According to the Confederation of British Industry (CBI), up to three-quarters of UK companies have been affected by labour shortages in the last 12 months. What’s more, 46% of those impacted are now unable to meet demand, impeding their growth potential. [1]
For many UK businesses, staff shortages can prove a nightmare scenario. Employee shortfalls can slow the productivity and efficiency of your business, as well as restrict your ability to meet demand. In the most extreme of circumstances, severe staff shortages can be fatal to a business.
In this article, we'll explore potential strategies to prevent and manage staff shortages.
What can lead to staff shortages?
There can be a number of reasons for staff shortages, such as the reduction in EU labour and shifting trends around ways of working. The Gatsby Foundation survey found that 81% of UK businesses are struggling to plug gaps in their workforce caused by the post-Covid ‘great resignation’ [2].
"People now have a lot of choices, and there is less stigma associated with job hopping compared to 10 years ago," says Shona Marshall, senior associate consultant at business consultancy Connect Three.
Some industries struggle to recruit candidates citing skills shortages, and other industries grapple with a lack of appetite for the jobs they're offering. Rachael Flanagan, founder of Mrs. Buckét, a company that provides commercial cleaning services across Wales and the West of England, says that industries like cleaning can have a poor reputation, making it hard to attract and retain staff.
Impact of staff shortages on cash flow
A high turnover of people not only impacts the culture of your business, but directly affects your cash flow in a number of ways.
“For starters, you might not be able to meet the demand to deliver products and services to your customers, which can hit your revenues,” says Marshall.
“Meeting that demand will have costs, whether that’s hiring temporary staff or investing in upskilling existing employees.”
How to manage staff shortages in your business
Whether your issues are with retention or recruitment, there are ways to address them. Here are a range of ways to manage and prevent staff shortages.
Invest in upskilling existing employees
A recent survey of employees by McKinsey (covering a number of markets, including the UK) revealed that the top reason people gave for leaving their previous job was a lack of career development and advancement (41%) [3].
Mrs. Buckét has created a cleaning academy to help staff to develop new skills, not only in cleaning, but also management skills that will help them progress through the company. "Career progression is central to what we do," says Flanagan. "We’re very passionate about growing the business from within and ensuring that people are always learning."
Marshall recommends holding regular one-to-one sessions between managers and team members to carry out ‘stay interviews'. Using similar principles as an exit interview, which is conducted once an employee has decided to leave, stay interviews are an opportunity to find out why someone might leave in the future, and take steps that encourage them to stay.
"You might ask someone what skills they’d like to develop, what skills they’d like to make better use of, or what future role they are working towards," says Marshall. "That helps people feel valued and invested in the future of the business."
Incentivise and reward your employees
In a competitive job market, it’s tempting to think that if you can pay higher salaries, then you can buy your way out of future problems. This is unlikely to be the solution, says Marshall. “Your salary costs increase, then competitors will match those increases, and you’re back to square one,” she says.
“Instead, you need to use all that information you’ve gathered from stay interviews and data and build a company where people want to work and want to stay in position.”
Mrs. Buckét has created a number of different methods of recognising and rewarding staff. The company runs an annual 'top of the mops' awards ceremony, pays referral bonuses, and offers flexible working to cater to individual circumstances.
If you choose to reward your staff with a financial incentive, American Express Membership Rewards® points can help to make this feel more personal. Each £1 spent on an eligible Card earns 1 Membership Rewards point, which can be redeemed against a wide range of employee perks that allow you to demonstrate your appreciation in a more individual way¹.
Keep staff motivated
The third and fourth most popular reasons respondents to the McKinsey survey gave for leaving their previous job were 'uncaring and uninspiring leaders' (34%) and 'lack of meaningful work' (31%).
Companies should try and take steps to help staff feel involved in the company’s purpose. “We talk a lot about KPIs in the business and I recently read an article that said KPI can also stand for 'Keep People Interested, Informed, Involved, and Inspired'. I think that is enormously important,” Marshall says.
Revisit your recruitment criteria
If you're struggling to find new employees, it’s time to challenge your hiring assumptions, says Marshall. “If you’ve always asked for a certain set of experiences or qualifications, are those necessary, or just what you’ve always done?” she says.
“Consider whether you could hire people with less experience, and train them, or look for people in other sectors with transferable skills. The key is not to keep fishing in the same pond if you aren’t finding the right people.”
How to prevent staff shortages in the future
Plan and forecast staffing levels
Effective workforce planning and management can help minimise the risk of future staff shortages.
Mrs. Buckét forecasts staff demand 18 months into the future, says Flanagan, who also keeps a close eye on a number of metrics tied to HR. “We are measuring things like net promoter score (NPS), time to hire, number of vacancies and engagement," says Flanagan. "It’s important to us that we invest in our workforce and understand what they will need to be engaged and to feel part of our community and our purpose going forward.”
It’s also important to consider your broader business plans. Are you planning to launch a new product or add a new distribution channel next year? Are you experiencing a rapid rate of growth that will require new staff?
Look out for 'red flags'
Marshall also advises keeping an eye out for ‘red flags’ that might be observed in a business before a staff shortage becomes apparent. For example, are you seeing a lack of discretionary effort? Are people avoiding spending time with colleagues at social events? Are voluntary training and development events poorly attended?
“These are red flags that show people are giving the bare minimum to the job, and are more likely to leave, so you need to be proactive and take action as soon as you see those signs,” she says.
1. Membership Rewards points are earned on every full £1 spent and charged, per transaction. Terms and conditions apply.
Sources:
[1] CBI, Three quarters of UK companies hit by staff shortages in the last 12 months
[2] Gatsby Foundation, The Education Landscape: A Guide for Employers
