Friday, August 8, 2008

Looming labour shortage

Over the next 3-4 decades, throughout the developed world, 26% of the adult population will enter retirement age. Simply becoming 65 years old doesn't mean automatic retirement, for some the option of retiring simply is not there. However employer agencies will face a number of issues related to our ageing society.

The community sector will be particularly hard hit by this emerging scenario. Why? The community sector is the poor cousin when it comes to remunerating its people. As a sector it recruits a range of professionals including psychologists, counsellers and social workers. These same people are in high demand in our public sector, health sector, education sector and the private sector. Where upon in recent years there has been a surplus of people entering these professions, there will be less people doing so within the next generation of people and those that are currently in the workplace are rapidly heading towards retirement age.

To add to the complexity of the equation, many professionals in our field are female. In many instances, females are more suited to many of the roles and in the past many of these roles have been part-time, again suiting the need amongst working mums for flexible work hours. For many of the baby boomer group, both parents have been working for a number of years now, they have invested and saved towards their retirement and they don't share the viewpoint of their parents that they should work themselves to death. While employers would prefer phased retirement, it is possible the bulk of those turning 60+ over the next few years will simply choose to take their money and relax to the best of their abilities.

From 2021 the baby boomers will begin to enter the retirement stage of their lives, in fact the first of that group will begin to enter aged care. This will likely create shortages of staff in our sector. The community sector is a people business - outcomes are achieved by people interacting one on one with other people - when there is a shortage of labour, our service sector organisations will be unable to effectively deliver services.

As service providers what can we do to minimise the impact of this trend? Firstly, we cannot reverse the trend. We need to look at our recruitment and retention processes. We will need to look, critcally, at our workplace practices and at how we deliver our services and we will need to look at our funding strategies as we will likely need to pay higher levels of remuneration than Government funding would allow for. One thing is for certain we will need to be proactive rather than wait for Government guidance. While Governments are aware of the looming issues, they are incapable of proactive action and will only react to public pressure for change after the cost has been incurred.

First step is some long term strategic planning. While it is difficult to predict labour needs beyond the short term; it is possible to make some projections and undertake scenario planning. More importantly the process focuses the governance team and management on the emerging environment and begins to shape future planning.

Predicted labour shortages are likely to cause a great deal of heartache amongst governance teams of community organisations, in particular those that have paid employees. The traditional approach within the sector is to wait till a problem impacts, then to complain loudly about the lack of support from Government. This approach will little effect in regards to labour shortages. Government everywhere cannot change the population statistics. They cannot build factories to clone and create the numbers of workers needed worldwide over the next 40 years. If those people are not born now, then it is to late.

Governance teams will be forced to grapple with a number of strategic issues. Top of the list will be how to fund their organisation. Look for exponential development of hybrid non-profits, those that have a commercial arm to the operation, as they seek to develop a revenue source independent of Government. For many governance groups this strategy is an anathema. Similarly, as organisations look to their operational processes and their ability to deliver services, governance groups will have to grapple with questions of merger and shared service delivery. Fighting over a limited pool of people is counterproductive. It will generate a self-feeding cycle of remuneration increases thus directly impacting upon service delivery.

In a strange way, pending labour shortages will likely impact more upon smaller service providers than the large providers. The large providers have greater resources and financial reserves, the will likely be able to be more strategic in their offerings to employees, they can share resources across centres and minimise costs.

In the past non-profits have relied upon 'social conscience', a vague term used to describe why someone would work hard for little remuneration in a sector that provides little in the way of personal recognition. Look at today's Gen Y, do they have a social conscience? Yes they do, however it is one that is tailored to meet their own personal needs, not those of society in general or any specific sector of the community. They also clearly understand the need to earn sufficient money to fund their needs. They will not work for nothing as many of the current generation do in the community sector.

One benefit an ageing population may offer is a growing pool of potential volunteers. Twenty six percent of the population will be seeking ways to utilise their time during their retirement. Many will also seek to implement a phased retirement process, therefore a pool of part time workers will be available. Will they work for peanuts? Only in so much as Government policy forces them to. On the flip side a larger pool of people will be available to draw board and committee members from. This may lead to more proactive governance.

A downside of an ageing population will be an increased need for service delivery by community organisations, from aged care to medical services, to support and advice, the list of needed services will continue to grow. At a time of the greatest need our service providers will face the greatest shortage of labour!

Monday, August 4, 2008

Front line managers are the key

Let me share with you the results of a piece of management research conducted in 2007 amongst health providers in the USA. View summary and white paper here. I originally posted this on my health management blog and though the research focuses on health management I believe the findings are applicable to management of the non-profit sector.

The research was conducted over five years and involved 500 healthcare organisations and 200,000 healthcare professionals. The study aimed to study, job satisfaction, organisational loyalty and degree of professional engagement. What was the main finding? Here it is. Leadership capability at the front-line level influences overall performance more than any other contributing factor. Rankings of leadership capability showed positive correlations with -

  • Job Satisfaction
  • Organisational Loyalty
  • Professional Engagement
  • Willingness to continue employment
  • Voluntary Turnover
  • Patient Satisfaction
  • Performance to projected budget
  • Employee productivity
  • Financial success (profitability)

I welcome feedback on this topic. Why not share your stories of how your organisation has utilised the strengths of its front line managers and supervisors?