The labour shortage – What if other people’s happiness at work made you happy too?

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Coming out of this pandemic, we’re all well aware of just how much our lives have been shaken up: our elderly, our children and our most vulnerable have suffered, fallen ill and even died. Perhaps humanity needed a wake-up call in the form of an invisible, viral threat and a war with global social and economic impacts to realize just how fragile we are, that our time on earth is fleeting and life is short. In the face of all these challenges, we’re rethinking our mission in life – and this includes taking a second look at the relationships we have with work, money, family and community.

Given that the job market and the economy have also been through the wringer, the question is, who exactly has profited from the chaos of the past two years? The government? Public institutions? Private companies, their managers, their employees? Some private companies have been hit hard, while others have unexpectedly come out on top – and some have even seen their business prosper. While small shops struggled to remain open despite public health measures, Amazon reported sales of $108.5 billion and a profit of $8.1 billion for the first quarter of 2021: a 220% growth over the previous year.¹

Even though one company’s misfortune is often another one’s gain, companies of all sizes are finding it difficult to recover from this period that, for some sectors, has still not run its course. This is particularly evident in food services, live entertainment and the arts.

Overall, however, there is one shared reality that has affected both successful and struggling companies: the labour shortage. The scarcity of talent is pushing for a fundamental shift in the balance of power between employers and employees. To successfully navigate this shift, it’s important to not underestimate the impact COVID has had on companies, and especially on managers on the front line.

So what are the key elements for keeping talent motivated and ensuring companies remain profitable?

The invisible tax

If employees have managed to hold their own in this veritable workplace revolution, managers have had to hold on tight, because they’re facing a new reality in which they need to respond as best they can to the ever-increasing expectations of talent (a valuable resource in times of scarcity) while sustaining growth and profitability.

¹New York Times, Amazon’s profit soars 220 percent as pandemic drives shopping online. April 29, 2021. https://www.nytimes.com/2021/04/29/technology/amazons-profits-triple.html

From a human point of view, managers need to:

• Find innovative solutions to attraction and retention challenges
• Prepare the next generation
• Reduce work hours to promote work-life balance and support mental health
• Meet higher expectations for working conditions

But that’s not all. Since 2020, a large number of organizations have seen a decrease in profits, and they’ve suffered the consequences of economic instability. Managers who have systematically responded to the new demands have greatly risked undermining their performance, and even their survival.

This is the challenge that a lot of Québec companies are currently facing. Both COVID and the war in Ukraine are like an invisible tax that everyone has had to learn to pay, all in a context that’s already not easy for SMEs with limited resources to satisfy a demanding workforce. And SMEs amount to pretty much all employers in Québec: 99.8% of companies in fact.²

On top of this, there’s the ever-lingering impact of COVID and the economic uncertainty resulting from the war in Ukraine. Against serious inflation and a rapidly shifting labour market, how can employers and managers innovate in a changing world whose final form has not yet taken shape?

Are salaries motivation enough?

The demands of employees, who currently have the lion’s share of today’s labour market, are many: more remote work, more flexibility, more training, better career opportunities, better quality of life, less pressure, higher salaries and better working conditions – all starting now.

The question is, how to meet these demands while keeping operating costs at an acceptable level and maintaining top-calibre products and services?

The initial response would be to improve working conditions as best you can, offer the requested competitive salaries, and let profits take a hit. Getting drawn into this game of one-upmanship, however, means falling into an even bigger trap. As many studies have shown, salary and working conditions, when they are fair and competitive, don’t have much impact on employee motivation and commitment. A meta-analysis of 120 studies carried out by Tim Judge and his colleagues shows that the association between salary and job satisfaction is very weak.³In other words, if you want a committed workforce, raising salaries is simply not enough.

As employee demands keep flooding in, this also expresses a more imminent need. Based on our own experience in the field, today’s talent is first and foremost looking to find meaning in their work.

So, if money can’t buy happiness, what else can we do to make our employees happier, more engaged and more committed over the long term?

²Gouvernement du Québec, Les entreprises québécoises de moins de 5 employés : portrait et contribution à la dynamique des entreprises et de l’emploi, July 13, 2020.

https://www.quebec.ca/nouvelles/actualites/details/les-entreprises-quebecoises-de-moins-de-5-employe s-portrait-et-contribution-a-la-dynamique-des-entreprises-et-de-lemploi#:~:text=QU%C3%89BEC%2C%20l e%2013%20juillet%202020,comptent%20moins%20de%205%20employ%C3%A9s

³Harvard Business Review, Does Money Really Affect Motivation? A Review of the Research. April 10, 2013. https://hbr.org/2013/04/does-money-really-affect-motiv

A manager at your service

The culture of an organization and the quality of its leadership have never before been so important. Flexibility, remote work and reduced work hours are undeniable factors in attraction and retention, but the ability to provide meaning and inspire a desire to excel are even more important assets for the employer.

It’s well known that, in most cases, employees don’t quit organizations – they quit their boss. So how can managers reinvent themselves? Here are a few practical pointers:

• Embody the organization’s values and set an example every day
• Be accessible and listen to your employees, including outside of formal meetings
• Learn to be a ‘servant leader’ by asking yourself, “What can I do for my employees?” rather than, “What can my employees do for me?”
• Generate trust by being predictable and consistent
• Be fearlessly humble, authentic and vulnerable, and treat mistakes as learning opportunities
• Appreciate small victories and give recognition on a daily basis
• Have clear expectations, provide regular feedback and hold employees accountable for their contributions to the organization
• Demonstrate managerial courage and act in the best interests of the team and the organization, especially when understaffed

Motivation at work is a shared responsibility

We often forget that managers alone can’t motivate their employees. Employees must motivate themselves based on these three individual – and fundamental – choices:

• Do I find meaning in my role in the organization?
• How much effort do I need to put in to succeed?
• How long do I have to sustain this effort to guarantee the success of what I’ve taken on?

The counter-intuitive hypothesis that pops up here is shared responsibility. Even during a labour shortage, it’s up to both employers and employees to build rewarding and enriching work environments.

Access to flexibility, remote work, higher salaries and better working conditions is not an acquired right but a privilege resulting from a shortage of talent in some sectors. But the scarcity of human resources and the pressure to deliver in no way justify settling for a lack of performance.

It’s still perfectly reasonable for a manager to expect that their employees:

• Perform their work with professionalism
• Respect commitments
• Have a positive impact on their workplace
• Embody the values of their organization

Investing in talent is a viable long-term solution

When everybody plays their part – that of either an attentive, hands-on manager or a committed, professional employee – the stage is set for employees to blossom in an organization, rather than face the temptation to go where the grass is greener.

Once a team is well staffed, a manager’s instinct might be to overprotect employees, walk on eggshells and avoid asking too much of them so that they’re happy and, above all, want to stick around.

What a shame that would be, since a lack of stimulation is often what’s most detrimental to employee development!

Sometimes, asking less of employees (by settling for less than they can actually achieve) and being overprotective (by shielding those with less experience or in training from the consequences of their actions) is not the solution. The best employees are often those who thrive on challenges and, as a result, find meaning in their work.

That’s why investing in development, coaching and mentoring to bring out the best in each and every employee is more important than ever.

A genuine leadership for a positive transformation

With the emergence of a new way of organizing work, employers and employees need to refocus on their respective obligations toward each other and reinvent the conditions that will allow us all to benefit from a renewed and refreshed social contract.

Leadership quality and employee engagement are definitively part of the solution. Like the industrial revolution, the post-pandemic era will certainly have an impact on talent. But this time, the changes will be much more positive for people’s well-being, provided that everyone – from employers to employees – does their part.

Managers are at the heart of this massive shift, and they have a key role to play in the current transformation of the workplace. They’ll have to up their game and be even more ingenious to face the tenfold expectations of employees and maintain profitability in an uncertain economic and geopolitical context.