I recently have had many discussions surrounding the fact that there seem to be more jobs than workers to fill them. Virtually every dealer I speak with is looking for people and can’t find them. Many years ago, there was a book called Boom, Bust and Echo, written by David Foot and Daniel Stoffman, that described the conclusions that can be drawn and predictions that could be made based on the study of human populations. It focused on baby boomers and their historical and possible future impact on Canadian society.
As we all currently observe the workforce shortages plaguing Canada and the USA, one cannot help but wonder why this has happened. Coined by Anthony Klotz, a management professor at Texas A&M University’s School of Business, the “Great Resignation” is a phenomenon made popular by Covid 19 where a higher-than-normal number of employees voluntarily left their jobs. Many believe this has created the labour shortages we are currently experiencing. One must ask the question though, how are these people managing to live without an income?
Another phenomenon is called the “Great Realignment”, where employees, looking for greater job security, are willing to retrain for what they perceive as better jobs. The reality is that the pandemic left several segments of workers without work, and for other segments, highlighted the vulnerable nature of their employment. This created a situation where employees, in many industries, reassessed their work options with the hopes of improving their wages, job security and their lives.
Businesses, on the other hand, furloughed a large percentage of the workforce, as business quickly dried up. Businesses of all shapes and sizes turned to digital solutions, causing many employees to see the writing on the wall. Businesses also were able to operate with fewer employees successfully and profitably, taking advantage of business efficiencies that came to light during the pandemic-led downturn. Many employers asked themselves “Why did we need all these employees? What did they do?” The retail, service and manufacturing industries were hard hit as a result. Many furloughed employees took the opportunity to reassess their future and many still today have not returned to their former jobs.
Back to baby boomers. During the pandemic, many chose to retire from their former employment. This is permanent, and has created a need for replacement employees. Part of the problem is that the size of the baby boom generation is so large that the Gen X (and to some extent Gen Y) cohorts are simply not large or experienced enough to fill all the job openings. This creates a waterfall effect when older employees retire, they are replaced by younger workers. The younger workers move up the ranks leaving behind their old jobs. This partially explains why there are more jobs than workers to fill them.
The “Realignment” is taking place as employers have realigned their businesses, many of them taking advantage of digital opportunities. Many employees, on the other hand, are retraining to improve their skills with the goal of realigning with better job security and prospects. In a lot of cases, employers are providing the training to attract employees.
Another phenomenon is called the “Great Realignment”, where employees, looking for greater job security, are willing to retrain for what they perceive as better jobs.
Wages inflation has just started. As employees experience higher prices for virtually everything they purchase, wage increase demands are increasing. Many businesses have been recording record profits causing employees to seek higher pay increases. This is the next step in our current inflationary environment. As central banks increase interest rates to curb demand and ultimately inflation, this adds to the pressure employees are feeling. We are now headed for a wage rate realignment.
Auto dealerships were designated as essential in the early days of the pandemic. Many dealerships furloughed employees and quickly adopted a more digital approach to their businesses. With the subsequent supply chain disruptions, many dealerships have also permanently reduced their head count since the business has changed and the need for certain classifications of employees shifted.
We all know that automotive retail is under pressure to keep up with consumer demands, OEM expectations and government environmental regulation. The dependence on digital retailing solutions and the evolution to electrification have dealers caught in a spin-cycle of change. Looking into the future, dealerships will have fewer employees. Many of those employees may very well work remotely and be providing services that have not yet been thought of. The emphasis on physical space will change as OEM business practices and terms of trade change closer align with general use of digital capabilities by consumers.
Consumers will dictate what retail practices they will support. Businesses will need to alter how they do business based on how the customer wants to transact. In many ways this has been slowly happening naturally for about 10 years, but the pace escalated during the pandemic and is now somewhat out of control. The fact that digital capabilities excite the OEMs is one thing, but the fact that digital capabilities excite the consumer is quite another. The latter point will create pressure at the retailer level for years to come.
I believe we have entered a time where employee productivity is under a microscope. Sure, we always calculated employee productivity and believed we had our eye on the ball, but the pandemic showed us that those former metrics also helped hide employment and process inefficiencies. We are entering a time where we need to do more with less. The current economic environment is challenging for us as businesses, but the real impact is being felt by our employees and customers. With a declining labour force availability, we need to be creative.
Our current situation was quite predictable given the fact that today’s situation was seven decades in the making. The pandemic served to escalate the employment situation but did not create it.
