June 20, 2023
The U.S. labor market faces a paradox: high unemployment and job openings. According to the Bureau of Labor Statistics, there were 10.6 million unemployed workers and 10.4 million job openings in November 2021. This mismatch between labor supply and demand creates a tight labor market where workers have more bargaining power, and employers have greater difficulty finding and retaining talent.
A tight labor market poses both challenges and opportunities for businesses. On the one hand, it can lead to worker shortages, higher labor costs, lower productivity, and reduced competitiveness. On the other hand, it can also spur innovation, efficiency, quality, and customer satisfaction.
So how can businesses remain successful in a tight labor market? Here are strategies to consider:
Invest in AP automation. Accounts payable (AP) is a critical function that involves processing invoices and payments. AP is well-known to be a time-consuming, error-prone, and costly process when done manually. AP automation is a technology that automates and streamlines the invoice approval process from receipt of the invoice through completion of payment, saving time, money, and labor. When done right, AP automation can provide better visibility and control over payment data, enabling smarter financial decisions. AP automation offers several other benefits, such as time savings, low-cost invoicing, improved accuracy, and fraud protection.
Embrace the contingent workforce. The contingent workforce is a flexible staffing model that involves hiring workers on a project or contract basis rather than as permanent employees. Deploying a BPO allows businesses to adjust their workforce according to their needs and demand by providing access from a wider talent pool across multiple disciplines and from anywhere in the world. Business intelligence shows that the contingent workforce brings several other benefits, such as scalability, flexibility, diversity, expertise, and cost savings.
Improve employee engagement. Employee engagement is the degree to which employees are committed, motivated, and satisfied with their work and employer. It can significantly impact employee retention, performance, and loyalty. According to McKinsey, highly-rated employee engagement results in higher productivity, lower turnover, better customer service, and a stronger brand reputation. To improve employee engagement, businesses can use various tactics such as providing feedback, recognition, training, development, autonomy, empowerment, and incentives.
Enhance employer branding. Employer branding is creating and communicating a positive image of the employer to attract and retain talent. Effective branding differentiates employers from competitors and highlights their values, culture, mission, vision, and benefits. According to Brookings Institution, employer branding offers several benefits, such as increased applicant quality, reduced hiring costs, improved employee satisfaction, and stronger customer loyalty. To enhance employer branding, businesses use various channels, such as social media, websites, blogs, podcasts, videos, events, and referrals.
The tight labor market does not have to be a barrier to success. By adopting these strategies, employers can overcome the current challenges of the time and leverage the opportunities at hand. The key to survival is being proactive, innovative, and flexible enough to thrive even during shifting workforce priorities.