If allocating more budget to employee wages and benefits solved the problem of a lack of qualified workers to fill open positions, companies might be able to outlast a tight labor market. But what if a company still can't fill open jobs and has so many unfilled jobs that its operations and revenues are affected?
According to two recent surveys of U.S. finance executives in both large and small organizations, worker shortages have started affecting the normal operations of some organizations and cutting into their revenues.
On Tuesday, the Job Openings and Labor Turnover Survey reported that job openings in the United States held steady in February at 11.3 million. Hires rose slightly to 6.7 million. The difference (4.8 million) is the largest imbalance ever recorded between worker demand and supply.
That fact was pointed out by the researchers who run The CFO Survey, a collaboration of Duke University and the Federal Reserve Banks of Richmond and Atlanta.
Unsurprisingly, the quarterly poll of finance chiefs, released Wednesday, found that more than 75% of CFOs had difficulty hiring new employees. About three-quarters of those CFOs said the talent shortage was impacting revenue and about half indicated it was constraining both revenue and full-capacity operations. A very small number of respondents (6%) said the impact on revenue and operations was significant.
In the second survey, the AICPA’s first-quarter economic outlook survey of CEOs, CFOs, and other executives with CPAs, 82% of respondents indicated their companies had some difficulty recruiting and retaining employees.
More than half (57%) said they had too few employees. Among the actions CPAs had taken to address the problem (respondents could choose more than one):
24% restructured staff to protect core operations
23% limited new projects or bids
16% delayed service expansions
9% slowed customer or client acquisition
7% reduced hours of operation or work shift
3% closed some work locations
“Pandemic-related trends such as the Great Resignation have complicated an already difficult hiring situation, and that can exacerbate burnout and disaffection among remaining staff if the situation isn’t managed carefully,” said Ash Noah, a managing director at the AICPA, raising another human capital issue facing management teams.
When the Duke CFO survey asked finance chiefs how they were responding to hiring difficulties, the CFOs of 76% of large firms and 61% of small ones said they had extended the working hours of existing employees. Implementing labor-saving automation was happening at half of the large companies and one-third of the small companies. (See the chart above.)
Farther down the list, companies were hiring less-experienced or less-skilled workers, using staffing firms more often, and training employees for other jobs.
Darden Restaurants, for example, is hiring some restaurant workers that it might not have considered qualified before. "Giving someone their first job and teaching them to do the things the way we do it is a good thing for us," said Ricardo Cardenas, Darden's president and COO, on the company's March 24 earnings call. "Maybe in the past, we would have said you needed to have a lot of experience in a restaurant before you [came] to work for ours."
Both the AICPA and Duke surveys showed finance executives less optimistic about the U.S. economy than they were in the fourth quarter of 2021.
The Duke survey’s optimism index fell to 54.8 from 60.3 last quarter. That was only four points higher than the optimism reading in March 2020. Optimism deteriorated largely among finance executives and business decision-makers at companies with fewer than 500 employees, Duke survey researchers said.
In the AICPA survey, only 36% of executives expressed optimism about the U.S. economy and its performance over the next 12 months, down from 41% last quarter.
The AICPA survey had 461 qualified respondents and was taken from February 2 to February 23, 2022. The Duke survey had between 317 and 337 respondents and was conducted from March 7 to March 18.