Long-term trends point toward an ongoing shortage of people, independent of short-term economic cycles. Dive into any research report and the story is the same —retirements, working age population declines, declining immigration, market shifts, climate-induced challenges — all of these forces and more have, and will continue to, create shortages of critical talent. Once the rumored inflation recession fades (if it ever happens) the shortage will come roaring back.

A 2022 study of 504 occupations published by The Conference Board notes that except for some science, technology, engineering and math (STEM) occupations (where there has been a significant long-term increase in recruiting and educational funding), most industries will experience significant skills shortages at least through the end of the decade.

Most companies are grappling with this problem. One approach is to attract people through compensation and other benefits. The thinking is that if you pay more than the competition, build climbing walls, improve the food in the cafeteria and provide other incentives, people will beat a path to your door. That only works to a point.

Paying people more is not a bad thing. But paying the highest wage has the same endpoint as fighting a low-cost producer battle. Only one company can pay the most, just like only one company can charge the least. And, in this new, and perhaps permanent age of remote and hybrid work, the climbing wall and cafeteria become irrelevant.

Turnover is painful. The average cost of recruiting and hiring a replacement can be more than 30% of a team member’s salary. The hit to productivity, project execution, and customer relationships is expensive, on top of the replacement cost. No matter how brilliant your strategy, turnover costs are one of the most significant challenges to your ability to achieve your business goals.

On the people-side of the equation, turnover causes your teams to lose cohesion along with capability. All of that critical knowledge and skill is stored in people’s heads and hands, not in the cloud. When they leave, so does the know-how, along with your productivity.

What If It’s About Leadership?

Let’s consider a real-world example. In the 1970s, Sean started his career as a union carpenter and after a few years rose to the top of his field, making a decent hourly wage; equivalent to $150,000 per year in today’s dollars. The problem for Sean was that he made a decent hourly wage but a lousy living because life for a carpenter then was similar to life as a carpenter today. Every company Sean worked for treated him like expendable inventory and laid him off when projects ended.

Sean was offered a job as an inspector at an oil major for exactly half his carpenter’s hourly pay with an opportunity to build a career, travel, use his skills, and stay employed. Suspecting this was a choice between unstable and stable futures, Sean took the job and never looked back. Sean was able to retire — still an inspector — with a comfortable pot of money at 63. We asked Sean why he stayed in one place, in one job for 30 years. His answer was about the same as you would hear from any person in his situation: “They treated me right and I was able to do interesting things. Management came to me for my opinion on big and small decisions, and they even listened to me pretty often. Why would I ever leave a place like that?”

The Great Disconnect?

People view themselves as individuals who want to be treated with fairness and dignity. When leaders view people as resources, the intersection of basic human interests and the “resource-focused” language of business ends up manifesting itself into the “great disconnect.” The problem is that people are not resources. People are people, and if they don’t like what’s going on, they leave, or worse, they “quiet quit” and stay.

First, let’s acknowledge that leaders cannot control retirements, people wanting new challenges, or life events. And money is always important.

What leaders can and do control is the experience people have working for them and the company. This experience, and the conditions that create the experience, are what determines people’s level of engagement and productivity.

Virtually every research report conducted in every corner of the world points out that the number one reason people stay, leave, quit, or stay and cause havoc is their experience with their leaders. A 2018 Udemy study found that 51% of Millennials and Gen Z employees are likely to quit their jobs because of a bad manager.  And Gallup research shows that only 32% of employees are engaged and just 18% of managers demonstrate a high level of talent for managing others.

This means that two-thirds of employees are disengaged, three-quarters of employees who quit do so because of their managers, and a shocking 82% of managers aren’t very good at leading people.

If you are one of the 18% of excellent managers and the 32% of employees who are engaged all work for you, research indicates that you don’t have a skills shortage. However, if you are not in that elite group and you and your company are partially or fully consumed by the competition for talent, perhaps the answer is staring at you in the mirror. What’s stopping you from joining it when the benefits are so obvious?

Where Are Your Blind Spots?

If you suspect that you and your fellow leaders are running in place while facing engagement and turnover challenges, you can gain honest feedback through periodic, third-party assessments. Well-designed assessments, where leaders are rated by their employees and teams are evaluated on their behaviors, provide invaluable insights and can point out blind spots across the organization.

Measuring the key indicators of team health and engagement provides valid, accurate measures of both how teams and leaders are performing. An environment of confidentiality is created for those giving input and those receiving the feedback. This makes for more honest input and hard-to-ignore output.

There are many ways to categorize team and leadership behaviors, these six are critical to effectiveness and performance:

  • Communication: Clear and open communication reduces misunderstanding, minimizes work delays and enhances overall productivity.
  • Interactive feedback: A feedback culture provides essential information for decision-making and performance improvement by reflecting on the past and anticipating future results.
  • Emotional intelligence (EQ): Identifying and managing your emotions while navigating the emotions of others reduces assumptions and increases psychological safety.
  • Structures: Unifying and streamlining work processes builds the foundation for efficient and successful teams.
  • Accountability: Holding one another respectfully accountable drives innovation, trust and productivity.
  • Cohesion: Team cohesion increases satisfaction, engagement and collaboration, resulting in increased success and productivity.

How Training Can Help

Effective leaders steer and influence their direct reports toward achieving short- and long-term goals. From seasoned, trained leaders to accidental leaders, how they lead — and how well — can look very different. How do you know if your leaders are effective?

Team alignment affects how your employees work together as well as company culture. Teams that are not aligned don’t perform well. Teams who are aligned on goals and priorities are more collaborative and have higher morale. So, how do you know if your teams are aligned?

The Importance of Measurement

People analytics is not a new concept and the links to business impact are well established. By collecting the right data, and continuing to measure and analyze over time, you can pinpoint where to make behaviorally based performance improvements that will have a significant, positive impact on productivity and retention.

Organizations need to provide the tools and training to set up their teams for success. Leaders need to learn how to foster deeper connections and be equipped with insights to help target their focus. Finally, everyone needs to put in the effort to stay connected, whether in person, remotely or both.

Make it a priority to develop the competencies of your people and processes and your company will excel — not just in a hybrid environment, but in any environment — and the data will prove it.