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Tight Labor Market Opens Opportunities for Strategic HR

October 21, 1999
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Related Topics: Strategic Planning, Featured Article
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Recently I received a letter from one of our vendors. Letters from vendors are an almost daily occurrence, of course, but this one was different. It wasn't about new technology or price increases. It was about HR.

The letter began by acknowledging that customers (including yours truly) probably were concerned about high turnover in the organization. (In truth, it has seemed that the organization in question has unlocked a revolving door.) The letter shared several reasons why employees have left the organization, but as I read between the lines, it all seems to come down to a single reason: They left because they could move on to something they believed to be better.

We're all struggling to cope with a tight labor market, but employers in some areas are struggling more than in others. Our vendor, located in a relatively rural area, is among them. The letter outlined some of the challenges of the current job market, and then some of the steps the vendor is taking to address the problem. In the end, the message was simple: We know there's a problem, we're working on it, please hang in there.

This vendor is unique in its candor, but not in the problem it faces. The labor shortage is hitting businesses hard, and the evidence is everywhere. If you've tried to buy a hamburger, book a hotel room or get your car serviced, I'm sure you know what I mean. In a very real way, the labor shortage is beginning to impinge on efforts to stay competitive. That fact may be interpreted as either cause for despair or as a golden opportunity for HR.

In truth, the situation is both. But while everyone seems familiar with the despair, the opportunity remains largely unrecognized. That was my reaction, anyway, in the few days after I received the letter from our vendor. During that time, I answered several telephone calls asking me, in one way or another, to address the issue of strategic HR. Some were invitations to speak, others were questions from readers. But the underlying issue was the same: Please help us understand what strategic HR really is.

I think there are as many ways for HR to be strategic as there are organizations, but every effort should support a single objective: To keep the organization as competitive as possible. The labor shortage-which, incidentally, I do not believe is temporary-is a competitive issue. Beyond such niceties as customer-service standards is the reality that burgers must be made, hotel rooms must be cleaned, autos must be serviced. Without people, those activities will simply stop. Those who can't provide the service or produce the product will go out of business.

There's no magic-bullet response to the challenge. Instead, there are thousands of answers applicable to thousands of businesses in thousands of circumstances. The answers lie in getting creative with candidate sourcing, fine-tuning the hiring process, rethinking pay plans and training, training, training. In each case, HR can drive the process, HR can make a difference, HR can prove its worth.

It's time to stop looking for the "right" answer, and to start taking action-any action-that makes things better. Otherwise, it'll soon be time for your organization to be sending a letter to customers. That's not the reflection of HR we hope to present, is it?


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