Since the baby boomers, there simply haven’t been enough births to keep up with every retirement. As a result, small businesses are struggling to find qualified employees for every open position. By adopting a few tips and strategies, you can improve your company’s ability to attract and retain top talent. 

Why There Is a Labor Shortage 

After the baby boomers were born, subsequent generations simply didn’t have as many children. Then, the baby boomers started turning 65 in 2011. Now, about 10,000 baby boomers are retiring each day. 

There was a ratio of five workers per retiree in 1960. Today, there are just 2.8 workers per retiree. Returning to the previous ratio would require a massive influx in births. Even supposing this influx occurred, it would take years to educate and train a new generation. 

For a long time, society thought there might be ways to avoid a labor shortage. In a recent podcast with Mission to Grow, Anita Lettink, partner and founder at HRTechRadar, discussed this attitude. “There were high hopes that technology would make us more efficient and more effective. And therefore, we would not notice this as much. Here we are in 2024, and we have more technology and more automated technology, but instead of eliminating work, it has also created a lot of new jobs and extra work.”

Top 10 Tips for Managing a Labor Shortage

While technology may have created as many jobs as it saved, it is one potential solution to the labor shortage. From outsourcing tasks to changing your job listings, there are a few important changes you can make to manage the labor shortage as effortlessly as possible. 

1. Outsource Tasks 

One of the first things you can do is outsource your employees’ tasks. For example, outsourcing your HR and payroll services means you don’t have to set up an HR department at your company.

When you outsource tasks, you’re able to get those tasks performed by experts and people who specialize in doing those tasks. Your business can scale up or down as needed without having to hire workers or lay anyone off. 

While each company is different, the following are examples of tasks that could be outsourced.

• Administrative tasks 
• Bookkeeping and accounting
• HR and payroll
• Marketing 
• Lead generation 
• Customer service 
• Shipping and logistics

2. Think About Automation, AI, Generative AI, and Other Technology

Automation, generative AI, and AI can help your business in different ways. While these technologies aren’t enough to replace an employee, they can replace some of the tasks the employee does. 

For instance, some teacher training programs are now teaching educators how to use AI to help with lesson planning. AI can also assist with outlining presentations, marketing materials, and business proposals. Meanwhile, Microsoft, BML Generation, All Chemical, and other top companies are using automation for scanning documents, invoice processing, order generation, and more.

3. Support Each Worker’s Career Journey 

When someone is offered a new job, they’ll talk to their spouse about it, discuss the pay, and decide if they want the position. Salary and benefits are major factors in determining if they take the job or not. On day one, this situation changes because the worker starts wanting to know what will come next and how this job can benefit their future. 

“In the first couple of weeks, people learn a lot, but once they have acquired the skillset that they need to fulfill their role–and depending on what you have them do, that can take, like a couple of days to a couple of weeks, maybe sometimes for like a couple of months–but then they start to think about what comes next,” says Lettink. 

The solution is to start training workers early on for new skills and additional roles. Support their career journey. Once you find out what the employee’s goals are, you can offer certifications, training programs, and other forms of training. People don’t always complete extended training programs, but shorter, on-demand options are an effective option that can be used whenever workers have time. 

4. Provide Clear Advancement Possibilities 

Top performers want to know that they have a future at your organization. Even if you can’t provide an advancement possibility today, discuss each worker’s long-term goals. Then, let them know what it will take to reach the next level in their career. 

Even when you’re dealing with a position that doesn’t have an advancement option, such as the chief financial officer, you should still talk to them about their advancement possibilities. Provide them with the training they need to reach their future goals and let them know that you plan on giving them the best recommendation possible. When top performers know that you are genuinely trying to help them achieve their future goals, they’ll work harder and stay longer before they move on.

5. Recognize Top Performers 

Employee recognition is important for improving employee morale and boosting retention rates. Unlike higher salaries and impressive benefits, recognition costs very little to implement. Thank-you notes, gift cards, company lunches, and employee of the month awards can help you motivate workers and show your appreciation. Plus, recognition has been shown to increase loyalty and productivity.

6. Adjust Your Job Listings

Some job listings have a ridiculously long list of requirements. Many of these requirements are simply unnecessary for the future hire to do their job well, and they deter potential applicants. If you remove a few requirements and focus on the necessities, you’ll have an easier time finding applicants.

7. Be Creative 

To win the war for talent, it helps to be creative. For instance, switching a position’s schedule to 9 to 3 would attract carers and parents who would otherwise struggle to find a job that suits their skills. Similarly, you could make the position fully or partially remote.

8. Fractionalize Jobs

As a part of being more creative with your HR approach, you can try fractionalizing jobs. Instead of having several people handle the phones, bookkeeping, client relationships, and administrative work, you could break those tasks down. Some of the tasks, such as administrative work and answering the phone, could be outsourced to a different company or to technology. 

Even if you decide that you want your employees to handle all of the work, you may be able to save on labor and recruitment costs if you change the way your jobs are performed. Instead of having your highly skilled workers handling low-skilled tasks, you can save money by giving a single employee those low-skilled tasks. Then, the high-skilled workers can use their time more efficiently, or you will be able to hire fewer highly skilled employees.

9. Assign Stretch Assignments

Stretch assignments help workers learn, and they show you care about the worker’s future. These assignments are an easy development tool, but many companies aren’t using them. 

At Asure, we conducted a survey of 1,065 small businesses. In the survey, we found that only 35% of zero-growth and shrinking firms said they gave stretch assignments. However, 85% of fast-growth companies used stretch assignments.

10. Consider Compensation

While it isn’t an option for every company, it’s worth noting that increasing compensation is a potential way to solve a talent crisis. Pay and benefits are the top factors that draw employees to potential jobs. Even if your company can’t afford to give every employee a raise, you can offer more to workers who play key roles in your company’s management or innovation. 

Improve Your Company’s Talent Pool

Demographics aren’t going to change in the near term, so it’s time to start planning more effective strategies for winning the war for talent. When faced with a labor shortage, finding substitutes for labor, recognizing existing workers, and getting creative are just a few of the options that can help you manage a labor shortage. 

To learn more about attracting and retaining top talent, reach out to our small business HR and payroll experts today.