Operations: Human resources

Jeff Garr, CEO and Frank Zych, director of HR Services, HR Knowledge, Inc, suggest ten reasons companies are struggling with staffing issues in the current economy.


Over the next seven years, total employment in the US is projected to increase 10.1 percent, according to the Bureau of Labor Statistics, US Department of Labor. These projections show growth in service providing industries, which are proposedto add 14.6 million jobs primarily in the professional and business services and healthcare and social assistance sectors.

“Baby boomers” who are heading into retirement will need to be replaced, which will also create a significant number of job openings. It's projected that these vacancies will account for more than double the number of job openings due to economic growth.

How are companies going to handle the increased demand for qualified candidates when so many companies are struggling with staffing now? Why are these companies struggling? We've outlined the top ten reasons:

With the economic downturn, employers have been faced with a deluge of job applicants and the vast majority are not suited to those positions. Job seekers often reply to advertisements for jobs they do not want or are not qualified for, hoping the employer may have other opportunities. One of our clients received 348 replies to an advertisement for an administrative assistant within the first 24 hours of the ad's publication, which completely overwhelmed their ability to properly screen candidates.

Skilled people are still hard to find, even in this economy. Many positions go unfilled simply for a lack of qualified candidates, particularly in many skilled trades.

Fewer job changers: 
When economic times are good, people will more readily resign from one position to take another with a different employer for the chance of getting ahead. Many people are much more risk averse in today’s economy, and would rather play it safe and stay with a current employer than risk a job move.

Benefits costs are soaring:
Benefits costs, specifically health insurance, increase by double digits annually. With the new federal health initiatives, there is even greater uncertainty for employers. An increasing number of employers are deciding to put off hiring or rely on temporary workers to avoid such uncertainty.

Increase in litigation by the unemployed:
When faced with the loss of employment and income, people are much more apt to seek legal redress than when jobs are plentiful. Across the nation, there has been a rise in class action lawsuits and other lawsuits filed by the unemployed for everything from age discrimination and sexual harassment to worker’s compensation claims for questionable injuries.

Unemployment benefits are becoming easier to get and last longer:
We are seeing anecdotal evidence that state unemployment claims are being approved at a much higher rate than before. It appears that the state does not want people in society with no means of income, so they are making it easier to collect unemployment benefits. We are also seeing these benefits extended for longer periods. This will inevitably result in an increase in employer unemployment taxes, at the state and federal level.

Reluctance to fill vacant positions causing increased employee stress:
With companies reluctant to hire, the workload of existing employees, with regard to the scope of responsibilities and total number of hours worked, is increasing noticeably. Stressed out employees make more errors; have increased health issues and can negatively affect overall employee morale. 

The Internet at work:
While the Internet is overall a highly useful productivity tool, it is also causing new and unexpected problems in the workplace. Employers report that internet abuse by employees is constantly on the rise. Such abuse includes social networking and online chatting while at work; Internet gaming on company time; accessing pornography and contributing anonymously to blogs with negative comments about the company or worse.

Low levels of employee commitment and productivity:
Studies suggest that employee loyalty is at an all time low. This is due in large part to the prevalence of downsizing during the recession. The most common employee perception is that the company will discard employees when things get difficult, so there is no reason to remain loyal to the company. Such feelings generally result in decreased productivity; reduced attention to the quality of work and increased risk for customer dissatisfaction.

This is the retail euphemism for the loss of goods. Indications are that shoplifting and employee pilfering are rising sharply. Employee theft is an ever increasing problem for a wide variety of employers across many industries. Both shrinkage and Internet abuse have created a whole new set of staffing issues with regard to discipline, termination and job replacement.

Is there any good news? Yes. College enrollment is trending up. According to data released by the US Bureau of Labor Statistics in April of 2010, 73.8 percent of women and 66.0 percent of men graduating in 2009 were enrolled for college. So, there should be an upswing in the number of educated, qualified candidates for the growing number of jobs that will be open. 

The answer to the staffing challenges of feast or famine may lie in retained searches. These days, retained searches are typically conducted for only the highest levels of staff, namely the CEO, CIO and CTO. There seems to be a reluctance to use retained searches for non-senior staff, the argument being that qualified applicants may be found by employee referral or via Craigslist and similar media. 

Or, maybe less technology, more “hands on” is the answer. Could it be that the candidate selection process depends too much on technology and companies are inadvertently eliminating qualified candidates solely on the basis of not having enough “key terms” listed in their electronically submitted resumés?

Thankfully, a few of the staffing problems we mentioned should resolve on their own in time. As the economy recovers, we should start to see an improvement in employee productivity and loyalty; people who are more willing to change jobs and a decrease in employee stress as vacancies are filled and the workload is redistributed.

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Author credit:

Jeff Garr, CEO, and Frank Zych, director of HR Services, lead the HR Knowledge, Inc. team in providing best-in-class integrated HR services at an affordable cost to clients. HR Knowledge, Inc. is a leading business process outsourcer (BPO) for human resource management, group benefits brokerage, payroll processing & managed services, financial services and recruiting and hiring process management (HPM). The company serves emerging to mid-sized companies in New England. For more information, visit www.hrknowledge.com