Economic, demographic and business operational trends are creating talent gaps – or setting future gaps – for U.S. corporations. In Welcome to the Talent Paradox, for example, we note that experienced Baby Boomers are leaving the workforce, taking with them, not only many years of business experience but also knowledge and skill sets still very much in demand although not necessarily attractive enough for younger generations to invest in acquiring. What is more, it is feared that current trends in both numbers and proportions of college degrees (STEM versus social sciences, for example) may not be well matched to future job creation trends. The potential for talent gaps extends worldwide and changing H1B visa regulations suggest U.S. corporations may not be able to rely on importing talent as they have done in the past.
We observe that companies are viewing falling unemployment rates with rising trepidation as many are being forced to lower job-fit requirements, for example, settling for fewer years of experience than they would like in certain high-demand and fast-changing technology areas. Corporate leaders are beginning to worry they may have gone too far to the flex side and have not maintained the right balance in their staff-to-flex ratios, compromising internal domain knowledge and removing infrastructure – recruiting, training and development and mentoring capabilities – that would help them to keep pace with the rapid evolution taking place in both technology and best business practices.
In Five Megatrends Driving the Rise in U.S. Domestic Outsourcing, we see both industry and regional disparities – employment rates, real estate costs and constraints, for example – as well as barriers to talent relocation that force some companies to cast wider nets and source more needed talent outside of their core markets to address skills gaps.
Talent strategists need to assess capabilities requirements and develop strategies that balance a complex web of interdependencies, including:
- Strategic business and technology roadmaps.
- Business operational parameters – desired fixed versus variable cost ratios, productivity growth rates, etc.
- A corporation’s fundamental appetite for risk.
- Corporate governance, security and controls considerations.
- And the ever-changing and expanding service delivery needs driven by market evolution and disruption, global competition and increasingly demanding consumer and business end-markets.
An important step for talent strategists is to undertake a thorough gap analysis, taking into account both current and future states and addressing both supply and demand sides of the equation. On the demand side, factors to consider include but are not limited to: strategic business and technology roadmaps, service delivery requirements; capabilities; turnover, aging workforce and retirement rates; desired staff-to-flex ratios; succession planning and geography as well as qualitative factors such as employee satisfaction.
On the supply side, factors to consider include: major demographic and labor market forecasts (preferably by region); college graduation rates (preferably by major/degree); immigration and work visa legislative trends and an understanding of contingent workforce trends across traditional staffing, consulting and outsourcing (both domestic and global) markets. Corporate location strategy is another factor to consider on both the supply and demand sides of the equation. Of note is that staffing, consulting and outsourcing services firms typically pay very close attention to labor supply-side stats and forecasts and may be willing to consult and share what they know especially with preferred clients or prospects undertaking in-depth talent-gap analyses.
Once current and future potential talent gaps are identified clearly, strategists can begin to develop concrete action and investment plans. Here are five key action areas to address:
1. Build and maintain a structured, searchable skills and competency database. The skills and competency database should outline core competencies, managerial and employee self-assessments, a list of key initiatives or programs supported, experience with identified methodologies and certifications. While maintaining a skills and competency database may seem fundamental, it is our observation that many companies do not dedicate sufficient or sustained attention to managing skills and competency evaluation processes and data. Line managers, for example, may perceive such processes as overly bureaucratic or not pertinent to daily operations, dedicating too little time to generating thoughtful and systematic competency evaluation. Obtaining consistency from one employee or manager to the next is another big challenge, but critical to overcome if such databases are to be useful in making assignments that account for competency, identifying talent gaps and directing future investments in hiring, training and development.
2. Create and align specific career and salary progression tracks, using business and technology strategic roadmaps as a starting point. Again, while this may seem like common sense, progression planning and consistent execution (moving people along according to their plans) has become less common as average terms of employment have become progressively shorter; managers have been challenged to do more with less, resulting in less time to allocate to these types of efforts, and frequent job-hopping has become the norm over the past several decades, especially among younger generations and junior talent.
3. Tap into large, but significantly under-utilized talent pools. For example, a recent Bureau of Labor Statistics report notes that the unemployment rate in 2016 for Gulf War II veterans was 5.1%. (A Gulf War II veteran is one who served on active duty in the U.S. Armed Forces at any time since 2001.) By way of comparison, the national average unemployment rate that year was 4.9%.
According to Remster Bingham, Vice President of Recruiting at Genesis10, there is a substantial corporate misperception of risk in hiring recent veterans because it can be difficult to translate their skills into corporate settings. “While the hiring manager is typically thinking along the lines of ‘Why would we hire someone whose primary skills are operating advanced weapons systems or calling in precision air strikes?’ they should be saying to themselves: ‘If this person is capable of being trained and becoming proficient at using sophisticated weapons systems or performing extremely complex and high-risk tasks such as directing precision air strikes, isn’t it quite likely they could be trained easily to execute complex corporate processes – such as supply chain logistics or project management in product development?”
Even after clearing the risk-perception hurdle, Bingham says corporate talent managers need to be mindful of significant cultural differences between military and corporate settings. While these differences are not barriers to tapping into veteran talent pools, they do need to be well understood so U.S. veterans can be adequately supported throughout their military-to-civilian career transitions.
Another under-utilized talent pool comprises recent college graduates (22-27 years old holding at least a Bachelor’s degree). For example, analysis by the Federal Reserve Bank of New York finds that following the Great Recession (2007-2009), the unemployment rate for recent college graduates peaked at 7% versus 5% for all college graduates. What is more the report finds that the underemployment rate for recent college graduates – the percent working in jobs that do not require college degrees – had risen to around 44% by 2012, compared to a cyclical low of 34% for the same group in 2001 and an average 33% rate for all college graduates over the past two decades. While the report contends that underemployment is not historically unusual among recent college grads, it does conclude that, “it has become more difficult over the past decade for recent college graduates to find jobs that utilize their degrees.” What is more, the authors’ analysis of job quality among recent college graduates finds that the share of underemployed college graduates working in ‘good’ non-college jobs (skilled roles such as dental hygienist, electrician or mechanic paying an average $45K/year) has fallen sharply, while the share working in low-wage jobs (bartender, food server or cashier and paying below $25K/year) has risen since 2000.
Where junior talent is concerned, Tara Wyborny, National Delivery Director for Genesis10’s Associates Program, notes that hiring managers are generally more open to investing in graduates with no experience but relevant degree programs than they are in candidates with experience that does not seem relevant. Still, they view junior talent as risky since Millennials are considered to be high flight risks once they get 2-3 years worth of job experience under their belts and their market value and earning potential soars. What is more, Wyborny says substantial workforce paring and focus on productivity growth over the past decade has left few business professionals with sufficient time in their days for the levels of on-the-job training and mentoring that is often needed to keep Millennials interested and engaged in their jobs.
Nonetheless, Wyborny notes in the recent white paper, Hiring Millennials: The Generation that Changes Everything, that “an estimated average of 10,000 Baby Boomers will turn 65 every day for the next 15 years and soon there will not be a choice [about hiring Millennials to fill talent gaps]. There are not enough members of Generation X to fill the empty seats.” With a proper understanding of the generation and what really motivates them in the workplace, she suggests that corporations can devise specific strategies for winning Millennials’ loyalty and retaining them for the long term to address talent gaps.
A third under-utilized source of talent includes more mature, experienced professionals who, for a variety of reasons, are either tied to specific locations (for example elder or childcare), choosing to work fewer hours, travel less in their jobs or remain removed from corporate competitive/political environments. Tapping into this third pool – via remote flexible staffing, consulting and/or outsourcing delivery center sources – may require talent strategists to work more assiduously and systematically at disaggregating jobs, skills and roles, understanding and balancing risks of sourcing talent remotely and creating infrastructure to support more remote work delivery.
4. Fund or deploy ongoing professional development to re-skill existing FTEs. Clear progression planning makes it easier both to recruit and retain junior talent and to encourage existing FTEs to invest time and energy in acquiring new skills and/or adding competencies that may be needed but not necessarily perceived as exciting or marketable over their longer-term career horizons.
5. Build and market your brand as employer of choice. While certain brands carry huge consumer cache that makes it relatively easy for them to attract talent, most companies need to work much harder at becoming perceived as employers of choice in the marketplace. This involves not only establishing a strong employment brand, but marketing and promoting consistently through all available channels, including social media, events, and other traditional advertising and PR avenues. While career progression planning is one aspect of building a strong employment brand, other aspects important in today’s marketplace include flexible work arrangements, work-life balance, consistent and transparent measurement and reporting on employee satisfaction, pleasant work environments, exposure to global markets and work experience, access to state-of-the-art advanced technology tools and investment in both internal and external training, continuing education and mentoring.
While pursuing these five key action areas can go along way to addressing both current the future talent gaps for U.S. corporations, the biggest challenge for talent strategists may be creating the requisite corporate cultural and attitude changes that can enable tapping into the under-utilized talent pools discussed above. Genesis10 will help keep you informed on this important topic through our weekly blog. Our talent experts Bingham and Wyborny regularly post on specific areas where talent strategists can focus to prepare their corporate organizations to welcome and support more military veteran and junior talent and to remove and dispel misperceived risks more effectively going forward. Stay tuned.