Archive for May, 2013

The War for Talent has arrived, so what you should do about it – by Deryl Emerson

May 1, 2013

Although the US unemployment rate as reported on Friday, March 8, 2013 remains stubbornly high at 7.7%, according to other government statistics, as quoted on CNBC, for the first time since Sept 2008 more people voluntarily resigned from their jobs in the month of February 2012 than were let go or fired. 10,000 employees per day reach the retirement age of 65(same pace for next 15 yrs – Boston Globe Mag,30-Jun-13), and 43% of the current workforce (Baby Boomers) will retire in the next decade. 52% of employers cannot fill jobs, and between 33-76% of workers are actively or passively seeking a new job (Pew Research, the Hacket Group, and the Manpower Talent Shortage Survey).

Still not convinced, PriceWaterhouseCoopers (PwC) 16th Annual Global CEO Survey indicated Talent was the #1 priority in both 2012 and 2013. 54% of the 1300 CEO’s surveyed pointed to the availability of key skills as a potential threat to growth, and 65% of US CEOs plan to increase investment in creating and fostering a skilled workforce.

The US Bureau of Labor Statistics and Randstad, the temporary staffing company, have reported that the average stay of a new employee is falling but currently stands at only 23 months. 33% of jobs end in less than a year, and 69% end in less than 5 years. It is now predicted that people will average 17 job changes between graduation, and the time they reach 30 years old. To add insult to injury, according to Harris Interactive Findings in 2011, the average cost to recruit and train one employee is equal to 2.5 times their annual salary ($104K average).

According to an article in the NYT (With Positions to Fill, Employers Wait for Perfection, 6-Mar-13), “American employers have a variety of job vacancies, piles of cash, and countless well-qualified candidates. But despite a slowly improving economy, many companies remain reluctant to actually hire, stringing job applicants along for weeks or months before they make a decision. The number of job openings has increased to levels not seen since the height of the financial crises (2008), but vacancies are staying unfilled much longer than they used to – an average of 23 business days today compared to a low of 15 in mid-2009, according to a new measure of Labor Department data by the economists Steven J. Davis, Jason Faberman, and John Haltiwanger.”

They’re chasing after the purple squirrel said Roger Ahfeld, 44, of Framingham, MA, using a human resources industry term for an impossibly qualified job applicant.” – NYT

Yes, employers may be taking their sweet time to find the purple squirrel, but employees are switching jobs faster than ever before too, and this trend is accelerating. And yes, as predicted in the cover story of the Economist Magazine back in 2006, the coming war for talent, although dealt a temporary setback during the financial crises of 2008, has arrived, and is here to stay for the foreseeable future.

We may read about the battle for top talent as waged between Facebook, Google and Apple in the heart of Silicon Valley, but this is no outlier. It’s a microcosm of what is happening closer to home, across all types of industries, through-out the US. So, as an employer, what are you doing about it? What should you do about it?

According to the BMC 2012 survey, there are 6 key areas of Talent Management that impact revenue growth and profit margins:

  1. Delivering on Recruiting
  2. On-Boarding of New Hires and Retention
  3. Managing Talent
  4. Improving Employer Branding
  5. Performance Management and Rewards
  6. Developing Leadership

Before you do anything, companies need to assess their current talent pool, and the strategic direction of the company. Consider your current workforce, who’s ready to take on more responsibility near term (1-2 yrs), and what are your development needs more long-term (3-5 yrs)? Who has leadership potential? What skill sets do we need to deliver on our strategic goals? What resources will we need to develop internally, or hire from outside?

As you assess your current labor force, you will undoubtedly identify gaps, which leads to point 1, delivering on recruiting. One of the best and fastest ways to fill a gap is to recruit an individual with the needed skill set. To recruit someone quickly and efficiently, in this day and age, sourcing can be the key differentiator.

What do I mean by sourcing? Well, I don’t mean just posting a job opening on your web site or a job board, although it’s a good first step if you have an established brand and reputation. Rather, I mean by leveraging social media in multiple channels such as linked in, twitter, or facebook, and most importantly, through employee referrals in these social media channels.

Most of us already use social media in our daily lives now for such things as reviews of restaurants or movies (Yelp, Twitter), or for bargains (Living Social, Groupon). Mark Zuckerberg of facebook fame speaks of a day when we turn to our network of friends in social media first and foremost (ahead of a google search for instance) for research or advice from the mundane, such as household products, to the more elaborate, such as cars, vacation destinations, or even investment advice.

Why wouldn’t we naturally seek out job opportunities from our social network? Well many of us already do. But, why wouldn’t we notify someone in our network when we hear about a job opening that might be relevant for them? We may already do this to some extent if we know someone is looking, but we probably wouldn’t go to the effort if they’re gainfully employed. We wouldn’t necessarily know if someone desires a job change, or is a passive job seeker, and everyone’s time is in short supply these days.

According to ERE.net, and many studies corroborate this, referrals are number 1 in hire volume, hire quality, time to fill, retention after 1 year, retention after 2 years, and applicant to hire ratio. In other words, the best way to find qualified new hires is through referrals from your existing hires. This is the best way to address point 1, delivering on recruiting.

Next up is the importance of effectively branding your company so you can attract the right match. Workforce dynamics are changing as the Baby Boomers (48-67 years old, 80M total) retire, the Generation Xers (38-47 years old, 41M total) move into these vacated management roles, and the Millennials (Generation Y, 18-38 years old, 86M total, 7% larger than the baby boom generation) come up the ranks (Here Come the Millennials – Barron’s, 29-Apr-13).

The younger generations tend to want more flexibility, and more meaningful work that contributes to community and society. They like to see an employer’s commitment not only in comp and benefits, but to create an interesting work environment, as Google is well-known for.

Branding comes into play because employers have to compete to attract these candidates, to be perceived as an employer of choice. Representing these intangibles in something as simple as an applicant website can be an effective first step to better branding your company, and attracting the right candidate who shares your ambitions, and values. Any mentions in media as an employer of choice, of course, doesn’t hurt either.

According to Gallup, 96% of first year employees were retained in companies that connected on-boarding with performance, compared to 18% of organizations where that connection was not present. Additionally, 82% of employees met their performance milestones when there was an on-boarding and performance connection as compared to 3% in organizations where there is none.

In other words, when you hire someone, they should not only have a good idea of what your company is all about (thru branding), your mission, the corp culture, and your goals and objectives, but equally important are your expectations of them, their aspirations, and how their individual goals tie into the over-arching company objectives, so they can appreciate the full value of what they bring to the collective enterprise. Their journey to obtainment of these objectives needs to be tracked, recognized and rewarded when achieved. Seems obvious, I know, but most companies fail miserably in this regard, and that’s often why good employees leave for greener pastures.

The process of tracking this employee performance in the HR world is known as performance or talent management, which is a key driver of retention because the process itself recognizes the value of a contribution. Talented employees want to be recognized for their accomplishments so that they can grow, and take on more responsibility, leading to promotions and higher compensation. Performance processes (annual performance reviews) that recognize the value of this contribution drive talent attraction.

Expectations, clarity on goals, goal alignment from business strategy to the individual contributor (goal management), need to be clear and measurable as well, and achievement of those expectations must be recognized. Employees want their work to be valued by their Supervisors, and open and honest dialogue between employee and manager (captured in 360 degree performance reviews), with objective assessments, improves employee engagement leading to higher productivity and increased retention, which ultimately impacts the bottom line.

By investing in a complete, end-to-end, Performance Management suite, which includes but is not limited to, Recruiting and On-Boarding (to initially recruit and transition a new hire to a productive contributor), Talent Management and Goal Setting (to manage, motivate, retain and develop leadership talent), Learning Mgmt (to train your internal talent for future skills), Succession Planning (provide career path opportunities for continued development and retention of talent), and Analytics (so you can monitor the results of your efforts, and anticipate future need proactively), companies can best compete in the 21st century’s War for Talent.

Investing in Talent Management infrastructure has proven to deliver Business Performance as well. According to the 2012 BCG/WFPMA Proprietary Web Survey and Analysis, high performing companies as measured by stock price appreciation over a ten year period from 2001-2011, and who made Fortune’s 100 Best Companies to Work for at least 3 times over the past ten years, invested more in people activities than those who do not. The three areas of investment with the most impact on business performance were Talent Management, Performance Management/Rewards, and Leadership Development.

One of the advantages to working with a Tier 1 software provider, such as Infor, is that they can provide a fully integrated Performance Mgmt suite to meet these requirements as needed. Clients can build out their talent management strategy incrementally; adopting the various, optional modules that address their most relevant, pressing needs first, and gradually scale into a more comprehensive, end-to-end, talent management suite that maintains tight integration with the core HR & ERP applications that drive the entire enterprise.

So, the time for battle is upon us, the war for talent is heating up. Those who get their performance management systems and processes in order today will be that much better prepared to compete tomorrow.