The past two years have been a roller-coaster ride for aerospace manufacturing. So-called predictable economic indicators can no longer be trusted to accurately forecast business decisions. This is reflected in today’s employee shortage.
It seems like overnight we’ve found ourselves in a talent “crisis.” The more skilled the talent, the greater the scarcity. This has created a vicious supply and demand game of wage negotiation that positions recruitment and retention as our top business priorities. Each week we play “employee-whack-a-mole,” as our best employees bring us the latest competitor’s letter to seek a counteroffer — and we usually pay it.
Last year, employers scrambled to offer mid-year raises to retain employees at what we thought to be the crest of the Great Resignation. A year later, wages are still rising, talent is scarcer, and employees are still leaving at more than four million resignations per month. The Great Resignation didn’t slow down.
Despite these challenges, there are some employers who are winning the war for talent — even thriving — by understanding a few things that others are still slow to adopt.
This Cycle is Different
Many executives say they have “seen this before.” The winners know this is different; today’s employees have different work ethics, attitudes, and priorities. They are motivated differently, care about different things, and — to be honest — hold all the cards. When inflation is up, buying is down, but unemployment is at record lows while job creation is at record highs; savvy companies recognize that the old models fly out the window.
We Will Never Have Enough Employees
Why? We have had fewer babies starting 25 years ago; retirements accelerated, millions left for the gig economy, and we are just warming up. We haven’t even mentioned shifting the attention of students away from manufacturing. By workforce population alone, this is a permanent problem. We will never have enough workers in our lifetime to fill the gaps to work the same way as in the past.
A Recession Won’t Fix It
Senior executives tell me they are not concerned about wages. They are certain that a “cooling economy” will fix things. With layoffs from big companies, they know we’ll have enough labor to meet our needs.
The ones laid off in a cooling economy are not the ones you need. A year ago, the same leaders were certain their needs would be filled as unemployment money ran out. That didn’t work. Those workers were not the skilled labor they were waiting on — just like the ones who might be laid off this time. Your skilled labor is currently working for someone else making premium wages. They won’t be laid off.
It’s Money — and More than Money
Money is flying everywhere. Employers who are not competitive in their base compensation will lose, but money alone is not enough. People will stay if they are not making the most money if the other terms and conditions meet their needs. However, if the base compensation does not cover the increased rent, gas, food, and daycare, workers must find something that will.
Money ranks number three on the list of why employees leave. Number one is the manager. To the employee, the manager IS the company. If the manager is disrespectful, doesn’t give feedback, or prevents employee growth, employees will leave. Culture is number two — the pay may be good, but if the culture is bad, it’s not worth it. We’ve had people leave for more money, then call us within a few days to ask for their job back. The grass is not always as green as the money offered.
Retention Is Your Number One Priority
In sales, we know that it’s easier to keep a customer than to find a new one. The same goes for employees. It retains your investment, maintains your production capacity, and avoids the loss of your primary assets. Besides the vacancy in production, remember that it can take a year or longer to return that position up to full proficiency. On average, turnover costs between .5-2x the average annual salary of an employee. What is the cost to retain them?
A leader’s greatest strength is self-awareness, while their greatest weakness is denial. Your success lies in recognizing that today’s situation is different, seeing it for what it is, and taking action to retain and recruit the best.
