If Labor Shortages Emerge
Despite the uncertainties caused by today’s turbulent economic and geopolitical environment, strategic thinkers should consider how their organizations will react if job growth continues and long-predicted labor and skill shortages emerge. Organizations may need to develop new strategies, perhaps catering to employees in the same way businesses cater to customers.
Over the short term, job growth is likely in various parts of the world. In fact, research from Manpower shows that the second quarter of 2004 looks promising for 18 of 19 surveyed countries in terms of net employment – that is, the difference between the percentage of employers expecting to increase hiring and those expecting to cut staff.
And the labor market will grow even tighter over the long run if various experts are right. For instance, John A. Challenger, CEO of outplacement firm Challenger, Gray & Christmas Inc., points to U.S. Bureau of Labor Statistics data showing that in “less than seven years, there will be 168 million jobs in the U.S. economy, but only about 158 million people in the labor market to fill them.” And he cites a report from the Aspen Institute that projects there will be zero growth between the years 2000 and 2020 in the number of native-born U.S. employees aged 25 to 54, a major change from the 44% growth that occurred from 1980 to 2000.
Challenger also predicts the kind of skill shortages that employers encountered in the 1990s. He notes that some industries, such as health care, are already suffering from a shortage of qualified personnel, while various others will begin to suffer serious shortages in just two to four years.
Assuming that trends such as offshoring do not forestall such shortages, U.S. employers will have a tougher time holding down labor costs than they have in recent years. There’s probably considerable pent-up demand for higher wages. In fact, employees consider benefits and compensation the top two contributors to their satisfaction levels, according to the Job Satisfaction Survey Report 2004 from the Society for Human Resource Management and CNNfn.
To avoid a constant ratcheting up of wages, employers will seek other methods of wooing and retaining employees. This might even involve catering to workers in the same ways that some businesses cater to customers: that is, by creating more appealing, welcoming environments.
Consider the case of Starbucks, as described by futurist Andrew Zolli of Z + Partners. He noted on the radio show Marketplace that Starbucks doesn’t compete at the low end of the retail market by selling customers a cheap cup of coffee. Rather, it improves its net margins by providing a unique and appealing environment. “You’re paying for the total design experience,” states Zolli, who argues that the U.S. is evolving from a service economy to a design economy. By using music and other design features in a powerful way, businesses like Starbucks are able to create “more holistic experiences for people.”
For employers, there are two implications of such ideas. First, in an age when employees must be attracted in the same way that customers are, companies may increasingly look at design features of the workplace. That is, just as many of today’s retailers focus on the customer shopping experience, more employers may focus on the holistic employee work experience. This includes everything from organizational culture to the layout of office space.
Second, creating better work experiences may help nurture the kind of employee creativity necessary for companies to survive in a design economy. Zolli believes that companies have actually been drumming creativity out of employees via design assaults such as cubicle farms. He states, “We’ve systematically taken out of the physical [work] environment absolutely everything required to connect people back to the real world.” In the future, the combination of labor scarcity and the need for greater innovation in the workplace may turn this trend around.
To read more about U.S. employment projections, go to
http://www.bls.gov/opub/mlr/2004/02/art5exc.htm
For Manpower information on employment outlooks, go to
http://www.manpower.com/mpcom/VisualLibraryMEOS.jsp?quarterID=52M
For a graph of U.S. national employment trends,
click here.
For more on the ideas of John Challenger,
click here.
For more on the SHRM and CNNfn survey on job satisfaction, see
http://www.shrm.org/press_published/CMS_006538.asp
or see http://money.cnn.com/2004/04/29/news/economy/job_satisfaction_survey/
For an audio file on Zolli’s ideas about “a design economy,” please go to the following Marketplace Web page and scroll down:
http://marketplace.publicradio.org/shows/2004/05/17_mpp.html
For more on Z + Partners, go to
http://www.zpluspartners.com/index2.html
Below are other sources used for this TrendWatcher:
Challenger, John A. “The Coming Labor Shortage.” THE FUTURIST, September-October 2003, pp. 24-28.
“Employees More Concerned with Feeling Safe at Work.” U.S. Newswire. Internet [http://www.hrmarketer.com/]. April 29, 2004.
Esen, Evren. Job Satisfaction Survey Report 2004. Alexandria, VA: Society for Human Resource Management, April 2004.
Horrigan, Michael W. “Employment Projections to 2012: Concepts and Context.” Monthly Labor Review, February 2004, pp. 3-22.
“SHRM/CNNfn Survey Finds More than 60 Percent of Nation’s Employees Satisfied with Compensation and Benefits.” U.S. Newswire. Internet [http://www.hrmarketer.com/]. February 12, 2004.
Over the short term, job growth is likely in various parts of the world. In fact, research from Manpower shows that the second quarter of 2004 looks promising for 18 of 19 surveyed countries in terms of net employment – that is, the difference between the percentage of employers expecting to increase hiring and those expecting to cut staff.
And the labor market will grow even tighter over the long run if various experts are right. For instance, John A. Challenger, CEO of outplacement firm Challenger, Gray & Christmas Inc., points to U.S. Bureau of Labor Statistics data showing that in “less than seven years, there will be 168 million jobs in the U.S. economy, but only about 158 million people in the labor market to fill them.” And he cites a report from the Aspen Institute that projects there will be zero growth between the years 2000 and 2020 in the number of native-born U.S. employees aged 25 to 54, a major change from the 44% growth that occurred from 1980 to 2000.
Challenger also predicts the kind of skill shortages that employers encountered in the 1990s. He notes that some industries, such as health care, are already suffering from a shortage of qualified personnel, while various others will begin to suffer serious shortages in just two to four years.
Assuming that trends such as offshoring do not forestall such shortages, U.S. employers will have a tougher time holding down labor costs than they have in recent years. There’s probably considerable pent-up demand for higher wages. In fact, employees consider benefits and compensation the top two contributors to their satisfaction levels, according to the Job Satisfaction Survey Report 2004 from the Society for Human Resource Management and CNNfn.
To avoid a constant ratcheting up of wages, employers will seek other methods of wooing and retaining employees. This might even involve catering to workers in the same ways that some businesses cater to customers: that is, by creating more appealing, welcoming environments.
Consider the case of Starbucks, as described by futurist Andrew Zolli of Z + Partners. He noted on the radio show Marketplace that Starbucks doesn’t compete at the low end of the retail market by selling customers a cheap cup of coffee. Rather, it improves its net margins by providing a unique and appealing environment. “You’re paying for the total design experience,” states Zolli, who argues that the U.S. is evolving from a service economy to a design economy. By using music and other design features in a powerful way, businesses like Starbucks are able to create “more holistic experiences for people.”
For employers, there are two implications of such ideas. First, in an age when employees must be attracted in the same way that customers are, companies may increasingly look at design features of the workplace. That is, just as many of today’s retailers focus on the customer shopping experience, more employers may focus on the holistic employee work experience. This includes everything from organizational culture to the layout of office space.
Second, creating better work experiences may help nurture the kind of employee creativity necessary for companies to survive in a design economy. Zolli believes that companies have actually been drumming creativity out of employees via design assaults such as cubicle farms. He states, “We’ve systematically taken out of the physical [work] environment absolutely everything required to connect people back to the real world.” In the future, the combination of labor scarcity and the need for greater innovation in the workplace may turn this trend around.
To read more about U.S. employment projections, go to
http://www.bls.gov/opub/mlr/2004/02/art5exc.htm
For Manpower information on employment outlooks, go to
http://www.manpower.com/mpcom/VisualLibraryMEOS.jsp?quarterID=52M
For a graph of U.S. national employment trends,
click here.
For more on the ideas of John Challenger,
click here.
For more on the SHRM and CNNfn survey on job satisfaction, see
http://www.shrm.org/press_published/CMS_006538.asp
or see http://money.cnn.com/2004/04/29/news/economy/job_satisfaction_survey/
For an audio file on Zolli’s ideas about “a design economy,” please go to the following Marketplace Web page and scroll down:
http://marketplace.publicradio.org/shows/2004/05/17_mpp.html
For more on Z + Partners, go to
http://www.zpluspartners.com/index2.html
Below are other sources used for this TrendWatcher:
Challenger, John A. “The Coming Labor Shortage.” THE FUTURIST, September-October 2003, pp. 24-28.
“Employees More Concerned with Feeling Safe at Work.” U.S. Newswire. Internet [http://www.hrmarketer.com/]. April 29, 2004.
Esen, Evren. Job Satisfaction Survey Report 2004. Alexandria, VA: Society for Human Resource Management, April 2004.
Horrigan, Michael W. “Employment Projections to 2012: Concepts and Context.” Monthly Labor Review, February 2004, pp. 3-22.
“SHRM/CNNfn Survey Finds More than 60 Percent of Nation’s Employees Satisfied with Compensation and Benefits.” U.S. Newswire. Internet [http://www.hrmarketer.com/]. February 12, 2004.