Labour shortages demand innovative solutions | Berenschot

And in the economic survey of the CBS, the Chamber of Commerce, the Economic Institute for the Construction Industry (EIB), the Dutch Federation of Small and Medium-sized Enterprises (MKB-Nederland) and the Confederation of Dutch Industry and Employers (VNO-NCW), also from May, business owners state that for the fourth quarter in succession personnel shortages are the main obstacle to their business operations. In the meantime the number of unemployed continues to fall. In other words, there is a threat that the shortage of people could become permanent. What can organisations do?

Trains for which there is no conductor available, an airport that cannot handle holiday peaks, people leaving a restaurant because there are no waiters to serve them. Just a few examples of the disruptive nature that staff shortages have started to take and which organisations are increasingly finding to be a problem.

Organisations can, of course, resort to well-known macro-economic solutions: encouraging flex-workers and part-time staff to put in more hours or mobilising people currently sitting at home or getting people in less successful sectors (e.g. hospitality during the pandemic) to switch to other sectors that are now flourishing. Admitting more immigrants (providing that housing and support are properly organised) could offer a solution or - in a hybrid form - having them work from their home abroad. And perhaps organisations could retain people better if they choose to have more permanent staff instead of flex workers. “And perhaps it is also a good thing that the number of bankruptcies will rise, as predicted. Then the talent released as a result can find its way to sectors where sufficient value is still being created. Also, in the longer term. All legitimate options to investigate,” says Arthur Claassen, senior managing consultant at Berenschot.

We must prevent that people simply switch from one patch of greener grass to the next for the money, only to discover that this is not how to reach the promised land.

The question is whether this apparently ongoing shortage will ever be fully resolved. “Perhaps it would be more interesting to take a different approach. And to assume that you can no longer find the talent you need or it will be simply too costly to continue using it in the same way,” explains Claassen. “Based on that scenario it really is necessary to be innovative in how you approach it.” What can help here is the innovation pyramid of Professor Annet de Lange, lector at the de HAN University of Applied Sciences, which she describes in her book ‘Future of Work’. In essence she identifies three forms of innovation:

• Strategic innovation: An organisation opts for a fundamentally different business model. Take the banking sector, the number of physical branches has been drastically reduced and the service model exported to an online environment. Or the retail sector, where more and more products can be ordered online and delivered at home. Look at healthcare, where more effort is being put into prevention to help reduce the burden on healthcare personnel. By redesigning services - making them less labour intensive - organisations can manage with fewer staff.
• Technological innovation: A widely adopted solution in which organisations enhance their operational continuity with the aid of automation, robots (AI) and digitalization. Now that human resources are more difficult to come by and personnel costs are rising, investing in technology solutions becomes all the more attractive (given that they are relatively cheaper) and the return is higher, certainly when business continuity is threatened. Although a great deal has already been optimized in this way, the current personnel shortages could provide a new impetus for technological innovation. Examples which come to mind include the complete automation of the check-in at Schiphol airport, self-service checkouts in the supermarket and the use of QR codes in the hospitality sector. “Then you would not need people for those jobs anymore or you can replace highly qualified personnel with less scarce or less highly qualified people.
• Social innovation: This solution touches upon talent management, for example. Getting the best out of your people and organising the work in accordance with the talent you have. This requires a different leadership style, one which is more facilitating, and a culture in which all the talent is properly deployed. Cooperation and networking with other organisations too, to make shared use of expertise, as well pooling employees so they can work for various entities, can ensure that the right talent ends up in the right place. “On the one hand, this enables you to allocate or release people and thus gain better access to qualified personnel,” explains Claasen,  “while on the other hand, you create a broader and possibly more interesting work environment for specific groups of people with special skills.”

In the short term, of course, organisations can try to fish personnel out of the already highly depleted pond and, above all, do their best to retain the talent that they already have and put it to good use. The shortages in some areas of the employment market, however, are extreme. Organisations are devising ever more ludicrous campaigns to attract scarce talent: from table tennis to a tiny house, along with exorbitant salaries, rapid promotion and allowances, not to mention signing and retention bonuses. “In the longer term such solutions will not be effective. They could seriously undermine the continuity of the business, the entire commercial sector and even society itself, and permanently damage the Netherlands’ international competitive position,” Claassen warns. “The higher turnover also creates unrest among the workforce, adds to the workload of the incumbent personnel and increases the risk of absenteeism. Therefore we must prevent that people simply switch from one patch of greener grass to the next for the money, only to discover that this is not how to reach the promised land. A waste of time, energy and the money spent.”

Instead Claassen maintains that for every organisation to really set itself apart, it needs to compete on the basis of substance and show what it stands for, know what is possible and what not, have a clear idea about what it should and should not do to maintain its personnel costs at a reasonable level without hounding people. “Providing employees with a truly great, unique place to work, where they can use their skills, develop themselves and work together in a way which is enjoyable. And in so doing, they can commit to a common goal, an impact, a contribution, a way of working that they truly believe in. Something which in the longer term is in everyone’s best interests, then we will really get the most out of our available talent.”

That organisations will have to pay their personnel more, offer more security, stability and flexibility and, above all, share more of the profit with them, is unavoidable, in Claassen’s view. “The time when talent could be blatantly exploited at minimum cost, with maximum flexibility in linear business models, focused only on short term profit and shareholder value, is over,” he states. “However, we must also accept that things will become more expensive because of the shortages.” Perhaps some things had become simply too cheap and a revaluation is now in order. So the current inflation rate cannot be mindlessly dumped on the commercial sector, but it also does not need to be fully compensated for everyone in society. Something to reflect on, on both sides of the negotiating table.”

For organisations it is, first and foremost, a matter of investigating what talent they really need, taking into account their mission and strategy, along with the continuity. Where can the best margins be achieved, is that enough to cover the rising personnel costs, how can they innovate, constantly improve and sharpen their game? That also means listening to their employees, thinking more purposefully and openly about how to deploy their existing talent, facilitating development pathways to scarce roles, providing good day-to-day guidance and support for development. “Gaining more insight into their preferences and expectations, keeping up with them and staying connected. All supported with a facilitating and coaching leadership style that can manage such a sustainable, responsible and agile form of talent management,” is how Claassen sums its up. “All of these elements require, above all, a new, deeply felt and expressed awareness that talent really is the success factor for the next decade.”