3 threats to companies on the labor market and 7 ways to overcome them

Ekaterina Ovchinnik, Intercomp HR Director for Russia and CIS, talked on HR-tv.ru about the conditions on the current labor market. She also described what could be done with employee income loss and how to significantly improve business performance.

By Ekaterina Ovchinnik, Russia and CIS HR Director

Every modern company strives to keep and improve their competitive edge, and one of the key advantages for providers of consulting services is their staff.

Екатерина Овчинник, директор по персоналу Интеркомп
Ekaterina Ovchinnik
HR Director Russia and CIS
Human capital is very important on the B2B market because employees provide services directly to clients. In other words, the prosperity of a business as a whole is dependent on its employees, their loyalty and commitment to the company's mission and goals.

What difficulties have arisen on the labor market recently? Like in other industries, these difficulties can be divided in three different groups:
  • 1
    Shortage of qualified personnel;
  • 2
    Employee income loss;
  • 3
    Business performance needs to be constantly improved.

Shortage of qualified personnel

Solution 1. Work on increasing loyalty and retention of current staff

Although HR is not the most digitized sector, today everyone understands that:
  • Loyal employees generate more profit than those who are not;
  • Restoring staff loyalty is more difficult than keeping it;
  • Hiring and training new staff costs considerably more than retaining staff with a proven track record.

Solution 2. Work with students

We often use this recruitment tool. The main disadvantage is the process which is rather long, but, oddly enough, this method offers more pluses than minuses. First, you get employees who can be completely “tailored” to your requirements. Second, after having received professional training in your corporate culture, they fully share your particular corporate mission, objectives and values. Third, companies employing students fulfill an important social function.

We consider the pros and cons and draw conclusions.

Solution 3. Focus on staff training and mentoring/buddy system

Many company executives see corporate training as part of employee benefits package because companies spend money on training, and people hired by companies offering training thus learn new professional skills that they can showcase in their resume. This is partly true, but it is important to remember that the main purpose of training is not for employees to quickly find a new job, but rather for them to think that any other workplace is not as good as theirs!

Let’s look at training from another perspective. 70 years ago people had no TVs, 50 years ago they had no Internet, 30 years ago no PCs, and 15 years ago barely anyone had a mobile phone. Today, mobile phones are used as a notebook, camera and mail service. They have become our closest assistants. And it is the same for corporate training, which today is no longer a benefit, but a way of adapting staff to a rapidly changing work environment. If you want to work in a leading company, you need to keep your employees up-to-date and let them learn new skills.

Fall in real income due to the economic situation in the country

According to data from Intercomp Center of Macroeconomic Research, average wage growth was 5.7% in 2016. And according to the Federal State Statistics Service, the consumer price index was 5.2% in 2016 and average inflation for the year was 7.1%. It follows that unfortunately no real income growth was observed in 2016. This is a fact that most HR specialists and company executives are a bit uneasy to recognize.

In my opinion, this unpleasant fact needs to be acknowledged and measures should be taken. Outsourcing work is different in its intensity so employees have no opportunity to do work on the side in addition to their main job because they are constantly involved in various projects. It is therefore not surprising that people expect companies to compensate them for financial loss. But no matter how large and successful a company is, resources are always limited. This situation can be addressed in two ways.

Solution 1. Introduction of changes to incentive system

Our incentive system is a living, working tool which is relatively quickly rearranged depending on the challenges faced by the company. I would like to clarify that we are a socially responsible employer and we always honor our obligations. Our remuneration system is completely transparent and understood by our staff.

If at the beginning of the year, we understand that not quantitative but qualitative indicators should be emphasized in the new reporting period, we adjust the system by introducing new and/or getting rid of old indicators. All these decisions are recorded in the relevant documents so that each employee understands what they should focus on in their daily work.

Solution 2. Retention of key employees

I consider that key employees are like the immune system of the organization they work for. Nothing can function properly without them. They provide internal stability in the team and consistency in the face of external factors and challenges. By taking care of their retention in the team, you are taking care of the health and prosperity of your company. Do not take any chances on your company’s health!

Business performance

Solution 1. Cost minimization, optimization and restructuring of business processes

The constant crises of recent years have taught us to live frugally, constantly looking for more effective solutions for our business. It is now fairly rare to find places with a strict hierarchical structure. Bureaucracy is becoming a relic of the past even in the public sector. Business structures are becoming more levelled and manageable. Following these trends, we:
  • Carefully monitor all financial indicators and keep our budget flexible;
  • Pay particular attention to the automation of work in production units;
  • Monitor the quality of services provided to clients by conducting regular surveys.

Solution 2. Focus on core business

Let’s recall any time management training and answer 2 simple questions: what is hijacking our time and what rule of successful self-management should be applied in our day? We are sidetracked by many unrelated tasks the fulfilment of which brings nothing fruitful and by many issues on which we spend 80% of our time to achieve 20% of the anticipated result. Successful self-management, as a rule, translates into the completion of at least one really important task every day, bringing us closer to our cherished goal. Why am I talking about that? Because our body is arranged this way: in conditions of chronic stress and fatigue, goals and boundaries are blurred. We lose sight of the ultimate goal and start dealing with everything indiscriminately. And meanwhile, the better we know our core business, the more time we can devote to it and the easier it is to develop it.

Transfer non-core tasks to contractors and outsource routine processes. This way you will be able to devote your time to what is really important. Many have done it already. Let’s talk about this real opportunity. The future is in the division of labor and IT.
And those working in outsourcing like us have nothing left to do but improving our work model performance and monitoring performance and quality indicators on a monthly basis.