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INSIGHT: Navigating your business in times of labor shortages

Consultant Raúl Burgos says that although starting or growing a business during these periods can be extremely challenging, there are strategies to employ.

Over the last couple of years, I have been providing mentorship to a myriad of small- and medium-sized enterprises (SMEs) seeking guidance on how to grow their business in Puerto Rico and abroad.

Aside from the conversations surrounding their “du jour” operational aggressors such as lack of proper accounting, taxes and ever-growing electricity costs, the topic of lack of qualified labor is becoming a consistent and growing concern.

In the case of Puerto Rico, the demographic trends do support this labor shortage concern, with forecasts showing the total population decreasing to around 3 million by 2028 and our median age surpassing the 46-year-old threshold by then, making the most productive labor segment (15-64 years old) smaller and older.

So, starting or growing a business during a prospective labor shortage period can be extremely challenging, no doubt, but there are strategies that can be explored to mitigate these challenges and even turn them into opportunities for growth and improvement. Here are 10 ideas that may work for your business:

  1. Optimize operations with technology: Use technology to streamline operations and increase productivity. Automation, artificial intelligence and machine learning can manage repetitive tasks, reducing the need for manual labor and allowing your existing workforce to focus on more strategic and value-added activities.
    Many of the SMEs that I talk to remain focused on processes and methods that demand high labor interaction. In today’s world, from a bakery to a service company, there are technology solutions that can improve productivity, quality, and costs while minimizing the need for more human interaction. My advice is to constantly research and evaluate Technological solutions and seek “man-hour” efficiencies where you can.
  2. Focus on employee retention: Retaining your current employees can be more cost-effective than hiring new ones, especially in a labor-short market. Invest in your employees through competitive salaries, benefits, professional development opportunities, and a positive workplace culture to increase job satisfaction and loyalty. This is an area where SMEs and particularly startups can struggle due to their tight finances and stage of business development.
    Consider outsourcing tasks that are not core to your business to external firms or freelancers. This approach can help manage workload peaks without the need to hire permanent staff, allowing your business to remain agile and lean. The advice here is always “less is more”; find a core of qualified employees, identify and structure the best retention program/package and nurture them. If possible, address your non-core labor needs through temporary labor agencies, and as the business grows, identify those temporary employees that may be a good fit and bring them on board.
  3. Tap the untapped older worker pool: In an article written by Steve Nail, dean of College of business at Anderson University, a recent Harris poll reported that 31% of retirees are eager to return to work due to inflation and concern about their financial futures; this trend has been validated in Puerto Rico as well. The truth is older workers can be a great resource to many industries, and I would add to many SMEs struggling to grow and move forward.
    Years of experience provide older workers with exceptionally good and relevant skill sets. These are not just the traditional job skills; an older worker often has those “soft skills” employers claim to desire, and SMEs desperately need. A more experienced worker is more dependable and less likely to jump from job to job, a trend more prevalent amongst younger workers.
    A 2020 academic article in the Journal of Business Diversity, co-authored by Dr. Stephanie K. Douglas and Dr. Robin A. Roberts, found that older workers, those 63 years and older, had higher levels of workplace engagement than any younger age groupings. Older workers make great mentors to younger workers, particularly regarding strategic thinking, navigating corporate politics and the nuances of the job that in some cases may take decades of experience to acquire. A trend amongst older workers is their positive attitude towards the employer. They can help younger employees realize that the “grass is not always greener on the neighbor’s lawn.”
    With a Puerto Rico population that is shrinking and rapidly aging, these obvious advantages of employing older workers, and taking into consideration that most businesses struggle to find workers, a greater focus on this demographic segment is required. Businesses that get rid of the “age bias” may be not only pleasantly surprised but may also obtain as a result a competitive advantage as well as an optimal pool of labor resources.
  4. Enhance recruitment efforts: To attract new talent, think outside the box. Consider remote workers to broaden your talent pool, implement employee referral programs and build your brand as an employer of choice. Use social media and professional networking platforms to reach potential candidates. Today’s collaboration and communication tools allow businesses of all sizes to attract the best talent and provide cross-border solutions.
    Boutique consulting firms like mine or big companies like Cisco are benefitting from these capabilities. In the case of construction, agriculture and the like, immigration for labor purposes is always an alternative. Although not optimal given its unpredictable nature and reliance on government immigration policies and quotas, it is no doubt an option to explore.
  5. Develop internal talent: Promote from within by offering training and development programs that prepare your current employees for higher-level positions. This not only fills your immediate staffing needs but also helps with employee retention by providing clear paths for advancement. Identify, develop and retain.
  6. Adopt flexible work arrangements: Flexibility can be a key attractor for new hires and for retaining current staff. Offer flexible working hours, the option to work from home, or part-time positions to accommodate a wider range of employees, including those with caregiving responsibilities or those seeking a better work-life balance. Flexible work arrangements can be a great solution but make sure that any flexible schedule fits the need of the businesses or customers.
  7. Leverage partnerships and collaborations: Form strategic partnerships with other businesses to share resources, including labor. This can be particularly effective in industries with seasonal demand variations. Although this option may be a little bit difficult in significantly “labor strapped markets” where employees are operating at maximum output capacity, sharing talent in industries such as restaurants, bars and other hospitality venues may prove a viable option.
  8. Invest in employee well-being: A focus on employee well-being can significantly improve job satisfaction and productivity. Offering wellness programs, mental health support, and ensuring a safe and healthy work environment are key factors in attracting and retaining talent.
  9. Adjust your business model: If certain areas of your business are more labor-intensive and difficult for staff, consider whether adjustments to your business model could reduce dependence on scarce labor resources. This might include shifting to more service-based offerings or products that are less labor-intensive to produce. A greater focus on automation and process improvement is required to seek less man-hour requirements while obtaining greater productivity.
  10. Engage with educational institutions: Build relationships with universities, colleges and trade schools to create a pipeline of future employees. Internships, apprenticeships and scholarship programs can attract young talent to your business. These relationships may not only apply to the geography of Puerto Rico; consider “cross-border” internships and virtual support. The University of Puerto Rico, Inter American University, Ana G. Méndez University System, and others can provide a pool of local potential employees that could be complemented with relationships with educational institutions based in the U.S. mainland, for example in states such as Florida where clusters of Puerto Rican students do reside.

The piece’s author, Raúl Burgos, is a business executive with 30-plus years of experience and is president and managing partner of Global 1080 Business Solutions and G1080 Consulting. Send comments to [email protected].

Not all businesses are alike, and depending on where you are in the life cycle of your business and industry, implementing these strategies will require careful planning and may involve upfront investment, particularly when it comes to technology and training. Seeking guidance from an experienced business consulting firm that understands the nuances of the market and industry will help this process.

The long-term benefits of building a more efficient, engaged and skilled workforce can significantly outweigh any initial costs, allowing you to set your business up for sustained growth even in challenging times. It can be done.

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This story was written by our staff based on a press release.

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