Labor Shortage For Decades! Get Used To Being Shorthanded.

[00:00:00.000] - Dan Paulson

Good morning, and welcome to Books and the biz. We are back again. I'm here with my good friend Rich. Rich, how are you doing?

[00:00:06.230] - Rich Veltre

I'm good. How are you?

[00:00:07.830] - Dan Paulson

I am doing excellent. I'm doing even better now that I'm talking to you. Hey, we're going to continue our trend on reviewing articles that I'm finding and that you're finding. We're breaking a trend here. This one is not a Wall Street Journal article. It is actually from Forbes. So we've got a new one here. But we came across this the other day, guys. And I think this is a telling sign and is something I have been going over with my clients and with people I meet on a regular basis because they all ask about the recession. They ask, well, why aren't more employees showing up? Why aren't we seeing more available? And the bottom line, as we'll talk about this article, is there just isn't enough. So in times past, we always had the situation where when the economy tightens up, it frees up more bodies. There's just more people in the marketplace because this company is downsized, they got to go somewhere. So here's the situation we're running into. I'm going to pull up this article for those who are listening. So again, this is a Forbes article. It is called, New Census projections showed tight US labor market for years.

[00:01:23.560] - Dan Paulson

I've been saying this for the last five years, Rich, that we just don't have enough bodies to do the work. And after the situation in 2020 through 2022, what I saw was a lot of people left the market. They just got out. They just said, you know what? My retirement funds are doing good. They're making money. I really don't need to put up with this BS anymore. And they left. Well, there went a lot of your talent out of the marketplace. So all these companies are also trying to figure out how to work in this new environment where a lot of people are working virtually, and they have these situations where they just don't have enough bodies to fill in. So if you will extend your gaze to the article, there's a nice graph here showing population change from ages 25 to 64. And this is again, recent Census Bureau projections, and it goes all the way back to the 1850s. And basically it projects out a couple of years, but it shows us where we're currently at in the marketplace. And if you're watching this video, you see right here, we are less than 5 million people that are entering the workforce.

[00:02:43.460] - Dan Paulson

Actually, it's probably closer to like 2 million people that are entering the workforce according to this. And it's not projected to improve much over the next 30 years. So we're about 2023 right now. By 2050, there's a slight bump up in between, but it's really not much higher than it is today. And what I hear from other stories in the media, how people are not having children now or they're holding off to really late, it's just extending that gap that we're seeing. So that's the breakdown of the article. Now here's what we need to talk about, each of us, is how does that impact the business? If there's not enough people coming in, what can you do? And the article goes into a number of different examples. They talk about retention, they talk about recruitment and different things like that. But let's touch on retention first. I don't know about you, but if there's a limited number of bodies that are working, and they are all currently employed, or at least a high percentage of them are employed, the only thing I can see doing is you have to steal from somebody else. Well, if you're stealing from somebody else, guess what somebody else is doing?

[00:04:05.180] - Dan Paulson

They are trying to steal from you. Now, I don't know what you've experienced in the finance world, but what I experience is, especially here in the Midwest, we all play Midwest nice. And of course, we don't want to take help from other people because we know the repercussions of that. It's a challenge.

[00:04:26.200] - Rich Veltre

It's a massive challenge. Unfortunately, I'm near New York and there is no Midwest Nights.

[00:04:32.890] - Dan Paulson

There's a cut your throat.

[00:04:35.020] - Rich Veltre

Yeah, well, I'm in Jersey, so yeah, there's a little bit of cut your throat. But New York area, I would tell you that it's definitely fast paced and it's definitely we want what we want. And New York is the money capital of the world. So money makes the world go round. Money makes people incentivized to do things.

[00:04:58.400] - Dan Paulson

There's also the cost of living factor that you have too.

[00:05:01.130] - Rich Veltre

True. So you get people who might not want to leave their position, but if somebody throws the right number in front of them, they have to think about it because like you said, the cost of living here is a different factor than it is in other parts of the country. You wind up where you're going to see someone who's going to try to steal your lunch because they're going to say, This person is really good. I want that person. What's it going to cost me? It doesn't always take that much if someone's motivation purely is financial. They see a good size paycheck change, they're going to have to think about it.

[00:05:40.730] - Dan Paulson

Well, statistics I've heard is to get somebody to move from a job they are currently satisfied with, not even elated about, just satisfied with still takes about 20 %. So if you're at $100,000, it takes about 120,000 in salary to get that person to jump ship.

[00:05:59.730] - Rich Veltre

Well, I do have one personal example of a person who was working for me and came to me and basically almost in tears because she was coming to me to tell me that she got an offer to go work somewhere else and she didn't want to take it. But there was no way I could match the offer dollar for dollar.

[00:06:25.740] - Rich Veltre

But.

[00:06:27.030] - Rich Veltre

I was able to get the offer... I was able to get an adjustment to her number that brought her probably within that 10 % statistic. I think it was pretty close to what you're saying you saw in statistics.

[00:06:43.620] - Rich Veltre

So.

[00:06:44.620] - Rich Veltre

She decided to stay and had to go through and understand, well, how did that work? I thought we lost. I thought we were just going to lose this person. She was really good. So to have her leave would have been a detriment. But we were able to find some ways to get her financially close. But I think the fact that she didn't leave really told me that it was because of company culture more so than it was for the dollars, because if it was purely on dollars, there was no way she would stay.

[00:07:17.780] - Dan Paulson

Yeah, I agree with you on that because I see it time and time again. Unfortunately, most companies want to compete on dollars. They just want to charge that, pay that high salary if they can afford to do so. But for most of the small to medium size companies, there's a limitation. As you pointed out with your situation, you can't just write the check and pay people whatever they want. There needs to be an additional factor in place to keep people happy with what they're doing. What I constantly see is, is this person plugged into a job that's a go-no-where position? Are they being held down more or less by management? Because let's face it, owners and managers typically want to plug somebody in a spot, and they want them to stay there forever, and then they get upset when people aren't motivated anymore and they don't want us to stick around or do that same task over and over and over again. If there is no career track, there is no growth, there is no opportunity, here's what you get. It really comes down to, again, that culture that you talk about. Culture starts at the top.

[00:08:26.070] - Dan Paulson

It's really about how you treat people and what your expectations are of them, and also understanding what their expectations are of you. And we have two generations right now that have been both brought up in a way different scenario than, say, you or I were. And there's that expectation for coaching. There's that expectation for mentorship and support that I don't see a lot of people getting.

[00:08:51.480] - Rich Veltre

Yeah. I have to admit that when I first got into my first jobs where I was considered leadership, I was a little bit more of a sink or swim type person. Give them the task and see if they could actually accomplish it and not really leaning over and watching over their shoulder. I thought that they have to show me a little bit more of they can do it. I don't think the new generations are receptive to that. I think they want you to walk through. They want you to be sitting there. And it's hard because in my type of profession, the economics are bad. If I'm sitting with you, I'm not doing anything else. So the cost of getting done what you're getting done is now really high.

[00:09:40.050] - Dan Paulson

Well, that's the problem with productive versus non-productive employees. Most managers, especially I know in finance industry, there is a certain level of production that's expected. I see that in accounting. I see that in legal, dentistry, all these professions where the professional has to do the job.

[00:09:58.660] - Rich Veltre

We used to be managed by a number. Literally by a number. So your productivity is 100 % correct. You have to have this many billable hours for the year. Oh boy. And then that number is just dauntingly sitting over top of you. So there's been plenty, I think, of creativity on how do you get the same type of productivity without dangling a number and that big red number over there like this is what you're short. Because then you're just focused on that number, you're not focused on anything else.

[00:10:32.300] - Rich Veltre

I.

[00:10:33.730] - Rich Veltre

Think creativity is going to really play a big part in everything that we're talking about. Yeah.

[00:10:40.060] - Dan Paulson

And we're going to keep this relatively short today, but we could spend hours talking about there's automation that you can do. There's optimizing your workflow. That's a huge one that can be done. There is enrolling your staff into helping with a lot of these production changes to make things more efficient. The people that do the job day in and day out when asked will often give you some pretty good advice. The problem is they're almost never asked. Let's look at the other side of this, though. We talked about worker productivity a little bit. We're not going to spend a lot of time on that today because again, we could spend hours upon hours on end. We did talk about employee retention. Let's talk about recruiting because I think it's the retention, the recruiting that are probably the leading factors to a lot of this. You talked about how culture was allowing you to retain. Well, what happens when you have to find new people? Because if your company is growing, you always have to be looking for different ways to add bodies to help do the work. Companies still seem to just think they can hang a shingle on the door and people are going to walk in.

[00:11:52.870] - Dan Paulson

That's just not the case anymore.

[00:11:55.560] - Rich Veltre

I think there's definitely a size factor in here too. I think that we have to throw into the mix, especially when we're talking about smaller companies. Smaller companies definitely follow what you just said. They definitely sit there and say, I'm going to hang out at Shingle that says hiring, or they'll put the big circle on their profile picture in LinkedIn. I'm hiring. Oh, okay, great. But I think the smaller firms are still thinking they can try to do that because the smaller firms, smaller enterprises are basically the owner has a lot more to do in the company than when you get to a bigger company that has a management structure and a board and they're looking at things from a 50,000 foot level as opposed to the guy that's doing the work as well as hiring the people as well as doing the biz dev, that person is so involved they think we're just going to do what we always did and put out a shangle.

[00:12:58.310] - Dan Paulson

Well, these larger companies also have much deeper pockets, let's face it. They can't play the money game to a certain extent.

[00:13:04.350] - Rich Veltre

Yeah, that's enormous. That's an enormous factor because those people are now running into, How do we recruit? Because they're looking at charts like you just showed and saying, We have to eat that guy's lunch, so we have to be out there first. And so they're changing and trying to be creative with their recruiting policies. There are people in high schools now where it used to be seniors in college. You're already down to seeing people come in and do talks at high school level, try to sway people into their profession number one. And once they're in their profession, they'll remember, Oh, I remember talking to that guy. He was in my school when I went to high school. So I can't imagine that the smaller guy can send somebody out to spend a day at the high school.

[00:13:52.010] - Dan Paulson

Well, I'll one up you there. I actually know of a couple of companies that are going to the grade school level, putting the other programs to start talking about careers or start talking about jobs at a very early age. Now they know there's a high level of attrition that's coming out of that because there's even high schoolers that don't make up their mind there. But they are making the investment, and these are not large companies that are going to spend time in school. It's like when your dad came into school to talk about what he did, or your mom came in for career day. We're in that same situation where instead of just talking about the job, it's now showing them the opportunities and trying to get them enrolled at early age. Now obviously a grade schooler is not thinking about what they're going to do for a career, so they try to make it fun or a game and just try to tap into some of that creativity, because as we all know, there are some people like you that are numbers people that would gravitate or do well maybe in a college experience, maybe do well in finance.

[00:14:55.490] - Dan Paulson

There's other people who are very hands on, and construction or trades might be a better benefit. There are some people who are just naturally gravitate towards technology, so maybe it's IT or engineering. But it's getting in at those early years and trying to find those kids, and then follow them all the way up through school. And hopefully what you do is you keep one or two of those by the time they graduate to move into your line of work or profession or become either an apprentice, or maybe they're doing some work study program with you just to try and keep them engaged. That's really where we're getting to the marketing side of things where we have to do a better job, especially if we don't have deep pockets of money to pay people to get them engaged in working for us.

[00:15:44.330] - Rich Veltre

It's a long road. It's a really long road for these companies to then be tracking. And if the companies have... The larger the company, they still have attrition. I mean, unless you're talking to a high level person in that firm, they still have their own attrition internally. So how do you match the fact you're falling off on the grammar school kid that you met 10 years ago and then the guy who met them retires or moves to another position of their own, follows the money. Right. He left. So it's one of those concepts. Your mind is a little bit blown that you're trying to say, I can't imagine trying to recruit somebody from grammar school right now.

[00:16:28.910] - Dan Paulson

But where we're going.

[00:16:32.220] - Rich Veltre

Yeah, but that's just me. I'm going to be stuck in my own pattern here because I've been doing this for a long time. So to tell me I got to do something that radically different, it's hard to swallow. It is.

[00:16:45.900] - Dan Paulson

And it's going to be for a lot of people that are very used to an old style recruiting technique, which really is falling by the wayside now. It is more about marketing your business. It's not about marketing the task. And that's where I see most companies fall off, is when you see a job posting, here's all the exciting things, Matt, that you get to do. If it's accounting, well, you're going to sit in front of your computer for eight hours a day and clunk on numbers. Now don't get me wrong, there are some people that would probably greatly appreciate that. There's also a vast majority of people that say, Well, I don't want to be plunked into a desk for eight hours a day. I want to go out and meet people. I want to know that I've got career opportunities. I want to know that the business is not only thinking of what I'm doing at work, but also trying to help me create better work-life balance. All these factors come into play, and if all you're doing is promoting the tasks of the job, you're really not doing yourself a service to attract the people that you want.

[00:17:43.440] - Dan Paulson

Rich, what's your takeaway in all this?

[00:17:46.560] - Rich Veltre

I think the biggest takeaway here is I have to get my head wrapped around creativity, and I actually understand that creativity for these type of changed numbers is going to be a lot bigger than my small brain would have told me to do. But seriously, I have to think bigger actually. I think the creativity is much more than we originally thought because I really think the numbers are starting to show that this is a bigger problem, as you've been talking about for a long time, the numbers are coming to a head that it's going to start affecting everyone. And depending on your industry, you're going to have to figure out how to be really creative and definitely also focus on the culture.

[00:18:32.080] - Dan Paulson

Yeah. And for me, it's the same thing. I would take your last part of that, focus on the culture. To me, that is the deal breaker. As you pointed out in your example, where the dividing factor over money is, Am I going to be happier where I'm at, or am I going to be happier somewhere else? And if I can't distinguish between the two, guess what wins? How much I get paid? Because if I'm going to suffer in both, I'll suffer and make more money. Now we can argue that doesn't work long term, but that's usually the thought process that goes into it. Rich, so if they want to get a hold of you and try and figure out how to retain employees and especially how to manage the finances around that, what's the best way to get a hold of you?

[00:19:14.420] - Rich Veltre

The best way for me, send me an email at rveltre@veltregroup.com.

[00:19:20.760] - Dan Paulson

Perfect. And if you need to get a hold of me, you can always go to danpaulsonletsgo.com. Leave me a message there and I will definitely get back to you. Rich, again another episode here. If you want to, please like, share and subscribe. You can also visit us at booksnbiz.com and catch up on all the past episodes we have. That is B-O-O-K-S, the letter N, B-I-Z. Com. And we'll see you next time. Thanks again, Rich.

[00:19:45.860] - Rich Veltre

All right. Thank you, Dan. You bet.