How Employers Can Navigate a Tight Labor Market
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When it comes to hiring, the U.S. economy is not cooling. A Harris Poll released this March found 91% of hiring managers expect to face staffing challenges this year. Nearly half, 45%, say they have positions they cannot fill — a number that is the highest Harris has ever seen — and one-third are worried about retention.

Employers have addressed these concerns by investing in talent development, as they should. Even before the Great Resignation, manufacturers spent $26 billion on upskilling, Amazon pledged $700 million to help employees build new talents, and Pricewaterhouse Coopers committed $3 billion to retrain every employee. Even investors are catching on. Venture capital has poured $2.1 billion into companies like Guild Education that provide upskilling opportunities.

Still, employers are worried about finding and keeping people. Why?

Skills development is essential, but it must connect to something more. As Gallup surveys have shown, “People want purpose and meaning from their work. They want to be known for what makes them unique.” Workers want their bosses to recognize their dignity as a human, not just as a cog in the wheel of commerce.

That is no surprise. Americans spend about 90,000 hours (about 10 and a half years) at work over their lifetimes. In a competitive labor market, they will not take a job where those hours do not connect to who they are as a person — the interests they have, the goals they want to achieve, and the progress they want to make in their lives. They want to be challenged, believe in a cause, or just enjoy their work.

Creating a workplace culture that allows individuals to define — and then refine and redefine — their purpose requires transcending the notion of career ladders and linear pathways and instead embracing a culture of lifelong learning. Finding purpose is personal and iterative. It is not just acquiring a new skill; it is continual discovery that comes from what people do on a day-to-day basis. Companies in SkillUp’s Employer Network, which includes Hyatt and Accenture, recognize this fact. The network helps companies learn how to become more worker-centric employers.

In a 2019 interview, Tanya Staples, LinkedIn’s then-vice president of learning content, offered employers an easy mantra: “The real key to lifelong learning is making sure that anyone who wants to learn has access to learning opportunities.”

Those opportunities may come from an online hybrid university, a local college, a trade association, or from the company’s own knowledge and learning opportunities. But the opportunities need to be accessible and affordable. And employers must support the journey —no matter where it happens, or where it leads.

This notion is easy in the abstract, but it can strike fear in the most supportive hiring managers. After all, helping an employee pursue their purpose may, ultimately, mean an entry-level sales associate leaves to become an engineer. It could mean individuals on maintenance teams or customer service frontlines earn degrees in another industry. What then?

We understand investing in workers only to lose them is a difficult concept to embrace, especially in a tight labor market. But the prospective rewards are greater than the risks.

Our research shows when companies do not align with how their employees frame what progress looks like to them, the chances of an employee leaving go up in today’s tight labor market.

What’s more, Glassdoor studied the link between employee satisfaction and customer satisfaction. It found a one-point improvement in employee satisfaction (on a five-point scale) translated into a statistically significant 1.3-point increase in customer satisfaction. Restauranteur Danny Meyer, who owns establishments ranging from New York City’s Gramercy Tavern to the chain Shake Shack, has found the same thing: putting employees’ first leads to happier customers.

Companies that take this risk will become the first-choice place of employment for workers. That is why we see companies whose workforce includes millions of frontline, entry-level workers investing in their teams. Walmart, McDonald’s, Starbucks, Lyft, and Chipotle have established programs to help their people prepare for jobs that will be meaningful to them. 

These companies understand they may lose their associates and drivers — but they know they may keep them, too, a fact that will lower recruitment costs and improve their bottom line. Indeed, research suggests companies that invest in their employees are four times more profitable than those that do not.

Ask Demetrus Hayes. The American Opportunity Index (AOI) measures how well U.S. public companies are doing when it comes to worker economic mobility. As AOI explained, Hayes started as an AT&T sales associate in 1994. Now he is a vice president. He climbed toward his purpose, but never left the company. “AT&T offered a pathway for Hayes to advance without a college education, and when he expressed interest in pursuing a degree in business administration … the company paid for his studies,” AOI said.

The labor market is tight. Employers that build a culture of lifelong learning and give employees the freedom to define, refine, and redefine their purpose will survive — even thrive — in it. 

Horn is the co-founder of and a distinguished fellow at the Clayton Christensen Institute for Disruptive Innovation, a non-profit think tank and an adjunct lecturer at the Harvard Graduate School of Education. Stowers is executive director of the Charles Koch Foundation.

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