March 1, 2008

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Weathering the Perfect Storm

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Weathering the Perfect Storm

Utah's Tight Job Market Creates Turbulent Times for Needy Employers

Carolyn Campbell

March 1, 2008

In 2007, Utah Transit Authority (UTA) experienced a shortage of 80 bus drivers. “We weren’t getting enough applicants to fill the jobs to run our ski service,” says Nancy Malecker, senior human resources officer. “We started in May and were finally able to fully staff for winter in late October. It took a great deal of effort on everyone’s part.” UTA improved the job’s appeal by raising the hourly training wage from $10 to $11 and offering two days off per week. The company was also short 30 mechanics. “We have worked hard to build community partnerships with colleges that graduate people in technical skills trades, but companies need to continue to be innovative and creative to attract qualified candidates,” says Malecker. “We had shortages in the past, but never to the extent that we did this year.” UTA’s experience illustrates Utah’s “perfect storm” – a combination of influences that account for the difficulty Utah’s employers are having filling their ranks, according to Monica Whalen, president and CEO of The Employer’s Council, an employer association of 500 companies. One such influence is the state’s unprecedented job growth in the last two years. Utah currently leads the nation in job growth at 3.6 percent, says Jason Perry, executive director of the Governor’s Office of Economic Development. He adds that 44,800 new jobs were added this past year alone, an increase of 3,700 jobs each month. “While the state of Utah accounts for less than 1 percent of the U.S. population, we are the site of 3.4 percent of all new jobs created in the United States. There are more jobs being created here than anywhere else. We have more talent coming to the state than we’ve had in the past,” says Perry. The unprecedented number of new jobs is combined with a record low unemployment rate of 3.2 percent during the last year along with an aging workforce and tightening immigration controls that include a renewed focus on worksite enforcement. Whalen feels that these elements translate to an extremely tight job market which creates a challenge for employers to find qualified job candidates, particularly in engineering, technical, service and manufacturing positions. “Manufacturing is a core industry for Utah’s economy and our manufacturers continue to be extremely frustrated in attempts to find qualified workers,” says Whalen. Perry adds that there are currently more engineering jobs available than there are people to fill them. The shortage also extends to nurses and pharmacists. When Petersen, Inc., an Ogden steel fabrication company, couldn’t find enough qualified workers in Utah, the company built a new shop in Pocatello, Idaho, to employ 250 people. “We absolutely love Ogden and Farr West, but being so busy with expansion opportunities, we’re not able to find enough welders and machinists locally, so we decided to look 140 miles north,” said Rob Despain, Petersen vice president of development. The Petersen relocation is “hard evidence that Utah’s ‘perfect storm’ job market is actually hurting us in a sense, when we have home-based businesses moving out of state,” says Whalen. Reaching Out Clark Caras, director of marketing for the Governor’s Office of Economic Development spearheads Utahworksforyou.com, the governor’s effort to proactively recruit talent. “We try, from an exposure and advertising standpoint, to show that we have jobs available,” says Perry. During December 2007, Caras arranged for 30,000 hotel rooms to includepostcards on the pillows to invite holiday visitors to apply for local jobs. “We are very proactive in getting local companies to share resumes and post jobs. We sent off an e-mail blast to 100,000 former BYU and U of U alumni. Thirteen thousand returned their resumes. Companies can log onto the Website, enter a profile and link to those alumni resumes,” says Caras, adding that the GOED will soon add information from other higher institutions. “It’s worthy to point out that we are not overlooking any other job sector, that people may register at jobs.utah.gov.” Perry explains that Utah’s job growth and low unemployment is shifting migration patterns, resulting in more people moving here. “Our population growth rate puts us third in the nation. People are moving to the state to take those jobs. Some we would have lost to other states are staying here.” He adds that along with more talent coming to Utah, people who currently work here are finding more advancement opportunities. “If you are underemployed, these new jobs make it possible for you to advance, possibly for the first time in years.” Higher Expectations Utah’s tight job market has led to higher salaries, particularly at the entry wage level for unskilled workers, says Whalen. “It is nearly impossible to hire someone for $7 an hour. Not every high school student can plan to make $9 an hour, but attracting people by paying $7 is a tough proposition.” Whalen feels it is shortsighted to focus only on the unemployment rate, which tracks people without a job, but doesn’t provide information about people who switch jobs – leaving one company for another. She feels that retention is equally worthy of an employer’s attention because “all the effort and time you put into recruiting and hiring is lost when you fail to retain an employee. We should place as much focus and effort on employee retention as we do on hiring.” For decades, studies showed that relationship indicators were more important to job satisfaction, Whalen says, and thus to employee retention, than higher pay. Work aspects such as recognition, communication and a good supervisor were paramount. Yet according to the SHRM (Society for Human Resource Management) 2006 Job Satisfaction Report, this year’s top five contributors are compensation, benefits, job security, work/life balance, and feeling safe in the work environment, in that order, says Whalen. “For the first time, money became the number one indicator of job satisfaction. Employers need to face the fact that employees are putting more emphasis on competitive pay and good benefits in making the decision whether to stay or go.” Seventy percent of the surveyed employees indicated that compensation was very important to them, making it the most important of the 21 aspects listed in the survey. Whalen adds that compensation was ranked fifth in the 2002 SHRM survey, when it “crept onto the list” as a satisfaction indicator. Along with money, health insurance is a crucial, highly ranked benefit, says Whalen. The Employee Benefit Research Institute (EBRI) released a study in November 2006, indicating that 75 percent of employees with employment-based health benefits said they would prefer $6,700 in employment-based coverage to an additional $6,700 in taxable income. When those preferring to keep their coverage are asked how much they would need in additional taxable income to willingly give those benefits, the response was $11,000. Whalen says employers need to “think beyond what they can do with their compensation practices and focus on getting creative with the benefits they provide. The value of the job is more than just money.” Shane Loftus, business consultant with Innovative Staffing, a South Jordan-based professional personnel management services company, says that the local economy’s current status causes businesses to spend more time and energy in retaining their staff, rather than the old “let them go and rehire” method. “Some of the most successful retention strategies that we have seen include employee benefits offerings, profit sharing, flexibility in the work schedule, the option to telecommute, a company-wide employee recognition program, job rotation within their organization and daycare flexibility. It’s evident that to attract and retain good people, they must feel like the company has their family’s interests at heart as well.” The Big Picture Despite the current need for more employees, Mark Knold, senior economist with the Department of Workforce Services, feels that the forces in Utah’s perfect storm may be subsiding. He predicts that although Utah currently leads the nation in job growth, the state will probably not stay in first place much longer. “We won’t fall too far behind considering that the U.S. economy is weakening, which means other state economies are also weakening.” Locally, he says, “the air is being taken out of the Utah economy, and it seems to be coming out fast. The construction industry is the rapid deflator.” He explains that a good portion of Utah’s housing boom was predicated upon easy credit and when that ease was withdrawn, the housing market shut down, and “it will stay down until the mortgage situation plays out and prices come back to reality.” As a consequence of the national environment, where various economic factors seem to have the economy flirting with recession, Knold says, “Businesses seem to be getting cautious. They will have a tendency to sit back and not hire while this plays out with time.” Knold already sees this happening in the temporary help industry, which he has used in the past as a barometer of future overall economic activity. “When employment in that industry surges, a general Utah economy surge follows about six months later. Does it also work in reverse? We’re about to find out, as this industry went into a contraction mode starting in the third quarter of 2007.” He predicts that Utah employers may find some relief from their struggles and find qualified and competent workers in 2008. Knold concludes that despite his somewhat pessimistic picture of the direction of the Utah economy, Utah’s employment growth and unemployment rate will still be better performers than the national average. Loftus says that overall, on the national front, with its family atmosphere, healthy lifestyle, leading universities and overall worker quality, businesses still view Utah as a place to grow and expand. “With the uniqueness of our state and its workforce compared to surrounding states or even that nationally as a whole, we see Utah continuing to be great place to work as well as a great place to do business.” Increasing Employees’ Job Satisfaction What can employers do to increase their odds of retaining high performers? Consider the following elements of job satisfaction and implement those that are feasible for the organization. Communication: Employees tend to be more satisfied with their jobs when management communicates openly and honestly with them. Responsibility: Employees feel respected when supervisors resist micromanaging tasks and projects. Sense of being valued: Employees like to know they are valued for the work they do. Consider adding simple, low-cost recognition programs. Benefits: What benefits can you offer your employees? While implementing efforts to control the rising cost of health insurance, companies may want to consider increasing the amount of vacation and/or personal days to their current offerings. Work-life balance: Consider making concessions to help employees with their busy lives by instituting flex time or compressed work schedules to allow additional days off. Career growth: Help employees to further their careers with your organization by implementing mentoring and/or career development programs. Work environment: Foster a healthy, pleasant work environment by providing social opportunities and health management programs at work. Job structure: As much as possible, structure jobs to allow employees variety, autonomy and the opportunity to see their work through from start to finish. Source: The Employer’s Council Hiring in a Tight Market Getting the right people into the right jobs is one of a manager’s most crucial tasks. Low unemployment and plenty of jobs create problems in two ways. Competition for the “good” employees goes up, plus the potential for job transferability of those already employed increases. Here are some tips for employers to deal with this dilemma: 1. Don’t panic. Resist the very normal temptation to lower the standards or up the ante for new hires. Resist the “warm body” syndrome. 2. View the situation as an opportunity to improve your recruiting techniques. What has worked best in the past? What changes could be made to do things better? 3. Polish your interviewing skills and reference checking methods. Take the extra time necessary to find the right people. The effort will help avoid having to hire a replacement next week or month. Put thought into hiring the right people in the first place, getting them started on the right foot and treating them decently. 4. Get the word out to civic, religious and neighborhood groups that you are interested in having qualified candidates apply for work. There are always people not working at the moment who are thinking about returning or going to work. There are also those currently employed who want to change jobs. A nudge from a neighbor, friend or advisor may be all it takes to get the ball rolling in your direction. 5. Tailor jobs or shifts to make it easy for students, parents with young children, or care givers with elderly parents to work at your firm. Can you arrange or rearrange work times to better fit the scheduling needs of today’s busy families? Or is the person interested in moonlighting on a second job? 6. Let customers or suppliers know you are in the market. Place a small, but easily readable sign in your shipping, receiving and customer areas. Let your employees know you want job applicants. Put a notice on the bulletin board or send around a simple memo. 7. Alert your receptionist and telephone operator to your efforts. Applying for a job is hard for applicants. Make sure you make it as easy and comfortable as possible. 8. Be positive about your company and what you are doing. People like to go with a winner. Don’t be negative and fretful because you can’t seem to get or keep enough of the right people. Stay on the bright side, especially with your own people. 9. Respect and relate to your people as individuals. Remember that recognition and feeling appreciated are two of the most critical factors for employee satisfaction. Source: The Employer’s Council
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