First there were problems with the economic downturn. Now there are problems with the upturn. The U.S. labor shortage is hitting companies like a second wave, and it seems no one is immune. Even Disney, who laid off 32,000 employees during pandemic closures, is now offering $1,000 sign-on bonuses to attract line cooks and housekeepers. More Americans are quitting their jobs than at any time in the last two decades, limiting businesses' bounce-back, and it's no surprise recruiting companies are getting creative. Some are limiting or slowing their own work, while others like McDonald's are raising wages.
The U.S. workforce rightly remembers last year's layoffs. While some companies managed to avoid letting employees go, as we looked at in a previous article, most couldn't or wouldn't afford that kind of loyalty. Now employees are repaying the favor. So how does your company keep its grass greener?
Let's picture two professionals, at the same level in the same industry. They even earn the same salary. One works at a company where his role looks like that of a hired hand. He shows up, does what he's told to do, and collects his check. He isn't engaged in the economics of the business he works for because he doesn't understand them. Beyond his basic wages, he's never given the opportunity to share in the wealth he works to create.
Can you imagine how this translates to the customer? And we know this set of circumstances isn't unusual--only about 30% of US workers say they are engaged in their work even when there aren't other companies competing for their attention.
Our second professional works at a place where she's treated like a trusted partner. We're not talking about magical, feel-good company culture. We're talking about a tangible, disciplined business system built on transparency, economic understanding, and employee participation. We're talking about an economically engaged business.
At this company, our second professional learns the economics of the business. It's not that she's simply taught how to read a balance sheets--instead, she's familiarized with key operational economics that drive profits, like safe tonnes shipped or job margin dollars per month. She's learning to track and forecast these economic metrics on a weekly basis. She's figuring out how to move those numbers in the right direction, and then sharing in the rewards of better performance.
It's obvious which professional is likely to stay and grow with their company, just as it's obvious which is more likely to be a quality worker and to refer other quality workers.
The impacts of the labor shortage are most visible in industries like food service and restaurants, where hours of operation, menu options, and seating availability are all shrinking--but hourly wages are getting a lot bigger. Henry Patterson, a colleague and food service consultant with Rethink Restaurants, sees this as market correction. Restaurants have been getting away with calling their wages competitive because everybody else in the game is underpaying too. There haven't been significant raises since the days when food service was chiefly a side gig for students. Today's food service professionals are often well into adulthood, working two or three service jobs to support a family--looking for long-term career training, opportunity, and looking for to be a part of something.
Patterson works with one restaurant that's started paying everyone $22 an hour, from the front of the house to the back. Their profits are increasing, but they haven't raised prices. The secret? Paying a smaller staff at a higher rate positioned them to generate $100,000 of revenue per employee, far above their competitors. The staff appreciates the extra hours, service quality is improving, and everyone has a livable earning.
Our friends at FA Engineering, one company that avoided layoffs, credit the economic engagement approach to their steady stream of referral hires. In a tight labor market, partnership is something they're selling to both current and prospective hires--this idea of being a part of something--and it's working.
FAE regularly engages their employees in getting feedback from customers, which helps them understand what's driving the value of the business and what critical issues face the company. Employees then develop a consensus on a single metric to focus on to drive financial results. They meet to forecast and track this metric weekly, and they enjoy profit sharing quarterly. The company is growing, with negligible turnover, easily filling new positions and drawing more than their share of the engineers from the local college; word about companies like FAE gets around.
The real case for economic engagement is that it makes a company stronger for the long haul, attracting workers who want to stick around and who know you're going to stick around, too. Partners stay because they have a vested interest in the company. Hired hands leave because they don't. And economic engagement is way of running a business that fosters real engagement, involving both the head and the heart. It's something most folks aren't offering, but you can.