How to Deal with Labor Shortages

Labor shortages affect almost every industry but affect them differently. In the restaurant industry labor shortages are mostly due to less participation in the labor force by teenagers.  Teenager participation in the labor force is half of what it was thirty years ago.  For other industries, most labor shortages are due to a combination of the lack of skilled labor to fill roles and more job openings than workers without jobs.  Labor shortages generally lead to an increase in competition for qualified candidates resulting in higher overall labor costs.  There are generally only two ways to deal with labor shortages, one is through automation of tasks and secondly improving talent management (recruitment and reducing turnover).

Automation of Tasks

When companies struggle with labor shortages, automation can help reduce labor costs and increase productivity.  For manufacturing, this means purchasing and installing robotics to reduce labor, improve efficiency, and improve productivity.  Robotics can help reallocate labor or reduce labor costs for a process while improving quality, productivity, and efficiency.  Administrative tasks can also be automated through effective use of software.  Software to help eliminate labor hours wasted on administrative duties, like scheduling, performance management, and inventory, are just a few of many tasks that can be automated to manage labor shortages. 

Reducing the effect of labor shortages via innovative use of software automation, has saved companies money and improved profits.  There are other benefits, it reduces strain on workers by reducing the need for overtime and a proliferation of tasks that need to be managed.  It frees up labor to be reallocated to other tasks that cannot be easily automated.  From a modest investment companies can manage labor shortages by improving productivity and retention rates.  

Rethinking Work

New work models have been developed to manage labor shortages that have disrupted the industry a bit over the last ten years. With the proliferation of the gig economy, employees are demanding more flexibility in their schedules.  Embracing a flexible work style will help with both recruitment and employee retention, but also forces companies to adapt.  However, companies will need to invest in automation to rise to the demands placed on them by the labor market. Employee scheduling can eat up labor hours without embracing automation.  Employee time-off requests, schedule changes, can cause stress and increased labor hours for employers.  Using automation alleviates these issues. 

Moving to using OKRs and making changes in management styles also can improve productivity and performance and help reduce labor shortages by effectively managing staff.  Improving employee performance and engagement, will lead to a reduction in turnover rates through increased retention rates. Using OKRs will help build trust and accountability, while improving productivity.   


Recruiting will help fill gaps in skilled labor.  However, recruiting needs to be part marketing and part selling.  Many job descriptions are boring and do not effectively describe the work.  Many job descriptions list requirements that have extraordinarily little baring on the skills needed for the position.  This requires rethinking the job description and creating them to reflect the work that absolutely needs to be performed.   

Also, this requires rethinking the importance of experience, how much experience is necessary to fill a role.  Skills matter more than experience, especially when technology changes quickly with some technology only being around for five months.  Asking for years of experience in certain technology or skills might be driving a company’s labor shortage.  Focus on skills rather than just experience, will help hire and retain employees.  It is fare better to hire for skills and train and develop employees that lack experience, than to hire experience and have them stagnate and leave.  Training and developing employees provide opportunities to engage employees and to develop skills you want them to have. 

Labor Shortages and the Future

Labor shortages fluctuate over time; however, the current trend does not show signs of improving.  A lack of skills is primarily causing labor shortages, until universities and trade schools begin providing education that suits business more, labor shortages will continue.  Labor shortages for restaurants are driven not so much by a lack of skills, but a lack of labor participation.  Restaurants will need to help brand themselves better and attract teenagers more to fill roles, while providing an ever-increasing flexibility the market demands.  For help with dealing with labor shortages, please contact us to help automate many processes and other solutions.