Your company has defined its strategic plan. You understand how you are going to increase profit, innovate new products and deliver value to shareholders/owners. I pose two questions to leadership: do you have the right workforce in place to accomplish your goals? Do you have the right talent pipeline in place to sustain your current competitive advantage?
Leaders know that the talent in their organization is important. However, leaders may not be aware of how competitive the talent landscape has become. Low unemployment, a shrinking labor force, a generational shift in work expectations and emerging industries are all factors that contribute to a competitive labor market for employers.
At the end of October, the national unemployment rate in the United States was 4.9 percent (according to the Bureau of Labor Statistics) and the rate has hovered at or below 5% all year. In economic terms, we are approaching full employment. Due to how unemployment is defined, 100% percent is an unattainable and undesired goal. As an example all graduate students over the age of 25 are considered unemployed, but are considered a leading indicator for a growing economy. A low unemployment rate translates into a diminished labor pool for employers. While your company may be located in a location with a higher rate of unemployment, that may not translate to a larger talent pool for your organization.
In much of the developed world, fertility rates are declining and the share of the population over age 65 is increasing. According to the US census, the rate of the working population will steadily decline from 62 to 57 million over the next few decades. While the number of millennials in the workforce continues to increase, following generations will not replace them in similar numbers. If your industry relies on a large workforce (mass market retail as an example), how does your long term talent strategy account for a workforce that will shrink over time?
The expectation of a 30 year career at the same employer is no longer the norm in the United States. Many individuals entering the workforce assume their career will progress amongst several different companies. This helps and hurts employers. On the positive side, many employer sponsored benefits are not intended to cover a person for life, but rather their time spent at the firm – decreasing costs. Voluntary attrition on the other hand can be extremely expensive. Often time, a company loses highly skilled and high performing individuals to competitors. With the expectation that an individual will only stay at a firm so longs as their career is progressing and they are satisfied, companies have the added hurdle of creating an environment that encourages high performing talent to stay.
Finally, the landscape in the war on talent has shifted. As an example: investment banks used to compete with each other when securing top talent from top universities. Now, those same banks compete with companies like Google and Facebook. Firms that may not have been in existence when the new hires were born. The technology industry has helped to break the mold of what a traditional career path looks like. Younger people are more open to jungle gym like careers that twist and shift as opposed to a career ladder that only moves upwards.
By now, I hope to have convinced you that the war on talent is real. It is not solely comprised of companies fighting for person X, but rather a complex environment where macro level factors influence the business environment. The first step is to admit something needs to be done; it is to acknowledge that taking a look at your talent strategy both long and short term is critically important. The success and failures of a company rests in the hands of the people that run the organization. We at Spartan Consulting encourage you to take the time to reflect on your firm’s strategic goals, and ensure there is a talent agenda aligned with that specific business strategy.
Melody serves as the VP of Marketing and Business Development. Prior to returning to school to pursue an MBA, she worked in a variety of HR roles at an investment bank.
References : Bls.gov , Census.gov