Talent Crunch: How are natural products companies navigating the workforce shortage?

Nutritional Outlook, Volume 25, Issue 6

How do companies thrive when there are too many jobs and not enough people to fill them?

In a reversal of fortunes from the historic 2009 recession, industries all around the world are facing a hiring crunch. According to the U.S. Bureau of Labor Statistics (BLS), in the United States alone, there were 11.5 million job openings across all industries as of March 31, 2022. That’s the highest number of simultaneous job openings on record since the BLS started tracking job openings 22 years ago.1

The worker shortage is affecting different aspects of the nutritional supplements and natural health products industry, depending on the country in question, and there doesn’t appear to be one single cause behind these staffing challenges. Rather, a confluence of economic, pandemic-related, and other factors is widening the gap between companies’ required staffing levels and the number of both skilled and unskilled workers available.

As the workforce shortage continues, companies will need to get creative and break out of old patterns in order to attract new hires. Here are some of the trends driving the natural products industry’s workforce shortage—and some of the effects companies are feeling from it.

Companies Pay More in Overtime and Temp Fees

The global labor shortage is forcing manufacturers to navigate a dual challenge: the need to pay higher labor fees for lower-quality work. In stark contrast to the years following the 2009 recession, when a single job posting could attract innumerable applicants regardless of the posted wage, companies today are finding that filling their immediate short-term staffing needs requires creative solutions. Unable to find permanent full-time staff, a number of companies are using temp agencies to fill the gaps.

“We’re relying more and more on temp services to fill labor demands,” says Barbara Stafford, vice president of people experience at contract manufacturer Best Formulations (City of Industry, CA). “But temp solutions are short-term, and temp workers can’t match the quality or efficiency of fully trained, full-time employees. The labor shortage is also causing our trained employees to work overtime, further driving up labor costs on top of already-increasing wages.”

Employers Compete for Talent

Stafford says the labor shortage is among both skilled and unskilled workers. She notes that in California, human resources professionals are very difficult to come by. There are also shortages of skilled workers in R&D, chemistry, and machine operations. Stafford says it’s difficult to recruit skilled employees to work in a facility when competing employers are offering work-from-home opportunities. As a result, companies must act more aggressively to overhaul the entire employee experience.

“Offering a hybrid work environment and flexible hours is a must for positions that can be done from home,” Stafford explains. “Higher salaries and increased benefits are also necessary to attract workers. Wages are increasing at a pace we’ve never seen before; the large companies are all advertising starting wages well above minimum wage, and we need to keep up because that’s now the expectation from workers, even from those with very little experience.”

Mark LeDoux, CEO and chairman of the board at Natural Alternatives International (NAI; Carlsbad, CA), says companies need to get creative in order to recruit and retain talent. Paying competitive wages, he explains, is imperative for all employers—but that’s not where recruitment efforts should end.

“Companies that are willing to invest in the future of their workforce will prosper,” LeDoux explains. “That means enabling employees to share in the profitability of the enterprise. It means ensuring employees can secure their financial futures through generous retirement programs, life insurance coverage, and best-in-class family health coverage. This requires capital, visionary leadership, and proper execution.”

Investing in these more robust salary and benefits packages is likely the most effective way to attract new talent. In October 2021, UC Berkeley professor of public policy and Rhodes Scholar Robert Reich, JD, wrote in a column for The Guardian that there is no labor shortage; rather, there is a de facto general strike for higher pay and better working conditions.2 Reich served as Secretary of Labor for President Bill Clinton from 1993 to 1997 and previously worked in the Ford and Carter administrations.

In essence, Reich argues that American workers’ priorities have radically changed in response to the COVID-19 pandemic, and workers are no longer willing to tolerate jobs that don’t provide healthcare, that don’t pay a living wage, that don’t offer hazard pay for dangerous work, that don’t offer paid sick leave, and that don’t fund childcare. In order to appeal to the new core values of the post-pandemic labor market, employers will need to continually reevaluate their salary and benefits offerings to determine whether what was competitive six months ago will continue to be competitive six months from now.

Reich’s argument is borne out in anecdotes from companies like Gravity Payments (Seattle, WA). In May 2021, Gravity Payments CEO Dan Price disclosed through social media that his company receives 300 applications for every job opening they advertise; Price famously raised his company’s minimum starting salary to $70,000/year in 2015.

Beyond implementing higher salaries for new hires, companies must also focus on retaining their existing employees. LeDoux recommends that companies examine current employees’ wages to ensure current team members are being competitively compensated. In the case of NAI’s own labor shortage, LeDoux says the company improved recruitment and retention by introducing an aggressive new profit-sharing program for employees, enhancing personnel benefits, and doling out super-sized raises—leapfrogging past rates that would have historically been considered competitive—to secure current staff.

Cultural and Logistics Changes Can Give Employees Meaning

Paying higher wages and expanding benefits to attract permanent staff are both effective and imperative for companies that want to fix their talent crunches. But beyond dollars and cents, there are other changes employers can make that can attract and retain talent.

LeDoux says that in some cases, companies are outsourcing manufacturing entirely to prioritize marketing, messaging, and direct-to-consumer commerce instead. In other cases, he has seen companies install robotic systems to tackle repetitive jobs, freeing up employees for more rewarding and challenging work. These logistical measures can enable companies to make the most of their current workforce when finding new employees proves impossible.

LeDoux also recommends that companies strive to offer employees more than just a paycheck. People don’t just want jobs, he says; they want fulfilling jobs that create a sense of ownership.

“People want a vision. They want to feel like they’re part of an enterprise that’s doing good for the community and beyond. Employees want to feel ownership. We encourage our employees to be proactive in suggesting improvements for workflow or planning, and we reward them with the profits generated from these modifications.”

More Than Just a Job

The natural products industry’s staffing shortage means employers can no longer expect to meet adequate staffing levels by simply offering a job. Attracting and retaining talent means offering the highest possible salary, with the most generous possible benefits, regardless of the position’s seniority or the candidate’s level of experience. It also means creating a company culture that employees want to be part of, whether that’s through profit sharing, flexwork policies, giving employees more authority and autonomy in the workplace, or a top-down overhaul of your entire HR structure.

Perhaps most importantly, filling open positions in the current labor market requires a paradigm shift. Gone are the recession-era days when any old job would do; instead, the balance of power has dramatically shifted from employers to job seekers. Today’s skilled and unskilled workers are looking for more than just a job—and with too many job vacancies and not enough candidates to fill them, it’s incumbent on employers to make themselves attractive places to work.

References

  1. United States Department of Labor Bureau of Labor Statistics. “Job Openings and Labor Turnover – March 2022.” Published online June 3, 2022.
  2. Reich R. “Is America Experiencing an Unofficial General Strike?The Guardian. Published online October 13, 2021.