Prior to the onset of the COVID-19 pandemic, one of the top complaints from employers was the inability to find employees to fill their job openings. At the time, Wisconsin’s unemployment rate was near 3% and it was a challenge for companies to grow their workforce.
Fast forward to this spring and employers again are finding it difficult to fill open jobs. With widely distributed COVID-19 vaccines and relaxed public health restrictions, consumer demand has returned and economic activity continues to increase.
Wisconsin’s unemployment rate is at 3.9%, which, while higher than it was pre-pandemic, is still relatively low.
Many business leaders have pushed for Wisconsin to end the additional $300 in weekly unemployment benefits added in federal COVID relief packages, seeing it as an incentive holding people back from returning to the labor force.
As president of Brookfield-based QPS Employment Group, Ryan Festerling has a front row seat to how the labor force is reacting as the economy ramps up again. QPS provides staffing services to more than 1,000 companies across seven Midwestern states, many in light industrial, warehousing and manufacturing settings.
Festerling said that while the enhanced benefit is likely keeping some people on the sidelines, QPS hasn’t seen a dramatic shift in applicants in states where the benefit has been ended.
“I would love to tell you that it was this big light switch that all of the sudden candidates came out of the woodwork, it’s just not the case,” Feseterling said on the latest BizTimes MKE Podcast.
He joined BizTimes associate editor Arthur Thomas to discuss what QPS is seeing in the labor market and offer some strategies for businesses to consider. Here are a few highlights from the conversation:
Pay rate is not everything
Festerling said companies are working hard to keep their wages competitive and QPS is seeing 10% and 15% increases in base wages. However, he said companies are often excited to have increased starting wages from $14 to $16 or from $16 to $18 per hour only to find the market has moved higher while they were making the change.
“We definitely see that pay rates help, but I don’t think even some of our best paying employers are sitting in the catbird seat saying ‘we’re good.’ They have openings as well,” Festerling said.
He said companies need to look at their wages as a cost of entry.
“We have to make sure we don’t look at it as the thing to fix it, cause it’s just not,” he said.
Look in the mirror
Festerling said companies trying to solve their workforce challenges should look within their own organization to understand what is happening with their workforce.
In particular, he said companies need to study the areas that are doing particularly well and emulate those actions.
“Study what works, study why people stay,” he said, noting that studying why people leave doesn’t always help since the opposite of that reason isn’t necessarily what keeps them with the company.
Get into the details and make small gains
While it may be frustrating if employees leave or choose not to show up, Festerling cautioned against having a defeatist attitude. Instead, he suggested companies should study their employee turnover at a detailed level. He pointed out a company cannot improve its annual turnover levels without first addressing turnover on a monthly, weekly or even daily level.
Festerling places particular emphasis on turnover in the first week of employment, which he said can be especially costly and disruptive for a company. He suggested identifying the rate of turnover in those early days and then making small goals to improve it.
“A lot of this is going to be about supervisors engaging, a lot of it is going to be doing things that are a little bit unconventional,” Festerling said.
He pointed to a recent example where a customer went from 13% to 10% turnover. The customer was dismayed at the lack of progress, but Festerling highlighted that 3 percentage points as a share of 13% is significant. The customer went back and reviewed where the progress had been made and found it was within two supervisor areas and not in others. Festerling advised the customer to study those two areas, figure out what worked and then scale that to the wider organization.
Festerling also discussed other approaches companies can take, from focusing on the impact of remote work on company culture to broadening candidate pools with changes to drug testing and background checks. He also addressed the impact scheduling can have on the availability of labor.
“If the people side of your equation is actually causing you to not hit your numbers … what If we started from the labor standpoint and said what is the best scheduling that we can do for our people?” he said.
To hear more from Festerling, listen to the full episode in the player at the top of this page or subscribe to the BizTimes MKE Podcast on Apple or Spotify.