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  1. Career Advice
  2. Career development
  3. What you need to know as an employee about labor hoarding!
What you need to know as an employee about labor hoarding!
Profile Jennifer Inglis

Jennifer Inglis

What you need to know as an employee about labor hoarding!

Artwork by: Antonina Kasyanikova

  • The definition of labor hoarding
  • Negative aspects of labor hoarding
  • What labor hoarding means to an employee
  • Key takeaways

Wondering about job hoarding? While it may sound scary, it's a tactic companies use to retain their workers, even in the face of an uncertain economy. In this article, we’ll discuss the ins and outs of job hoarding, and what it means for you.

When you hear the word, “hoarding,” it might bring to mind images of houses filled to the brim with knick-knacks, clothing, and back issues of “T.V. Guide.” With the economy in flux, more and more businesses are coming to see that instead of labor reduction tactics such as layoffs, retaining and retraining their employees is much more cost-effective than finding new hires and keeping their workforce productive and engaged.

In this article, we’ll discuss the concept of labor hoarding, including

  • What is labor hoarding?

  • What are the benefits of labor hoarding for the employer?

  • The downsides of labor hoarding

  • What labor hoarding means for the employee

The definition of labor hoarding

Labor hoarding occurs when employers reject layoffs at all costs, even if it would help their bottom line in the short-term, and instead keeps the company’s workforce intact. Basically, it’s the polar opposite of layoffs. Instead of laying employees off to save money, businesses are "hoarding" workers to avoid the cost involved with hiring and training when the economy does bounce back. And this concept isn’t new — it was developed in the 1940s and was utilized to keep companies working effectively during and after a recession.

Why a company might choose to labor hoard

If a company were in challenging financial traits, why wouldn’t they want to let go of employees? It’s the easiest way to cut costs, right? Not necessarily. There are several reasons why some companies are choosing to labor hoard:

  • It costs a lot to replace an employee. The problem is that doing this is expensive. The Society for Human Resources Management estimates that the cost to replace an employee is at least $4700, with other experts stating that it can cost up to three to four times the position's salary. 

  • Hiring new employees takes a lot of time. While it varies from company to company, in general, it takes about four weeks to fill an open position. Then you need to factor in onboarding and training.

  • There is a shortage of talent. Right now, there are almost two open jobs for every person looking, according to the Bureau of Labor Statistics JOLTS report. Thinking long-term, it might be quite difficult to rehire people for open positions, so it makes sense to keep the talent a company already has.

Other benefits to labor hoarding

There are other reasons a company might choose to hold on to its employees rather than laying them off, and these considerations can have a positive effect not only on the employees themselves but also the overall company culture and the national economy. These benefits include:

  • It increases employee morale. When employees feel secure in their jobs, they tend to be more productive.

  • It prevents competitors in the industry from hiring your employees and benefitting from their knowledge and experience.

  • It allows companies to strengthen their talent pool through the use of upskilling, reskilling, and professional development.

Statistical Insight

According to a survey by Skynova, 91 percent of small business owners are practicing labor hoarding, with the main reasons being “confidence in their current team's strength” (48%), impact on morale (47%), and difficulties in hiring new employees (43%).

Negative aspects of labor hoarding

Labor hoarding does reduce recruitment costs as well as employee turnover, but it’s not always the best path for your company to follow. If a company has reduced staffing needs and they don’t feel that the situation will change any time soon, it’s not an effective cost-saving method.

Additionally, it may increase employee resignations. If there are a plethora of employees but not enough work for everyone, it can lead to low employee job satisfaction — one of the main reasons people quit.

What labor hoarding means to an employee

Assuming there’s enough work to do (and employee engagement remains high), labor hoarding can be a positive thing for an employee. Companies practicing labor hoarding may be more likely to implement upskilling or reskilling, which will provide opportunities for new positions within the company. And there may be more opportunities for in-house training, new assignments, job shadowing, and mentor programs, all of which can lead to a positive impact on career growth and advancement. It can also increase your value in the marketplace, should layoffs occur at your company.

As companies are taking more steps to retain the talent they already have, many are offering perks to ensure their employees stay put. According to the Skynova survey:

  • 50% of companies have increased their salary

  • 44% have invested in their workplace environment

  • 44% have offered remote/work-from-home situations

But remember, even if a company is job hoarding, that doesn’t equal job security. Always keep an eye out for opportunities to learn new skills, both hard and soft, to increase your value to your current company as well as a potential future employer. 

Looking to accelerate your career? Check out our Job Search tool to explore your options.

Key takeaways

  1. The term “labor hoarding” refers to the idea of employers rejecting layoffs at all costs.

  2. Companies may choose to labor hoard to save time, decrease hiring costs, and eliminate issues with finding qualified applicants.

  3. Companies practicing labor hoarding may be more likely to implement upskilling or reskilling, which will provide opportunities for new positions within the company.

Profile Jennifer Inglis

Jennifer Inglis

Jennifer Inglis is a freelance writer and content creator. A former public school teacher, she has expertise with English literature, writing, and public speaking, as well as an extensive professional background in advertising and media analysis. Jennifer has a bachelor’s degree in Theater and a master’s degree in Education, and is the author of two published novels.

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