Talent is scarce; recruiting it requires adaptation

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Dominique Harris

Dominique Harris

If talent acquisition and retention isn’t a top-five topic for your executive team, it should be. The reason is straightforward: The U.S. labor market has undergone significant changes, resulting in fewer available workers and more open jobs — 10.9 million — than at any time since that statistic has been measured. As if that weren’t enough, the retail pharmacy sector has been working peak hours under acute stress on the front lines of battling the COVID-19 pandemic.

Karen Yocky

Karen Yocky

Pharmacies, after all, are one of the first places people go to when they’re not feeling well. During this pandemic, that has meant lots of potentially contagious customers coming in for prescribed or over-the-counter medications, and for testing or vaccines — resulting in longer hours and a higher tempo for retail pharmacy workers. Throw in the volatile cultural dynamics of masking and vaccination status, as well as the added work associated with administering the vaccines themselves, and you have the ingredients for an unusually pressure-filled retail workplace.

All these challenges are likely to continue or even worsen over the coming autumn and winter, with the persistent spread of variants — along with the onset of flu season, COVID boosters and holiday shopping.

Jeff Hewitt

Jeff Hewitt

Retail pharmacies are taking short-term measures to address these challenges. But these near-term problems are just the beginning. The broader labor market dynamics are not going to improve anytime soon. That means retail pharmacies need to look at their talent strategies with an eye toward strengthening their companies’ entire employee value proposition over the months — and years — to come. To find out how to get on the right track, read on.

Understanding the scope of the problem

For starters, let’s look at some industry-specific details on the worker shortage — and the factors exacerbating it.

Across the retail sector, the job openings rate is continuing to grow — from 4.3% in June 2020 to 7.0% in June 2021; over the same period, job turnover increased from 2.9% to 4.2%.

Laura Bowen

Laura Bowen

A report from earlier this year found that pharmacy job openings have also continued to grow, with open-job listings up 35% over the previous year. Among independent pharmacies, 80% report they’re having a difficult time filling open positions, 90% say they can’t find pharmacy techs, 60% report the same for front-end employees, and 25% are having trouble hiring delivery drivers.

To understand the forces that make the retail worker shortage even more severe among pharmacies, you need to look at burnout. An American Pharmacists Association study conducted in January of 2020, just prior to the start of the pandemic, found pharmacist burnout in 75% of study participants. Then came COVID. In March 2020, as the pandemic began spreading across the U.S., prescription demand jumped by nearly 15%. A later BMC Health Services Research study unsurprisingly found that nearly 91% of community pharmacists reported that their work load had significantly increased during the pandemic.

As the pandemic has continued, pharmacy personnel have continued to take on significant additional responsibilities: COVID-19 testing and vaccination programs; rising prescriptions; increased demand for flu vaccines; and the inherent stresses of answering the questions and meeting the needs of customers facing a grave public health crisis.

The shift in the labor market combined with the burnout experienced by retail pharmacy teams has created a significant challenge. The good news is that some job openings will fill as workers begin to feel a bit safer and their kids head back to school.

The bad news is that despite these gains, the labor market isn’t going back to normal. Part of the reason is simple demographics. The working-age population — defined as those between the ages of 15 and 64 — declined in 2019 for the first time in decades, then dipped further in 2020. Beyond this, early retirements, opting out of the workforce, long COVID, opioid addiction and staying at home with children are additional reasons the labor market won’t be solved in the short term.

Not only are there fewer available workers, but their preferences and needs are changing. They are placing a higher value on their mental health and well-being, preferring workplaces that offer more predictable hours, more flexibility and less stress.

Meeting both short-term and long-term challenges

Several pharmacies have already begun taking steps to address the worker shortage, at least for the short term. The National Community Pharmacists Association found that over 72% of respondents said they are raising wages to attract workers, 56% are offering more flexible work hours, and more than 20% are increasing benefits.

The sector’s leading companies are full participants in this trend. CVS has announced it’s raising its minimum wage to $15 per hour and offering a $3,000 signing bonus for pharmacy technicians. Walgreens is also raising starting wages to $15 per hour and offering signing bonuses of up to $10,000 for pharmacists and $500 for technicians.

Such incentives are a good idea — they can help ensure that pharmacies are in a better position to deal with the challenges and demands of the next few months. However, while a plan to broadly increase compensation may enable you to fill open positions in the short term, compensation isn’t a durable advantage in talent management. If that is what’s holding your employees, then you’re vulnerable if your competitors simply choose to pay more.

Beyond compensation, short-term actions should incorporate two other important ­considerations:

• How do we recruit from new and different pools of talent? For example, in eliminating its high-school diploma requirement and opening workforce training centers, CVS has expanded its applicant pool. Benefits such as child-care support also enable more individuals to join the workforce.

• How do we retain our current employees? Bonuses only go so far. Creating safe and supportive working environments will be key to success. This may include training store managers on fostering supportive teams; examining hours and shift allocations to enable more breaks or paid time off; and establishing clear safety protocols to ensure that workers feel safe.

In addition to short-term actions, retail pharmacy chains need to be thinking about how to set themselves up for sustained success. The primary aim should be to create a long-term employee value proposition that plays to their brand’s unique strengths as described in the six dimensions in the graphic below.

It’s not that retail pharmacy hasn’t designed employee value propositions for its workers. It has. But with the competition for talent becoming fierce and the expectations of the workforce rapidly changing, adjustments are required to better compete for scarce talent. Those that do this well will reap substantial rewards of better operations, happy and loyal store teams, and satisfied customers.

Consider where your company will differentiate. Is your work environment more supportive than that of your competitors? If so, how are you building and maintaining this across the chain? Or will you choose to differentiate through excellence in shift scheduling and flexibility? How are you increasing visibility, matching schedules to employee preferences and improving ease of switching shifts? Or you might differentiate on development opportunities and career paths. There are countless ways that retail pharmacies can significantly improve the employee experience, including instilling a sense of pride and loyalty within each store’s workforce.

This last point may highlight an unusual comparative advantage that pharmacies have over other industries: Pharmacies have played a crucial front-door role for health services in their communities, serving customers at a time of unprecedented need. Helping to reinforce this sense of purpose and mission can be an important element in building long-term talent retention.

The key is to focus on dimensions of the employee value proposition that match the current strengths of your organization, and that your workers value most. This requires understanding how your employee value proposition for each role compares to the other options your employees have. It also requires understanding what your employees value, what is attracting new recruits and why you are losing talent.

The path forward will require an investment of resources that isn’t typical, but this situation isn’t typical. Leaders need to be prepared to make the case for investment and then be prepared to execute the change.

It’s clear that the war for talent has never had higher consequences. Retail pharmacy has never been more important and has also never faced a challenge like this. For all its perils, this moment is an opportunity for chain drug retailers to identify and take advantage of their strengths, invest in future growth and gain lasting advantages in an increasingly unforgiving labor market.


Jeff Hewitt is a partner in the Health practice at Kearney, a global strategy and management consulting firm. He can be reached at Jeff.Hewitt@kearney.com. Dominique Harris is an associate partner in ­Kearney’s Leadership, Change and Organization practice; she can be reached at Dominique.Harris@kearney.com. Laura Bowen is a principal in Kearney’s Health practice; she can be reached at Laura.Bowen@kearney.com. Karen Yocky is a manager in Kearney’s Health practice; she can be reached at Karen.Yocky@kearney.com.


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