Rethinking the Labor Shortage
Tom Stimson
November 5, 2021
A camera operator setting up a camera to film a soundbooth.

Imagine that you’re a manager of a major league baseball team. Your scouts tell you there’s a ton of talented athletes out there shopping around for the best deal. How do you get them to play for your team over somebody else’s?

As in baseball, the quality of a business’s team depends a good deal on the manager’s ability to attract the best people. Believe it or not, there’s not really a shortage of workers. There’s a shortage of attractive employment offers.

While many factors can play a role in attracting workers (location, benefits, networking opportunities, prestige), the main one they care about is money.

It’s a hard truth: business owners must find ways to compensate employees appropriately if they hope to compete in this challenging labor market.

Simply put, the answer to the labor shortage problem is to do fewer sales at higher profits and pay employees better.

Worker Values Have Changed

AV Rental and Production businesses are being hit across the board by the labor shortage. Busy periods, especially, mean trouble finding techs, specialists, project managers — critical positions that are primarily outsourced.

Owners still have employees in similar roles as before the pandemic, which is fine, but the job has changed. In-house employees should be concerned with acquisition and planning, NOT with execution. Full-time staff now hold strategic positions. They are the core of your team. They deserve more pay.

And it doesn’t end there.

Owners have to pay on-demand workers more too. Relief pitchers and designated hitters don’t play in every game like infielders and outfielders. Nevertheless, they can make or break a team. They have to be paid their worth.

The same holds true for your on-demand workers.

On a per-job basis, all of this means your costs will go up.

Fortunately, we also have a huge demand for our services with limited supply, which means your prices can go up. So the supply-demand curve makes up the difference in what you have to pay people to make all this work.

If you don’t raise what you pay employees, you won’t attract (or keep) the workers you need to execute the business you’re winning.

Us vs Them

Before the pandemic, many business owners had an Us vs. Them mindset. It made sense because payroll is one of a businesses’ biggest expenses.

Guess what? You need workers more than they need you, now.

The reality of the situation is this: it’s not Owners vs. Workers anymore. Now it’s, how can we make this work? How can I charge clients more so I can afford better workers? We need each other more than ever if business is going to thrive.

Here’s a list of Dos and Don’ts to help your business adjust to the new rules of the game.

  • Do procure a well-developed freelance labor pool to meet demands.
  • Do pay employees better and treat them as allies.
  • Don’t try to be attractive to the workforce using outdated compensation and benefits.
  • Don’t go to the labor market with the same old offer. Make your business attractive to workers…again.

Tactics To Improve Margins and Increase Capacity

The bottom line: workers value money, along with benefits and good working hours. To satisfy their needs in the current market, follow these guidelines:

  • Realize you need workers more than they need you.
  • Understand you’re now in the procurement business — procuring people. You must make a good offer. This is a marketing problem. You need to sell your company to the workforce.
  • Increase the size of your available on-demand bench.
  • Know that as the cost of labor goes up, fees to customers should increase as well.
  • Equalize the way you treat full-time and part-time workers. They’re all human beings — they all have the same needs.

Good team managers, whether they’re in the world of baseball or AV Production and Rental, know the needs and wants of their teams and do their best to meet them.

Winning teams almost always have good morale, and competitive wages are a perennial morale booster. Higher pay makes employees feel good about themselves and the business they work for.

The key is in doing what’s best for the whole team. For owners, this means competitive compensation to maintain a team that can handle the ample work available, resulting in profit. For employees, it means higher pay and better benefits, leading to greater job satisfaction. There is a way to toe the line.

Don’t fall back into the trap of pricing by fear. Keep overhead low, wages up, and demand better margins.

Then, the whole team will be happy.

About Tom Stimson
Tom Stimson MBA, CTS is an authority on business and strategy for small- to medium-sized companies. He is an expert on project-based selling and a thought leader for innovative business processes.
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