This post was first published in the WITS Journal, June 2011.
The “Great Recession” of the past few years has been more than merely an economic downturn. As this decade unfolds it will become increasingly clear that it also acted as an accelerator for a few key trends that have the potential to fundamentally change the way we work. Companies that recognize the shifts taking place, and begin to act in response, will find themselves clear winners in the “war for talent” that is about to be rejoined.
It was common in the 1990s for HR directors to declare that the biggest challenge facing their organisation was a “war for talent”. Booming industries and growing companies were demanding more and more highly skilled staff to fuel their expansion. Head hunters and recruiters were driving Ferraris and the brightest stars in each industry could name their price and move companies whenever they wanted to.
All of that stopped abruptly on 15 September 2008 – the day Lehman Brothers collapsed. Since then employee attrition has dropped dramatically as companies stopped hiring and talent stopped moving. And business leaders have rightly focused their attention on surviving the downturn. Over the next few months and years, the inevitable upturn will gather momentum and growth will return. Companies that anticipate growth need to start planning for it now, or be left behind in the turbulence that lies ahead. And that especially includes strategic human resource planning.
A Talent Exodus
I work with a global team that researches the trends shaping the world of work. We’re increasingly sensing that our corporate clients should brace themselves for a tidal wave of key employee departures over the next few years – especially among their 20- and 30-something staff.
The talent exodus will happen for at least three reasons. (1) Some companies have ‘abused’ their staff during the downturn, taking their hard work under tough conditions for granted. As soon as an opportunity to move comes along, disgruntled staff will be tempted to take it. (2) By the time we see an improvement in the economic conditions, it will be ‘time to leave’ for many younger talented staff. This generation wants to keep their CVs ‘warm’ and see their personal development as critical. Many have felt stagnant in their careers because of the downturn, and are ready to move on. (3) When companies want to increase in size and start rehiring, they would prefer not to recruit someone who is currently unemployed, and will go head hunting (in your company) instead.
Business leaders are going to discover that we are not going to go ‘back to normal’ after the downturn. The recession has been more than just a financial meltdown. The structures of many industries are changing with new rules for success and failure, legislative and regulatory changes are reshaping industries, and people’s attitudes and expectations have shifted too.
If my assertions are correct, then we are about to enter an exceptionally turbulent time for recruiting, engaging and retaining staff. Creative approaches will therefore be needed to secure the necessary ‘human resources’ your company needs to thrive as the upturn begins. Here are some ‘thought bullets’ to get you and your team thinking about changing the way you manage your most important and best people. Different times require a different script.
Our “Most Important Assets”
Almost every annual report claims boldly that the company’s staff are their “most important assets”. Yet, they don’t treat them that way. After rounds of layoffs, companies have piled all of the old work on the few people who were ‘lucky’ enough to keep their jobs. And the training they might have needed to do the new jobs was cancelled too.
It’s not too late (nor is it ever too early) to start actually treating your staff with both respect and understanding. Have you said ‘thank you’ recently – especially for the extra effort in recent months? In what physical ways are you living up to the statement that your people are your most important asset? As an additional thought, why not allow everyone in your company an opportunity to ‘apply’ for a ‘new’ job inside your organisation. Instead of leaving to seek new challenges elsewhere, allow them to find those new challenges with you.
Talent is as Cheap Now as it’s Ever Going to be
Over the next few months and years, many companies are going to look to ramp up their assets: plant, facilities, warehouses, logistics, infrastructure and the like. The cleverer ones will do this pre-emptively, snapping up bargains and buying the assets cheaply. There is no doubt that merger and acquisition activity will increase dramatically too. So, why do so few companies have the same attitude about their human assets? You know you’re going to need more people, so why not go out and get them now? Even if you have to debt finance it (like you would with other assets), talent is never going to be cheaper or easier to find than it is right now.
Increase Their Pay Faster Than Yours
Senior leadership in most corporates have not suffered as much during the downturn as their staff – not unless they accepted incrementally higher pay cuts than they asked staff to take (reducing a CEO’s salary by 10% does not have the same effect on lifestyle and means as reducing the receptionist’s salary by the same percentage). As growth returns, and salaries start increasing, companies need to ensure that lower ranking staff get bigger percentage increases than the senior staff. That will send a strong and powerful message throughout the organisation. In fact, you should commit to do doing this now – you have to be sending the right signals now in order to ensure your employees aren’t going to be looking elsewhere.
Stop Paying Bonuses and Start Using Real Motivators
Talking of remuneration, recent research shows clearly that paying financial bonuses only works as a motivator for people doing manual labour. For everyone else (and that’s pretty much everybody engaged in the modern workplace), financial bonuses increase activity but actually produce the opposite outcomes from what was intended. This may sound counter-intuitive but the research is unequivocal (reflect, for example, on what outcomes the banking industry has recently achieved with their bonus incentives system). The best recent book on the issue is Daniel Pink’s “Drive”. You could also search for research on bonuses by Dan Ariely or watch a 15 minute talk by Pink at http://tr.im/pinkrewards.
There is also interesting research available on teams that have had unintended, long-term management absences (a manager away on extended sick leave or compassionate grounds, for example). In almost every instance, the team that remains without a manager improves their performance and outputs after an initial period of decline and sometimes a bit of chaos. Not every team needs a manager. Now is an ideal time to think of radical restructuring and reconfiguration of your hierarchies.
Total Talent Management (or Fire the Managers who don’t take this stuff seriously)
Back in the 1980s, most manufacturing companies had “Quality Control” departments. But then along came “Total Quality Management” (TQM), followed quickly by “kaizen” and Six Sigma. The principle is now obvious to us: quality control cannot happen only at the end of the manufacturing process. Quality needs to be everyone’s issue, at every stage of the process. And that’s the reality now in almost every manufacturing company I know – there are no more quality control departments.
And that’s what needs to happen to “talent management” over the next decade. It needs to be every manager’s problem – an item on every manager’s performance review. And even more importantly, you need to make this is a deal breaker issue with your leaders. If they regularly cause talented people to leave, then you need to fire them (regardless of what other contributions they might make). Talent is too precious to waste through bad management.
Let them loose, and watch them fly
Over the past decade or so, increased competition, the speed of change, globalisation and new technology have made business increasingly more complicated. Simultaneously, reduced layers of management and bureaucracy have passed responsibility and authority further down into our organisations. We thus expect people at all levels to act with the type of understanding, critical thinking, initiative, agility and responsibility that just a decade or so ago were largely reserved for people in the executive suite. Your people need to be trained for this, and mentored in it too.
To be successful in the coming decade of turbulence and opportunity will require the involvement and commitment of everyone throughout your organisation. You’re in danger of losing your best staff if you don’t focus creative attention on them right now. The benefits of doing so will be a strategic advantage that will be difficult for your competitors to match. And we’re all going to need some of that if we’re to survive and thrive in the years ahead. The input required now will be well rewarded in the near future.
Graeme Codrington is a founding partner of TomorrowToday.biz, and a respected trends analyst, author and keynote presenter. His latest book is on “The TIDES of Change”, about the five disruptive forces shaping the new world of work, and will be published in late 2010. More details at http://about.me/graemecodrington