It’s no surprise the principles of supply and demand also apply to skilled workers. In a competitive labor market, where we find ourselves today, there is a high demand for talent and a limited pool of qualified and available candidates. While not at the magnitude of The Great Depression and associated Labor Unrest of the 1930’s, or the Steel Strike of 1959, we have seen some unprecedented labor market trends following the COVID-19 pandemic. Indeed wrote a nice 2023 review that’s worth reading. While these trends have exerted a profound influence on business’ financial operations, the struggles are often matched with some unintended benefits.
As demand for skilled workers intensifies, companies find themselves in a bidding war to attract and retain top talent. Of course, our business brains immediately focus on the associated rising costs of higher wages, increased employee benefits, and additional perks. Not to mention the staff time and financial outlay of recruiting process revisions, advertising, hiring platforms, and employee referral programs. While these mounting operational expenses will impact profit margins, it is important to stay strategically focused with measurable [SMART] goals and deploy Lean thinking/process improvement to capitalize on the investment. For example, as recruitment practice and process streamlines, candidate experience improves, impacting key metrics like “offer-to-accept ratio” and “first-90-day retention rates”.
A competitive labor market can also stimulate innovation and productivity. Employers facing scarcity in talent are motivated to invest in technologies (like AI), automate processes, and foster a culture of innovation to optimize workforce efficiency. These strategic initiatives are initially costly but can yield long-term financial benefits through increased productivity and market competitiveness. Take for example, www.nccareercoast.com, which was a result of the Wilmington (NC) Chamber of Commerce and employers’ work to attract skilled talent to the newly-tagged, “Career Coast”. The collaborative effort resulted in an innovative attraction campaign. Led by a world-renowned advertising research agency, local hiring professionals are now equipped with a new website that is a “kitchen sink” that addresses what new-to-mid career professionals want to know with respect to living and working on the Southeast NC coast.
For employees, a competitive labor market can be financially rewarding. As companies vie for skilled individuals, employees often see an uptick in wages and benefits. Skilled workers find themselves in a position to negotiate better compensation packages and improved perks, enhancing their financial stability. Additionally, quality of life benefits arise as companies are offering flexible work arrangements and innovative employee support benefit programs. A competitive labor market can also create numerous career advancement prospects. Companies, aiming to attract and retain top talent, offer professional development programs, training initiatives, and career growth opportunities. This enables employees to upskill or reskill, potentially leading to higher-paying positions and increased earning potential. These benefits contribute to improved employee satisfaction and overall well-being, ultimately, enhancing productivity.
The wider economic implications of a competitive labor market are, well, inflationary with increased operational costs driving higher prices for goods and services. On the flip side, a competitive labor market can stimulate productivity gains as companies are forced to innovate and optimize efficiency. This heightened productivity can contribute positively to economic growth, creating a more competitive and resilient economy. In a nutshell, a competitive labor market, while it poses financial and accommodation challenges for employers, it fosters innovation, improves career prospects, and has the potential to result in economic growth.
So why is Leath HR Group writing about economics? Well, we’re more than HR Consultants, we’re strategic HR business partners who have a finger on the pulse of what top talent is demanding in this competitive landscape. Not only do we know what the workforce is looking for, we understand HR industry best practices for companies looking to stay competitive. We’re experts in helping you understand your workforce, tailor innovative benefit offerings, and develop overall business strategies that will:
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