Part II: Building Business Value Series
August 09, 2016
This month, in Part II of our Building Business Value Series, we look at assessing talent shortages. This blog series examines the most common business owner issues that may detract from making your business more attractive to potential buyers and how to continue addressing your value gap.
Baby boomers exiting from the workforce are causing a talent shortage. Last month, Part I of our series shed light on the available hiring pool to replace boomers – the smaller percentage of Gen X coupled with the less-experienced Gen Y or millennials. This new demographic reality is resulting in the onset of a workforce shortage.
“Your company’s value depends on its ability to hire, develop and retain quality individuals. The right people can strengthen culture, ethics, customer relations, production, innovation and other aspects of operations. Your company’s value is further elevated if there is a leadership team or individual in place to carry on the company’s vision and mission while helping the owner achieve his/her objectives. You should be able to execute a plan to run the company effectively for an extended period of time if the owner is not available.” – CEO Chuck Richards, CoreValue Software
While Connecticut may be a leader in manufacturing, the talent shortage is a nationwide deficit, which has been years in the making. According to a July 2015 National Association for Business Economics Business Conditions survey, more than 35 percent of the respondents reported their companies experienced shortages of skilled labor during the quarter ending in June 2014.1
According to Jim Diffley, the New York-based senior director of IHS Economic and NABE survey chair, it is the manufacturing sector where skilled labor shortages are the most prevalent. With the exit of the highly skilled, experienced, boomer technicians, the new generation of precisions tradesmen are not being trained in sufficient numbers, he adds.
By applying supply-chain-management thinking to the recruiting pipeline there are several solutions small and mid-size manufacturers can use to get the people they need and get the most out of the people they have:
- Needs assessment – examine which roles will be vacated and when and determine what type of talent is needed to fill existing positions and/or create new ones
- Training Programs – develop the skills of the existing workforce and the next generation
- Examine the HR function – forecast your company’s talent needs and where they can be sourced from. Work to address the perception that trade or blue collar jobs are less prestigious or less valuable than office jobs, which will help with your recruiting and retaining efforts.
- Create an attractive workplace – ensure a compelling employee value proposition and competitive and relevant sets of total rewards programs to add to that value
Knowing what additional talent you will need in the next three to five years is critical when looking at the elements of your company’s success equation. Making the workforce assessment is part of identifying the strongest and weakest areas that are driving your business’s valuation and devaluation. From here, you can redirect your efforts in making your business more attractive to potential buyers or to the next generation of family leaders. If you’d like some help with assessing your workforce or would like to learn more about CONNSTEP’s services, please complete the form to the right of this page.
Next month, Part III will take a look at business sustainability and creating a business that runs without you.
- William Atkinson, Confronting the Skilled-Worker Shortage, August 4, 2015.
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