At the onset of 2022, Gold Bond (asi/57653) was struggling. The Chattanooga, TN-based supplier was desperately trying to fill open positions in a highly competitive job market.
Labored Decision
Soaring labor costs are putting suppliers in a bind when it comes to their pricing. In fact, 95% of suppliers are finding it difficult to set their prices because of increased staff costs, and nearly a third labeled it “very challenging.”
How challenging is it to set prices due to labor costs?
“Our resources were constantly being exhausted with HR and managers exerting efforts toward staffing agencies, initial call screenings, day-long interviews, multiple interviews per candidate – all for people to either not show up for one of the interviews or the actual job,” recalls Britney Godsey, chief revenue officer. A lot of applicants, she says, seemed more interested in “checking a box by going through the process” than actually becoming a member of the Gold Bond team.
Fortunately, the dire situation didn’t last. Internal restructuring, wage increases and other factors helped the supplier to become fully staffed, with “built-in layers of talent” created through cross-training to ensure that it’s prepared for distributors’ current and future needs. “Our email response time hasn’t exceeded 24 minutes for the last several months, and it absolutely shines through in our relationship-building with clients,” Godsey notes.
Gold Bond’s situation mirrors what several other suppliers and distributors have noted: that the labor market, while still competitive, isn’t quite so strained as it was last year. “I believe that we’re going from the Great Resignation to the Great Application,” says Mike Brugger, Power 50 member and president of Top 40 distributor Fully Promoted (asi/384000). “I don’t see other stimulus happening, which means people who were on the sidelines will be reentering the workforce, particularly as prices continue to go up.”
Ira Neaman, Power 50 member and president of Top 40 supplier Vantage Apparel (asi/93390), agrees that the end of government subsidies has increased the labor pool. Schools returning to a more stable, in-person learning environment has also helped, he added.
“Hiring is better than it was six months ago. But it’s got a long way to go.” Ira Neaman, Vantage Apparel
Still, Vantage is seeing a shortage of both factory and office workers, with the former being particularly hard to find. “Hiring is better it was six months ago,” Neaman says. “But it’s got a long way to go.”
Across the country, labor costs have been on the rise. During the first quarter of 2022, business and government employers spent 4.5% more on worker costs than they did compared with the same three-month span the prior year – the steepest year-over-year increase in records that go back 21 years, according to the U.S. Department of Labor.
Compared to the fourth quarter of 2021, Q1 2022 worker compensation in the United States was up 1.4%, signaling rises in wages, salaries and benefits. Hourly wages alone were up 5.2% in May compared to the same month the previous year.
Good Help Is Hard to Find
Even with inventory woes and significant price pressures, large suppliers (with more than $5M in revenue) named labor issues their number-one challenge.
Most difficult challenges for large suppliers
Promo companies have certainly experienced those shifts. Top 40 supplier Cap America (asi/43792), for example, examined its internal pay structure recently, making notable changes to compensation earlier than it typically would to keep up with a hyper-competitive job market. “Normally, we examine our structure on a yearly basis so that we stay in line with the overall market, and we typically make minor adjustments to stay in sync,” says Rhyen Campbell, communications and engagement strategist. “However, the current state of hiring dictated more significant changes all at once.”
Other industry suppliers have reported labor costs up as much as 18% compared to last year.
6 Tips for Attracting Good Workers
Having trouble finding employees? Try these six strategies to attract and retain high-quality talent.
1. Cast a Wide Net
Post job listings in the usual spots online, but don’t stop there. Use social media, college job fairs, and even outdoor signage to attract potential workers. Top 40 supplier Vantage Apparel (asi/93390) has found luck by posting “We’re hiring” signs outside its Avenel, NJ, headquarters. “It’s interesting because you wouldn’t necessarily think that would bring in people, but it actually does,” says Vantage President Ira Neaman. Billboards and other outdoor signage can be particularly effective if you’re catching a potential worker at the beginning of a long commute, Neaman notes.
2. Offer Referral Bonuses
Your current employees are one of your best resources when it comes to finding workers, so try incentivizing them to do some recruiting for you. Employee referrals are “an extremely reliable source to fill vacancies and includes acquaintances, friends and family of existing employees,” says Rhyen Campbell, communications and engagement strategist at Top 40 supplier Cap America (asi/43792).
3. Give Candidates a Parting Gift
Mike Brugger, Power 50 member and president of Top 40 distributor Fully Promoted (asi/384000), likes to give candidates a self-branded promotional product, perhaps some logoed chocolate or a nice tumbler.
“It doesn’t cost us a lot of money,” he says, adding that in a competitive job market, “you want to do the little things that will separate you from those other people.”
4. Advertise Your Perks
Let potential employees know what it’s like to work for your company. Do you offer flexible hours, work-from-home options, free lunches or other amenities? Consider posting day-in-the-life videos or employee testimonials on social media and your website to show those perks in action rather than just listing them as bullet points in a job ad.
5. Offer Sign-On Bonuses & Increased Wages
In a tight labor market, financial incentives are crucial to stay competitive with other industries that are drawing from the same labor pool.
6. Develop Robust Onboarding & Training Programs
Good onboarding can improve new-hire retention by 82%, according to research by the Brandon Hall Group. Supplier Gold Bond (asi/57653) puts a focus on employee training and testing. “Although some might consider our training process long – and trust me, it’s grueling taking our best people off the floor and out of their role to train others – it’s worth it,” says Britney Godsey, chief revenue officer. “Nurturing [new workers] in the training process and testing them consistently to see if the training is resonating ensures that we’ve done our due diligence so they can succeed and thrive in their role.”
Distributors report some difficulty in finding quality labor, but on a much smaller scale than suppliers. Gerry Barker, president of Cheshire, CT-based distributor Barker Specialty (asi/132690), says his company experienced some turnover during COVID and is still having trouble finding qualified workers for accounting/bookkeeping positions. For the most part, however, Barker hasn’t had trouble keeping his business staffed up and his employees happy.
It’s a similar story for decorator Culture Studio (asi/532911). The shop employs around 137 people at its Chicago location and is working on hiring around 50 more for a 75,000-square-foot facility it’s opening in Daytona Beach, FL. “I think we’ve been on the receiving side of a lot of the Great Resignation,” says CEO Rich Santo. He notes that Culture Studio makes an effort to keep wages and benefits equal to or even better than the competition, offering things like 401(k) matches, extended PTO and a great working environment. Santo adds that having a strong culture and communicating the company vision to all employees is also a priority.
Another trend Brugger of Fully Promoted has seen is an increase in people wanting to become their own boss so they can continue to enjoy the flexibility they had during the pandemic. “Sales reps are deciding they want to do this for themselves – owning their own franchise, their own promotional products company,” Brugger says. “People want that flexibility. And as a distributor or supplier, if you don’t make those changes, they may end up owning their own business instead.”
Dramatic Disparity
Across the board, a far greater number of suppliers reported labor-related concerns and struggles compared to distributors.
Percentage of on-time orders from suppliers
Addition & Subtraction
For years, a greater percentage of suppliers annually increased instead of decreased their employee count. Of course, that trend was upended in 2020. And though it reverted back to form last year, it didn’t match 2019 levels
Employment compared to prior years (suppliers)
Suppliers Struggle to Fill Roles
Staffing shortages and rising labor costs are affecting the promo industry as a whole, but the challenges of hiring and retaining workers are a much more immediate worry for suppliers than distributors.
Consider these statistics from the State of the Industry report: 89% of suppliers are worried about finding qualified workers to hire, and retaining them is almost as big of an issue, with 81% of suppliers expressing concern. On the distributor side, those concerns are still evident but more moderate, with 63% of distributors worried about hiring workers, and 56% worried about employee retention.
Ira Neaman, Power 50 member and president of Top 40 supplier Vantage Apparel (asi/93390), calls it a numbers game. Suppliers, in general, are hiring factory and warehouse positions rather than the office workers and salespeople that distributors need. “Suppliers aggregate labor, and distributors aggregate information,” he says. And thus, suppliers typically have more positions to fill at any given time. “The scope of our facilities and operations are traditionally much different as a supplier than an average distributor,” agrees Britney Godsey, chief revenue officer at Gold Bond (asi/57653).
Another factor is that COVID has altered many people’s priorities in a way that might not match the kinds of jobs suppliers have available. “Production and factory work can’t be remote, unfortunately,” says Rhyen Campbell, content strategist at Top 40 supplier Cap America (asi/43792). “The workforce has shifted, and remote work options are very important to the current pool of available employees, so distributors with more flexible work options will be more appealing than suppliers who need on-site workers to fulfill orders.”
The production floor can also be a complicated and “extremely fast-paced environment,” Godsey says. “The level of detail and engineering that each employee must have can be difficult to find,” she adds. “Sometimes that’s simply too much to ask. Some people just want to come in and do the same repetitive task over and over again for their set work schedule, and I don’t believe we have any one job in the building that is this way.”
With competition for workers fierce, employers across industries have been upping compensation packages and building more flexibility into positions. And that’s had a ripple effect for suppliers. “We raised wages significantly in 2021 and anticipate doing so again this year,” says Jennifer Larson, chief people officer at Top 40 supplier SanMar (asi/84863).
Retention, though, continues to be difficult, and, she adds, “I anticipate this will create significant challenges going into the fourth quarter.”