3 Ways to Fix Your Labor Shortage

One size does not fit all when addressing a labor shortage. However, these three strategic pillars provide a framework for organizations to regain operational stability.

Fix #1: Increase Wages

The first solution is to increase wages. Companies like McDonald’s, Under Armour, and Bank of America have all announced wage increases to attract workers—moves that have been well-received by both employees and the public.

In principle, it is easy to throw money at the problem, but in practice, it may not always be feasible. Higher wages cut into profits, so you will need to make a strong case that wage increases will pay for themselves through reduced turnover and higher engagement. Another approach is to examine the risk of not increasing wages, equating labor shortages to decreased customer service and, in turn, reduced sales.

Fix #2: Increase Hours

The second option is to ask your existing employees to work more hours. Giving more hours to your current workforce reduces the need to hire new workers, along with the training and onboarding expenses associated with new hires.

Overcoming the Hurdles

• Willingness and Lifestyle: Your employees need to be willing to pick up more hours. Some may be happy to do so, while others cannot due to childcare, school, or other commitments. It is helpful to provide employees with technology that allows them to see available shifts and choose the ones that work for them.
• The Overtime Strategy: For many, “overtime” is a four-letter word. However, overtime can be less expensive than hiring new workers when you factor in recruiting costs, benefit costs, and the higher productivity of experienced staff. Organizations that overcome their hang-ups with overtime are better positioned to keep operations running.

Fix #3: Increase Productivity

The third solution is to increase the productivity of your existing workforce. Increasing the output of workers already on staff reduces the need for more headcount and the reliance on overtime.

Two Paths to Improving Productivity

The Big Ideas: Productivity gains can come from eliminating tasks, reducing the frequency of certain tasks, or redesigning workflows entirely. These may take time to implement, but they offer a large, sustainable impact on your labor model.

The Small Changes: Big gains often come from tiny adjustments. Look for tasks performed frequently. Moving a piece of equipment closer to where a task is performed to reduce travel time can have an outsized impact. Saving a few seconds thousands of times a day across your entire portfolio adds up quickly.

Conclusion: The Cost of Waiting

Each organization and its workforce is different, and what works for one may work differently for another due to culture, industry, and geography. The good news is that these solutions can be used in combination. The important thing is to act—because you won’t solve your labor shortage by waiting for more workers to appear.