5 Steps for Employers Experiencing the Human Capital Crisis
Many companies have the same problem, they can’t find qualified workers. A recent disappointing job report reflects an employment market that has expanded for 15 consecutive months. The unemployment rate of 5.5% is remarkably close to economist’s definition of full employment[i].
Of course unemployment is a horrible indicator of the true health of the economy, and clearly many hourly workers are underemployed. Yet wages are expected to rise 2.2% this year and over 3% in 2016. The threat of a higher minimum wage is omnipresent and large employers such as Walmart have raised the stakes in an effort to be competitive.
The shortage of skilled workers feels like an epidemic. There are ten times as many openings as new graduates with a nursing credential. Petroleum engineers are commanding $80K, fresh out of college[ii]. It appears that there are segments of the economy (such as health care) where supply and demand are completely out of whack.
Our country has no coordinated effort to train (and retrain) unskilled workers and earning a college degree is simply the price of admission. But there is a more significant gravitational pull that is driving the employment market; demographics. The labor participation rate is in decline, slipping from 66% in 2006, to 63% last year and will continue to decline as baby boomers retire.
It is time for a new narrative on how we think of human capital development. For example, conventions around recruiting are proving to be futile. The standard playbook of a hiring manager working with an H.R. manager at the time of hire to find suitable candidates simply doesn’t work in this environment. Within my experience, employers do a poor job developing people, including providing a career path, mentors, training and performance management.
It is time for a new offense. A contemporary roadmap for recruitment and retention includes:
Recruit around the clock: It is simply not adequate to be looking for people at the time that you need them. Employers need to think about hiring like they think about client acquisition. Every manager in a company should be responsible for recruiting, 52 weeks a year 24/7. Best in class companies have a bench of resumes to choose from at the time of a new job opening.
Expand sourcing opportunities: Many companies have a bad taste in their mouth about recruiters, but often get better results using them than they do on their own. A new fixed fee model is evolving with fixed fee recruiters at costs lower than traditional recruiters. At near full employment, the employer must go to the candidate instead of waiting for unemployed people to come to them.
Involve more people in the process: With the stakes of a failed hire being so high; multiple managers should be involved in vetting each candidate. If each manager has a prescribed role, such as establishing the candidate’s project management skills, they can go deeper with probing questions and are more likely to diagnose gaps in competency.
Conduct behavioral assessments and skills tests: Behavioral assessments not only help vet candidates but also create alignment from the time they are hired we recommend Lighthouse Consulting (contact firstname.lastname@example.org). For the relative low cost of such tests, they are worth their weight in gold.
Retain the “A” players: Companies cannot afford to lose their best people. Some turnover may be necessary, and is perhaps even healthy. But employers must handcuff their best talent buy keying in on their professional objectives, providing the flexibility to have a quality of life, and deliver meaningful feedback for a job well done.
They have an old saying in the South; if you do what you did, you will get what you got. It is time to hit the reset button and try new approaches in order to build the talent required to sustain growth.
[i] Slowing Job Growth Tests Economy by Ben Leubsdorf Wall Street Journal April 4, 2-15
[ii] Kiplinger Letter February 27th and March 27th, 2015