Competing for Labor
As
the overall labor market tightens, having access to lower-cost labor is
based on a company's ability to compete for labor. With the loss of the
social contract between employer and employee, i.e., of "employment for
life" that permeated the culture of previous generations, the employee
loyalty factor has been greatly diminished. Essentially, employees will
stay in a given position at a particular company only as long as there
is not a better opportunity elsewhere. In order to address this
phenomenon, companies need to be aware of how employees "rate" their
employers and how well they are competitively positioned in the local
labor market.
There are five common factors - the five "C's" -
that employees and prospective job candidates consider when evaluating
a particular job situation:
1. Compensation and benefits:
These include base compensation, pay for performance, bonuses,
incentives and commissions, as well as the benefits package.
Compensation and benefits packages have become more comprehensive and
flexible to attract a labor force with diverse needs. In tight labor
markets, job candidates will rank benefits high, particularly features
like 401(k) plan options, access to stock options, and elimination of
waiting periods for insurance coverage and other benefits.
2. Career opportunity:
Job experiences that allow the employee to demonstrate and expand
competency of skills are regarded highly. Titles are less important to
younger workers, but working on "hot projects" and new technology is
much more valued.
3. Company image and culture:
This includes brand recognition and image, company reputation, type of
work environment, approachability and style of leadership, dress code,
and other operating norms. Image and culture perceptions are formed by
the website presentation, office and building design and maintenance,
access to healthcare/fitness and daycare facilities, and flexibility of
work hours.
4. Commutation:
The common ideal commute time is up to 20 minutes in small and
mid-sized areas and 45 minutes or more in major metro areas. When a
commute exceeds 30 minutes, employees frequently will seek options for
employment to reduce commute times. Employers entering a community may
seek locations that intercept longer commute patterns for existing
employees as a potential recruiting strategy.
5. Community attributes:
Consideration of community quality of life is critical when hiring and
relocating talent from outside the area for functions such as
headquarters, R&D, software development, and highly technical
production. Primary considerations are the availability and cost of
housing, the overall cost of living, quality of local school systems,
cultural and recreational options, parks and meeting places, and
healthcare facilities. Evaluation of an area is highly subjective and
will vary by the life stage, life style, and special family needs of
the prospective employee.
How Communities Can Help Companies Address Labor Costs
The
best approach to sustaining existing companies is to know their needs
and their position within the product life cycle for locally produced
products and/or services. To enhance a company's productivity, the
community can partner with a local or state-level university to provide
free or low-cost process-technology improvements - particularly for
smaller or mid-size companies. In addition, the community can survey
labor needs of local companies and assure that local students and the
labor force are aware of pending and future skill needs and that local
colleges and training facilities offer courses related to the skill
requirements. Communities that become more active partners with their
local companies have a better chance of meeting needs early rather than
trying to offer incentives too late in the company's decision to
relocate from the area.
As labor becomes a much higher
proportion of a company's operating budget, the need to seek locations
that offer high productivity at a competitive wage rate becomes even
more critical. Communities that understand their wage positioning,
become familiar with company needs vs. life cycle stages, and promote
their level of productivity and technology support will ultimately be
the winners.
