Labor Shortage: PART I

By Dennis J. Donovan, Principal

The U.S. labor shortage has morphed into a serious challenge for business across most industries. Among the most impacted sectors are manufacturing, construction, technology, health care, financial services, and distribution (for both qualified year-round and seasonal workers).

Unfortunately, dynamic shifts, from demographics to artificial intelligence, suggest that the worker deficit will only intensify. This has major implications both on a macro-basis (especially constraining GDP growth), and at the micro-level with the possible curtailment of business expansion at existing or new sites.

Growing Businesses

For companies planning to add new capacity, the talent portion of the equation must be well thought-out, from headcount planning through labor market assessment and on to actual hiring. In essence, site selection now demands the crafting of an HR success blueprint.

Blueprint designs begin (i.e., the first step) with defining the new facility’s headcount requirement, both year one and for the foreseeable future. This embraces several layers: skill mix; proportion of entry-level (qualified to learn process/technology) vs. experienced (either in the function and/or industry); demographic profile of the ideal new hire (which should drive the identification/evaluation of potential metro areas, communities, commute sheds, and sites); maximum headcount and time to reach that level; training requirements; desirability of locating in areas with a concentration of similar companies; acceptable compensation structure including pay for performance; flexibility in HR practices, etc. In addition, gauging how changes in technology will affect future hiring requirements (including upskilling) is important.

Upfront planning will shape outcome of any site selection exercise. For instance, the mix and scale of experienced talent vs. qualified entry-level will dictate the type of labor market best suited for the operation in question.

Eliminating Areas

Building on the delineation of parameters such as those enumerated above, a series of metrics should be established to sequentially eliminate areas failing to pass the test on critical mass, cost, talent pipeline, etc. One metric example would be that for every electronics technician required, a metro area should have a ratio of 25:1. That is, headcount pool in that occupation for every new hire.

Once qualified locations are targeted, empirical research must be undertaken. This includes interviews with comparable employers and other organizations (e.g., education, training, staffing agencies, etc.) It’s important to thoroughly assess current/emerging dynamics shaping demand/supply/cost. Subsequently you must define the optimal labor submarkets (where in a metro area). Subsequently one must ascertain how a specific site would enhance ability to recruit/retain a best of class workforce.

Once operational, it is incumbent for the company to become an integral part of the local/regional workforce development ecosystem. Importantly, this includes collaborative training (companies with similar HR needs), customized training (for a specific skillset). Also: apprenticeship, internships, and helping to promote the social/economic value of technical careers. Of course, taking steps to ensure recognition of a high-quality brand will be paramount.

In future blogs we will delve into metrics, empirical investigation, and post site selection involvement in the workforce ecosystem.

A parting thought:

Successful site selection is first and foremost an “HR Deal”. The real estate deal is important for physical operation (e.g., infrastructure). If real estate does not optimize attainment of HR objectives then future viability of the subject business could be problematic.

 

About WDGC HR Location Strategy Services

Businesses seek new locations for myriad reasons and the drivers are often multi-faceted. These drivers must be clearly understood and prioritized by the combined Client and WDGC Project Team to ensure alignment on project objectives. Learn More. 

 

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