Countering the shortage of skilled labor with employee relationship management

The shortage of skilled labor causes headaches for many companies. But is complaining always called for? No, says Kuno Ledergerber. The Head of the Center for Human Capital Management at Zurich University of Applied Sciences (ZHAW) lays the facts on the table and reveals solutions for properly acquiring, retaining and sensibly deploying the right employees. 

Everyone is talking about the shortage of skilled labor. Hardly a day passes without reports about it in the daily news. There is also no lack of political discussions and proposals for taking action to counter this major threat. Politicians and industry associations are launching task forces to come up with solutions. It seems to be a major challenge to find and retain qualified employees. That is why a few thoughts will be formulated here that are both intentionally provocative and also aimed at opening up new perspectives. Rehashing what is already known does not generally lead to solutions.

The following objectives are based on the analysis of various interviews with line managers, HR professionals and current studies. What becomes apparent is that the repetition of the same old stereotypical statements solidifies into a pattern that is hardly ever questioned anymore. These arguments are best summarized in four myths, which we will counter in the following.

“Employees should be viewed as customers who provide their human capital.”

Kuno Ledergerber

Myth no. 1

The shortage of skilled labor is omnipresent.

The impression is often given that our economy is about to collapse. Everyone is talking about a widespread shortage of skilled labor that is primarily attributable to the demographics problem. Those who do not talk about it, or who question it, are not taken seriously. It is considered good form to place this topic on the agenda. What is often lacking is an in-depth discussion, because simply naming the problem suffices to garner sufficient attention and confirmation by others who share the same problem. That is why an in-depth analysis of the labor market and its impact on one’s own company is urgently needed. 

The shortage of skilled labor does, in fact, exist, though not everywhere and not in all professional categories. This is impressively shown in a study conducted by B,S,S. Volkswirtschaftliche Beratung AG, Basel, on behalf of the State Secretariat for Economic Affairs (SECO). What’s more, there are indications that demographics alone cannot offer sufficient explana-tion in professions showing signs of a shortage of skilled labor. Hence, we need to look for other reasons. The explanation is also offered that the demographically caused replacement requirement is especially acute in professions in which the portion of employees over 50 years of age is relatively high. Apparently, there are other causes to explain the shortage of skilled labor, such as the attractiveness of the industry or the unwillingness to continue employing those over 50.

The study encourages companies, and particularly HR heads, to precisely analyze the situation in the labor markets that are relevant for their company and to become clear about the real problem.

It is entirely possible that the shortage of skilled labor does not apply to all industries and all professions. The mantra-like moaning about the unbearable situation generally tends to hinder those geared to solutions. What is also apparent is that the shortage of skilled labor is nearly exclusively quantitatively defined. This is a limitation that blocks the view of potential entre-preneurial solution approaches. Companies generally not only determine the quantitative needs for personnel, but also their qualitative requirements, i.e. the job profile and the associated requirements for potential employees. The provocative question here is whether all companies really need the three top graduates of the world’s best three universities for all activities?

Upon closer, and a more professional observation, it may be that a well-trained vocational school graduate with professional experience may well be able to meet the job requirements. And already a new labor market segment opens up. If you really only need academic personnel, then even in this market there are highly qualified people who do not always find a job because they do not precisely match the profile 1 to 1. 

This means that when searching for solutions, it also makes sense to consider other labor market segments. However, before we formulate solutions, let’s take a look at the other myths.

A man holding a young plant with a bit of earth in his hands.
Once a company manages to recruit new employees, that’s when the work begins.

Myth no. 3

Promises are formulated and kept.

An additional challenge is represented by communication towards existing and potential employees. Let me explain this by means of an example: From marketing, we know that a product can only be sold in the long term if the advertising message does not promise something that cannot be delivered. This truism, however, applies to “sales” and is not entirely applicable to jobs. Communication in the labor market, as formulated in the myth no. 3 can be described as “fact or fiction.” 

If you page through the “help wanted” ads across all media, you will notice that nearly all companies promise the same thing in a cookie cutter approach: internationality, development possibilities, a participative management, and corporate culture, interesting duties and a high degree of autonomy. Research has shown that a major information asymmetry exists between applicants and the company. The applicant can hardly verify these advertising messages during the recruiting process. However, he or she will – especially if it involves a highly coveted specialist from a professional group in which there is a shortage – quickly find out whether these promises will indeed be kept. It is thus not enough to hang management principles on the wall in the hallway or to publish values on the website or print them on mouse pads. There is an expectation that promises will be redeemed. 

Nevertheless, there are features that we publish in job offers which can actually be experienced immediately during the recruiting process and thus are verifiable. Companies that list flexibility and openness as aspects of their corporate culture should also be able to act accordingly in the recruiting process. Those who are incapable of reacting to applications within a reasonable time period or to provide reasons to justify a negative response will hardly be perceived as communicative and flexible. Surely you can come up with hundreds of examples of this.

“Operative hectic does not permit medium- and long-term solutions.”

Kuno Ledergerber

Tree in a meadow
If we determine that there is a shortage of skilled labor, then medium- and long-term strategies are needed.

Myth no. 4

Recruiting does the trick.

This leads us the myth no. 4. Those professions for which there is a potential shortage of skilled labor are also highly competitive. That is why it is especially important to establish professional relationship management with these professionals. 

When it comes to this issue, we can also reference experiences in marketing: “The systematic, active designing of customer relationships (Customer Relationship Management – CRM) has long been an essential component of professional marketing when it comes to customers in the sales market.” Professional relationship management of employ-ees or ERM (Employee Relationship Management) is just as essential. However, this requirement entails considerably more than just filling in performance management forms once a year or conducting employee surveys every three years, only to file the results in a drawer. It is an attitude towards existing and potential employees with an enormous impact on performance, motivation and the image of the company. This association should be clarified again in regard to the top three graduates of the top three universities: Should we really manage to recruit these people, then we should also be able to appropriately apply their skills and establish a relationship that ensures that they won’t consider reentering the labor market again tomorrow. If this is not the case, then valuable human capital is wasted, which is not value creation but value destruction. These considerations show that professional recruiting is a necessity, but is insufficient for finding a medium- and long-term solution for the shortage of skilled labor.

“A large information asymmetry exists between applicants and the company.”

Kuno Ledergerber

Recommended actions

With regard to this topic, the company management is encouraged to attribute the same importance to the labor market as it does to the sales market. If we are to take the moaning over the skilled labor short-age seriously, then it involves a strategic influence factor that can be crucial for competitiveness. What recommended actions can be derived from this?

1. New labor market segments

A comprehensive examination of the relevant segment of the labor market is absolutely necessary. The shortage of skilled labor is not acute in all professions. Not every diagnosed skilled labor shortage is caused by demographics. In this regard, the job profile should be critically reviewed by companies in terms of its significance for performance. Is a top academic really important for every job? Are we also ready to employ people over 40? Have we exhausted our internal potential or even considered it?

2. Strategic recruiting

If we determine that there is a shortage of skilled labor, then medium- and long-term strategies are needed. Short-term, economics-driven, hectic recruiting only solves short-term problems at best. What is necessary is interaction between the company management and HR management. If there really is a shortage of skilled labor, then this challenge should be made a priority at the management level.

3. Authentic communication

Can we really deliver what we promise both internally and externally? Advertising alone does not sell jobs, even if they are communicated in a contemporary manner through social media! Particularly for professions with a tight supply of labor, the relationship to the existing employees is very important. To moan about a lack of skilled labor and, at the same time, to insufficiently appreciate existing high performers or to demotivate them through microman-agement and by constantly setting new rules, is not very convincing.

4. Employee Relationship Management 

More than just recruitment is needed. If a company manages to recruit new employees, then the work has just begun. Human capital belongs to the employee and is invested by him or her in the company. The company is responsible for applying this within the organization in a manner that is value-creating. If the company also manages to not only retain the employee, but to create the conditions that develop a sense of belonging and responsibility, then this is a sure sign of successful relationship management.

Tree roots
The relationship with existing employees is especially important, particularly for professions for which there is a labor shortage.

“The company management is encouraged to make the labor market as equally important as the sales market.

Kuno Ledergerber

The author

Kuno Ledergerber Portrait

Kuno Ledergerber is Head of the Center for Human Capital Management and Head of the CAS Personnel Development and HR Marketing Studies at the Zurich University of Applied Sciences (ZHAW) and an HR lecturer for various MAS study programs. His scientific expertise is also enriched by many years of experience in leading management positions in the business world and in politics. Kuno Ledergerber is also prized as a consultant for HR strategy projects and as an expert for personnel marketing/recruiting and personnel development.