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Click here to subscribe to HRET Resources RSS feed Workforce Shortages: Lessons Learned from Other Sectors

Peter Cappelli, DPhil, University of Pennsylvania - October 08, 2010

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A wide range of factors affect the availability of workers to any industry and potential solutions to labor shortages span the entire range of those factors.  In a paper that evaluates the varied responses of industries to labor shortages, Dr. Cappelli focuses his analysis on industries where an entire occupation is in short supply across the economy.  Such situations are most closely related to the continuing shortage of nurses within the health care industry in the United States.  Cappelli identifies and discusses four options that employers in these industries have used successfully to address their labor shortages.

The first option is increasing the supply of applicants, a strategy favored by many employers because it focuses on recruiting rather than on changing the way an industry operates.  One of the newest (and most underutilized) tools for recruiting, especially in health care, is recruiting online, which dramatically increases the effectiveness of outside hiring.  However, Cappelli observes that attracting employees away from other employers does little to address an occupation-wide labor shortage.  One alternative strategy is to attract new applicants into an occupation by carefully analyzing the specific nature of the shortage.  For instance, one school system addressed a shortage of elementary school teachers by recruiting and retraining from their oversupply of secondary school teachers.  According to Cappelli, recruitment efforts can also focus on groups (males, for instance, in the case of nursing) not traditionally engaged in an occupation and on programs that tap and train underused applicant pools (such as immigrants or the unemployed).  Among other recruiting strategies examined by Cappelli are adjusting hiring standards and using marketing to change attitudes about a particular profession.

An alternative to hiring workers from the outside market is internal development, in which employers absorb the costs of training existing employees to perform more skilled jobs.  For example, one health care system developed its own critical care staff by teaming newly graduated nurses with nurses who had surgical experience, then placing the new employees in internships within the hospital’s critical care unit.  Two other alternatives to hiring expensive and better-educated workers is arranging on-the-job training for less qualified job applicants and providing tuition assistance to current employees willing to return to school to skills that are in high demand.

Reducing attrition and absenteeism are another means of coping with tight labor markets, especially when such actions keep an employee from leaving the occupation when they leave the employer.  Among important, proven efforts that solve turnover problems and remedy job dissatisfaction are training programs (such as nurses taking courses for CEU credit) that improve employee performance while offering the option of career advancement without the necessity of leaving the field.

The final option that Cappelli explores in his paper is reducing the demand and the overall need for new workers in an occupation where there is a labor shortage.  Examining factors that might reduce the demand for labor--such as improving productivity through changes in an industry’s business model—is one way to reduce demand for new workers.  The productivity of skilled workers can be increased by automating simpler tasks or having them performed by less skilled workers.  Cappelli’s research also suggests using contingent workers and alternative suppliers to meet peak and variable demand, thus reducing the requirement for full-time staff members.

Cappelli acknowledges that some of the options he explores are either difficult to apply to the nursing shortage or (as in the reduction of demand for more skilled nurses) have already been fully pursued by employers.  He believes that the most promising options for nursing are in the areas of recruitment and retention.  For example, research suggests that most nurses work within 10 miles of the nursing school they attended.  Thus, employers who invest in local schools and work programs are likely to benefit from such investments.  On the retention side, Cappelli points out that there are a long list of practices that have been found to reduce employee turnover.  One approach, however, seems particularly suited to nursing—continuing education as a retention device.  Record numbers of nurses are furthering their educations and employers who help them undertake additional education generally experience lower turnover because their employees are happier and more committed to their jobs.

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