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The Hiring Squeeze: What You Need to Know

Hi, I'm Hansen Hussein. I'm a small business owner as well as an educator and a longtime fan of creative lives, so I'm pleased to contribute to this amazing small business recovery curriculum. You know, the pandemic has clearly disrupted America's economy from supply chain to the subject that we're gonna discuss today, which is the labor shortage or just trying to hire qualified workers. No one really knows how this situation or this crisis will evolve even over the next few months. But we know that small business owners such as yourself have to adapt to this unique challenge. And there are some pretty obvious questions you might be having right now. Do you have to offer more money to hire these people, hiring bonuses? What are other strategies you can employ to maybe make you less reliant on hiring these people? And so this is what we're going to discuss today with three wonderful experts as we think about how do we deal with this labor crunch right now? Yeah, yeah. So this is an urge...

nt conversation that requires, uh, an urgent approach to it. And happily, we have the right experts for the right conversation joining us is Michael verso from the University of Washington's consulting and Business Development center, F one Visa, whose owner of Buddha buddha coffee, and Van Nguyen, who owns the naturally nightlight nail salon, thanks to the three of you for being here and for engaging in what is a very fluid subject right now. So, Michael, I thought I'd start with you is let's set the big picture up first. What is the challenge right now with regards to hiring and small business? So it's complicated, as you said in your opening remarks, right? Um, the as the economy opens right, we're seeing shortages in lots of areas. Right? So a couple of weeks ago, the big news was that the cost of lumber, right? Um, you know, now, you know, yesterday there was a big headlines around the cost of oil. Um So I think what we're seeing right is when it comes to employees, is the function is the functioning or the restarting of the labour market, right? Um and so just like other markets, there are frictions in that, and so what we're seeing is, you know, employers looking for employees, employees looking for other things than what they might have looked for before and needing to adjust for that. Um You know, I can go into more, more details, but I think again, it's we're starting a market, um and there's frictions in that marketplace. Um and it's, you know, it will be interesting to see how it turns out over time and um, you know, as we talked to colleagues here who are running businesses on day to day than to the challenges they're facing and hiring folks. But I think maybe that maybe that my concluding thing here right, is that there last month, right? We saw a million, nearly a million new people hired for jobs. Um so things are working themselves out, but there will be a period of friction and I think there's gonna be some long term labour force issues that we have to deal with in this country. I think that's a really good way to set us up Michael and that this is in one way, a short term problem that has definitely been caused by a global health crisis. But there are some other longer term considerations that we all need to take into account as we think about strategizing for hiring Sovann for you specifically. How has what's been your situation in terms of being able to hire new employees or keep employees? You mean the higher the new stuff? Well, it's very difficult time for me right now because like I I learned that some people that still get the money from, you know, government Uncle Sam, like they, when I call my coworker, they said, hey, you know, the salon get too busy. So now we'll be up in the full capacity, you know, come back and help me go to work and they say, well no, I'm busy, I need to take a break, you know, Which is very tough for me because my job is like more depending on the cut tomorrow. So when you have a short stopping more, I was stressful. So you're saying you're at full capacity right now, but you don't have enough people to help you. The people who when they when you do speak to them, what are they saying that they want if you're going to, if they're going to work with you? You mean my coworker or the ones that you're, they want to, they told me they don't want to be relaxed for now. I want to relax so they don't want to work or they do they want more money if you're going to hire them. Well they said they said like oh well I want this and want that and that. But we did I don't I never have this experience before with them ever. Even though they've been working for me like four or 5 years Six years and some people work for like 10 years. So how have you adjusted to this challenge? I mean you're working with fewer people it sounds like, so what does that mean for you personally as a business owner? Well I have to work with her. You know I drive my best as I can. Yeah, try to be as Katima, okay. You know, this is a tough time for me because I don't have enough staff and hire a new stuff. But nobody calls, you know, you know, you know, you try different ways to like pay more or whatever is what and willing to pay more. But the thing is nobody called me at all. That's interesting. So willing to pay more, I want to come back to you, Michael just quickly before I go to Ephraim on this, on your experience. But how surprising is, is what you're hearing from from Van in terms of what you've been hearing from other business owners across the country. Yeah. So, um, I was on on call today with some folks on Long Island, um you know, earlier this week, folks in Chicago and columbus. Um and and and it's a similar issue, right? Um And I think that that's the shift. That's one of the shift that's happened, right? Is that when we look at hiring employees, it's a wage. But it's also do they have child care? All right. Do they have the health care that they want? Are they able to take time off to take care of elderly parents? There's a whole package of things. Um And because we've had this interruption in the labor market, folks are sort of have gone back and reassess, right? You know, and can they really meet all of these things? And in some ways it's no different. I mean, you know from, right? I mean, what? You need coffee beans, you need sacks, right? You need you need um, you know, cups, right? And and there's there's sometimes the shortages. I mean, we all remember back in the beginning of code, right? There was no shortage of toilet paper, Right? Um, And so in some ways what's happening in the labor market is no different than that, may be more painful. Um Right. I mean, certainly from small business owners perspective, but but no different than that of of what is what is required to get a worker to the workplace is more than just a salary. Alright. It's do they have the child care that they have the transportation and that's what you think. Yeah. It's clearly a shock to the system. So everything we've heard Michael speak about the big system X systemic issues and Van her very personal problems with staffing. How's it been for you at bona bona coffee? It's been it's been interesting because you know, at about two months ago we we we opened up a new cafe which meant new staff for the entire space. We were fortunate enough to put that out onto social media out on our website. And you know, we had roughly 60 applicants for these roles and you know, cafe manager roles, roaster roles as well as barista roles. And so it was like the full spectrum of what we could offer as a small business. Um and we were very fortunate to be able to kind of just look at this great pool and start, you know, talk, reaching out and started to talk to them. And so it was a different experience uh for me, so if you had to put together a theory about why you've been successful getting that interest from people to work at your company, what is it, is that social media, is that the story you're putting out there? Is it because you're a cool guy, everybody wants to be with you? I doubt that's it. I doubt that's the one that I think, I think the biggest one that we heard over and over again, one of one of the things that, you know, we even speak to it in our application and uh job post is that, you know, we're looking for individuals, that one, you know, uh care about their community. Um so, you know, it's about values. What is the value of the business? Um, what we value, you know, how do we go about business? How do we treat our team? Um, and then also, um, another thing that we try, you know, speaking to as well as throughout the interview is I can't teach nice, so come as you are, but, you know, we want someone that can respect their coworkers and and build together and, and if you have a passion for coffee, if you love coffee, we got you wherever you are, whatever level we'll take you and will help develop that side. But then outside of that, because that would be very role specific. We then asked the other question of what else would you like to do? What else are you passionate about? Um, so, whether it's photography, you know, we have a social media, you know, we could use some help there. Uh, as a journalism, you know, we do have coffee producers that we work with. We'd love to hear their stories. Um, so, if you want to write those articles, um, that's great, or maybe it's just specifically in coffee. Okay, well, you want to know more about exporting or importing coffee, you know, we'll give you access to that information. We're not gonna, kind of, gatekeepers of that. And so it it was around those things that I believe we were able to attract the candidates that we did. It sounds like what you've done, you've offered a unique culture that might be attracted to certain people as well as it sounds like a bit of an opportunity for some kind of growth, whether it's professional growth or just sort of feeling like, oh, I really like doing that, at least get a chance to exercise that, you know? Yeah, Yeah. And we desire that. We prefer that we enjoy that kind of engagement because we believe that that makes us all better. I'm a student of it as well of coffee. And so what another person's perspective is or has done in coffee, I'd love to learn even if they've been in it for a year. Um, so that's great. Then. It sounds like for your, for your salon, you're looking for people who have a specific skill set. It's not something you can just hire somebody off the street, right? You have to have somebody who has an understanding of how to engage with a customer and do some of these, these particular things. So how much have you been? How much have you leveraged a social media and other outreach tools to be able to reach the people that you want to bring to work for you? You mean how much percent have you been able to use? Like facebook or? Yeah, you, a lot of social media also passed that has been helpful for you in terms of hiring in the past, Not right now in the past, like before the pandemic. Not right now. So what is that now? You basically just given up and you know this, I'm just gonna wait for this to end or have you thought, what other um, strategies might you think of using to get more people to work for you? Well, like I said, I'm willing to pay more for now, because Yeah. You know, somehow we um right now, we allowed to uh, open the full capacity. So I'm willing to pay more for them, whatever I can afford it, to pay them to have them to come to help me, and we'll need to do it. And and Michael, we're hearing this a lot like, there's a lot of putting up the wages or offering bonuses, as we think about people who are watching this, who are looking for answers and hearing from Africa and Van, how successful are those particular strategies in hiring? All right. So, so, generally speaking, like, I mean, paying people more is always better. Right? I mean, again, but it's a gun. Think of this in the context of supply and demand, right? We as employers to, you know, have a demand for workers. Workers have a price at which they will come to work. Now, is that a price that we can or are willing to pay is another? There's another story, right? And so I think what was done right, is think about other ways to package other value in in addition to the cash. One of the challenges you have is you need a license to practice your work, right? Uh, and so, so, so getting those, we don't often think of folks are working in your line of business as skilled, but they are skilled labor. Um, and so getting those folks, um, you don't have as large of a pool, you could bring in somebody who's never poured a cup of coffee before and teach them how to pour a cup of coffee. They would have to get licensed in order to work for you. And so they need to have a license and also they need to have an experience. Yeah. And so you've got a more constrained labor force to draw from than Ephraim has. And so again, so we can talk at some point about the longer term issues because I think that that's going to be an issue that others are going to face. And so, but in terms of what you can do now, right? Yes, you can pay them more. But then how are you going to pass it on to your customers? Right. And there's gonna have that challenge. That's a good question. Have you had because you are willing to pay more? And I don't know if you are paying more. Does that mean you have to put up your prices as well, correct? And have you put the prices up? Actually I've seen the scene, the pandemic happened. The supply, everything went up a lot. So compared to last year the supply went up to the cheapo compared to before the pandemic to be honest. But no matter what I'm willing to pay them or not, I have to raise the price up. We're gonna need to be survived. Has demand change? Do you still have the same number of customers? Even though I mean in the last six weeks lately I I saw more more regular come back already. So which has been grateful for us. But it it seems like more people, more people vaccinated. You know when they come to out you go and compared to last year. Yeah. So you obviously created this unique culture. People want to work for you. You have this great approach to hiring. Um What, how unique are you? I mean is there anything specific that you've done that other businesses as they're watching this business owners might be able to replicate even if they're not say in coffee or food service at all. Oh wow, I wish I knew a lot of it. Uh I think it stems from, you know, you know the business model in itself, you know? Um you know, for us we're very transparent about how we kind of operate. Um And so this clarity of kind of like where we source from how we engage, trying to engage more in our community. It's a lot of like being active in our and our surroundings and really uh not only are surrounded but even to the core of what we do. Um and so we're really excited about it. We and especially in area like coffee, which is something that nearly all of us consume and it's everywhere to differentiate, differentiate yourself uh in some manner is important. And I think that my hope is especially that with things like coffee, these goods that come from elsewhere, uhh that as transparency is provided that as you're more transparent about your process, that it attracts more people to you. Um and that it's a natural kind of process. It's not, it's not something I have to market, it's something that I just speak to. Um and I think that in my business model itself, it could be replicated in even the garments that we were, if we, we kind of took that intentionality behind how we go about that. I think then it attracts, it attracts a certain type of different experience um which then leads them to those that want to be a part of it, also desire that too. Um And then it just fosters it. So I'm not too sure if there is a specific answer to it, but that it's a I think it is a cultural shift um to be able to do that. Yeah. I think for the purposes of this conversation we have two unique businesses that are that are distinct in what they do. Yours is a coffee company, you know, established within the community, able to really connect values and how you are represented in the community and you can pretty much higher anybody that you can train well. Then you've got a constrained labor force. Um obviously fewer people, which means fewer people to choose from. And it's harder for you to be able to operate like a coffee company. Right? So community and values. I'm sure that your value valuable. You've been in your community for it sounds like 20 years people really cherish who you are, but it doesn't necessarily help you overcome your Labour challenges. All right. So I mean, so these are two distinct companies. I've if you had one piece of advice for somebody watching and saying yeah, I'm exactly in your shoes, I have to pay more money. I gotta give bonuses, I'm going to give any to keep anybody hired. What one piece of advice would you have to other business owners in terms of how to make it through this current challenge in terms of finding more people to work for you right now? Yeah. Right now, I mean for me, I learned that like like I'm still repeating the world and we will need to pay somebody who come over to help me right now because you know my jobs is more busy in the summer time. So you cannot say no if somebody called me okay and you didn't help you that whatever, I mean, I would do that to get them. So bottom line, be prepared to pay more money to have the people you need to work for you to be able to meet demand is what you're saying, that's your advice and that makes complete sense in terms of the business that you have your number one piece of advice. Ephraim to business owners, I think provide the the the opportunity for growth, provide, provide uh what, who are you, what is, what is your business about? Because they are going to be asking those questions. I think uh especially now, I think it would be uh you know, you know, we came out of the murder of George Floyd last year, you know, what was your stance throughout that time? Um And and and those things are really being asked in the interviews. Um how are you engaging? Um and I think that, you know, for any business, you know, what is, you know, we can, you know, we're familiar now with, you know, the diversity equity and inclusion roles that are being attitude corporations, but are they, are they really doing, are they really doing the work um as the company really reflecting the work that is being advised of them to do, to engage in the community and support in these great causes. Those questions are real questions that employees will be asking, candidates will ask, coming into that place, I believe, and so being prepared in that space, um is important. But then, um, once again, the, you know, the wages are true. It is it is it is something that they will be asking about, but I think also where can I go to next? Um where can I go to next? If I'm here? If I come in as a barista, will I stay at barista for the next 10 years or will I have an opportunity to learn how to roast? Will I learn how to uh evaluate coffee better? Because then I can then move to another role or open up my own business or become another business that works adjacent to yours to support your business because maybe I then focus on coffee in Tanzania. And I started bringing in coffee and I sell it to Bumbuna, which is great as well. And so those are some of the things that I would consider in this time, Michael, as we hear it from a man, give their specific advice. It just reminds me that the pandemic has really sharpened people's focus in terms of what they want professionally. And then it's almost like an existential crisis. And so they're thinking, well, I don't want to go back to what I did before. I don't want to get paid that little or I want to get paid more or I want to do something that really fulfills my sense of purpose and I think both of them and then are speaking to that, how much does that jibe with what you're seeing and hearing across the country? Uh That's absolutely true. Again, you know, talk to folks in, you know, from Alabama to, you know, Atlanta to new Orleans to Houston um L. A. Um you know, Chicago um talked to two ag industry work um workers as well as as employers. So folks picking crops, packaging, crops, shipping, shipping boxes of of of tree fruit. Um And yeah. And what what covid did right? As you said, right, is it shifted how people think about their lives and think about us as business owners, right? Or as university people, right? You know, What do we value? What time do we have? 600,000 people in this country died? Um And you know what what's the value of my time and this idea of simply paying a wage and thinking that's all that employees want from us, isn't there? Right. It's can I get that professional growth? Can I get that time off to take a class? Can I can I do do what you're paying me for? But I've got this passion over here, right? Um And that's really that's a fundamentally different way as employers, especially small business employers to think about me. You look at large corporations, right? I mean, they've got HR staff and they can figure all that stuff out. They got training and departments, right? They can do all that stuff. Um But it's now being required of small business owners. Um And um and and it's hard, it's hard um And it's a challenge because you're also trying to keep the doors open every day. Um but it's what the labor market is requiring of us as employers today is different than it was a year, 18 months ago. Well this has been a really um fruitful and useful conversation. I have one final area I want to explore before we bring it to the clothes and that is the labor crunch has something that got worse during the pandemic but actually was in existence before as well. And so there is some understanding that there this is a systemic changes happening just got accelerated by this crisis. And so some people are beginning to think that we need to think differently about the strategies and how we streamline operations within small businesses. So we're not so reliant on making sure that we have the right number of people. So I'll start with you, Michael maybe come to us from. I know it might be a little different for a nail salon, but uh huh. Are we thinking differently about automation or at least thinking differently about not so many uh challenges by keeping keeping our labor a little bit lower so that we can have more innovative ways to do this. So again, complex question constantly try to distill it down. Right. Introduction of technology in businesses is a double edged sword, right? Because it will it will simultaneously reduce labor costs. But that will sign that will as well as signal to your employees that there are more expendable. Right? So if you're trying to keep employees working for you, but they see introductions of new technology, why am I going to be loyal to you? Because am I going to have a job six months from now? Or am I going to teach this machine how to do this thing? And so so again, this is what we teach in business schools, right? I mean if there if there was if there was an easy answer, all of us would be sitting on a beach somewhere, you know, feet up into my tie, Right? Um but but it's not right. And so it's the yes, you need to introduce some new technologies. Um but you need to be careful about how do you do that and what signals that sends to your employees? I think the other major train technology piece, we've got a shrinking labor force in this country. Overall. That's right. Demographically America is getting older and the population is shrinking. Uh birth rates are down, uh, us baby boomers are retiring, you know, every day. Um, some of us a few days from now. But uh, but yeah, we got we got a shrinking labor pool to draw from regardless of the industry. So we got, so that that drives technology. But again, you know, what is that, what signals does does that send to our employees and then how do we solve that over the long term? Right. So then, I mean, I know that you have a very labor intensive business, you it's skill oriented, how much I mean, as you hear, what what Michael saying in terms of things are changing. We're going to have fewer people to work for us in the future. People are looking for more technological solutions. As you consider your own business. How much would you be able to bring in changes that you would say? Maybe I don't need so many people or I can use some kind of technology to do this Or is it always going to be your particular business? Always requires people all the time? Well that's that's a good question. I mean I mean my job my um with my ex explain for a long time for being small business. Right? So I mean people can come like like Michael is that they have no reason to be loyal to you. So if you pay lower of there are some benefits so better compared to other companies. But my my my my businesses nails along so they can able to I mean if you treat them well they stay or there are some beneficial they would stay for you at some point. Is that my answer your question? Yes. And obviously you cannot use technology in your business anytime soon to help overcome your challenges would bring with hiring people, right? You have to, your business is very human intensive. You need people, right? So there's no way you're ever going to bring in a robot to do nails at some point. Impossible. Okay. Everything. I mean obviously you haven't had any challenges in terms of hiring, but how much uh you have a background in finance? How much have you thought about bringing down your labor costs? Especially as labor as wages do go up and thinking about streamlining and doing things a little more efficiently? Well, I mean it was actually throughout Covid, there was a lot of that because um you know, during Covid I had to evaluate my balance sheet, I really didn't want to incur more debt and I needed to make sure that I was keeping healthy, healthy business. And and I noticed that, you know, as we would go to phase 12 and three and then back to two and back to three. And such That that movement um would cost, it would take time, it would cost, it would wear and it would exhaust the team as well to allow people to come in or uh to have just 50% or 25%. That would also mean I'd have to have an extra staff probably keeping track at the door. That means I'd have to have someone that's constantly going around the table is cleaning them up. Um And all the other precautions necessary to reduce the likelihood for uh someone getting sick inside the cafe. Well, if as a small business, um you know, if we're okay with just the traffic flow as it is, without letting folks sit down um, and not incurring more cost then how about we just wait until good old Phase four happens and we know things are good and well and, and then, you know, we'll lay out the tables will open it up and we'll get back to normal because I always said that, you know, for the, for the revenue that I may potentially gain, what is the cost of which I will incur. And does that make sense? Does it justify it? And what about the risk factor of catching covid in here? Now that, you know, all of us are hanging out here inside the space, which we probably prefer to be in a cafe, working then maybe at home where, you know, maybe the dog is going or you know, someone in the kitchen or, you know, all those factors, you may just want to be in a cafe so that setting is also desired. So there was always this like analysis of like okay, increased labor or just maintain as is and keep getting the team back in here more often so that they're getting shifts and you know, maybe it's like a work share. So E. S. D. Employment security department had a work share program. So I was like, okay, well You know, 50% of the time they're on the bar working and then 50% of the time they're on work share. And so there is some kind of assistance as well. So there were those factors and to kind of come back to the piece about, you know, how do you retain almost uh your staff for a longer period of time outside of just the desire for wages and such. I think it goes back then to saying, okay, let me not, you know, put a glass ceiling here, you know, you know, handsome, what is, what is your passion and because yes, you were brought in as a birthstone. We're gonna expect the things that we need from you as a barista. But you know, if one extra day a week you were able to fulfill that passion of yours, which is, you know, journalism or coffee, sensory analysis, we need that skill, we need that, we need someone in that space and we're willing to pay for that because we value that education. In turn, you've now added something else to your resume outside of just being a barista. Um, and now you have this other skill which will, you know, the next opportunity. It's not with us, but it'll allow that person something or to grow as well. Well, you actually raised an important point that we can talk about hiring and bringing new people in so you can meet demand. But we should, we should actually end on retention. Right? The people you already have, how do we keep them? And you mentioned, you know, giving them that the expansive sense of opportunity for you, then I should ask you as well that your people who you do have working for you are really precious right now because you're having challenges, bringing new people in. How much are you thinking about what you need to do to make sure that they stay and don't go anywhere else? Uh, well, there are no guarantee on a stay when they come and work for you so that somehow you have to prepare more people behind because they can jump this one, all the state, they can jump into all the city. They move somewhere. You don't know guarantee they're gonna keep them stay with you, Elena. So what do you do to make sure that they want to try to stay? What do I do? Well, I just try my best to get a good boss. You know, That's how I do it. That's all they could ask. You can ask for. Well, I wanted to thank the three of you for for bringing your expertise and your experience too. What is, frankly, a challenging conversation and even though this is something that is happening right now, and it's a unique situation, it's clear, especially for what we're hearing from Michael in terms of systemic changes, demographic changes that small business owners are going to have to grapple with. This. Long after this crisis has passed, it started to start thinking about what we've heard from Van and Ephraim, in terms of thinking about paying more, hiring bonuses, building a strong sense of values and a connection to the community so that people want to come and work for you. I think these are all really good best practices or at least good lessons that you can also employ. As you think about how you ah are able to hire the qualified workers that you need for your business right now. So thank you very much, Van, thank you Ephraim and thank you Michael for your insights for this. You say you.