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The Big Not-So-Easy

February 8, 2006
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Related Topics: Change Management, Contingent Staffing, Workforce Planning, Featured Article, Recruitment
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Before Hurricane Katrina devastated lives in the Gulf Coast region, it seemed to the local staffing industry that the demand for people and the supply of people usually paralleled the national trend. The labor market was a balanced situation. Not too many open jobs, not too many people--it was just about right.

    Today, the New Orleans area has transitioned from the disaster phase to the recovery phase, and local staffing firms now say that just-right balance is long gone.

    "With so much cleanup and rebuilding under way, the construction industry is placing lots of orders for people and we can’t get them all filled," says Krisi Barker, site manager for Express Personnel’s Louisiana offices.

    In addition to demands for construction workers, Barker says that Express is receiving job requisitions from many local private-sector companies that have reopened their doors and must hire new workers for a large number of positions left vacant by departed workers. The staffing companies are getting calls from businesses that might never have tapped a staffing agency before.

    Local staffing firms estimate that up to 50 percent of the former local-economy workers are now living in other cities, and they don’t plan to return. For those who want to come back, availability of housing is a problem. Barker says her company is receiving calls from people in cities as far away as Atlanta who will drive back for an open position, but they have to find "somebody to bunk with."

    As an example of the dynamic shifts that have occurred in the labor market, New Orleans went from a plethora of jobs in tourism to zero jobs in tourism overnight. But now the service sector is rebounding and adding jobs. Even the manager from the local Chili’s restaurant called and asked for help filling positions for wait staff, according to Diane Guy, branch manager for Express in New Orleans.

    Express estimates that it had about 300 people on assignment in the New Orleans area before Katrina, many working in the area’s dominant industries--tourism and oil. Most of those assignments ended with the hurricane. Then within a few weeks following Katrina, the agency’s roster swelled to more than 2,000 people on assignment, many in temp-to-hire positions with the Federal Emergency Management Agency.

    In the weeks that followed, many of those employees were converted to regular full-time positions on the FEMA payroll. Now, Express has about 1,500 people on assignment working in open positions in local businesses and construction. That’s the third workforce transition in five months.

Inflated wages
    The result of the tight labor supply has been wage inflation in the region. That situation has been further exacerbated by the housing shortage and subsequent rent escalation. In addition, there are lingering effects from the wages that FEMA paid for jobs immediately following the hurricane. Barker says the FEMA "debris monitor" positions, meal-counter positions and clerical support positions offered wages of $10 to $20 per hour, which is higher than the average of $8 to $15 that Express is currently offering for similarly skilled private-sector jobs.

    However, Barker adds that the private-sector range is $1 to $3 per hour higher than what employers were offering for the same positions before the hurricane. Peg Easley, manager for Manpower’s metro New Orleans branch, reports a fairly constant 50 to 70 open orders that she works to fill with qualified candidates.

    She also cites lack of available housing as an obstacle and estimates that rents are double what they were before the hurricane.

    "Fuel prices have had an effect as well," Easley says. "Many of my former employees are now living 20 to 30 miles outside of the metropolitan area. They can get the same pay rates there as they can in the city, cheaper housing and they don’t have to commute."

Send in the RVs
    Even with all those challenges, staffing firms have a large distribution of offices, and that gives them an advantage over local single-location businesses. Evacuated branches could forward phones to unaffected offices. Off-site data storage, along with distributed payroll functions, enabled employees to pick up checks in alternate locations, such as Houston.

    In the days immediately following the disaster, FEMA contracted with Express to serve as an outsourced recruiting partner in New Orleans with one goal in mind: hire a large workforce--quickly.

    Bob Carroll, disaster recovery project manager for Express, said that some of the staffing agency’s offices had been damaged and were not operational, and that even if local residents knew about the open positions, they were unable to get into town to apply.

    Carroll decided that he needed to take the jobs to the workforce. He authorized the purchase of two recreational vehicles and a fifth-wheeler trailer from the closest location where he could find them available for purchase. That turned out to be Illinois. By the end of the second week following the hurricane, Express was operational, with mobile recruiting units set up in residential areas.

    "FEMA wanted us to hire local people for the jobs, and the screening included drug tests and FBI-level background checks, so we did those on-site," he says. "The challenge was that local residents had no electricity, access to gasoline, public transportation, television reception or Internet access."

   Using a satellite phone and some local radio advertising, Express began recruiting for general labor and administrative personnel as well as geologists, soil scientists, chemical engineers, waste-water engineers and massive numbers of computer programmers via word-of-mouth and by contacting local churches, school boards and politicians.

    Many applicants walked miles to get to the recruiting center, and some only had the clothes on their backs. Local church groups supplied clothing, and Express provided small cans of gasoline to get the applicants to the job.

    "It was the concept of community-based recruiting and networking that got the job done," Carroll says. "We also had support from other trained personnel that drove into the area from as far away as Oregon and literally camped out in our offices so we could run the business while our local staff dealt with their personal needs."

    Now, Carroll says, Express continues to use the concept of community-based recruiting.

    "Those RVs are in use every day. We can employ that concept whenever we need to hire large numbers of people on short notice," he says.

    Carroll also says that a lesson he learned in the hurricane’s aftermath is to trust and give authority to the people on the front line. "As soon as I understood there was a problem, I was able to solve it without having to go through an encumbered decision-making process," he says. "In the end, that made a big difference in our adapting to the situation quickly and effectively."

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