Winning the New War for Talent
The “war for talent” is about to get worse. Over the next several years, businesses will experience unprecedented changes to workforce demographics and employee expectations. Strategies for attracting, developing and retaining talent must evolve for large companies while smaller companies will look to leverage their cultural agility.
To read more, see the below article which was published in the April 2016 issue of Human Resources Executive magazine.
In 1997, McKinsey published a groundbreaking study called The War for Talent. The research outlined how talent was a significant driver for business performance and, more importantly, a strategic challenge for most companies during the late ’90s and early 2000s. The iconic talent factories such as General Electric, Procter & Gamble, American Express and Deloitte responded with revamped college-recruiting programs, management development tracks, corporate universities, employee-engagement and retention initiatives, mentorships, and even established “talent-management” functions. These became the talent programs that most companies would benchmark in the following decade.
While the McKinsey report is now considered more of an artifact, the war for talent is still a threat today and will reach a critical point of concern in 2020. While the talent supply will be evolving and even growing over the next several years, the “mega-talent” programs of the past may not have enough substance to attract and retain talent in the future. In fact, structured talent development, rotational programs, and retention programs may work against organizations intent on becoming coveted “employers of choice.”
So where is the workforce headed? Nearly 20 years ago, we were warned about the changing demographics of the future workforce and this impending “talent crisis.” Many reacted, few planned.
Baby boomers, who now account for 46 million workers in the U.S. workforce, are retiring in droves, and taking critical skills and knowledge with them. Each year, more than four million baby boomers leave the workforce, according to the Bureau of Labor Statistics. This trend is expected to continue well into 2020, resulting in a massive corporate brain drain.
Behind them are the Gen Xers, the forgotten middle children of the generational cohorts. Though a smaller segment than the boomers or the millennials, they are nevertheless important. According to Pew Research, Gen Xers make up 52.7 million workers in the U.S. workforce and, according to PayScale, approximately 15 percent hold management positions. Gen Xers will continue to assume more and more management and leadership roles vacated by the retiring boomers, increasing their influence over how the organizations of the future will look and function. As the boomers retire, this generation of leaders will be primed to shape the vision, attitudes, beliefs and corporate cultures over the next 10-plus years until they, too, begin to retire and leave the workforce.
1980s and 2000s, this group has already surpassed the baby boomers and Gen Xers, accounting for more than 53.5 million in the workforce in 2015, Pew Research finds. According to research by Forbes in 2015, “44 percent of college grads in their 20s are stuck in low-wage, dead-end jobs, the highest rate in decades, and the number of young people making less than $25,000 has also spiked to the highest level since the 1990s.”
In addition to demographic changes, the Kaufman Index — a record of entrepreneurial activity and new business creation in the United States — recently reported that the number of new business owners and entrepreneurs is increasing by 530,000 every month. From 2014 to 2015, the United States saw the highest year-over-year growth in newly established entrepreneurships in the last 20 years. The move from a full-time to part-time workforce strategy, together with employment uncertainties, has left many people weary of working for the bigger corporations.
The U.S. unemployment rate (approximately five percent today) is half the rate of 2009 and many who are eligible to work have decided to retire earlier than planned or to freelance. People have more choices now and are essentially becoming “free agents,” changing base competencies to more innovative, consultative, and entrepreneurial skills. Jobs are more plentiful, and the number of active job seekers is down, resulting in an ever-expanding workforce gap.
In addition to the “widely changing” workforce statistics, the competencies, workforce composition, and employee skills and interests are also rapidly changing. By 2020, many boomers will be gone, the Gen Xers will most likely occupy the majority of the leadership roles and the millennials will approach 50 percent of the total projected labor force, according to BLS. The early millennials will begin to take leadership positions and start to influence corporate strategies. In five years, we will also see the number of women eclipse men in the workplace for the first time. Hispanics in the workforce have doubled over the past 20 years and will continue to grow at a rapid pace. The ethnic labor force will grow faster than the white labor force.
The new generation of workers expects workplace flexibility, less-structured career paths, more opportunities to express individuality at work, and greater balance between work and home. This new generation also expects more access to technology, rapid and available learning, and close, mentoring relationships with their managers.
While so much has been written about the millennials (our future leaders), what do we really know about them? Despite what you may have heard, millennials are not all disloyal, needy destroyers of tradition. Many seek opportunities to learn and grow, respect older workers as sources of information and guidance, and genuinely seek to improve the world around them by focusing on the social good. Employers that are willing to listen to what millennials want, be adaptive, and trust and support them through their careers will find that millennials are more loyal and dedicated than they have often been portrayed.
The workforce evolution — or revolution — will have more of an impact on large corporate firms than smaller startups and entrepreneurships. While pay and benefits will normally be an advantage to working with the big companies, the advantages may stop there in the eyes of the 2020 employee. The emerging workforce is beginning to view large corporations as too bureaucratic and structured, with limited opportunities in terms of decision making and flexibility. Often, these organizations move talent deliberately and slowly in an effort to properly groom high-potentials for the next level. There is nothing wrong with this approach; however, millennials want to be involved, exposed and accountable now, and are less likely to see the value or allure of “paying your dues” to climb the corporate ladder.
Additionally, well-structured, larger firms have more-controlled job roles. Specializations, well-defined job scopes and developing depth are common tenets in large organizations. Career paths are often pre-defined, salary grades are set, and promotional opportunities are usually dependent on time over contribution. Autonomy is often secondary to working on teams, group goals and matrix-organization structures. The 2020 employee is less likely to be interested in this employee-value proposition; therefore, it’s time to rethink everything.
By contrast, smaller entrepreneurial firms may be better positioned to take advantage of the changing desires and expectations. Typically more nimble, innovative and less structured, these firms are more likely to adapt to the new emerging social changes occurring in the workforce. Rapid learning, less-structured job roles, more collaborative environments, and more reliance on technology to drive results will help these firms take a significant lead in attracting and retaining future talent.
What Workers Want
In the end, winning the talent war of the future will depend on how organizations plan now. They need to take inventory of their workforces and embrace the idea that, not only will their workforces look very different, but the talent programs of the future will look and feel very different as well.
The 2020 workforce wants:
- More involvement and proximity to the mission of the company;
- Regular interactions with senior leaders, customers, and even investors;
- Leadership opportunities sooner rather than later;
- Development experiences by wearing many hats;
- A faster and more agile pace at work;
- Personal ownership for success;
- To be evaluated on results and outcomes, not time in grade or presence in the office;
- The ability to manage life and work interchangeably;
- Technology and real-time information to facilitate decision making;
- People they can learn from at work, not just someone who joined the company earlier;
- Flexibility, individuality, and autonomy; and
- Innovative, collaborative, and progressive work environments.
To address these needs, new strategies for winning the talent war are crucial. Here are some practical suggestions for all employers to consider:
- Assess (or develop) your talent strategy and create plans to address future talent. Balance this with the generational shifts that we will see in the next five to 10 years. One size will not fit all.
- Stop wasting time on creating career paths for the younger generation and focus on experiences. Employees do not care for these “paths” anymore. The goal should be gaining and demonstrating new competencies, not checking boxes over someone’s career. Career paths are obsolete within two to three years anyway, as jobs and organization structures change. Do not focus on time in grade.
- Get your workforce plans done — really done. Hire experts if needed. Create a multi-year workforce plan to address the generational, demographic, and workforce changes that are about to occur. Consider your shifting generational demographics, generational influences, and the changing workforce composition to inform talent strategies of the future. Measure everything.
- Tap into the baby boomers before they retire. There is a great opportunity to arrange mentorships between older and younger employees to capture and transition knowledge and experiences. Offer part-time work for retiring boomers to develop and grow your talent.
- Work with the Gen X leaders to model and shape the organization of the future. They will have a big influence on how successful the millennial generation will be at leading companies over the next decade.
- Embrace the fact that work confined to an office or building is a thing of the past. Create a work environment that allows for individuality, inclusion, flexibility, and an ability to comingle work and life demands. Incorporate flextime, hoteling, and virtual work space into the work environment.
- Have succession plans not only for your leadership roles, but also your most critical jobs. You should know which jobs have the greatest impact on your mission or strategy. Have specific workforce plans to anticipate needs three to five years from now. You want to have a targeted approach for recruitment and development for these talent pools.
- Re-invent your employee-value proposition. Find ways to tie your firm’s purpose, vision, and mission with something bigger in society. Corporate and social-responsibility initiatives are extremely important to millennials.
- Finally, ensure that every leader in your firm understands and is accountable for being a talent manager. Every leader in the company must feel responsible for the development, exposure, and engagement of his or her people. This is not HR’s job. Your leaders at all levels must be accessible, authentic, and open to getting employees of all ages, ethnicities and genders involved in the mission of the company.
While the seismic workforce shift is creating a new war for talent over the next decade, it is winnable. It requires a different kind of thinking, a new talent mind-set, new strategies, and lots of planning. Those that have already started will reap the benefits immediately. Small to mid-size companies that are more nimble, less bureaucratic and more accessible have strategic advantages to attract, train and retain talent of the future now. The larger corporations that have not yet started need to press a reset button now.
Our world is changing and, along with it, our workforce. Will you win the talent war? Are you ready?
Dan Hawkins, a former chief human resource officer and top-talent executive at numerous companies, including Asurion and Ingersoll Rand, founded Summit Leadership Partners after 25 years in the corporate world. The firm helps business leaders implement strategy and organizational performance.
Apr 8, 2016
Copyright 2016© LRP Publications