Where Did the People Go? Survival Hacks for a Lonely Business Owner When Staff are Scarce.

During and since the COVID pandemic across the breadth of industries that we serve, there is one question that haunts so many of our clients… 

We are of course talking about the question: Where Did The People Go? Staff that is!

There are just so many factors to be considered in answering this. And the published pundits disagree on the causes, predict different outcomes, and propose different solutions,none of which seem to apply to the individual client. 

Contributors to Labor Shortage

Labor shortage is most pronounced in developed countries (eg. USA, Canada, Australia, most of western Europe) but is also evident in developing countries (eg. Vietnam, Taiwan). Even countries with an overall oversupply of labor, such as India, face an undersupply of skilled labor. 

Multiple factors are proposed to contribute to labor shortages across multiple industries  and several have been exacerbated by the COVID-19 pandemic and international responses.

Supply was decreased during the pandemic as the workforce was in many cases not permitted to produce. Yet demand did not proportionately decrease,and in some cases, paradoxically expanded. Some argue that the increased demand was as a result of massive, unprecedented government subsidies. That is likely correct. 

Some have also argued that government subsidies should not have occurred (i.e. governments should have let the chips fall where they may). However, let us for a moment consider what would have occurred globally if the developed world stopped consuming. How many billions of people globally would not have had jobs to return to? And with what consequence?

In any case, this mismatch of supply and demand created a deficit that will take a long time returning to balance. The pandemic basically exposed and exacerbated a risk that was pre-existent.

During the pandemic, particularly in the developed world, there was a massive subsidy or payment for work not done. Yet, the data suggests that the subsidy alone was not a major factor in the labor pool’s decision not to return to work. While some did leave the labor force as a result of this and have not yet returned, the perception of getting something for nothing is a fallacy that puts the animal nature of man on a course towards addiction. It breaks the link between service and reward. What has not been well studied is the effect on expectations of the workforce of getting unearned pay, which we propose is a more significant factor. If one can be paid (rewarded) for not producing, how much more does one expect to be rewarded when one does produce?

The worker might have had an opportunity to consider what other priorities they might have beyond work. And now, they have also reset expectations of what a job ‘must provide’ in order for them to return to work. Some jobs might not be able to provide some of these ‘must haves’ (eg. remote work in some industries). Millions of employees have relocated and are no longer available to work in the industries where they previously worked. 

There has been a training deficit. Less staff less trained reduces output quantity and quality.

Pandemic related work and school restrictions definitely reduced the availability of labor. And this effect has particularly affected women who have often assumed more prominent nurturing roles in the family. It also disproportionately affected lower socio-economic level workers where ‘delegating’ child care, for instance, was less economically feasible. 

In some countries such as China, massive numbers of workers in some of the world’s most prolific manufacturing centers were unable to work for long periods of time.

So, as we can see, multiple factors have contributed to the labor deficit.

Productivity does not directly correlate with a decrease in employment hours. For most of the world’s productivity, it is not a pure product of # hrs x # of widgets/hr. There is also a factor for engagement of the workforce. A worker’s engagement correlates directly with their perception that the job is helping them fulfill what they value most. So, if they most value their kids having a high quality education and they can see that their job helps them achieve that, they will be more engaged in that job.

Business as an Organism

In this section, we will introduce the concept of the business as a whole organism with a few different working parts similar to cells. We will then use this to explain the critical interdependence of owners and employees.

If we were to consider the business as an organism, then the investor and owner on one side and the employees on the other side, are akin to different specialized cells within the organism. Each is a specialist with a value proposition to offer to the other party – and when that transaction between them occurs, the organism learns and grows, is more adaptable to evolutionary pressures, and the probability of survival increases.

So, it appears that it is preferable for the cells of this organism to ‘do business’ together –  to engage in this transaction.

Let’s analyze where we are then with our two cells – employees and owners. Each is a differentiated specialist in its own right. Each offers a ‘service’ to the other. And both of their products or services are required for the business to grow, adapt, survive, etc.

This transaction pre-supposes an exchange in value. Party A (the employee) provides labor for instance and party B (the owner) provides monetary value for instance. Note that in total, the goods and services provided by one party must equal the goods and services provided by the other (we shall discuss why later). Each cell then has a vested interest in the other cell surviving and thriving. The owner has a vested interest in the employees’ wellbeing and the employees have a vested interest in the owner’s wellbeing.

Now, let us examine the currency that might be exchanged.

The owner cell might provide the following to the labor cell: a dollar value as a wage, an infrastructure where they might ply their trade, security and stability for their family, a social network, a buffer against risks that can and do occur in the marketplace, etc. For the labor cell, the dollar value being amongst the most easily convertible, is traded in another marketplace for whatever the labor cell values more than the money itself. For instance, the labor cell may trade that dollar for learning, for resources to start their own business, for saving for their future, for their families, for growing their social network, for accessing medical care, or for furthering some spiritual quest among an infinite range of possibilities. 

The labor cell might provide the following to the owner cell: the very machine that allows a vision to turn into a plan and into execution so that there is an eventual product or service. Those goods and services are then sold in another marketplace for dollars. The dollars that accrue to the owner, after expenses are paid, become profit. A discussion of how profit relates to cash flow or equity is beyond the scope of this article. Essentially though, the owner is left with some dollar that may be traded in the ‘outside market’ for anything that is of higher value to the owner than money itself – similar to the options available to the labor cell in the paragraph above.

What is critical here is to recognize that more is being exchanged in this transaction than ‘just labor’ or ‘just wages.’

There can be no excess value given or received by the owner or by employees. If one side gets more than the other, the law of conservation would be broken. And there are no examples of this law being broken anywhere in nature – so why should it occur within the business organism?

Now, frequently, the total of all currencies being exchanged by either party in the transaction is not considered. What is considered is dollars only, or at least predominantly. When this occurs, resentment builds up from one party to the other. Eg. labor resents the owner for not paying more dollars. If this situation is not brought into balance either on a sensory basis by changing the perception or awareness of all the other forms of currency being exchanged; or on a motor basis by adding more currency (eg. dollars, employee benefits, flexibility) from the owner into the pot being given to labor, resentment builds. Interestingly, the instantaneous build up of ‘resentment’ is a currency too. It might get converted into another form at the next round of labor negotiations for instance, or it might build up enough that the employee leaves that job.

This perception of imbalance occurs in the other direction too. 

Failure to recognize that these equations are instantaneously balanced (i.e. a sensory fix as perceptions are changed), or taking steps to add or subtract currency (i.e. a motor fix as something is ‘done’), leads to increased stress on the organism and eventual disease or death. It also explains the swings of the pendulum we observe in the marketplace, where sometimes labor seems to have the upper hand (as some perceive is currently the case) and sometimes where the owner is perceived to have the upper hand. 

We have described here some of the laws that govern all interactions between owners and staff and some of the economic laws that are adhered to in every such interaction. 

In our Extended Member Teaching, we shall review some of the principles and specific tools that you might apply to address the challenges that you might be facing with staffing. Join us here for that. On a rare occasion, we meet an owner who thinks that they are immune to the effects of staff challenges – that is until we ask about their upline or downline, their vendors or buyers. Then, the fallacy of them being self-sufficient on their island rapidly collapses. For not one of us is an island discrete.

Until the Next Perfect Time…

Amit and Kumar Ramlall

PS… In our Extended Member Teaching, titled: “So What You Gonna Do?, we review some of the specific steps we have advised our clients to take to help address their staffing challenges. As you might predict given your experience with us thus far, different clients have taken even one of those tools and used it as a launching pad for new businesses or product / service lines that have significantly up leveled their business. Your challenges hold the seeds of your next growth steps. Join us here.