For today’s essential businesses, the skilled labor shortage threatens to withhold success and impede growth. Few things are more frustrating than mapping a strategy and identifying the capabilities to get ahead, only to fail to get the right workers on the job.
The skilled labor shortage is a subset of the larger labor shortage. At any given time, the job shortage in manufacturing, distribution, and retail industries totals into the millions, numbers that show no signs of decreasing this decade.
Issues of that size can feel overwhelming to tackle all at once. Instead, companies should focus on more specific and manageable areas, like the shortage of skilled workers, so that they can discover opportunities to build a better workforce for today and tomorrow.
How the Skilled Labor Shortage Affects Business
With all the discussion around the skilled labor shortage, it can be useful to clarify what, exactly, skilled labor means. In general, skilled labor refers to work that involves specialized skills. To develop these skills, people start by enrolling in technical education and training programs.
Once they get a job, these folks begin to improve their skills and build foundational knowledge that helps them adapt to different work situations. A skilled worker can leverage their technical and strategic expertise to flex across roles, departments, and industries, which helps companies keep pace with rapidly shifting customer demands and industry conditions.
The size and complexity of the global business ecosystem puts a premium on skilled labor, so when it’s unavailable, your bottom line can suffer. For instance, in one recent survey, 90% of specialty contractors in the mechanical, electrical, plumbing, steel, and concrete fields reported that their projects have been negatively affected by a shortage of skilled trade workers.1
This is supported by reports showing the skilled labor shortage as high as 45%.2 Even more worrying, industry experts expect 33% of the specialty contractor workforce to retire in the next five years. This is similar to how thousands of baby boomers are retiring every day, taking their deep knowledge and skills with them.3
But if you approach the situation strategically, you can gain an advantage and minimize the effects of the skilled labor shortage—and accelerate into the future.
Ready to get started? Here are four steps to take.
Step 1: Upgrade Your Technology
Skilled labor usually involves working with technology, and having cutting-edge tech solutions is a baseline for staying competitive. No matter your industry, company, team, or role, you want an enterprise resource planning (ERP) system that integrates all aspects of your business, from orders and production to customers, sales, marketing, and more.
When everything is connected, all your business information is centralized. This allows you to become a proactive data-driven organization that can diagnosis and resolve issues before they become problems. Modern ERP systems also give you the power of artificial intelligence (AI) to spot patterns in your data, generate actionable insights, and link them to business goals.
Today’s ERP is advanced technology, especially when it’s deployed in the cloud. Many legacy ERP systems are still deployed on-premises, which means they’re slower, less flexible, and less secure than cloud ERP. They also take more resources to manage, which leaves your IT team with less time to work on initiatives focused on your business.
Cloud ERP creates a dynamic and flexible business environment, where you can quickly respond to disruptions and adapt to changing customer needs. Cloud ERP also enables automation, which can cut down on manual tasks, reduce error rates, and allow you to do more work with less people.
Skilled workers, especially the younger generations critical to the future, want to work with the best technology. As the foundation of your business, cloud ERP makes that possible.
Step 2: Enable Remote Operations
Employees in skill-based roles now expect a degree of remote work and flexible scheduling. One reason they want to work with advanced technology is that it helps them stay agile in balancing their professional, personal, and family needs.
Cloud ERP directly gives your business the ability to operate remotely with speed and security. It gives you the technical capabilities to get employees the devices and connection they need to work from anywhere, at any time.
A remote operation isn’t about eliminating job sites. The essential businesses that make, move, and sell the things we all need will always have an on-site work component. But those jobs are increasingly being done in partnership with advanced technology, whether it’s a mobile device that increases shop floor mobility or a real-time dashboard that shows managers critical information.
The flexibility and satisfaction that comes with working with more advanced tech also makes job openings at your business more attractive. Promote these attributes in job descriptions, on your website, and at job fairs. Your business will also be more productive just by giving employees the tech, time, and space to complete their tasks.
Step 3: Invest in Workforce Training
When workers are well trained, they are more likely to be productive and satisfied. But that takes investment. Making a concerted organizational effort to offer training and professional development can be key to employee retention.
Cloud ERP doesn’t just help you manage your products and services; it can also help you manage your human resources. It has tools to help your employees personally and professionally. They can take courses, watch webinars, set performance goals, and browse internal opportunities. Their engagement gives you data, which you can mine for insights about building a better workplace.
Learning, development, and training for the modern skilled workforce is more than just an email and instruction manual about something new. It’s about encouraging employees to find new opportunities for growth and being a part of an organization that is invested in them. It’s about creating a culture of collaboration.
Step 4: Develop Talent Pipelines
A remote-enabled workforce powered by cloud ERP can help you attract skilled workers and develop talent pipelines that can withstand the labor crunch. Here are a few ways to do it:
Create Dynamic Hiring Practices
Human capital management solutions for cloud ERP automate administrative tasks, allowing you to focus on finding great candidates, not filling out paperwork.
Partner With Local Schools and Organizations
Although there’s been a shortage of skilled trade workers for decades, there are plenty of ways to partner with local colleges and trade schools. By offering internships to students and pathways to a job, you can find skilled workers and help them develop into committed employees.
Celebrate Your Industry
Holidays are great reasons to showcase your business and technology. For manufacturers, Manufacturing Day in early October kicks off a monthlong industry celebration, while Small Business Saturday, at the end of November, is dedicated to small, local retailers, where 54% of consumers shop at least once a week.4
4 Industries Experiencing a Skilled Labor Shortage
While the skilled labor shortage affects many industries, within each one there is a nuanced conversation. Here are some of those specifics for four essential industries.
Manufacturing
The manufacturing labor shortage is significant, with estimates that 2.1 million industry jobs could go unfulfilled by 2030.5 Among the culprits are an older workforce, outdated cultural perceptions, and high turnover, especially related to seasonal work.
To offset challenges, many manufacturers use modular cloud ERP solutions to integrate their factory systems. For instance, a manufacturing execution system (MES) is functionality that can be added to help streamline operations, automate workflows, reduce interruptions, and keep skilled workers focused on production.
Distribution
For distributors facing the same labor challenges as manufacturers, technological innovation is key. If you’re a leader in leveraging intelligent robots, it helps to also show videos of your technology to job candidates in a streamlined application process.
Building Supply
According to McKinsey, there are roughly 440,000 job openings in construction in the United States, and the situation is likely to worsen.6 To stay competitive, building supply and lumber companies need to do stay on the forefront of technology.
When it comes to warehouse management, the best systems help you optimize your staff by providing real-time inventory tracking. Back-office tasks like accounts payable and receivable, office management, and sales can be done remotely with cloud ERP solutions. This allows you to find the best candidates for the job, even if they don’t live near your facility.
Retail
According to Goldman Sachs, 45% of small businesses say that finding and retaining qualified employees is their toughest job, even more than high inflation and creaky supply chains.7
Retail is a fast-paced industry susceptible to turnover, so quick and effective onboarding is critical. Retail management software gives you a data-driven approach to employee scheduling, while inventory management solutions help your business meet shifting customer demand.
Sources
1 “Dodge/Procore Report: Labor Shortage, Supply Chain and Rework Biggest Obstacles for Specialty Contractors.” Engineering New-Record, October 20, 2022
2 “NABE Survey Panel Indicates Further Slowing of U.S. Economy As Sales Growth Decelerates and Profit Margins Contract.” NABE, October 2022
3 “The pace of Boomer retirements has accelerated in the past year.” Pew Research Center, November 9, 2020
4 “2022 ICSC Small Business Consumer Survey Results.” ICSC, May 2, 2022
5 “2.1 Million Manufacturing Jobs Could Go Unfilled by 2030.” NAM, May 4, 2021
6 “Will a labor crunch derail plans to upgrade US infrastructure?” McKinsey, October 17, 2022
7 “Survey: From Bad to Worse.” Goldman Sachs, April 25, 2022
