Despite a 5.2 percent U.S. unemployment rate, there is an acute shortage of talent. That talent consists of researchers, manufacturing specialists, engineers, educators, executives and others who can produce between 10 percent and 20 percent annual growth, or make the difference between profit and loss, according to a recent study from Deloitte Research. These individuals are critical, driving a disproportionate share of their companies’ business performance. They possess highly developed skills and deep knowledge. Without these people, organizations could not achieve their business goals.
Critical talent is scarce and about to become even scarcer. Four industries in particular will suffer a mass exodus of employees: health care, manufacturing, energy and the public sector. More than 80 percent of U.S. manufacturers face a shortage of qualified machinists, craft workers and technicians. There will be a shortage of more than 1 million nurses by 2012.
The shortage is not just a function of retiring baby boomers. Not enough students are pursuing science and engineering studies. While 42 percent of students in China earn undergraduate degrees in science and engineering, only 5 percent of U.S. students do so. In other areas of specialized education, such as information technology and nursing, schools simply can’t meet demand. Perhaps the most disturbing factor is the decline in educational standards. Many schools are not keeping pace with increasing complexity and the rapid technological changes organizations face today. Only 70 percent of U.S. high school students graduate, and only 32 percent leave high school qualified to attend four-year colleges.
When labor markets get tight, most organizations hunt for external candidates to fill their most critical jobs and try to convince employees to stay. However, both of these strategies can be short-sighted. A focus on acquisition alone is expensive. The average cost to acquire an employee averages one-and-a-half times the salary that employee will earn. New candidates can take a year or more to master their jobs. Moreover, a company that focuses on external talent can erode the commitment of internal candidates.
Common retention strategies also are problematic. Often, they are driven by simple metrics, such as turnover. But while the churn may fall from 10 percent to 5 percent, it can obscure the fact that the most valuable employees are pouring out the door. Furthermore, the numbers say nothing about why people leave. In exit interviews, those leaving frequently resist giving the true reasons for their departure for fear of burning bridges. Finally, turnover does not measure people’s commitment to the company. When jobs are scarce, it is easy to retain a non-committed workforce.
As competition for critical talent heats up, organizations must rethink the actions they take to retain and attract talent. To begin, they must identify the segments of the workforce that drive current and future growth. Then, they must focus on the things that employees care about most: development in a way that stretches individual capabilities, deploying into work that engages their heads and hearts, and connecting with the people who will help them achieve their objectives.
This develop-deploy-connect model is the core of a strategic approach to talent management. It focuses on areas critical to performance improvement, thereby delivering business results while addressing the career aspirations of individual knowledge workers. Much of this is the work of CLOs and their teams, working in collaboration with HR and business leaders. It requires innovative approaches and applications to produce:
- Alignment: Connecting people to work that is motivating.
- Commitment: Providing coaching and mentoring.
- Capability: Developing critical skills to ensure success.
By focusing the energy of talent management on these three things, attraction and retention largely take care of themselves.
Nick van Dam is Deloitte’s global chief learning officer and learning consultant in the Human Capital Practice, and is author of “The E-Learning Fieldbook.” For a complete copy of the Deloitte research on talent, or for more information, e-mail Nick at email@example.com.Filed under: Leadership Development, Measurement, Talent Management, Technology