Peak Manpower - have we hit the end of the road for hiring?

Back when I started in sustainability business in the mid 2000's the industry was talking Peak oil. Peak oil is the theorized point in time when the maximum rate of extraction of petroleum is reached, after which it is expected to enter terminal decline. Peak oil theory is based on the observation that for any given geographical area, from an individual oil-producing region to the planet as a whole, the rate of petroleum production tends to follow a bell-shaped curve .

Environmentalists were excited that finally nature itself would reduce the extraction of petroleum based fuels simply because the supply would start to dry up.

Peak oil has yet to materialize, mainly because the thing environmentalists promoting the theory overlooked was how innovative the oil industry would become. Necessity truly is the mother of invention.

The oil industry didn't ball itself up in a corner and cry itself to sleep each night, instead they invested, innovated and found solutions to extract more petroleum than ever imagined possible. The best part was this innovation meant less wells and a lower environmental impact. For instance on a 1200 acre parcel approved for gas drilling traditionally 32 wells would be installed, but with innovations around horizontal drilling - one well can now handle the volume of 32 and multiple wells can be connected to that one well site reducing the environmental impact on the land considerably.

The industry got lean, it got innovative and it took the thing that could have been its destruction and it turned it around to make itself more profitable and sustainable.

Right now we face a similar "Peak", Peak Manpower. Millions of jobs are going unfilled and the labor numbers does not show any end in site. What happened? Well unlike the oil industry prediction that never materialized, we actually did hit Peak Manpower and we weren't ready for it. Where the oil industry had years to innovate Covid "came in like a wrecking ball" (shout out to Miley). Over three million people took early retirement, two million women did not return to the workforce and 979,000 Americans died. Add to that, many industries grew during the pandemic and very quickly you realize, we have far more demand for workers than we have supply of workers.

So like the oil industry, we need to act. We need to solve the problem and quickly. We must either dramatically increase the supply of workers (immigration) or find new ways to do more work with less people.

Immigration seems like a quick fix, but if you live in the US you likely know about the housing boom, another area which has peaked - in some markets where the demand for workers is the highest (Phoenix and Dallas for instance) it is not uncommon for a home up for sale to get 100 offers from buyers wanting to purchase and wanting to purchase at prices far over asking (or even appraisal). So bringing in millions of immigrant workers won't work if they have no where to live.

One solution is to become the most lucrative employment option out there, that way we are the only choice for qualified candidates. Just like the housing market we need to offer $50k, $75k or $100k more than the market rate for positions in order to obtain talent.

Or ...

We find ways to do more with less, and the only way that occurs is through improving, changing or replacing process.

Right now the thing that will improve your competitiveness, increase your margins and stabilize your position in the market all while improving employee retention is taking what you have and making it more efficient.

Oddly this concept of improving your existing position is not one that American businesses embrace.

Before the pandemic I spoke to a large group of CEO's and asked them to write down the members of their leadership team focused on "Offense" - essentially tasks associated with growth like sales, marketing, product development, customer service, logistics, supply chain etc. Then I asked them to write down the "Defensive" players on their leadership team, you know the people devoting all their time to making sure process is followed and improved, the people devoted to protecting margin, those gathering feedback on unprofitable aspects of the business and providing that business intelligence back to the board. Like you, other than IT (cyber defense) and compliance and safety at least 90% of the CEO's could not identify a single person in their company devoted to defending margin and making sure the business processes were lean and efficient.

Perpetual growth was the focus with no dedicated consideration for how to maximize that growth, increase profitability and hit economies of scale.

Instead economies of scale were seen as some magic occurrence that just happens once you hit the right size.

Peak Manpower is here for now and you have a choice, continue complaining, enter the bidding war or consider what you have now and how to make it more efficient.