chief executive officers are to achieve “sustained and steady top-line growth and profit growth.” The keyword here is “growth.”
Obviously to grow a business you need people—good people! Herein lies the problem. The baby boomers are leaving the workforce. A recent Federal Reserve report indicates the impending loss of 77 million boomers. They will be hard to replace over the next decade.
The “Gen Xers” and “Millennials” will not fill the void. The Bureau of Labor Statistics projects a shortfall of 35.2 million workers by the year 2031. In 1990 there were five workers for every retiree.
By 2031, it is projected there will be 2.5 workers for every retiree. This will lead to an economy that will grow at a significantly slower pace than it has in the past. So now we will all compete for a declining labor pool, which will lead to higher wages and, then ultimately, higher interest rates. Don’t forget the debate going on regarding how to handle immigration and the effect that could have on our labor pool.
The demographics certainly say that our number-one problem going forward will be to attract, train and retain good co-workers. Steven S. Little, a senior consultant for Inc. Magazine, spoke at a recent Association of Millwork Distributors Top Management Leadership Conference. He provided the formula: “Employee retention equals customer retention equals growth.” The simplest solution to this major problem is to attract the best and brightest candidates and then retain them.
High employee turnover has a high cost associated with it. Looking at 15 independent, employee turnover cost studies
(www.sashacorp.com/turnframe.html), it appears that the cost to replace an $8 an hour employee is $5,505. That cost doesn’t include less tangible costs, such as lost customers, low morale or reduced productivity.
Obviously, the first step to correcting a problem is to identify that you have one. Companies currently have their “head in the sand,” according to the Society of Human Resource Management. Seventy percent of companies don’t know of the impending problem or are just becoming aware of the problem.
Active and ongoing recruitment is needed before the hiring process can begin. At Reeb Millwork Corp. of Bethlehem, Pa., (where I serve as president and chief operating officer) various recruiting tools are utilized such as: newspaper advertising, internet postings, job fairs, co-worker referral awards and technical school tours. Those candidates identified then go through an extensive interview process, including pre-employment testing and reference checks. Once hired, an orientation program is given so the new employee understands the culture of Reeb, job expectations, key processes, an understanding of work rules and company policies.
All phases of the orientation are designed to make the new employee feel comfortable with Reeb and be excited about being a member of the Reeb team. Our statistics show that a co-worker who stays six months is very likely to be a long-time team member for
The action plans and successful implementation to accomplish the ominous challenge of attracting and retaining top employees should be top priority at all of our companies. Get all your co-workers involved in the problem and in contributing to the solution. Our successful “growth” and survival depend on it.
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