More than a decade ago, many of the nations leading trade associations like the Associated General Contractors (AGC), began warning its members of an impending labor shortage. They encouraged contractors to begin providing contemporary labor training and development. Their warning was based on a prediction that baby boomers who fueled the industry's growth in the seventies would begin leaving in droves. Few heeded the warning. Today, most companies are having to come to terms with a shrinking work force.

The labor shortage has been effecting almost every industry, and will continue to be a problem unless employers begin to look outside their traditional sources.

Twenty years ago, baby boomers flooded the workplace. Two decades later, the baby boomers have begun to retire. As they do, they're leaving employers with huge gaps in the labor pool. Business Week in its September 16th 1996 issue "A Scramble for Good Help," stated the government expects the number of workers aged 25 to 34 to shrink by 13% each year over the next 10 years. "Eighteen months later, this prediction seems to be accurate. Latest figures from the U.S. Department of Labor show a 10% drop in the number of workers age 25-34 as compared to Last year."

But the worst may still be ahead. According to recruiter Ken Shaw of Shaw & Associates, Norfolk, VA the trend is expected to continue accelerating beyond the year 2006. "The generation-x labor pool for talent offers employers far less talent than anyone could have predicted, and this labor shortage is going to be felt across all segments of the American employment community well into the new millennium," said Shaw.

It's not that the future labor pool is shallow on talent. Just the opposite, today's new recruits, aged eighteen to twenty four are equipped with more skills than perhaps any crop of potential employees in recent memory. And that is precisely the problem. The field is so talent-rich it is heavily courted by booming high- tech industries that offer outstanding job opportunities.

At the same time, potential employees are also being tempted by the prospect of working at home, another by-product of the techno-revolution. Plummeting technology costs and the Internet have reduced business start-up costs so that almost anyone can afford a home-based business.

Beneath the surface, the fundamental employee/employer relationship is also undergoing change. Loyalty is waning. Recruiter Ken Shaw commented, "The onslaught of firms merging, downsizing, and changing directions has caused employees to view company loyalty with skepticism. Employee loyalty is very short-lived, and most employees do not expect to be with the same employer after a few years." As employers and employees adjust to new market changes, the issue of loyalty is being redefined.

Even employee's basic needs are changing. Finding and keeping good talent is not just about money anymore. Recruiter Jim Vockley with Moffitt International in Asheville, NC comments that "Typically we find that candidates don't usually leave for just more money, or to avoid difficult job circumstances. We find they usually leave for more human factor reasons such as greater job appreciation, better working relationship with management, better geographic location to their family, better work environment, more flex-time, etc.."

There's no doubt that the employment landscape has changed dramatically. The reality of these changes is that employers who do not find a way to attract and retain good talent will die out. And that implies fundamental changes In the how many employers view the employee/employer relationship.

There are three key ingredients to effective employee recruiting and retention. Identifying why employees leave. Appreciating employees financially. And creating a better working environment.

• Determine why employees leave

"Why didn't it work?" When a problem arises on the job site everything comes to a halt until the problem is identified and corrected. Rarely do employers follow the same process when an employee leaves. If they did, they just might find reduced turnover. Of course, employers don't have to wait until an employee leaves to begin taking preventative measures. They can begin by asking themselves, "If I were looking for a job, why would I want to work for my company." Employees who have left can also help identify ways to reduce future turnover, as can a brainstorming session with top management.

Many of the underlying reasons employees leave are similar, and surprisingly, have little to do with money. Often they leave because of a human factor such as conflict with management personnel, broken promises, perceived lack of appreciation, support or direction. Still others have nothing to do with the employer at all, such as a need to be geographically closer to their families. Whatever the reasons, employers need to understand them and work to minimize their effects in the future.

• Appreciate employees financially

PAY MARKET WAGES: Accessing market information on compensation averages has never been easier. Associations, recruitment firms, even the Internet make compensation surveys readily available. Any employee worth keeping is smart enough to monitor these figures to make sure he is getting paid fair market value.

OFFER STOCK PLANS: The most loyal employee is the one with ownership in the firm. Lawyers and architects have been offering their key people partnerships and shares in the company for decades. Corey M. Rosen, the executive director for the National Center for Employee Ownership states a strong stock plan can cut employee turnover up to half.

SUPPLEMENT WITH BONUSES AND PERFORMANCE-BASED PAY: Many firms offer their employees bonus plans that take into account personal performance, team performance (or project performance) and firm profitability that is distributed over 3 to 5 years. Payment on commission has been common on the sales end for years. But the industry is now seeing more operations employees earning the bulk of their compensation through bonuses and or commissions.

IMPROVED BENEFITS: Perks to a compensation program don't have to cost a great deal of money. And the message they send to the employee can mean increased loyalty and reduced turnover. Many perks now focus on helping the worker succeed as both an employee and as an individual. Common incentives include reimbursement for tuition on qualified programs, retirement plans, child-care subsidies, and flexible schedules to attract working parents.

Additional benefits may include:

• Trips and weekend excursions

• Leased cars
• Awards, certificates, plaques, honors
• Memberships in professional organizations
• Subscriptions
• Computers/laptops
• Cellular phones
• Tickets to sporting events, movies, theater, restaurants
• Software
• Additional paid days off
• Birthdays as a floating individual holiday
• Gifts of all sorts
• Health club memberships

• Improving the work environment

Most people spend more time with their co-workers than they do with their families. In fact, for many workers, the workplace functions as a surrogate family, with the worker looking for support, encouragement and appreciation. The extent to which employers can provide this type of atmosphere can be a good determinate of how successful they are in reducing turnover.

The Center for Creative Leadership in San Diego commented in a recent survey that firms which offered employee development, good communication, ethics And other positive human factors enjoyed better retention rates and 20% higher profits. Here are some non-financial tools some employers are using to help boost retention rates.

A CAREER PLAN: Employees like to have clearly defined goals, as well as defined plans and schedules to achieve those goals. Help employees develop a career plan within the firm so that they understand where they are going, and why it makes sense to achieve those goals.

OPEN DIALOG: Sharing of operating and financial information helps build Trust between employer and employee. It also helps workers understand how their performance affects results, and encourages their input. This ultimately invests them with a feeling of ownership in the company and a long-term stake in its future.

LISTEN: Reinhard Ziegler, a managing partner for the Dallas office of Andersen Consulting says, "To retain people you have to be a good listener." One of The most valuable tools a manager has is the ability to provide regular feedback. Keep suggestion boxes for company improvement available to all employees, and offer rewards for the suggestion of the week, or month.

TEAM BUILDING: Provide reward and recognition programs that recognize performance and achievement. Hold regular company social outings to build rapport and enthusiasm.

ON-GOING TRAINING & DEVELOPMENT: FMI comments in their 1997 Training Survey that "50% of the largest firms indicated that supervisory training would reduce turnover by 10-19%." They suggest employers partner with local community college or technical schools and offer internships, apprenticeships, or pay for education in return for a certain number years

of work.

• Develop advertising and marketing programs targeted to potential employees.
• Using computer-based recruitment tools not only make your recruiting more efficient, they ensure your technology is at the same level as that of the labor pool.
• Network with associations, suppliers, owners and peers.
• Establish an internal referral program that pay employees for referrals that result in a hire.
• Maintain a visible presence wherever the labor pool frequents, such as industry associations and related events.
• Use in-house recruitment personnel to visit job fairs, colleges, follow up on networking leads, do direct sourcing, surf the Internet, etc.
• Use a specialty recruitment firm to supplement your internal hiring efforts.
• Recruit retirees and minority workers, two of the fastest growing labor markets in the US.
• Use the Government Unemployment Office as a resource.
• Help industry enhance its image as a career for today's youth.

The wide availability of similar technologies and the growing consolidation of vendors are quickly leveling the playing field for most employers. As competition within industry continues to grow, success will be judged less on price and quality of work and more on the employer's ability to provide responsive and informed service. All this points to the critical importance of attracting and maintaining a well-trained and loyal work force.

Those companies who are first to realize their success hinges on serving their customers will also be the first to realize that to maintain that level of service among their customers, they must first provide it internally to their own people. In that respect, the employer's first and most important customers may wind up being themselves.

The previous information is written and copyrighted by Frederick C. Hornberger, Jr., president of Hornberger Management Company, a national board and executive search firm specializing in the construction industry. This information is provided for personal use only. It may not be copied, printed or distributed to anyone other than you the reader, for any reason without permission from the author. Contact the author at address One Commerce Center, #747, Wilmington, Delaware 19801, phone 302-573-2541, email [email protected], or through the company web site at www.hmc.com.