Talent wars transforming the economy
We live in interesting times.
That realization hit me again this past week during discussions about limited workforce growth and its impact on future economic success. For the first time in my life, long-term labor shortages will drive transformation throughout our economy. Our present business models depend on a reliable spot market for talent, facilitating the free flow of people, and they are based on the terms offered by employers. That spot market is gone — probably for the next 20 years — and that disappearance creates a market where talent determines the employment terms.
We’ve seen the talent spot market disappear before, but never for two decades. The demographics always caught up and provided new workers. The current reality means that traditional talent strategies will quickly become obsolete as more and more companies fight for fewer and fewer workers. Successful companies will find new ways to grow and build operations with precisely the talent they need.
Labor statistics show this trend may affect small- and medium-sized organizations more acutely. A recent article in the Wall Street Journal examined the latest job-growth numbers and the significantly slower growth numbers in smaller companies. The profiles in the article highlighted the competition between those firms and larger operations, demonstrating the handicap smaller companies must overcome when fighting for talent using traditional tactics. In this case, Goliath routs David.
Manpower Group’s Becky Frankiewicz highlighted many of these same themes during a breakfast discussion last week. She emphasized that accidental or traditional strategies will not work in this economy, especially as workers define more and more of the terms of employment. Transferrable skills are the new currency in this market; the paradox is that technology makes the soft skills critical. The balance tips toward people who have the communication and engagement skills to unleash the full potential of the people around them.
How will you set your strategy to compete for talent in this new world? Frankiewicz suggests four approaches that make sense to me:
- Buy — Putting together a value proposition that attracts talent;
- Build — Using traditional development approaches to groom your internal talent;
- Borrow — Engaging temporary skills when and where they are needed; and
- Bridge — Identifying jobs at risk for automation and creating a path to more secure and demanded positions.
Successful companies will explicitly consider each of these options and develop their specific strategy. Each approach applies in different situations. Let’s take a quick look at each one.
Can you afford to buy the best talent? Unless your margins are strong and markets secure, probably not with pay alone. This option demands that you put together a creative proposition that your targeted talent values. One of the examples Frankiewicz cited was a company providing DirecTV’s NFL Sunday Ticket to its employees, a relatively inexpensive approach that is working for them. As you can see, creativity is key to create a package that attracts and keeps the talent you want.
Would you rather invest in your present people to build the needed skill base? Leading organizations realize that their needed skills portfolio continues to change at an accelerating rate. They use internal and external training capabilities to meet their needs. Critical to this effort is a clear focus on specific outcomes. Smaller companies must create effective partnerships to reach those outcomes. Here in Wisconsin, I see how companies, educational institutions, and government agencies align in unprecedented ways to leverage resources and provide the help companies need. If you take this approach, you can find the resources to reach your goals.
Does it make sense for you to create a portfolio of skills that you can engage on demand? It starts by taking a serious, clear inventory of the critical skills you need, and when you need them. Often, particular skills are not needed on a full-time basis, but can be difficult to engage on the spot market. Developing on-call resources may meet these needs more effectively and economically than hiring someone. For example, my organization has very limited and highly volatile accounting and analysis needs. Instead of putting someone on staff, we found a local talent resource that fulfills our needs and can flex with changing demand. We couldn’t fill this need on the spot market, but the gig economy — and the firms created to harness it — make it possible to engage the right skills at the right time.
Finally, does your organization have roles that are susceptible to automation? Rather than losing that talent, it may make sense to clarify the core transferrable skills, identify emerging roles within your company, and provide the bridge for those people to move into these new roles. Technology will continue to eliminate some jobs while creating new ones. Alarmingly, a disproportional amount of the most vulnerable jobs are predominantly filled with women. The bridge strategy will be critical to close the gender pay gap. That may not be a critical driver for your organization, but keeping good people within your company is.
Frankiewicz provides all of us with plenty of alternatives to consider. Most critically, she provides a push to create a narrative to grow your business without more people. All of us should have that story built around talent and how technology will change our world. That narrative provides a roadmap for proactive action to create a bright future. Build your own compelling story and act on your conclusions. These four ideas provide a good start!
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