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Hiring in 2022 is no easy task.
Wisconsin’s unemployment rate is at a record low of 2.8%. Wages climbed more than 6% year-over-year for three straight months to start the year. The state has seen more than 200,000 job openings every month since June, and nearly 80,000 people in Wisconsin quit their jobs on average each month in 2021.
“It’s incredibly challenging. It’s the most challenging I’ve seen in my career,” said Clarke Sinclair, director of talent acquisition at Milwaukee-based blood health solutions organization Versiti Inc.
Labor shortages show up in all kinds of ways in the economy, from manufacturers producing less to day care centers closing classrooms. From restaurants closing early – or even altogether – to burned out nursing staffs stretched beyond their limit.
The job market was already tight before the COVID-19 pandemic. Back then it wasn’t uncommon to hear employers say they could grow more, sell more and generally do more if only they could find the people. The skills gap complaints of the early 2010s gave way to a body gap: There just were not enough people.
Wisconsin’s current labor force has around 20,600 more people than it did at its highest point in 2019, but at 3.14 million it has grown just 0.04% in 13 years.
“Demographic trends decades in the making are challenging businesses in their pursuit of more workers,” said Jennifer Sereno, communications director at the state Department of Workforce Development, highlighting issues like low birth rates, net zero to negative immigration and migration and the retirement of baby boomers.
The trends may be decades in the making, but a global pandemic, several weeks of shutdowns and proof that remote work was not the end of all productivity also mean the post-COVID labor force has new ideas about what matters in life and what they want in a job.
“I think human beings have just reprioritized what’s important in life,” said Ryan Festerling, president of Brookfield-based QPS Employment Group. “As a human, I don’t think it’s a bad thing. As an employer and as someone that’s in the staffing business, it makes it challenging.”
The good news is Wisconsin’s real GDP exceeded pre-pandemic levels in the fourth quarter of 2021 at $306.7 billion, the highest level on record, even as total nonfarm employment is still down by 68,000 from February 2020, meaning productivity is up about 3.5%.
“This is a clear sign of a more modern production sector that is supplementing operations with increased technological efficiency to overcome the impact of a flat workforce,” Sereno said.
Wisconsin’s labor force participation rate is also consistently among the highest in the country and has rebounded to above pre-pandemic levels.
The bad news is Wisconsin’s economy may have recovered, but other states are doing better. Wisconsin’s GDP growth ranks 41st since the end of 2019 and the productivity gains rank 34th.
Making matters worse, the outlook for Wisconsin’s workforce is not promising. By 2040, nearly the same number of state residents will be over the age of 55 as will be 25 to 54, according to estimates from the University of Wisconsin-Madison Applied Population Laboratory. The state’s population grew at less than half the rate of the U.S. in the last decade, and growth has gotten off to a slow start in the 2020s. In metro Milwaukee, the population dropped 7,100 last year after growing just 1.2% in the previous decade.
The need for growth
Of course, Wisconsin is not alone in facing labor challenges. Other states and countries face similar issues.
“It’s limiting the state’s growth, it’s limiting national growth, it’s limiting global growth,” Dennis Winters, chief economists at DWD, said on a recent call with reporters. “It’s not just Wisconsin, the lack of talent is global.”
The fact that others face the same issues makes it more important that the state find ways to grow its labor force. If a state or region can make more people with the right skills available to companies, it will be well-positioned to capture future growth opportunities. Some cities and states are tackling the issues with cash, tax credits and other incentives to attract people.
If Wisconsin fails to expand and grow its workforce, it will only become more challenging for the state’s existing companies, and economic growth here will continue to lag. Companies may expand elsewhere and, ultimately, the state’s economy would suffer.
“One of the things that worries me is that when you think about what happens when the job market is tight is it means people have to focus on, I’ll call it, operational maintenance versus strategic priorities,” said Kathy Henrich, chief executive officer of the MKE Tech Hub Coalition. “What happens over time is if you’re not investing in your future, we’re not going to maintain our competitiveness and our innovation to be globally competitive.”
Among the efforts aimed at bolstering the available workforce is the Metropolitan Milwaukee Association of Commerce’s Region of Choice initiative, which seeks to increase the number of African American and Hispanic employees in metro Milwaukee by 15% and the number of managers from those groups by 25% by 2023.
“If we cannot figure out how to do a much better job of preparing, developing and retaining the talent that we have, we are not going to be a successful region in the future,” said Julie Granger, executive vice president at MMAC.
The MKE Tech Hub’s research suggests top factors for employees considering relocating to the region include working on problems that matter, using current technology, having clear career paths and employers showing a commitment to diversity.
“We have to be promoting our progress and commitment and ask people to be part of the solution,” Henrich said of DEI (diversity, equity and inclusion) efforts.
Region of Choice has shown early progress with the number of African American and Hispanic employees at participating companies up 6.2% by 2020 and the number of managers up 23%.
Corry Joe Biddle, vice president of community affairs at MMAC, said more companies are looking at how people advance through their organization and providing more transparent and clear pathways. Anecdotally, she’s hearing companies are making more investments in people.
“It’s not just about advancement, it is really a retention tool,” she said.
Diversity is growing as an important issue for all workers, especially as Generation Z becomes a greater percentage of the workforce.
“These 20-somethings really are unapologetic about their expectations around equity and inclusion, and they’re the most diverse cohort ever. That is just a standard for them,” Biddle said.
Granger added that Gen Z is coming into the workforce amid the backdrop of COVID-19 and societal change and can be emboldened by their circumstances and environment.
“Employees hold a lot of capital right now … they’re just in demand and they know it,” she said.
Born between 1997 and 2012, Gen Z came of age with smart phones and social media in their life. Their experiences have been shaped by major events like the pandemic; controversial deaths of Black people and subsequent protests; school shootings; increasing attention on climate change and mental health; and political polarization.
“What we’re seeing is Gen Z have very high expectations for their employers. Gen Z, they’re very well rounded, they’re very educated and they’re very opinioned,” said Kimberly Kane, president and chief executive officer of Milwaukee-based Kane Communications Group.
Jim Morgan, vice president of business development and workforce strategies at Waukesha-based employer association MRA, suggested companies might opt to rely on Gen Z employees for more presentations and noted CEOs are increasingly looking at the unique skills of younger generations.
“You put a camera in their face and they don’t even blink an eye at it, whereas you put it in front of a 55-year-old and they’re liable to freeze for five minutes until they figure out what they want to say,” he said.
Gen Z also does generally seem to have more confidence than other generations at their age and a willingness to ask why, Morgan added.
Festerling thinks Gen Z is generally willing to put up with less in the workplace than prior generations.
“If we don’t listen to how they want to work, we’re going to lose,” he said.
A focus on retention
Whether they’re baby boomers, Gen Z or somewhere in between, keeping current employees is step one in addressing labor challenges. Most of the thousands of Wisconsinites quitting their jobs aren’t leaving the workforce altogether. They’re going to other companies.
Employers should spend a disproportionate amount of time making sure their current employees are excited about the prospect of coming back tomorrow, Festerling suggested.
“What employees really want is to be part of a workplace where they feel valued,” Kane said.
Kane regularly consults with businesses, surveying their employees and comparing the findings against state benchmarks. Once employers realize they have issues, the question becomes how to change the environment.
“That’s often where eyes go to the ground, where people can’t really answer that question,” Kane said. “Today, companies don’t have a choice in this area. If they want to retain employees, if they want to recruit top talent, they have to answer the question, ‘Why would employees want to work for me?’”
The answer may be different for employees in different parts of the organization, and it’s important to ask employees what they are looking for and need in order to stay, said Morgan.
“It’s a tough question to ask because you better be ready for the responses that you might get,” he said.
One of Kane’s clients is the Wisconsin Center District. When Marty Brooks joined the organization as president and CEO in early 2018, he spent the first few months getting to know the business and found it wasn’t reaching its potential.
“Something didn’t seem right,” said Brooks.
A late 2018 employee engagement survey shed some light. WCD had communication issues, people were siloed and no attention was paid to job satisfaction or career growth.
“Where we were was an organization that was in turmoil,” Brooks said. “The vast majority of the staff, be they full- or part-time, were working here for a paycheck.”
Staff needed to know they could make decisions and take steps to satisfy guests. Even if leadership didn’t agree with the decision, they’d support it and then discuss doing things differently in the future after the fact, Brooks said.
“In our business, like many other businesses, tomorrow isn’t a satisfactory answer for someone,” he said. “If you’ve got an issue with a seating problem for tonight’s concert, getting it addressed tomorrow does no good.”
The survey served as the basis for changes, including new organizational pillars (be bold, be proud, be experience-obsessed), organization-paid employee parking, regular town hall meetings and an increase in minimum wage to $15.
WCD is now finishing a second survey to drive more improvement.
“It is a very dedicated and purposeful, intentional focus on a continued path of growth,” said Sarah Maio, vice president of marketing and communications at WCD, noting great employees will always have choices.
Taking feedback and acting on it also has other benefits.
“What we’ve ended up doing is getting on a path to creating brand ambassadors,” Maio said, noting employees are increasingly referring potential candidates to WCD.
Employee input can also shape company benefits. Offering more PTO may seem like a good idea, but if employees are already stretched thin, they may only see it as a stack of work waiting for them if they use it, Morgan said. A better option might be adding more people to the team if possible.
Different age groups also view benefits differently. Student loan repayment might be more attractive to someone in their 20s, while a 35-year-old might want help with childcare. Someone in their 40s might be attracted to a 401(k) match, while extra vacation could grab the attention of someone in their 50s.
“You’re seeing an increased emphasis with managers knowing their people well and what is it that they need,” Morgan said.
While more individualized benefits are possible, there can be legal obstacles. Instead, companies are providing additional cash benefits and allowing employees to decide how to spend it, Morgan added.
And while it is possible to put systems in place to manage more individualized benefits, the heavy lift is identifying employee wants by listening and sourcing providers, Sinclair said.
Retention is also about more than benefits and engagement surveys. It starts with the onboarding process. An employee may eventually leave for more pay, but other factors play a role in the decision.
“It shows up when you don’t train properly, when you don’t build properly, when you don’t help people grow, when you don’t help people connect, when you don’t provide them mentors, all that stuff,” said Jeremy Fojut, CEO and co-founder of Milwaukee-based Like|Minded.
Companies should think about where the initial focus is for new employees, Fojut added. Is the emphasis on meeting the HR director? Or does the new hire talk one-on-one, not just in a group, with the people they will work with?
Rachel Margolis, a talent acquisition supervisor who joined Versiti during the pandemic, said even the virtual equivalent of an open-door policy helped her find her way in the organization.
“Knowing that you could call a co-worker, a hiring manager, your boss at any given time to say, ‘I need help, please help me navigate through this,’ because it’s not just peeping your head into the office next door,” she said.
People know there are other opportunities out there, even if they are not actively looking, and turnover has gone up, Sinclair said.
“We’re approaching it from a transparent, honest place of focusing on our culture, focusing on our mission and listening,” he said.
Versiti’s mission, which is directly connected to saving lives through blood drives, research, organ procurement and testing, also gives it an advantage in recruiting and retaining employees, but it has its limits.
“It’s a great reason to come here, it’s a great reason to stay here, but ultimately this is still someone’s job, their career, and they’re going to get what they want and need out of their career beyond just having that mission to focus on,” Sinclair said.
Hire with urgency
The reality is employees are going to leave. Job tenure trended down over the past decade and the pandemic only gave workers more motivation to reconsider what they want. People leaving their jobs also means there are opportunities to add new talent, but businesses must act fast.
“You can assume that if you find a good person, they have two to three other opportunities,” Festerling said, estimating there’s a 30% to 40% chance a candidate will go elsewhere for each week a business delays a hiring decision. “If you don’t act fast, you will lose that person.”
Companies are likely to lose a candidate if it takes longer than two weeks to go from first contact to a hiring decision, Morgan said.
“Because they own the market, they’re looking while they’re looking, they’re looking after they’re interviewing, they’re looking after they’re hired,” he added.
“This is pay and title agnostic,” Festerling said.
Some companies offer internships within 24 hours of receiving an application, Henrich said.
Of course, hiring quickly sounds great in theory, but for employers, it comes with inherent risk. What if the candidate isn’t a good fit? Worse, what if they are downright toxic for company culture? What if there’s a better option?
“We also don’t want to rush because we don’t want someone to make a decision that they have not thoroughly thought through or that we have not thoroughly thought through,” Sinclair said.
Moving with urgency but not rushing requires organization, he added. The talent acquisition team works to get candidates in front of managers quickly, help make solid but expedited decisions and get back to candidates quickly.
“Managers have made it a priority to interview candidates because they understand it. It’s not because they’re told they need to, it’s because they get it,” Sinclair said.
Defining what you want in a candidate and what you’ll pay before going into the market can help with speed, Festerling said.
It isn’t uncommon for an early interview to be a near perfect fit but for the person doing the hiring to still see other candidates.
“The answer should be ‘why?’” Festerling said. “If you just want to ‘date other people’ so you’re convicted about who you want to marry, you’re going to lose.”
‘Flexibility is the new non-negotiable’
Beyond moving quickly, employers are being forced to offer more flexibility to workers than in the past. For some, that means going fully remote or adopting a hybrid model. Each approach comes with its own challenges: How and when should teams come together to work in person? How do primarily remote employees avoid being passed over for promotions? What about those who would prefer an all in-person office experience?
“Flexibility is the new non-negotiable,” said Susan Koehn, vice president of talent and industry partnership at MMAC and Milwaukee 7.
The consensus among a group of top Milwaukee-area HR leaders brought together by MMAC is two or three days in the office, Koehn said, adding employers generally want to stay in line with others in the area to avoid an exodus of employees if they push too hard for a greater office presence.
Companies requiring a set number of days in the office will still lose out on talent, Fojut suggested.
“The problem with everybody doing hybrid is they have no idea what they want to do with it,” he said.
Employers would do better bringing employees together on a quarterly basis to hang out, have fun and learn about each other or to hold monthly coworking days where people can connect, Fojut said.
“We think communication is connection,” he said. “Communication actually taps into a different part of the brain than connection does. Connection is about empathy, listening, laughter. We think that just because we send an email or a social post we’re connecting, we’re not”
Instead, some employers seem to be coming to the office for the sake of coming to the office.
“People are doing that a ton here in Milwaukee,” Fojut said.
More remote work also opens the pool of potential talent for local companies, but local residents also have opportunities to work for businesses around the country or the world.
“It’s a double-edged sword,” Koehn said.
Plus, not every job lends itself to remote work. At Versiti, for example, phlebotomists have to be with donors to collect blood. In manufacturing, it would be beyond difficult to send a CNC machine or assembly line home with someone.
Employers can still find ways to offer flexibility. In some of its facilities, Generac, which has 700 openings in Wisconsin, offers as many as 14 different shifts, including options that allow employees to see kids off to school or to work weekend-only shifts.
“Given the current labor market, we’ve become a lot more creative and flexible in our manufacturing facilities. Gone are the days of three shifts,” said Rhonda Matschke, executive vice president of human resources at the Town of Genesee-based manufacturer.
Versiti has tried assigning employees to blood drives closer to home or at set times of day and explored different workweek arrangements. For some, working four longer days may be a better fit, while others may be more open to six shorter days per week.
“It’s a tough dance, because we’re also trying to be as convenient to the donors as we can be,” Sinclair said.
Wages still matter
While many factors influence hiring, wages still do shape employee decision-making. A QPS survey of employees across eight mostly Midwestern states found 60% would leave their job for a pay increase, although 24% said they would need a $5 per hour bump to leave.
Companies are increasingly willing to pay to get talent. More QPS customers are interested in direct-hire services instead of using temporary or contract arraignments, Festerling said. Starting wages have been pushed higher, and it is not uncommon to see $1,000-plus signing bonuses.
“All of that is great, it’s attention-getting and it sort of stops the bleeding if that works in terms of getting people,” Morgan said.
The problem, he added, is if a company is offering an $8,000 sign-on bonus but doesn’t offer anything to employees who started a few months earlier. Then hiring one person creates retention issues with others.
A January MRA survey found more than 90% of companies are offering signing bonuses for at least some positions. Depending on the job, a quarter to a third or more of bonuses are worth at least $1,000. Most pay out right away and nearly four in 10 did not include requirements for an employee to stay.
Another MRA survey found 66% of employers had adjusted pay ranges and starting wages to account for higher wage demands, while another 19% made increases to starting wages only. Morgan cautioned employers making starting wage changes to adjust at other points on the scale, too.
“They’ve got to look at this a little bit more wholistically,” he said.
With many companies using wages and bonuses to attract employees, some small- and medium-sized businesses simply may not be able to compete financially for talent, Morgan said. For those companies, he suggested identifying potential employee groups with a lifestyle matching the company’s work style and then utilizing benefits to attract that group.
Some ideas include three 12-hour shifts instead of five, eight-hour shifts, targeting those in their early 60s who might have left the workforce at the onset of the pandemic, or finding a way to help young parents with childcare issues.
“Maybe instead of hiring five full-time people, we hire 10 part-time people and they swap their childcare with each other,” he suggested.
While many businesses are getting creative, Morgan acknowledged some older business leaders don’t see the need for new benefits like a Netflix subscription, signing bonus, box of company swag or assigned mentor and have more of a “lucky to work here” attitude.
“That hasn’t quite sunk in with everybody yet,” he said. “It’s just the market that we’re in right now and demographically, it’s going to last for a little while.”
To Festerling, it is generally a good thing more companies are taking innovative approaches and trying to position themselves better for the future.
“Having CEOs get involved at the lowest level of culture is positive,” he said. “Watching operations managers study the candidate lifecycle and why people are leaving and why people are staying, that’s a net positive.”
Average Hires, Job Openings and Quits: Pre- and Post-COVID
Milwaukee’s path forward
Looking ahead, the picture only gets more complicated for employers. Yes, the labor market is tight, but the economy is also full of uncertainty. Inflation, supply chain and COVID-19 challenges remain, there is an ongoing war in Ukraine, U.S. GDP decreased 1.4% in the first quarter, and it isn’t hard to imagine circumstances conspiring to tip the economy into recession.
Depending on the depth of a slowdown, employers could be left with tough decisions when it comes to the staff they’re working hard to hire. Let people go and they likely won’t be there when the economy returns, or keep paying them and cut production.
“I’m between a rock and a hard place here because either one of those decisions could be the end of me as I know it,” Morgan said.
Regardless of the direction of the economy, Wisconsin and Milwaukee face demographic challenges.
With Milwaukee Mayor Cavalier Johnson embracing the idea of somehow drastically increasing the city’s population to 1 million, Fojut suggested every decision at city government should be made while at least asking if it would help grow the city.
“Culturally, the city has to change,” Fojut said. “The city has to say it’s all about growth, not about maintaining. We have a really maintain culture, and we don’t expect a lot. That’s been the problem.”
He also suggested employers need to think more about how to develop the next generation of talent, which also offers access to a bigger pool of talent.
Festerling has a similar suggestion.
“We have to find a way to give more people more chances,” he said.
One of Festerling’s concerns is the automation companies, especially in manufacturing, will adopt to get through talent shortages and will leave some people behind even as employers cannot fill other jobs.
He pointed to a customer having difficulty filling maintenance positions. Finding a solution requires looking at what makes a good, entry-level maintenance person – things like mechanical aptitude and an ability to problem-solve. People with experience as machine operators might be a good fit, but the company needs to be willing to invest in training over six months or a year, Festerling said.
“Take every job that we have a shortage of, I would say half of them we can build them, but it’s going to take us as employers being really deliberate,” he said.
Similarly in tech, creativity could keep more people in the region. Henrich pointed to data gathered by MMAC suggesting there are three times more graduates than entry-level positions in tech fields in the region.
Companies could create more entry-level roles – and ultimately retain more graduates – by breaking down the work that needs to be done and realigning it, Henrich said. The result might be two entry-level jobs and one mid-level instead of just two mid-level positions.
Another alternative would be upskilling current entry-level employees to higher-level roles faster. Those investments are typically less expensive than moving someone into the region and help with retention, Henrich said.
Beyond specific efforts to retrain and retain talent, companies and the region have work to do on their brand.
“I do think that this Milwaukee region continues to be misunderstood and really still defined by maybe the ‘Happy Days’ era,” Kane said.
Henrich said the region has not told its story broadly enough.
“What is different about this region is a lot of our tech is embedded in traditional industries versus being a tech industry,” she said.
Kane said Midwest companies are slow to change and like to run using dashboards and metrics based on sales and efficiency. They think about what they do, make great products, but not enough about why.
“I think the thing that plagues Milwaukee companies the most is their inability to understand how to build an employer brand,” Fojut said.
Koehn said the idea of an employer brand, marrying talent attraction and marketing, is new for a lot of people but many are starting to understand acquiring an employee can cost as much as acquiring a customer, and budgets should reflect that dynamic.
“That’s not second nature, and that’s where we’re starting to see some divergence between winners and losers in this job market,” she said.
Fojut said many companies in the region like to participate in culture but don’t know how to create the kind of external culture that would attract people.
“I’m not saying these places are bad to work, but it’s not like somebody in Atlanta is waking up and saying ‘I want to work for a company in Milwaukee,’” he said.