The Sky is Falling!

Over the last few months, I’ve spoken with recruiting leaders at dozens of Fortune 500 companies, getting their reaction to some of the hiring challenges we all face. It seems that everyone agrees the talent shortage is for real and getting worse, but most recruiting leaders are reluctant to implement the bold actions needed to address the problem.

In this article, I want to make the case that we have a problem, get your viewpoint, and then offer the vision of Steve Jobs, Darwin, the underpinnings of the American Industrial Revolution, and obviously Geoffrey Moore, Jimmy Buffett, and Thomas Friedman. These are our guides on how to implement the appropriate corrective actions.

Here are some of the more obvious factors explaining why the gap between top talent supply and demand is increasing:

1. Everybody is competing for the same talent pool. As a result, only the most aggressive competitors will get a bigger share of a shrinking pool. (This is the Darwin part.)
2. The demographics are for real. The first of the baby boomers are turning 60 this year. I know a few, and some wouldn’t mind working at Starbucks or McDonald’s (since it now has better coffee).
3. There is a difference between the generations. While there is no difference in work ethic, there certainly is in the types of work each generation prefers and their attitudes and ambitions.
4. The hidden job market is no longer hidden. Pre-1995, top people had to find a recruiter to get good jobs quickly. Now most jobs below $250,000 are available for all to find. This is an example of Thomas Friedman’s “flatlander” argument that information is now accessible to everyone. (Not advertising jobs might be an option worth exploring.)
5. The passive candidate pool is no longer hidden. Anybody can find the names of just about anyone within an hour or two. People are joining ZoomInfo, LinkedIn, FaceBook, MySpace, and Yahoo! 360? so they can be found.
6. Jobs are changing faster than people are being trained to fill them. This exacerbates the overall talent shortage since it takes longer to train people to meet current needs.
7. Workforce mobility is on the rise. In part this is because of economic cycles and in part because of changes in attitude (listen to Jimmy Buffett for more on this) about work. There is no longer a stigma to leaving a company every year or so. Work is now being designed with this concept in mind.
8. The shift to hire more corporate recruiters has worsened the problem. The more recruiters you have, the more turnover you’ll get since everyone is stealing from everyone else more often.
9. The line between passive candidates and active candidates is blurring. Passive candidates now start checking out other opportunities once they find out another company has some interest in them.
10. Technology has not evolved as rapidly for recruiting as it has for other business functions. For example, think about the disruption the OFCCP ruling has had on company reporting. I suspect that if some top distribution person from WalMart led an OFCCP reporting project, it would have been handled with relative ease. It’s certainly an easier IT project then JIT inventory and cross-docking.

Don’t hesitate to challenge my thinking here or add some ideas of your own, but the point is that you can’t use yesterday’s solutions to solve tomorrow’s problems. New ideas and new approaches must be found.

From what I can tell, only those willing to be innovators and those willing to look at the problem/solution from a totally new perspective have a chance of ending up on top. According to Darwin (and every economist), everyone can’t win when there is a finite supply of a scare resource.

In some cases, price is the equalizer, so expect some dramatic wage inflation for top performers in the short term. Of course, if your comp and benefits department is looking at yesterday’s data, you’ll lose valuable playing time fighting this argument. This is one of the bottlenecks that needs to be broken in order to move ahead at a rapid enough pace.

Geoffrey Moore offers some interesting marketing insights in his book Crossing the Chasm. The book describes how to market technology products. In the book, he describes these five types of buyers:

1. Innovators. The technology enthusiasts.
2. Early Adopters. The visionaries.
3. Early Majority. The pragmatists.
4. Late Majority. The conservatives.
5. Laggards. The skeptics.

Moore suggests that the key to successful selling in this type of market is targeting customers who are early and late majority buyers, since these are the largest pools. From a recruiting perspective, I’d suggest that you need to be an Innovator and Early Adopter type of buyer. This means being the first to try out everything. Given a finite supply of talent, waiting for some new tool to be proven to work means you’ll be stuck with the leftovers.

Steve Jobs offers another perspective on how to reorganize your recruiting resources. Jobs recently made the contention that record publishers needed to unlock their music to increase portability across different devices. Jobs made the case that total sales would increase as a result, not decline.

History suggests that common parts and transportability of data increases growth and efficiency. For example, consider the growth of the PC industry and Microsoft, in particular, when everyone began using the same Windows-based operating system. Similarly, the shift from a craftsman model to mass production and the use of standardized parts accelerated economic growth and was the foundation of the American Industrial Revolution.

The Information Age is causing a comparable transformation with everyone having access to the same information. This is the contention Thomas Friedman makes in his book The World is Flat. In many cases, what he describes is the root cause of the globalization of the workforce and the increase in workforce mobility. (Here’s an article you might want to read for more on this.)

Back to Jobs and the iPod for another ground-breaking transformation. The reason the iPod continues to be such a huge success is its seamless ability to link a pretty decent music player (but not the best) with an online store that allows a person to easily buy and download music. It’s this systems integration that makes it work, combining a bunch of hardware and software together so that anyone can easily and intuitively use it.

From the perspective of ease-of-use, systems integration, standardization, and marketing, most recruiting, interviewing, and hiring processes are in the Stone Age. Craftsman (recruiters) still dominate the show, using unsophisticated tools to address an Information Age problem.

With this in mind, here are some specific things you can do to move your recruiting process into the future:

• Don’t get into a price war. We might be setting ourselves up for some massive wage inflation as counter-offers seem to be the dominant approach used to attract and retain top talent. Top people want better jobs and better careers, so use these factors to differentiate your jobs. Use the same concept to re-recruit your best people.
• Expand the talent pool. Looking for functional equivalent experience and/or people with the potential to quickly adapt seems like a far better sourcing approach than playing musical chairs.
• Rapidly upgrade your technology. To get started here, hire people from distribution and marketing to design and manage your systems. These people were trained to do it right, and got promoted because they were good. Few people in HR or recruiting get promoted because of their tech prowess, so why would you choose them to lead these types of projects?
• Shift from a transactional recruiting model to a consultative one. Corporate recruiting is a different breed than external recruiting. Using a transactional model based on unsophisticated sourcing, screening on skills and closing on speed is one sure way not to hire top people. Shifting to a consultative recruiting model is how you can match top performers with great career opportunities without price being the primary criteria.
• Implement staffing requirements planning. If you think you’re behind because you’re not using sophisticated workforce planning, you need to find out about Staffing Requirements Planning. Ask some leaders in your supply chain what this means, then get started by putting workforce planning at the top of the priority list.
• Figure out if your competency models and behavioral interview techniques are helping or hurting. Since everyone has the same competency model, it’s hard to believe they’ve had any impact. Of course, it doesn’t really matter, since most managers don’t know how to assess these factors during the interview anyway. Worse, most managers only use behavioral interviewing to eliminate bad candidates they don’t like, not to assess candidates they do like.

I could end this article by saying that 10 years ago few people believed global warming was a threat, and look what happened when nobody took action. But I won’t. Because in this case, there is a solution.