The fall and winter holidays are some of the busiest times of the year for businesses, both in services and the supply chain. In 2022, lots of businesses found themselves with either too few or too many workers during the last months of the year. This time around, the smartest business leaders will avoid a staffing mismatch with a more strategic approach.
Last year, it was almost inevitable that some employers would find themselves short or overstaffed. Demand for goods — particularly those delivered to and consumed in the home — had skyrocketed in the early years of the Covid-19 pandemic. Businesses throughout the supply chain, from manufacturers all the way through retailers, struggled to bring hiring up to pace with demand. But then the bottom fell out; starting in the spring of 2022, demand for goods stalled and demand for services boomed.
As a result, big inventories built up throughout the supply chain, and some companies found themselves with more workers than they needed when the holidays rolled around. A lot of them decided to hold onto these people, even if there was less work for them to do, and wait for demand to return. The thinking here was that letting them go and then trying to rehire them would be more difficult and costly than just keeping them on the payroll — but this still meant resources sitting idle.
The situation was the opposite in services. The big surge in spending that started last spring took plenty of businesses by surprise, so they raced to hire more workers. Yet this was far from easy since employment levels in leisure and hospitality were still well short of their pre-pandemic trend. Average wages, which had already risen by about 17% since the pandemic began, climbed by another 5% to lure people back to the sector. The gap started to close — but not before as many as a quarter of businesses had to forego at least 10% of revenue for lack of staff.
Related: 5 Tips to Ace the Busy Holiday Season With Flexible Work
Normal service is set to resume, but when?
This year’s holiday trends will probably be easier to anticipate for companies across the economy since the balance of spending on goods and services will look more like it did before the pandemic. But there are still risks to the upside and downside for demand, including whether the Federal Reserve will keep raising interest rates or allow the economy to resume its boom. A few months ago, retailers were expecting a muted holiday season. Now, growing optimism among consumers may lead to higher spending.
This continuing uncertainty means that agility in staffing will be at a premium. So what can businesses do to prepare?
- Figure out what can’t and won’t change. Some contracts for the holiday season will need to be fulfilled regardless of the latest economic news. Their labor requirements won’t change, so that labor can be set aside when deciding how much payrolls might grow or shrink when other sources of demand fluctuate.
- Find out who can do what. The simplest way to react to changes in demand is by adjusting the hours of existing employees. But first, it’s important to know what workers are willing to do. Are some workers ready to accept fewer hours, perhaps in exchange for a more flexible schedule? Are others, including part-time workers, willing to do more? It’s especially crucial to know these things during the holiday season when more workers are likely to have personal obligations and travel plans. Having a clear idea of the payroll’s capacity to flex up or down on short notice will decrease reaction times while aligning expectations about what might happen will keep more employees happy.
- Line up your options in advance. If you think you might need to bring in temporary or flexible workers — either to deal with extra demand or to stand in for permanent employees — then build the necessary processes and relationships now. Negotiating labor supply contracts with temp agencies can take time, and things tend to move more slowly during the holiday season. Alternatives include online labor market platforms. Even though businesses can sign up and start looking for workers anytime, it still pays to build a roster of trusted professionals. Bringing in workers for training or practice shifts now will help to assemble a deep bench of people who already know the business and can jump in on short notice.
- Think about the future when reacting to the present. Changes in payrolls bring new people into the organization, and businesses may want to keep some of them in the New Year. After all, businesses will always have turnover, no matter what the economy is doing. So what looks like a short-term assignment need not always be one. Treating workers with equal dignity and offering a path to a closer relationship can unlock the best of their abilities, not to mention loyalty.
Related: How to Scale Up Your Holiday Workforce the Right Way
Not everyone who works during the holiday season will end up as a permanent hire — and it’s hard to tell right away who will — but it’s worth leaving the option open by laying a strong foundation for the relationship. And that’s equally true for businesses that are just hoping to bring the same people back for the next holiday season. Trying not to cancel shifts at the last minute, being respectful of time spent with family and letting everyone participate in a little holiday fun at work, no matter their tenure, are good places to start.
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