There are a few things in our life time that we don’t expect to see. Things like elephants flying, the Toronto Maple Leafs raising the Stanley Cup, a dog driving a car, a Green Party Member becoming the Prime Minister or employee scarcity in Canada.
Case In Point:
Supply chain bottlenecks are slowing international global growth in the Port of Los Angeles. Currently, port workers can offload 10 container ships per day. The problem is that 18 new ships are arriving daily, 62 ships are berthed in docks and there are already 81 other container ships waiting in the harbor. Considering that contain ships hold 18,000 containers which is equal to a freight train 36 miles long, the costs are staggering. Adding to this is a lease cost of $ 200,000 per day per container ship. Several of my American clients have told me that the challenges plaguing the Port of Los Angeles is the employee shortage of dispatchers, off loaders and truck drivers. The aforementioned challenges are not confined to the USA. Major Canadian Ports of Call from Vancouver to St. John report similar challenges and these challenges create inflationary consumer prices. Unfortunately this is only the “tip of the iceberg” and I use this example because port goods represent 68% of Canadian consumables.
“Due to our aging population employee shortages are here to stay over the next five to ten years and will be longer in rural areas”
Don Cyr, Professor. Brock University & Chair of The Niagara Industrial Association
According to Pierre Cleroux, Vice President, Research & Chief Economist at the Business Development Corporation (BDC); Canada’s labour force problem did not begin with the pandemic. It is the result of the aging population and related declining labour force participation, which started over 20 years ago. The pandemic has amplified the problem by destabilizing an already-precarious situation.
The Dilemma:
Peter Ayres, General Manager of Nordock Incorporated says; “people are not showing up for interviews and new hires are quitting after one shift and this is hard on business. Usually we had a stack of 100 resumes to choose from, now have 10 if we are lucky”.
Jobs that 18 months ago took a few days or a week to fill are often going unfilled for a month or more and some companies are forced to adjust schedules and deliverable timelines based on the workforce available. The talent gap can no longer be filled with overtime or extra effort of existing employees. Companies offering sign-on bonuses of thousands of dollars are finding that not even that strategy is working long term. With open roles, jobs can be filled one day and vacant a short time later due to a surge in job openings, competition and quality of the employee.
To attract applicants, I have advised several of my clients to offer higher pay (70th – 80th percentile) along with enhanced benefits (20% of wages) and much to my surprise it’s not having the effect that my clients and I thought it would as employee turnover remains high.
According to a recent report from business development bank of Canada, 61% of employees have had to increase employee hours as a result of employee shortages. Canadian companies are continuing to struggle in their quest to find workers — and they think it’s only going to get worse from here. The Harris Poll, commissioned by staffing company Express Employment Professionals, finds this assessment to be accurate and without question.
Eighty-four per cent of Canadian companies say they expect to face problems in the year 2022, with 39% reporting they currently have open positions and they can’t find anyone to fill these positions.
“local talent is being scooped up by American and European organizations along with Toronto based organizations in the legal, finance and construction sectors and the pandemic has changed the attitude around remote work”
Andrea DeMichele, Manager, Human Resources, Stackpole, International
Among the reasons employers cite for the hiring crunch are problems with assessing potential employees’ skills, more competition in the job market and the “pickings” are slim. My clients have told me that they’re running up against a skills gap with people lacking experience and both hard and soft skills. Other clients have told me that no one is applying at all. I have also seen things getting worse over the past three months, with some of my clients who never struggled before suddenly having a hard time filling vacancies.
But the skills gap is also part of a broader trend in the labour market. The Royal Bank of Canada (RBC) flagged a looming trades worker shortage in a report released October 6, 2021. The RBC said it expects to see a 10,000 worker deficit in 56 nationally recognized Red Seal trades over the next five years. That number jumps to 100,000 when you include 250 provincially regulated trades in the tally. Furthermore, 700,000 skilled tradespeople are expected to retire by 2028, adding even more pressure to the market. What’s more concerning is that RBC estimates 25% of current red Seal Trades will need to upgrade their skills amid advances in technology. Failure to do so will make the crunch even worse.
The Cure:
With more competition for human capital, employers are dealing with an “employee market.” That means that at the moment, potential workers have so many opportunities to choose from that they feel more confident turning down a role that doesn’t quite meet their needs.
To add to that, companies say many workers just don’t have the skills they need to actually do the job. And they are pointing the finger at government benefits for keeping people who do have needed skills sitting out of the workforce.
“There is a massive gap between skills that jobs seekers possess and skills companies require, especially in the skilled trades and physically demanding jobs. The feeling in the market from employers right now is that these people are out there but are still staying home to collect the Canada Recovery Benefit or Employment Insurance.”
Stuart Johnston, Director of Operations. WIOSS Vaughan, Sobeys Corporation.
So, what are some solutions that really work. I suggest that companies ought to consider five key elements.
- Adopt new technologies and automation methods
- Use a formal integrated hiring process
- Offer a comprehensive compensation package
- Provide growth and development opportunities
- Tap the untapped workforce
Cure One – New Technologies & Automation:
Automation is often referred to as the use of any technology that can complete repetitive and easily replicable tasks with reduced human capital input, freeing up employees to perform more value added work.
The fear that technology and automation will replace employees and create social unemployment is long gone. History has taught us that the opposite is true. The greatest challenge in the next ten years for organizations is employee shortages.
Improving productivity through the use of technology and automation not only frees up the employee to perform more interesting and challenging tasks, it also provides training and development opportunities for employees, keeps them engaged and increases output per hours worked while increasing business profits and capacities. This situation increases employee compensation and engagement. New technology and automation is a win – win situation.
The BDC report that 61% of Canadian businesses that invest in technology and automate find it easier to hire as opposed to 38% who do not adopt new technology or automate. Twenty – five percent of small to medium enterprise (SME) businesses have fully automated while 43% say they have automated at least half their operation. Some of my SME clients who have invested in technology and partially automated have found that waste has been reduced, adding 9% to 13% onto their bottom line while increasing employee retention by 16% and in turn decreasing employee recruiting costs.
Cure Two – Employing a Formal Integrated Hiring Process:
A formal integrated hiring process refers to a fully organized hiring process where organizations must identify recruitment needs, utilize a comprehensive job portfolio which leads to a detailed job posting. It lists relevant roles and responsibilities along with critical success factors, advertises for the job opening and selects the candidate that they believe fits the position best.
The process although at times may appear long and drawn out has terrific benefits. It enables businesses to find strong matches and higher quality personnel which in turn reduces employee turnover while boosting business performance. Fifty – three percent of SME’s who utilized this cure found the recruiting process easier as opposed to 42% who did not employ this cure. In many cases, this strategy would require a full time or part time Human Resources Professional (HRP) however, it will reduce your recruiting costs by 50%.
“we are interested in the whole journey from candidate to employee because, we have deliver the goods and services. We ensure that they are satisfied with their experience so that they stay and speak positively of the company.”
Nicolas Clusiault, Vice President Human Resources, Momentum Technologies
Cure Three – Offer Comprehensive Compensation Packages:
A comprehensive compensation package includes various types of tailored benefits that organizations might wish to consider. A strong comprehensive compensation package will reduce labour shortages in an organization because it helps to make employees feel valued and appreciated which in turn lays the foundation for employee engagement and engagement leads to strong employee retention technique.
The fallacy about compensation is salary. Many associate compensation to salary and salary only however, it is much more than that. Salary is a part of compensation packages and for many it is a prime mover and for those of us who think that way – we are not wrong. I’d like to point out that a comprehensive compensation package includes several other elements.
Comprehensive compensation packages consist of two categories; Prime Movers and Secondary Movers. The Prime Movers are those elements that employees require before saying yes to a job. Some manpower experts refer to these elements as the absolutes. They may include but, are not limited to:
- “top shelf” employee benefits (usually 22% – 27% of salary)
- 70th – 80th percentile wages (based on qualifications, geographical location and investment required to replace the employee should they leave)
- vacation starting at four weeks
- being treated with respect
- flexible work arrangements
- 40 hours of professional development per year
- working in a team environment.
“people are not showing up for interviews and new hires are quitting after one shift and this is hard on business. Usually we had a stack of 100 resumes to choose from, now have 10 if we are lucky”.
Peter Ayres, General Manager, Nordock Incorporated.
Secondary Movers are those elements that employees find intriguing because they arouse interest in wanting to pursue further opportunities for employment with your organization. They include but, are not be limited to:
- overtime after 40 hours
- perks (such as monthly mental health days)
- bonuses (attendance & punctuality bonus)
- subsidized child care
- four day work week
- supportive workplace culture
- diversity and inclusion initiatives
- spruced up / rehabbed office space
Just from a point of interest, a BDC survey of 1,251 SME’s stated that 77% of all Canadian SME’s that offer a comprehensive compensation package say that is was easier to recruit and retain employees as opposed to 61% who did not offer such.
Organizations also might like to recognize moving forward that whatever they are offering, it needs to be in sync with what candidates are expecting and there are several innovative ways to craft a compensation package. It is not a one size fits all scenario – individual flexibility is the order of the day.
Cure Four – Provide Growth & Development Opportunities:
Kerri McArthur, President and CEO of Centennial Glass was having a terrible time recruiting and retaining employees before the pandemic. The COVID – 19 crisis just exacerbated the situation for her Ottawa based company. “There was just no one available. We were quickly growing glass and glazing installation and repairs and we simply could not find people to hire”, she said. This is not a unique situation for SME’s.
When Centennial lost several employees during the pandemic they got creative. Kerri expanded her recruiting strategy by loosening the parameters associated with qualifications and introduced a training and development along with a mentorship program for new recruits.
What Centennial did was that they requested experienced veteran employees to train and mentor new employees with on the job training and follow up. Although this training initiative took time (several months of in house apprenticing under the guidance Lead Hands and Project Managers) it has paid dividends in the growth and development of new employees. The program was so successful that it was used to cross – train installers and designers in both residential and commercial divisions.
Growth and development initiatives has allowed workers the flexibility to move divisions as the volume of work decreases or increases. In addition, Centennial has employed enough people in their front line and talent pool to handle a 30% increase in divisional sectors. The company is now looking at using metrics to improve the in house training and mentorship program and there is little shortage of new candidates.
Cure Five – Tap The Untapped Workforce:
According to the Ontario Disability Employment Network (ODEN), there is 59% employment rate amongst people with disabilities. That means that 41% are employable but, currently unemployed. Add to this the fact that 19% of all Canadians over the age of 18 identify as having a disability. That makes the untapped workforce a “gold strike” for some organizations.
The challenge may be that employers do not always see the disabled person as a talented candidate. Less than 40% of companies reach out to disability employment service providers when recruiting employees. Says one manager; “the cost to accommodate is far too high for us so, we shy away from that hire.”
The truth is it costs around $ 500 to accommodate a disabled person in the workplace and that cost in most cases is refunded through the federal and provincial governments.
I am the first person to agree that there are some tasks that a disabled person may not be able to perform in the workplace due to safety or other concerns however, as organizations begin to automate there are a number of routine subservient tasks that disabled employees can accomplish quite well. Perhaps it is time for organizations to stop focusing on the disability and limitation and focus more on the person.
Conclusion:
The scarcity of employees ought to worry not only businesses but, the public at large. In order to compete against the shortage of employees, organization are going to need to shift their ways of doing business and working with their employees. Make no mistake about it this has now become an employee or potential employee world, where they are in charge.
While short – term imbalances account for frictional unemployment and job vacancy numbers, long lasting factors such as the aging population, decreasing workforce, a lack of skill trades and a lack of skill sets in general – will place a significant amount of force on the employee shortage dilemma. Economic growth will be at risk, a compromised Canadian business setting will be evident and artificial inflation will take hold. Better integration of underutilized groups and services may alleviate part of the challenge but it will not serve as a solution independent of other factors.
Employee shortages are here to stay and they will not vanish as the economy recovers from the COVID – 19 pandemic. SME’s will be plagued with these shortages for the foreseeable future. By taking action organizations will have the opportunity to create the foundation for a more flexible, adaptable and profitable business.
Intelligence For Your Corporate Life:
I had an opportunity to have lunch with Brock University Professor, Don Cyr this past week. Don is not only a intelligent distinguished Professor at Brock, he is also the Chair of the Niagara Industrial Association and my friend so, when he speaks – I’m all ears. He told me that The Ontario Ministry of Finance in 2019 reported that of the 41.60 million people living in our province, 5.22 million are under the age of 30 years. That means that only 12.51% of our provincial population will be able to fill our employee shortages yet, our Federal government is saying that at least 28% will be required.
So, as we look outside of our Canadian window and look at potential immigration hot spots; only Iran, Mexico and India will be able to supply the people we require over the next ten years. Only these three countries have shown the ability to maintain a stable population with Iran actually increasing their young population. The median age in Mexico is 28, Iran has an median age of 29 and India has an median age of 30. This compares to Canada’s median age of 43. That is a median spread of 33%.
These numbers would indicate that we as a country will need to be much more creative with our immigration policies and procedures in order to support corporate growth in the future. Educated immigrates and future educated immigrants will be the people stabilizing our economy, buying our houses and goods as well as providing a futuristic road map to success.
With that being said, I don’t believe that SME’s can change our immigration policies and procedure however, they may be in a position to influence its expediency. In the meantime the SME’s future is now so, just to recap potential solutions to consider are:
- Adopt new technologies and automation methods
- Use a formal integrated hiring process
- Offer a comprehensive compensation package
- Provide growth and development opportunities
- Tap the untapped workforce
About The Author.
Nicholas Pollice is President of The Pollice Management Consulting Group located in Niagara, Ontario, Canada. An international facilitator, presenter and consultant, he is known as an operations management leader and coach. Nicholas conducts programs in leadership, supervision, communication, negotiation, conflict resolution and strategic planning. He has been a consultant since 1989 and is the author of several professional publications. His presentations have been consistently ranked in the top 10% throughout North America. See Nicholas’ bio, his other publications and services on the PMCG. Website at www.pollicemanagement.com
