The Great People Deficit

Recently our CEO attended an industry leadership conference, and the main topic of conversation was a common refrain from podcasts, articles, political think tanks and keynote speakers everywhere—good people are hard to come by. 

Of course, this statement doesn’t encapsulate the many angles of the story: people taking other jobs, retiring or leaving the workforce altogether. Nor does it address the reasons why. But unless you’ve been in a cave or coma for the last 18 months, you already know the world has endured some volatility via a global pandemic, unprecedented monetary and stimulus policies, demand surges and declines (sometimes in the same industries), rising material costs, massive climate and weather events and generally broken supply chains. It’s no wonder our country’s labor situation is, well, messy. Here are some of the more eye-popping stats dropped at the leadership conference: 

• 41% of employees are considering changing employers in the year ahead
• 71% of businesses are increasing their total number of employees over the next 12 months
• 66% of companies are planning to increase wages
  

Despite all of this, only 32% of companies say they are investing in automation and labor saving devices. Here’s what Alan Beaulieu, principal at ITR Economics, had to say about this paradox:

“Labor is the key to success–find it, keep it or automate it out of existence. With the labor situation in the United States the way it is...you are not going to survive if you don’t automate and increase your efficiency. I know change is hard, but if you don’t like change, you really won't like extinction.” 

While the tone is dire, automation doesn’t mean robots and a dystopian future of joblessness. For instance, when working with companies we first map their processes to identify “low-hanging fruit” of process improvement. It’s incredible the value that can be derived from having a third party assess operations. With a recent audit, we were able to eliminate and consolidate dozens of steps in the company’s order management process—a double-digit efficiency gain without really lifting a finger.

After working with a number of companies that are making or moving things in the supply chain, here are some key takeaways to help prepare you for the next 12-18 months: 

• Institutional knowledge is a benefit, but also a vulnerability. What happens when your star employee with decades of knowledge in how the processes work retires? Or leaves for another job? While it’s easy to rely on the “rocks” to get things done, baking processes into organizations builds resilience. 
• Incoming talent wants technology to make things easier. Millennial and even Gen Z employees expect to use software and other tech tools. It’s not laziness, it’s the efficiency they’ve grown up expecting.  
• Material and labor costs generally don’t decline. If your margins have declined or operating expenses increased, don’t write it off as a glitch in the system. Look for efficiency gains to offset the hits and/or enable faster growth. 
• Get help. (We say this with love.) It can be overwhelming when so many things change at once. Companies like ours exist only to help other businesses. Find the partners who are willing to demonstrate and prove the actual value of their solutions, not just push new technology for technology’s sake. 

We’re in for a turbulent fourth quarter and 2022, but take solace in the fact we’re all in this together!