January, 1997
SMART COMPANIES seek to hire the very best people, not just the merely adequate.
In addition, they seek to employ those who can grow into tomorrow's jobs, not simply perform the one available today.
Unfortunately, the talent pool that will be available for the next generation of senior management positions has begun to shrink and will shrink still further by the year 2000, as the U.S. population ages. Moreover, a number of changing conditions in the employment marketplace have made changing jobs more complex.
Companies therefore will compete increasingly for a smaller and smaller cadre of highly skilled executives, managers and professionals. In the marketplace of the late 1990s, shrewd strategies will be required to attract those key players who stand out from the crowd and show high potential to be the corporate leaders of the 21st century.
An effective strategy, however, first requires an understanding of the demographic and market forces currently at work.
The population is growing older, as Baby Boomers from the 1940s and '50s enter solid middle age. While this has created an impressive talent pool for senior-level positions, the smaller percentage of the population now in its thirties reduces the supply of people at the age when significant promotional opportunities typically begin to occur.
And in an effort to reduce training costs, many companies have curtailed entry-level hiring, preventing many of those now in their twenties from entering the corporate workforce at all.
By the start of the 21st century, many expect to see the same kind of managerial shortage that accompanied the economic boom of the Eisenhower and Kennedy years.
The U.S. unemployment rate in the latter months of 1996 hovered around 5 percent, a figure approaching the 4 percent rate which most economists view as "full employment" (on the assumption that the remaining unemployed are between jobs or temporarily laid-off). In Singapore, the growing commercial and financial hub of southeast Asia, unemployment stands at virtually zero. By contrast, many European and Third World nations continue to experience high unemployment.
Wherever full employment occurs, a seller’s market emerges. People have jobs. They have to be convinced to change jobs. And if you can hit the ball out of the park as often as former Cleveland Indians outfielder Albert Belle, you can name your price. (He did, and the Chicago White Sox paid it.)
The promise of a better, more lucrative job used to be the key to recruiting good people. Today, however, many employees (especially those with children at home) are viewing quality-of-life issues to be as important as the economic or career rewards of a job change, particularly to a new location.
Increasingly, candidates for jobs in a different city are requesting computerized analyses from their search firms that compare a variety of lifestyle factors in their present location with those in a prospective employer's city. How expensive, for instance, is it to live or buy a house? What are the schools like? What kind of cultural and athletic opportunities exist? These are but a few of the issues on candidates' minds.
Candidates likewise want to compare the work environment of their current and prospective employers. Is working late the norm? (I.e., will I ever get to see my spouse and kids?) Is day care available? Am I trading one rat race for another? How happy will I be?
Further, in today's dual-income families, candidates want to know the impact of a job change on the spouse, particularly if relocation is involved. Does the spouse even want to quit his or her current job? If yes, are equivalent jobs available in the new city?
Last but not least, in countries with high income taxes, strong unions and/or cradle-to-grave entitlements, quality of life may be a more tangible reward than the elusive value of higher wages. The concept of harder work for higher pay holds little appeal if the government will take away most of the increase in additional taxes.
Your company is probably no exception: it's gotten smarter about employee retention.
In the wake of the massive restructuring programs of the 1980s and early 1990s (which are not yet finished at several well-known institutions), corporations found they had to cope with declining productivity and employee morale. This has led to several important initiatives – including pay for performance, deferred or long-range compensation, greater equity participation, improved benefits and liberalized work rules.
To the extent an employee likes where he or she works, and/or is tied to long-term rewards, that individual is more difficult to recruit. Certainly, he or she is not reading the classifieds or browsing the Internet for employment opportunities.
Absolutely not. But attracting good people has become more difficult.
The company that needs to hire the very best may want to consider a number of strategies:
- Determine your company’s selling points. Advertising legend Ted Bates invented the USP, which stood for "Unique Selling Proposition." What is it, he asked his clients, that would make me want to buy your product over all others? What is it about your company that would make a candidate want to change jobs and take yours? Consider such factors as your position in the industry, rate of sales and earnings growth, new products, prospects for the future, opportunities for advancement, work environment and caliber of personnel. And know what's nifty about your community.
- Try getting ahead of the curve. Not all job openings can be anticipated, and unexpected departures do occur. But what about the rest? You may well have plans to promote, transfer, demote or fire one or more managers in your organization. You may also have plans for new job creation to support a growing operation or new location. Even if these are slated for later in the year, begin talking to your search consultant now.
- Expand your use of a trusted search firm. A new study by Kennedy Information reveals that executive search consultants are filling 15 percent of all management jobs but 80 percent of those above $200,000. The wisdom here is that more is at risk when hiring high-level people, so a better, more comprehensive search needs to be done. However, it may make very good sense to begin recruiting highly qualified candidates at an earlier stage in their career before they grow roots or become locked in to their current employer through the kind of long-range compensation plans being offered to senior-level executives.
- Develop a succession plan for all key personnel. It's a good idea to have a strategy in place for the planned or unplanned departure of all executives and other key personnel throughout the organization. If you have the proper breadth and depth, internal promotions or transfers may be the answer. But if the right individuals aren't on board, or if you feel the need for new blood and fresh approaches, begin strategizing now with your search consultant. The ability to get a head start on developing the job parameters and conducting preliminary research may save precious weeks or months once an opening occurs. Then, when it does occur, proceed with the same sense of urgency your company would assign to a plant start-up or new product introduction.
If you work in a large, multi-unit organization, others – including the corporate Human Resources and MIS Departments – might appreciate copies of this issue. These can be ordered from your Sanford Rose Associates search consultant.
©1999 SRA International, Inc. All rights reserved, including electronic reproduction or alteration. This SRA Update is published for the clients of Sanford Rose Associates.