When night falls, some children are frightened by dreams of a boogieman under the bed. Corporate executives have their own boogieman, and his name is Skilled Labor Shortage. More than 500 corporate leaders revealed what keeps them up at night in the 2005 Issues survey from The Ken Blanchard Companies, and people problems top the list. A shortage of skilled labor is their number-two concern relative to business challenges.
“There’s a few things going on. There’s a skill issue, and there’s also an issue around people being ticked off and unhappy at work these days,” said Scott Blanchard, senior vice president, The Ken Blanchard Companies. “We’re at a 40-year low with people being happy in America right now, and that’s transferring over to the workforce. President Bush was running around all excited about the number of jobs that were created this last quarter, but the real wages haven’t gone up in about three years. People are being worked to the bone, they’re not making any more money, and many feel they’re being treated like dispensable commodities inside of their organizations. A lot of people feel lucky to have a job, but at the same time they don’t feel particularly enamored of their current employer.”
Blanchard pointed out that the demographics are sobering. The baby boomer generation will start to retire at the end of this decade, and as that population goes away, there won’t be enough skilled knowledge workers to fill vacated positions.
Developing managerial and supervisory skills also is a major concern for 61 percent of the survey’s participants. Blanchard said this is the result of a combination of poor engagement and poor relationships with management. “The thing that drives employees to stay at work and to be engaged—that’s a big term these days, engagement—is primarily two things,” Blanchard said. “One of them is that people have a sense of justice and fairness in their organization, with how they’re treated and how their customers are treated. Secondly, is the quality of the relationship that people have with their manager. Many people do not have a great relationship with their manager. Managers are spread more thin than they were years ago, and just about every organization is concerned about keeping their workforce turned on.”
Blanchard said that there is direct evidence to support the fact that if an employee is excited about work and knows how to do his or her job, external and internal customers will benefit from more effective service. “If they don’t know how to do their job very well, or if they’re frustrated by some lack of justice, fairness or the way they’re being treated by their manager, then only part of them shows up,” Blanchard said. “I think that people realize that our competitive advantage these days is our ability to get productivity out of each person, and productivity is not like driving a horse. It has to do with their heart and their soul, and their minds, hands and their habits.”
Developing that kind of skill in a manager obviously isn’t easy, but Blanchard said the needed investments are worth it for the manager and for the organization. “If I’m a manager, the number-one indicator of my success is my capacity to build effective relationships with my team members and with my boss. Managers who are not good managers are cutting their own throat,” Blanchard said. “They are not the people who are going to get promoted. People who get productivity out of groups of people receive promotions, and the higher you go in an organization, the more critical the skill set of being able to build effective relationships is. If you want to be stuck in middle management, treat your people poorly, sub-optimize their performance, and you’ll be stuck there for a long time. It’s a matter of common sense, but it’s not applied very often.”
Competitive pressures present leaders with another business challenge. Some 63 percent of survey respondents stated that it tops their list of concerns. “I’m the leader of Vaughn’s supermarkets on the west coast, OK? Wal-Mart is coming into town and will open their superstore. They offer groceries, and they kick butt every time in one of those markets. That’s an example of competitive pressure,” Blanchard said. “Competitive pressures led Northwest Airlines to get rid of pillows. So has American. They are so pressured from a price standpoint by Southwest Airlines and JetBlue that they’ve had to bring their ticket prices down to be competitive. At the same time, they have a larger infrastructure. The competitive pressure of everybody doing everything more for less is killing companies. That’s one of the reasons we need to get more out of our people. It happens every time there’s a recession, and it’s happening in every industry: insurance, HMOs, within the government. Everywhere I turn, it’s almost become passé for organizations to do more with less. Everybody’s having to work harder.”
Additionally, Blanchard said that in most companies the number-one expenditure is the salaries of the people who work there. This is yet another reason it’s essential to improve employee productivity: to garner a substantial return on investment. “There is an answer to this,” Blanchard said. “Senior leadership needs to do a better job of establishing division direction in the culture of the company. They need to make sure that the management practices are aligned to support their big goals because it’s all about engaging your employees in the game of your business. If you look in most organizations, while they may think that’s true, the way they set their companies up and the way they manage their people moves in the opposite direction. This creates dissention rather than loyalty, and that’s a big issue that I think people need to look at and address. The best-run companies? They do things differently. You go to Microsoft and they treat their people exceptionally well. If (senior leaders) keep up, they need to figure out how to engage people, get everybody moving in the right direction, and quit so much of the productivity loss that occurs because the messages are not made or translated all the way down.”