Layoff news may dominate the headlines, but U.S. employers are still struggling to fill open roles and retain top performers. At the heart of the issue is a shortage of skilled workers that only worsened during the pandemic and may persist for years to come. Mentoring offers a solution to labor shortages that maximizes companies’ existing workforce while also attracting new talent.
How bad is America’s worker shortage? The labor force participation rate has been in decline for the past 20 years, down from an all-time high of 67% in March 2001. According to St. Louis Fed data, labor force participation hit a 21st-century low of 60% in April 2020. The rate has since rebounded to 62% or thereabouts–a substantial improvement, but a full percentage point lower than immediately before the pandemic.
The U.S. Chamber of Commerce estimates that there would have been 2.8 million more workers in January 2023, had the labor force participation rate remained above 63%. These “missing workers” have implications for staffing and productivity in a wide range of industries including manufacturing, technology, energy, and healthcare.
Mentoring can help organizations close these gaps by leveraging their key contributors and most knowledgeable leaders. The right mentoring program can help your company retain workers, build a stronger management pipeline, upskill current employees and attract new hires in a tight job market.
Why is there a labor shortage?
In early 2023, there were 10 million job openings and only 5.7 million potential employees looking for work, according to the Chamber of Commerce. Economists have proposed many different reasons for the shortfall, including Covid-related illnesses, deaths, and caregiving responsibilities, reduced immigration and higher retirement rates and a systemic lack of childcare support.
The role of wages and inflation also come into play, although experts differ on how they affect the labor supply. Some argue that salaries are too low to tempt workers back into the labor force, while others argue that pandemic-era unemployment compensation was too high to force them.
Regardless of why it’s happening, the labor shortage is having a real impact on companies, employees and consumers. Employers struggle with reduced productivity, profits and supply chain issues; employees suffer from increased workloads, lower morale and reduced engagement at work.
Which Industries Have Worker Shortages?
Worker shortages are more pronounced in some industries, including:
The manufacturing industry will have 2.1 million unfilled jobs by 2030, according to a study by Deloitte and The National Association of Manufacturers (NAM). Over three-quarters of manufacturing employers said they have ongoing issues attracting and retaining workers since the industry rebounded after the pandemic. Employers told NAM that they were having trouble hiring entry-level workers even at high rates of pay.
Big tech companies like Amazon, Alphabet, and Meta have laid off thousands of workers since late 2022. So, it may come as a surprise to learn that many companies are still hiring for tech roles–and are in desperate need of skilled workers. Many of these employers are also struggling with the loss of institutional knowledge that resulted from the Great Resignation.
Energy and Utilities
Labor is already tight in the energy sector, but it’s about to get a lot tighter. The Inflation Reduction Act is expected to create 537,000 jobs annually for the next 10 years, according to research. Reuters projects labor shortages in electric vehicles and batteries, solar panel installation and other areas.
Hospitals and other healthcare employers took a direct hit from the pandemic. A Washington Post-Kaiser Family Foundation poll showed that around 3 in 10 healthcare workers considered leaving their careers in 2021. Job vacancies for nursing staff increased by 30% between 2019 and 2020 according to data from the American Hospital Association.
How Can Companies Attract & Retain Employees During a Worker Shortage?
Surveys have shown that workers value connection, meaning and support in their workplaces. For example, respondents to a 2022 Gallup poll said that work-life balance and improved personal wellbeing were only slightly less important in the job selection process than money and benefits. Monster research has shown 86% of candidates consider a potential employer’s approach to diversity, equity and inclusion (DEI) during their job search.
Create connections across engaged employees
During a work shortage, it’s especially important to facilitate a connection between your most engaged employees. Relationship building creates opportunities for these top performers to trade knowledge and build robust skill sets. It also creates a support system that can help employees navigate challenging times.
Invest in employee wellbeing and company culture
Employee wellbeing goes beyond physical and mental health. When employers support their workforce’s wellbeing, they offer support for their professional, social, and financial health. Companies can do this in a variety of ways, from investing in manager training that teaches leaders to prioritize employee recognition to employee programs that have various skill sets. The result is a culture that supports employees in all facets of their lives.
Offer growth opportunities for all employees
Regardless of whether employees want to be promoted in the short term, most want growth opportunities. These can include skills development, mentoring and leadership development and chances to align their work with their values.
How Can Mentoring Help During a Worker Shortage?
Mentoring helps organizations leverage their existing workforce and attract new talent.
Improves retention and reduces turnover
Research has shown that mentoring programs boost employee retention and satisfaction and reduce voluntary turnover. Deloitte reports that companies with a strong learning culture, which includes mentorship and other on-the-job education, have retention rates that are 30-50% higher than their competitors.
Fosters a sense of community and belonging
Diversity mentoring has tangible benefits for employees, who feel a deeper sense of connection and belonging. It can also help companies develop a brand as an employer of choice, as well as boost retention and productivity. McKinsey research shows that organizations in the top quartile for gender and ethnic diversity are 15%-35% more profitable than those in the bottom quartile.
Promotes professional growth and development
Employees want professional development opportunities. In a PwC study, 52% of millennial respondents said that opportunities for career progression made an organization an attractive employer. Mentoring programs allow employees to take charge of their career growth and track their progress. The end result is a more satisfying experience for workers and improved retention and productivity for employers.
Builds a pipeline of future talent
An organization is only as strong as its talent. To build a healthy pipeline, you need to recognize and develop your top employees. High-potential mentoring offers an opportunity to support these key contributors and future leaders.
The Process of Mentoring During a Worker Shortage
Regardless of when you’re starting a mentoring program, it’s essential to begin with clear objectives. During a worker shortage, for example, these may include retention, building a supportive culture and attracting new talent. Chronus Mentoring Software provides a framework for these goals, as well as the metrics and analysis you need to ensure success.
To get started building your program:
1. Identify potential mentors and mentees
Depending on your goals, you might decide to allow mentors and mentees to self-match or use administrative matching functions. Bulk matching can facilitate large-scale programs, while hybrid matching allows flexibility.
2. Establish mentoring relationships
Our mentoring best practices show that programs are most effective when they are built around defined metrics. Regular checkpoints ensure that participants have multiple opportunities to report on their successes and challenges.
3. Develop and implement a mentoring plan
Once you’ve determined why you need a mentorship program and established how you’ll build your mentor-mentee pairs, you’ll need to design your mentoring program template. This means converting your goals into SMART objectives (specific, measurable, attainable, relevant and time-bound). For example, if your goal is employee retention, your SMART objective might be to retain for at least three years 90% of employees who participate in the program.
4. Provide ongoing support and feedback
One of the major pain points of manual mentoring programs is the difficulty of gathering–and acting on–participant feedback. Providing this kind of opportunity for reflection and support is essential to the success of your program. Mentoring software automates this process and ensures that user feedback informs program flexibility.
Overcome Your Worker Shortage with Mentoring
The worker shortage is likely to be an issue until at least 2036, according to research from LinkedIn and Glassdoor. But you can innovate ways to attract workers, retain talent and maximize the potential of your existing workforce. Mentoring programs offer a strategic lever.
The Chronus mentoring platform helps you create high-impact mentor programs that drive connection, engagement and retention. Create a culture that reflects true inclusion, not just lip service, and upskill and reskill your top performers for tomorrow’s workplace. Learn more about why more organizations are choosing Chronus to help make mentoring more productive.