Change in labor force participation over the past five decades (Bureau of Labor Statistics)
I’ve had three conversations recently with Growth Leaders at firms in unrelated industries, all with the same set of circumstances: each project had a solid approach, had done their market and product homework and had good early feedback. The projected ROI’s were above each of the firm’s benchmarks.
Yet when they put these programs in place, they all struggled to get traction.
What could be wrong?
Hint: It had to do with the demographics. There are simply not enough people to scale our operations.
Now a decade out from the great recession and driven by birth rates, we have rapidly moved from a talent surplus to a talent shortage. We’ve all heard and read that the demographics were going to be against us (to the tune of $1.7 trillion in lost US opportunity), and now the inverted triangle is affecting the bottom line. An implicit assumption in most business plans is that we can go to the market and get all the talent we need. This is no longer true. Even China will see the gap.
I’ve gotten a number of really good demographic briefings recently, and far from being academic, my clients are confirming the reality on the front lines. Gone are the days that we could write up a business case and simply send personal requisitions to HR and expect the talent to arrive.
The bottomless pool of talent is gone for the next couple of decades (for example, see this report, figure 8), so for those of us who lead new opportunities in established firms, this changes a lot.
We now need to do more with fewer people, and the C-Suite needs to be razor focused on the ratio of value created by each employee. Moving forward, we need to have a plan in place to either free up or attract the talent we need as a precondition to having a viable product.
These plans can take five directions:
#1: Lower Friction Internal Talent Matching
What it is: Making sure that the best talent is consistently applied to the highest leverage business opportunities. This older thinking needs to be replaced with a fresh paradigm of seeing talent as the new scarcest asset.
Why it’s important: The old paradigm of people anchored tightly to one business group or product line leads to high-quality talent that is “held hostage” in lower performing business models.
How to implement it: A great start is to review your portfolio for products and services that need to be put on “end of life status” to free up talent. We also need to look at the internal friction of our best people finding out about our best openings. The same rigor we apply to allocate financial resources needs to be applied to human capital, as well. We can have a plan to build on the talent base we already have by accelerating the development of those we already have on board.
#2: High-Performance External Talent Acquisition
What it is: Conventional systems as currently built are set up to defend hiring leaders from application overload. High performance systems are those that are set up to proactively seek a small number of the best possible candidates, particularly those who may not be “looking.”
Why it’s important: We have reached a point where we need to look towards significantly upskilling the firm with every hire. Treating the hiring process with the blunt object of generic job descriptions, multi-page HTML applications and traditional “sourcing” will not be successful.
How to implement it: If you’ve not done a diagnostic on your end-to-end skill identification to onboarding cycle within the last four years, now is the time. Numerous integrations of cloud-based tools can bring you into the AI space and allow you to move from defense to offense.
#3: Put a Talent Leverage Plan in Place
What it is: We can improve the efficiency of our core products, leadership, and services to free up the gifted team members we already have.
Why it’s important: A culture of efficiency and leverage will create more exciting opportunities for team members and allow us to share better financial rewards with stakeholders.
How to implement: Each product line, plant, and region needs to develop a clear plan to increase the ratio of output for each person employed. Freeing up talent needs to have the same focus as operational cost reduction.
#4: Create Great Organic Projects
What it is: There is no better leadership laboratory than well-structured, cross-functional teams tied to client objectives.
Why it’s important: We can attract talent from other firms and situations with the strength of the opportunities that we present.
How to implement: Skilled growth leaders can create serial opportunities that create the slots that are known around the industry. This kind of reputation is a valuable asset that will keep these firms on top. Using a methodology to “make it good” before scaling is essential (see posts here, here and here).
#5: Use the M&A Engine Well
What it is: Talent has long been viewed as a side effect of M&A, but it’s time to move talent to the top of the shopping list.
Why it’s important: Carefully considered culture and talent acquisition can solve a shortfall of skills and capabilities quickly. Getting a development engine up and running poorly can be a value sink, so be careful to apply clear and objective criteria and integration planning.
How to implement: By rank ordering your products and services by talent efficiency, you will have a great set of benchmarks for looking outside your firm for potential acquisitions, realignment or partnerships.
The old adage that the second best time to plant a tree applies well here. Those that move quickly to get talent efficiency worked deeply into their planning and operations will be well positioned to move through this period and thrive. (For more about unlocking firm value, see posts here, here and here).
The application of these strategies begins with a diagnostic. I’ve been privileged to work as a right-hand advisor for more than 15 years to innovators and their firms across 20 countries and a dozen business models. If you’d like to discuss your application, please call me at 847-651-1014 or use this link to set up a short call.
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