Employment and unemployment issues have been widely discussed over the last few years, however an even more detrimental issue is the impending talent crisis.
“According to a yearlong study conducted by McKinsey Co., the most important corporate resource over the next 20 years will be talent.”
The Talent War Defined
Are you already sensing shortages in the talent pool? Most likely, yes.
We have completed extensive market research and found that exceptional talent is in short supply and that companies are finding it increasingly difficult to compete for attention and capture the most productive and innovative people.
Although the current unemployment rate is nearly 9%, the rate for over age 25 and college educated is 3.83%, and 3.3% is statistically equivalent to 0. We are at rock bottom. Right now, and for the next several years we are facing a historically small talent pool. Baby boomers are leaving and they are not coming back. The aging workforce possesses critical skills and knowledge, these valuable skills and knowledge will “walk out the door” as Baby Boomers retire. To further complicate matters, experts are warning that there are not enough capable and skilled professionals to replace those who will retire. In others words, there will be a limited supply of emerging leaders to fill future positions – aka, the talent pool is shrinking.
Why is this important?
It is estimated that as much as 15% of companies will go out of business over the next several years simply because of their inability to attract key talent. The ability to produce and perform financially is a direct result of having talented employees and capable leaders. The critical short supply of skilled individuals will make it harder for companies to find suitable leaders for both management and technical roles. Seventy four percent of companies surveyed by Business Week acknowledged that there are financial consequences as a result of retirees leaving without transferring knowledge to other employees.
Organizations must be strategic about attracting, developing and retaining talent as this is the only way to maximize your talent acquisition investment and to maintain your competitive advantage. Active preparation is required to deal with this crisis. Strategic solutions include the following: conducting a labor force analysis that incorporates business strategy, establishing development and rotational programs, developing retention improvement policies, and understanding what motivates future leaders. These strategies can help prepare companies for talent shortages.
First, an analysis should be conducted to determine current and future workforce needs that incorporates the organization’s business strategy and projected workforce retirements. Using this analysis, management can develop a workforce strategy to address the company’s future talent needs.
Also, companies can utilize development programs to groom and mentor. These programs should incorporate the following: decision-making training, managing in the current economic and business environment, and exposure to major operations of the company. Some major Fortune 500 companies have rotational programs for high achieving individuals, which allow employees to gain experience in different operational areas. For example, Northrop Grumman’s Professional Development Program allows employees to rotate within Engineering and Manufacturing, Business Management and Supply Chain Management, etc.
Future leaders must have a dynamic skill set that includes both technical aptitude and business savvy – these rotational programs can provide the development necessary to maintain your competitive edge. Failure to prepare and groom future leaders may be detrimental and the consequences will be noticed most severely when seasoned employees make their exodus. In addition, when the economy improves younger workers are likely to transition into higher paying jobs with better promotional opportunities if such opportunities are not present within their current company.
According to a study conducted by Spectrum Knowledge and California State University Career Center (sponsored by Northrop Grumman), Generation Y has different motivations and values than previous generations. Pay and Recognition, Work Environment, Flexible Hours and Schedules were cited as very important to Generation Y in this study. Employers must understand what motivates the future generation of leaders, and develop their corporate culture and compensation strategies accordingly. Specifically, strategies should facilitate knowledge transfer and incorporate motivational factors.
In addition, companies should develop retention improvement policies and hold managers accountable for retaining employees. As more employees retire and certain positions are difficult to fill, companies should focus on retaining qualified employees to fill future vacancies. Retention improvement policies could include corporate culture makeovers, salary increases, expanding the bonus pool to high performing individuals and other recognition related programs.
Figure 1: How companies can prepare for the talent crisis
Job Seekers and Employees
Employees and jobseekers will have to understand that knowledge transfer and management will be major factors for future career success. Experience is a great teacher and knowledge is developed over time; therefore, it is necessary to learn from older, more seasoned leaders.
Another issue involves the willingness of experienced leaders to share and transfer knowledge specific to the organization. Many professionals will encounter this issue; however, it is the responsibility of the company to enforce and facilitate knowledge transfer.
What does the Talent Crisis mean for individuals?
Individuals who are prepared can turn this crisis into an opportunity. In order to take full advantage of this crisis, you must be ready for development which will include dedicating time and effort to your goals. Many believe Generation Y does not have the will to “pay their dues”, according to a study conducted by Spectrum Knowledge and California State University Career Center. This is an opportunity to make exponential leaps forward in your professional life if you are willing to exhibit your hunger and desire to overcome the hurdles associated with knowledge transfer and knowledge management.
If you are a talented employee seeking career growth and promotion opportunities, demonstrating loyalty to your organization will be helpful as companies are striving to retain talented employees. Active engagement at work can be one measure to show loyalty and differentiate yourself. According to Gallup, “seventy one percent of American workers are actively disengaged”. In addition to engagement and loyalty, job seekers and individuals must demonstrate a commitment to learning and to actively absorbing the knowledge of company leaders. Now is the time to actively seek development, mentors, and rotation programs to acquire knowledge.
In addition, professionals should acquire licenses or certifications to meet all associated prerequisites, requirements or preferences. Research has shown the supply of future leaders will be limited; therefore, people can properly and strategically position themselves to be successful in the talent crisis by striving to meet the criteria in the figure below.
The talent crisis is a major threat facing organizations around the world as attracting and retaining top talent is essential for success. People are often called the greatest asset of any organization and the talent crisis threatens the very core of this statement. The good news: this impending crisis presents a genuine opportunity for both individuals and organizations to adapt and evolve; to become better and to thrive…to turn a war into a victory and a crisis into an opportunity.