The Employee Power Shift: Why Employers Should Be Afraid and What Can They Do About It
By
Bruce Powell
It's
beginning. That subtle shift of power from employer
back to employee. Of course it's barely noticeable to
the casual observer. But when you work in the Executive
Search and HR Services business you see signs of it
every day: an employee resigns with no new job in sight;
the company struggles to fill the vacated seat; and
an eager job-seeker who turns down a perfectly good
offer because they're looking for something "just
a little bit more appropriate".
Like many major shifts, this one's starting slowly - but it's not like we haven't seen
it coming. Demographers have harkened the impact of
the retiring baby-boomers for years and everywhere you
turn another business publication highlights the topic.
Many people (and most company executives) acknowledge
awareness of this issue - but few have really
given it more than a passing thought. This might be
a mistake.
The
coming demographic evolution, and the employee power-shift
it will drive, will become the greatest factor to influence
your company's success over the next 10-15 years.
This is good news if you're an employee - and
bad news if you're the employer.
This
is hard to believe given the current marketplace. Companies
receive hundreds of resumes for every job they post
and many still pay below market to hire extremely qualified
candidates. For now, supply of talent doesn't
seem to be an issue.
And
it's not. Over the last 3 years a record number
of white- and grey-collar workers lost their jobs due
to the lingering economic malaise in the IT and knowledge-based
sectors; few of those jobs have returned. Even the small
upswing of the past 6-8 months was labeled a "jobless
recovery". The economy is expected to recover
slowly through 2004 and unemployment figures for knowledge
workers will remain high.
From
all appearances, employers still have a buyers market
- for now.
"So
a few companies are starting to hire again," one
of our clients recently noted, "there's
still lots of talent out there. Should I really be concerned?"
In
a word - yes. Because all this is about to change -
and the speed of that change and the impact it will
have on the corporate world will take a lot of people
(and their companies) by surprise. The demographic tidal
wave is a few years out - but the precursor, the
veritable storm-before-the-storm is the frustration
and pent-up demand for change that is currently brewing
in the workforce.
Pent-up
Demand
Employees
are extremely frustrated. And they want change. As recruiters
we see it every day. It's human nature. People seek
job change to stay motivated and mentally challenged.
They seek job change to improve their financial position.
Even individuals happy in their roles seek job change
to advance. But the economy has stymied the regular
flow of change. And like caged animals, these people
have grown frustrated with their lack of freedom.
For
almost three years they have been under significant
pressure. They've watched their co-workers get laid
off and their teams get consolidated - then they've
been asked to deliver even higher levels of productivity.
They've dealt with the anxiety of losing their
own jobs and most haven't had a raise in ages. Many
earn now what they used to earn 10 years ago. Yet few
have complained. Better to have a bad job than no job
at all.
Naturally
risk averse, most have been waiting for the recession
to pass before exploring other opportunities. Now, those
few companies starting to hire again are
generating the first ripples in what will grow to a
dramatic wave of employee change.
The
best and brightest are already beginning to move -
and once these individuals start leaving their jobs
there is going to be a huge round of "musical
chairs".
Companies
already operating 'lean' won't have the resources
to backfill the empty seats, and the candidates available
in the marketplace won't always have the depth
or experience necessary to fill these roles at a comparable
level.
While
supply will not be an immediate issue, qualification
and assessment of new talent will. Corporate resources
will be stretched to process the hundreds of applicants
for each opening and to identify the truly high-caliber
candidates. Many companies will forgo the whole process
and will simply start recruiting proven performers from
their competitors. And so the round of "musical chairs"
begins.
Demographics
Of
course this is concerning for employers. Change is always
costly in terms of knowledge transfer and succession
management. But this is just the beginning. What employers
really need to be concerned about is the coming demographic
shift. Supply of talent may not be an issue yet -
but it sure will be.
Starting
in about 2 years and continuing for the next 10-15 years,
the baby-boom generation will retire. As this demographic
cohort moves into their golden years the Canadian workforce
will begin shrinking.
In
fact, Profit Magazine recently noted that "By 2006,
two North Americans will be leaving jobs for every one
available to refill those positions. Two years after
that, projections show a worker deficit of 10 million
people."
The
raw facts are pretty simple: the generation following
the baby-boomers just isn't large enough to replenish
the workforce on a 1 for 1 basis. The resulting shortage
will be most acute among two key groups: team-leaders
/ managers (who tend to be older and closer to retirement)
and knowledge-workers.
People have been talking about this for years. It's
been the topic of news stories and economic studies.
Many have considered the theoretical implications -
but few have considered the real-world repercussions
this shift will have on their business. Fewer still
have taken steps to address it.
Good
News for Employees
If
you're an up and coming middle-manager in your
30's or 40's the next ten years will be
the most rewarding of your entire career. As the boomers
move en masse into retirement dozens of key management
and leadership positions will open up. And after years
of waiting on the sidelines you'll now have your
pick of new opportunities.
Companies
will be falling over themselves to attract and retain
you. You will probably have multiple job options and
significant leverage in your contract negotiations.
For the really accomplished - those with a proven
ability to manage businesses and lead people -
there will be active bidding wars for your talents.
How
can you capitalize on this opportunity? First and foremost,
you must be pro-active in your own career management.
While some roles will come to those who wait, the best
will require you to position yourself accordingly. And
don't think it's all just going to arrive
on a silver platter. Boomers may choose to work longer
and immigration levels may be increased to address the
talent vacuum. You'll still have to be qualified
to earn your new role and it's a good idea to
have a career plan for what you want, and for what you
want to accomplish.
Companies
will be seeking managers and leaders - so look now for
opportunities that allow you to grow your leadership
skills. Having team management and P&L experience
will be important building blocks in your success. Sacrifice
short-term financial gain for the opportunities that
provide learning, experience and advancement. Your accelerated
success during the next 20 years will more than make
up for the diminished short-term returns.
Having
obvious and measurable accomplishments is still the
best way to qualify for the best jobs. Seek out and
pursue self-development opportunities. Find a forward
thinking company that supports development and mapped
out career-path opportunities. If there aren't
opportunities within your company look outside for personal
development. Take courses and look for other ways to
grow and demonstrate your skill-set.
If
you aren't working yet, volunteer. Offer your
services on a short-term contract to a company to gain
experience. Many people pay for courses and formal education
when sometimes volunteering provides even better experience
- without having to pay! If there isn't
a company that is appropriate, offer your services to
the community. Anything that will help you advance and
grow your leadership skills will be valuable.
If
you do volunteer, make sure it fits within your career
plan. And just like graduating from school, make sure
you leave with proof of your tenure and experience.
Don't be afraid to ask for a written report on
your performance and accomplishments. Even self-documented
accomplishments combined with a positive reference will
increase your negotiability and leverage as the market
tightens up.
Bad News for Employers
Of
course all this change is scary if you're an employer.
You'll have to work hard to retain your current
employees and work even harder to attract new ones.
Worse than that, you'll have to pay more for the
employees you do attract - even though they'll
be less qualified than the ones that left! Internal
costs for your HR and administration will go up and
there will be a constant struggle to populate your company
with the best talent.
We're
still several years away from the main shift -
but complacency is dangerous. So what can you do about
it now?
Again,
the key is to plan. Only dead fish swim with the stream.
And while fighting against these demographic trends
may feel like holding back the sea, the leading companies
are already preparing their battle plans for the new
"talent war".
The
best offense is a good defense. And the first step is
to take a cold, hard look at your own company. Are you
an employer of choice? Why do your employees choose
to work with you? (vs. your competitors and/or other
companies?) More importantly, why do they choose to
not work with you? Do you conduct exit interviews? And
how often do you conduct corporate image audits? Among
your staff? Among your community? Do current employees
refer their friends to your company?
We
were recently requested by a large national client to
conduct exit interviews on every employee that left
their workforce. While industry standards indicated
an expected employee churn of 8-10%, this company was
replacing almost 17% of their workforce every year.
The cost of this replacement was significant yet it
wasn't the short-term costs that were concerning
this customer. They knew that if they didn't resolve
this issue while talent was abundant they would be in
a far costlier position when the talent crunch hit.
Next
it's important to evaluate your existing resources.
Divide your current employee workforce into two categories:
1) keep & grow, and 2) replace & refresh.
Most
corporate managers know it's critical to identify
and nurture their top performers yet few know exactly
how to make this happen. Identification isn't
the hard part - most companies have some sort
of formal or informal evaluation method. It's
the nurture and retention that's the challenge.
Often it's as simple as opening up the lines of
communication. Study after study has shown that employees
rank having mentorship, growth and opportunity for advancement
above increased financial return - yet few companies
take this to heart.
Many
companies don't even have an annual review process
much less a formal employee development program. This
is a mistake. As time-starved managers dedicate less
time to developing their next generation leaders, companies
are losing the very employees they need to succeed in
the long-term.
The
key to success isn't in attracting the new superstars;
it's identifying, developing and retaining the superstars
you already have. If you don't have the resources in-house
to assist with this process, then outsource. Seek help
you develop and implement an employee retention programs
that will dramatically reduce your churn - and in turn
reduce your cost of knowledge transfer and recruitment.
And don't hesitate. This is one of the most important
things you can do for your business!
Ok,
so you've identified and are actively developing your
top-performers. What else can you do to put your company
in the best position for when the storm hits?
How
about preempting the change? Identify and replace your
weakest players now - before the rush. If you're going
to lose employees anyhow as talent gets tight, why not
take charge of the process now? Evaluate your team and
let go those that fall in the lowest 10-20%. It may
seem counter-intuitive with all the push towards "retention",
but it makes incredible sense.
Leaders
want to work with other leaders - and companies
with the courage to actively assess and replace their
weak performers will gain significant respect in the
eyes of their current employees. The remaining top performers
will be pleased that the "dead wood" is
removed and the new talent will bring fresh energy and
motivation to the company.
Not
only that, by becoming one of the few companies
starting to hire again - now, you will have your
pick of the talent pool. Early movers are often the
most ambitious - and they're already looking
for their new roles. If you wait until the talent crunch
hits, many of these individuals will have already settled
in new jobs elsewhere - and will be less willing
to consider joining your company.
While
there is some cost and upheaval in initiating employee
change, the companies who are proactive in refreshing
their workforce will realize significant return as the
economy rebounds.
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IQ
Insight is published by IQ
PARTNERS Inc.
IQ
PARTNERS helps intelligent companies hire better,
hire less and retain more. Our services include
Executive Search, Qualification & Assessment,
Employee Development & Retention, Career
Management, and Contract HR Services. We specialize
in Marketing, Communications, Media, Technology
and Financial Services, and operate at the mid-to-senior
management level. IQ PARTNERS has offices in
Toronto and Ottawa, and internationally via
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