The US has been facing a labor shortage conundrum since 2021, rooting to a myriad of reasons which are often interrelated. While this is still in the process of toning down, CFOs are considering outsourcing services to combat the deepening impact of employee inadequacy.
The Labor Shortage Crisis: An Overview
Last 2021, there has been a record-breaking pool of 4.5 million US workers who quit their jobs, but met a slight decrease this 2022. The Financial Times revealed that the US’ number reached its peak in November despite the job openings remaining overhead. Given its unique magnitude compared to previous workforce shifts, The Great Resignation hit all-time high unemployment, quit, and separation rates.
There is, of course, a surrounding unease because of the stringent talent market. Among these concerns is the sharp decline in the participation of professionals. Even if the economy gets going, if there are no people to fuel the key economic activities, then this attrition is bound to stay for a long time. A report from McKinsey props this up, saying that 40% out of the 5,774 respondents (from various countries with advanced economies) are somewhat likely to quit their jobs for the next three to six months.
What are the effects of the labor shortage?
Challenging retention and hiring of employees
Because of the decreasing workforce, companies are scrambling to retain their people, while some are hiring employees that would take the job and stay. Without their worker's skills at play, aiming for higher targets are twice as hard to do.
Unmet profit targets
This demand for employees, when prolonged, can lead to a trillion dollars' worth of immense revenue remaining unrealized, which would resonate internationally across all industries. Although the Great Resignation has hit a slack last December, businesses are barely out of the woods as the vacancies remain at 10.92 million.
Increased wages and enticing benefits
Employers aren't reluctant in offering higher salaries along with retention benefits under the current situation. Financial perks are known to be quick fixes especially in circumstances like this and mostly boosted with bonuses to tip the scales in their favor.
Addressing the talent inadequacy
If employers don't understand, they won't be able to patch things up. Having a concrete sense of understanding why this massive resignment is happening can be a good start to establishing a formidable workforce retention strategy. Here are a few ideas to retain your people and attract skilled ones to your team.
- Building a community. What most people don't get about having a hybrid setup is the relevance of its nature to the kind of community it creates for employees. With the mix of onsite interaction and work-from-home setup, there needs to be a new sense of normalcy between them and their work. How are you connecting with your employees? Do you reach out to them on a personal level? How are the employees interacting with one another? An inclusive approach with your workforce can greatly improve collaboration among them which leads to a heightened productivity at work.
- Development opportunities. Aside from higher wages, stronger career plans are the appealing values you can offer. Continuously hone their skills through training and seminars; introduce them to a new system that would supplement their current expertise; Create recognition programs that will inspire them to do better. Blend career development during their tenure at the company to help them improve as part of the business, and as an individual.
- Fostering high-value work. Now that hybrid working arrangements are widely rolled out, there is a certain emphasis on the quality of work rather than the quantity that gets done. Regardless of where you choose to work, as long as you do quality work, then you seal the deal. Remember that when tasks get too routinary and tedious, employees’ enthusiasm goes downhill and when no new responsibilities are turned over to them, their interest in staying takes a sharp turn as well.
- Offshoring business functions. Should the problem of delegation arise, consider looking into external entities for help. Unloading your business functions to a partner that possesses the resources and expertise that suits your requirement opens up opportunities for your team to do more valuable work and expand your skills.
How to manage talent in an organization
Employee retention is a tricky business in our current environment especially when companies are neck and neck in offering competitive benefits and wages just to keep their operations running.
Let's be clear on one thing first — having in-house champions plays a pivotal role in the recovery and eventual success. With key people playing in your field, from rank-and-file to managerial staff, you have advocates of support inside your team, who promote long tenure in your organization.
However, if you're grappling with the exodus of employees and are looking for ways to combat the ongoing turmoil, start by assessing the scope of impact the issue has brought to your business. Did it hurt your business metrics and success rate? If so, how extensive is it? After you're done quantifying this, you can now proceed to analyze its root cause/s. Apart from compensations and promotions, try to explore the blind spots that most executives miss, such as personal factors, belongingness in the team, and relational ties, among others. Lastly, implement a tailored retention campaign that corrects and improves the struggles that your people underwent. One well-established way to support this strategy is through outsourcing. How so?
Aside from the cost-cutting benefit of outsourcing, it also [takes or] supplements important functions such as accounting and bookkeeping [off your employees], and takes care of it accordingly. Through outsourcing, you also tap into a global talent pool that delivers services outside your expertise with the help of advancing remote work equipment and virtual communication platforms. An offshore component provides you with labor resources that come in a more affordable manner, scalable solutions, and larger network opportunities. If you could augment your current workforce with a reliable external support, your in-house teams welcome more strategic responsibilities and even create a more focused working environment.
Outsourcing of services is not a panacea, but it can serve as a silver bullet to your staffing challenges. Gauge what function would be best outsourced and produce pragmatic reverberating results to the business, then pursue the other advantages that come with it later on.
If you want to navigate the outsourcing engagement, start them with us. D&V Philippines has almost a decade of experience in helping clients all over the globe through its premier finance and accounting outsourcing solutions. Grab your copy of our whitepaper Outsourcing: How to Make it Work to know how offshoring can help in the fulfillment of your business objectives, or schedule a free consultation with us today.