For the second year in a row, the US celebrates Labor Day during a dramatic transformation of work and high anxiety for CEOs and workers. The difficulties presented by a chronic labor shortage of skilled and unskilled jobs are complicated by Covid-19 safety issues, changing workforce expectations, automation, and enabling digital technologies that will permanently transfer how, where, and when we work. Employers who embrace these changes will emerge as industry leaders and grow profitably.
Lately, scary business news headlines have reflected a higher number of job openings than unemployed people and the three million or more Americans who have dropped out of the workforce. Many of these people are women who do not have daycare options or who have decided their jobs as nurses or waitresses are not worth the safety risks, and baby boomers who have decided to hang it up for good and retire. Labor birth rates and strict limits on immigration mean the labor shortage will be long-lasting, requiring the use of AI-powered technology to do the work formerly done by workers.
According to Littler Mendelson Labor Day Report 2021, the industries with the most significant job deficits are leisure and hospitality (with by far the biggest deficits, health care and social assistance, government, professional and business services, manufacturing, and trade, transportation, and utilities. As indicated by the chart below, many more industries are struggling. The industries that have surpassed pre-Covid-19 employment levels are financial and construction. Please see the chart below.
Employees are acutely aware of their advantage during this time of high employee turnover and pay increases. Depending on the survey, 40 percent to two-thirds of the workforce says they are looking for jobs that allow a flexible work environment, usually allowing three days of working at home per week. Workers are shopping around for who offers better pay, benefits, and working conditions. In June, another 3.9 million US workers quit their jobs, many to get higher pay. In May, four million quit their jobs. Employers have to adjust. Keeping pay and benefits competitive is critical during this period.
Retail giants Amazon, Walmart, and Target have increased their hourly pay rates, and Target and Walmart have added signing bonuses and benefits such as tuition aid reimbursement to attract and retain workers. These humongous employers are wise. They realize that the cost of higher pay and benefits is less than the cost of their turnover, which is about 20 percent for retailers. Raise pay and benefits and actually save money! Besides, they really don’t have a choice in this era of scarce labor.
In the hospital sector, which is facing a long-standing nursing and nurse’s aide shortage that is now getting worse, many nurses are walking away from ICU care due to the stress of Covid-19 delta wave care, hospitals have dramatically increased starting pay, flexible schedules, and signing bonuses. (Some as high as $40K!) The National Institutes of Health estimates that there was a shortage of about one million nurses in the U.S. in 2020. In some cities, this has triggered a bidding war. This sector also began to require Covid19 vaccinations for all in-hospital workers except those with religious, medical or disability exceptions. The courts have upheld the mandates in hospitals and other employers such as the University of Indiana.
Covid-19 has become endemic and is requiring strong measures by more than the hospital sector to control it. Employers, such as Google and Facebook, are requiring Covid19 vaccinations for in-office workers. They know that the threat to the US economy is the stalling US Covid19 vaccination rate and the politicizing of vaccinations. Delta Airlines has required vaccinations too and is also charging employees who are not vaccinated with an additional $200 monthly health care premium to cover the $50k of hospital care costs for Covid-19 patients. About 90 percent of these hospitalizations are among the unvaccinated.
Turning to office work, Covid-19 and the usefulness of collaboration platforms such as Zoom, Teams, Slack, and chatbots have forever changed expectations about where, when, and how employees should work. Repeated surveys show that the productivity of office workers increased during Covid-19 office shutdowns. Most of these employees do not want to return to the office five days a week and face Covid19 safety risks, office disruptions, and time-consuming commutes. They prefer, instead, a hybrid arrangement, generally, of three days at home and two days in the office.
Many CEOs see this concept as something that is threatens their long-term profitable growth. I can assure you from my experience it does not. At Medtronic in Santa Rosa, CA, I helped implement a hybrid work model long before the pandemic. Many employers are wringing their hands over when to reopen their offices due to the stubborn surge in Covid19. Please stop. Recognize Covid-19 for what it is: an endemic and an ongoing threat. Set your workplace up to be bulletproof to Covid19 disruptions over the years, and to endure. Here is a simple recipe for success.
- Determine who can work remotely three to four days a week based on their job duties, the use of collaborative digital platforms, and whose presence is not required in the office daily to meet with customers, work in manufacturing, research and development labs, or on newly launched innovation teams. I have found that about 45 percent of company workforces can work remotely for part of the week. Allow remote work to be a choice, as not every qualifying worker will want to work remotely.
- Require remote works to come into the office at least one day a week to connect with their leaders and team members on goals, for training, collaboration, new initiatives, recognitions, and build relationships. This practice keeps remote workers aligned to the organization’s mission, strategies, and culture and maintains strong relationships. This requires managers to rethink the work week so that meetings and training are held on days workers will be in the office. Also require any worker coming into the office to be vaccinated against Covid-19 unless they have medical, religious, or disability exemption. Then consider a testing regiment that assures safety.
- Change your office to be a place for reconnecting, meetings, and training. Those working from home most of the time no longer need a cube, just a touchdown space to turn on their computers to check email. You will save a small fortune in real estate costs you can invest in R&D or other strategies.
- Change your operating norms to allow for instant communications and collaboration with your in office and remote workers, and make sure remote workers are not left out of important information and learning.
- Research shows that remote work is most successful when workers already have strong relationships. New workers ought to spend more time in the office at first to build relationships and learn from mentors who will work with them in the office, showing them the ropes. As they get through their novice time, they can spend more time working remotely. New innovation project teams benefit from more time in the office together building trust and collaboration for the risk-taking required for innovation. I have found, however, and research bears it out, that after these teams are up and running, product development goes faster when team members are allowed one or two days a week to work remotely analyzing data and writing up reports.
- Invest in digital technologies to optimize remote work. This includes the currently popular Zoom, Microsoft Teams, and Slack but also chatbot technologies that help employees through the headaches of onboarding, benefits open enrollment, and answering commonly asked questions of IT, HR, facilities, and finance. Provide your work from anywhere employees with work anywhere technology. The chart to the right from Price Waterhouse Cooper shows trends in spending by CEOS to support hybrid work models.
- Redesign your office to be Covid-19 safe, from the cleanliness of toilets to office spacing, improved ventilation, and protocols for when to wear masks. OSHA provides great guidelines.
Finally, there is the issue of automation. The US labor shortage will not abate soon due to low birth rates and limits on immigration. Smart companies will automate highly routine tasks, like using chatbots to answer commonly asked employee questions. This technology is not only more efficient, but it will also save you costs. In addition, imbed AI technology into the workflows of employees to improve their competency and efficiency. This usually works best when the employees are involved in implementing the technology and designing its interfaces.
A recent article in the Harvard Business Review provides guidance on how companies can use machine-enabled or AI-power technology to allow employees to work better with technology. One of the examples described in the article relates to how an insurance company used big data and artificial intelligence in its recruiting and employee development efforts. The company used AI to identify the characteristics of top performers and combined it with the advice of top external exports. They used the new information to improve insurance agent performance and company financial performance.
Let’s recap on how employers can transform their organizations to emerge as industry leaders in a time of disruption>
- Get pay and benefits right. In addition to the examples I site above, I encourage you to read my recent column on benefits issues for 2022.
- Covid-19 is endemic. Stop thinking that one day it will go away or nothing worse will take its place. Design your office, manufacturing and R&D labs to be safe, require your employees to get vaccinated, and watch for disruptive emerging health trends.
- Embrace hybrid work models. The workforce expects it. You can be more productive, innovative, profitable, and be a leader in your industry.
- Embrace AI powered technology and involve the workforce with its implementation. Every business needs digital platforms to better understand its data and learn how to make improvements. The companies that involve their workforce with implementing digital transformation will see the highest return on its investment.
Maybe next Labor Day, your company will already have a head start on transforming work and be a leader in your industry.
Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting, managing partner of InnovationOne, and Sales Advisor to MeBeBot. He works with companies to transform HR and recruiting, implement remote work, and develop extraordinary leaders, teams, and innovation cultures. He is the author of the highly acclaimed book, Hack Recruiting: the Best of Empirical Research, Method and Process, and Digitization. Subscribe to his weekly blogs at www.VictorHRConsultant.com.