Many in talent management have been hoping that this chaos is a short-term phenomenon, but it is a permanent condition that we must all learn how to manage under.

Because they were designed for more predictable times, almost all current HR, talent management, and workforce planning processes fail to perform in this chaotic environment. In a VUCA environment, there are more changes, a faster rate of change, and the size of the changes are so impactful that they must be labeled as “disruptive.” So the question for talent leadership becomes, “how do you effectively hire, develop, place, and retain individuals and leaders in the volatile environment where literally everything changes in months rather than years?”

V.U.C.A. (pronounced voo – ka) is an acronym for an environment that is dominated by:

Volatility – where things change fast but not in a predictable trend or repeatable pattern.

Uncertainty – where major “disruptive” changes occur frequently. In this environment, the past is not an accurate predictor of the future, and identifying and preparing for “what will come next” is extremely difficult.

Complexity — where there are numerous difficult-to-understand causes and mitigating factors involved in a problem.

Ambiguity – where the causes and the “who, what, where, when, how, and why” behind the things that are happening are unclear and hard to ascertain.

Talent Management Has Been Lagging in VUCA Preparation

The concept of operating in a chaotic environment is not new. Tom Peters has been talking about managing under chaos for years, and “decision-making under uncertainty” is a well-established academic field. What is new is that most economic, business, and political leaders have realized that the VUCA environment is a permanent condition.

Business executives have been preparing for the VUCA environment for years. Although most of the initial work was done by the military and in counterterrorism, VUCA planning has been part of business processes like supply chain and risk management for years. A few firms like GE, Unilever, and McDonald’s have even begun changing their leadership development model to fit the VUCA environment. But unfortunately, no one in recruiting, retention, skill development, compensation, performance management, onboarding, etc. has paid more than lip surface attention to this strategic problem. As a result, the time has come to face the fact that you can’t be strategic in talent management, HR, or recruiting unless you can manage and thrive in a VUCA environment.

Why Talent Managers and Workforce Planners Must Prepare for VUCA

Under the established 20th-century talent management model, the future was relatively predictable. As a result, firms hired, trained employees, and developed leaders in order to prepare for the “predictable” upcoming business environment. Most firms prepared their employees for the single-most likely future scenario (i.e. scenario A), which was usually a 5%-10% extrapolation from the current situation.

The more advanced firms prepared for not just the single-most-likely scenario but also for one or two alternative predictable scenarios (i.e. scenario A and B, C). But unfortunately, in a world of continuous disruption and VUCA, using this traditional model usually means that you end up hiring, training, and developing for business and talent management scenarios that will literally never occur. Planning, forecasting, and training simply cannot work if the environment that you are preparing for never appears!

A Quick Example to Illustrate Complexity and Volatility

For example, recruiting routinely plans for three distinct scenarios: no hiring, moderate hiring, and large-scale hiring. However, in a VUCA environment, talent acquisition must plan for each of those scenarios, but in addition, it must also plan for periods where the firm will do rapid hiring in some business units and regions, while simultaneously having a hiring freeze or even layoffs in other business units.

What Is Needed Is an Agile Talent Management Model

The 21st-century VUCA model that I am advocating requires talent management to have plans for handling numerous “disruptive events” that traditional narrow workforce planning simply can’t handle. Some of those disruptive events might include generational shifts that occur every six years, social media changing the way we communicate, and simultaneous talent surpluses and shortages.

One possible conclusion for talent management leaders could be that you should stop any planning process that never accurately forecasts the future. But that would be a major mistake. Instead, in a VUCA environment, talent management needs to develop an “agile model” that prepares for a wider range of options (i.e. scenario A-Z) but more importantly, it must also develop Talent Management processes/systems that can actually shift and handle any unpredicted upcoming event “just-in-time.” It might seem counterintuitive at first, but the military has proven that you make people more agile and successfully prepare them for handling unpredicted events that literally no one thought of in advance.

Things That Talent Management Must Start Doing to Meet the VUCA Environment

Talent management leaders must prepare for disruptive problems and opportunities that cannot be predicted. Some of the action steps that you should take to prepare for complete surprises and the VUCA environment include:

• Agile employees — Develop as a primary goal a focus on the hiring, training, and retaining of employees and managers who are agile, who thrive in a VUCA environment, and those who have the capability of acting effectively in unforeseen and unpredicted situations.
• Agile processes – Require agility, flexibility, and a rapid change capability as an essential component in all current and new talent management processes and programs.
• Self-obsolescence of processes — Require all talent management programs and processes to include a component that continually “self-obsoletes” its own current practices and replaces them with updated ones.
• Training to solve unanticipated problems — training and development must create the capability to prepare employees and managers to identify and effectively handle previously unknown problems. A high volume of scenario training and simulations can make an employee more comfortable and confident when they encounter a completely new situation. With repetition, employees can eventually develop skills and their own processes for handling “brand-new” volatile and complex situations that are full of uncertainty and ambiguity.
• Focus on innovation — Prioritize talent management so that it focuses on innovators, game-changers, and pioneers who are essential for success in a VUCA environment.
• Rapid learning — Develop systems to increase the speed of individual and organizational learning.
• More internal movement — Develop process to proactively speed up the movement of employees internally to where they can have a greater impact.
• Contingent labor — Use contingent labor as a significant percentage of the workforce, in order to increase your capability to meet sudden upturns, downturns, and new skill needs.
• Rapid increase in talent — Develop the capability for rapid hiring for sudden needs through poaching, with pre-identifying talent pools and by building professional communities.
• Rapid release of talent — Develop the capability for rapidly releasing surplus and inappropriately skilled workers.
• Fluid job descriptions — Develop continually evolving job descriptions and hiring standards that reflect the continually changing work.
• Outsourcing for flexibility — Use outsourcing to fill sudden needs and overflow work.
• Competitive advantage — Develop talent management processes and programs that provide a continual competitive advantage over other talent competitors.

Things That Talent Management Must Stop Doing to Meet the VUCA Environment

Leaders must dramatically modify or stop doing the following things to prepare for a VUCA environment.

• Stop seeking permanent solutions in talent management and HR
• Stop relying on the past and trends as an accurate predictor of the future
• Stop benchmarking best practices and solutions to most current problems
• Stop assuming that long-term employee retention is possible or even desirable
• Stop assuming that “one-size-fits-all” is a good approach to managing employees
• Eliminate “fit” as a desirable criterion in hiring and retention
• Stop assuming that the corporate culture and even corporate values should automatically remain fixed

You Must Also Prepare for Disruptive Changes That Can Be Predicted

Although these listed problems will likely appear unexpectedly, these dramatic changes in talent management can be anticipated, so they must be planned for.

• A continually changing set of required employee skills and job duties and a huge gap between the needed and the available skill sets
• A completely new set of leadership skills that will focus on agility, flexibility, and in developing a “just-in-time” solutions capability within the team
• Dramatic fluctuations in employee turnover
• Continually changing candidate expectations
• Dramatic shifts in the volume and quality of applications
• Frequent changes in offer acceptance rates
• Continuous development of new communications and learning tools
• Generational changes that occurs every 6 years instead of 20

Final Thoughts

The new talent management model that I am recommending is based on the assumption that for the foreseeable future, most problems and opportunities will simply not be predictable. The model however does take advantage of the fact that the skill and capability of handling completely new unforeseen situations can be developed. My challenge and question to talent management leaders is “What are you doing to ensure that every talent management process and employee can produce optimal results in a VUCA environment? The time is come to put together a planning session devoted to making the shift toward the new agile talent management model.

Employer brands, however, have limited shelf lives in maturing markets. As an example, just compare Google today and its continuing series of product blunders to the Microsoft of 10-15 years ago. When a company’s business strategy changes due to changing market conditions, its talent acquisition strategies must immediately follow suit.

Quickly, here’s what I believe are at the root cause of most companies’ hiring challenges:

1. The company’s talent acquisition and development strategy is out of alignment with its business strategy and operating plans.
2. Lack of understanding of how the actual customer, in this case the passive candidate, decides to engage with a company and eventually accept an offer. Since there is a disproportionate percentage of top people in the passive pool, this is a critical shortcoming.
3. The workflow and recruiting methods to find and hire passive candidates is fundamentally different than for active candidates. Unfortunately, most companies try to mishmash the two together, and wonder why neither one works too well.
4. Overreliance on a big employer brand that hides process inefficiencies and narrows the selection criteria based on past hires rather than current and future business conditions.
5. The decision-making process to hire or not hire someone is flawed, and does not fully address the fundamental reasons why top people underperform. Typically these involve style problems with the hiring manager, lack of clarification around total job needs including available resources, and a superficial assessment of cultural and environmental fit.

Aligning Talent Acquisition Strategies, Plans, and Processes

Addressing the lack-of-alignment problem starts by examining each factor involved in the process. Start with these core components to see how well-aligned your company is. As you read through the descriptions, you’ll quickly see how lack of alignment on any of these factors creates inefficiency, lost opportunity, and problems with attracting, hiring, and retaining the best. One example will highlight problems causes by lack of alignment: a passive-candidate program to target world-class design innovators will fall short if the compensation is based on group averages instead of best in class. I’m sure you’ll see similar problems at your company as you read the list.

Business Strategy. The long-term business plan combined with current operating plans needs to drive every aspect of a company’s talent acquisition program. When the business strategy changes, everything else has to change in domino-like fashion, including the talent acquisition strategy. Since talent acquisition is so critical, if it doesn’t flex quickly with changes in a company’s business strategy, it becomes the tail wagging the dog.

Talent Acquisition Strategy. This needs to support the business strategy with emphasis on ensuring that the best people are put into critical roles. A quality-of-hire target for each job category should further refine this, with specific targets for all managerial, professional, staff, and rank-in-file positions. If you’re a recruiter and don’t know this for your assignments, either you’re not working the hot jobs, or your recruiting department is out of sync with the business it’s supporting.

Workforce Planning. A workforce plan allows a company to develop internal mobility and succession planning programs, and from this, determine external needs by class of jobs. Different sourcing programs are then developed depending on candidate demand vs. local supply, and whether candidates are active or passive. A workforce plan is the first step involved in turning a talent acquisition strategy into a operating plan, so if you don’t have one, you’re missing an important connecting link.

Sourcing Strategy by Job Category. A passive candidate sourcing program is far different than one designed for active candidates. Active is generally higher volume and based on a “find-and-apply” model. A passive candidate program is more targeted, including focused messages, and a multi-step “career discovery and matching process” before the candidate agrees to be a candidate.

Active and Passive Candidate Recruiting Workflow. This is a huge tipping point, and even if the planning and strategy development is appropriate, it often falls apart at the execution level. The key is to have at least two different workflow branches. The passive candidate branch would focus more on the prospect’s needs, involve a formal means to “bridge the gap” at first contact to ensure candidates never opt-out without full information, include pre-interview exploratory conversations with the hiring manager, and a career-based closing and negotiating process.

Of course, there are still a bunch of other HR/recruiting issues that need to be included as part of this talent acquisition program, but these are the big ones (here’s a link to the full list). Doing the up-front talent strategy and planning and then executing against this plan is why doing this right is important. Surprisingly, many companies react to changes in hiring needs rather than plan for them. This is equivalent to putting the cart before the horse, doing the doing before the thinking, or firing before aiming.

While most companies complain they can’t find enough top talent, the root cause is more likely a lack of alignment with the company’s business strategy and talent acquisition programs. If you don’t have enough recruiters, if hiring managers aren’t held accountable, if compensation determines who gets hired, if your ATS establishes your workflow, or if some corporate lawyer says you have to write a boring ad, you are experiencing the problem first hand. Collectively all of these practices and processes are built upon a surplus-of-candidates mentality. The idea behind this approach is to attract as many unqualified people as you can, and hope that a good person falls through the cracks.

Alternatively, you could build your talent programs on a scarcity-of-talent model. In this approach, the needs of the best people determine the workflow, not a DBA. To get a sense of a talent-centric approach, consider how some of your recent best hires made it through the maze. As you review what happened, don’t be surprised that someone “modified” your company’s basic processes to meet the person’s needs. Commonsense would then suggest that you make the talent-centric approach the default rather than the exception. This is a great way to start aligning your talent acquisition programs to meet your company’s business strategy.

If you are a proponent of transparency, you’ll be happy to know that despite this low percentage of openness, there are many benefits associated with making managers and the high-potentials themselves aware of who is on the high-potential list for succession planning and leadership development.

The following list covers the positive benefits. (The arguments for maintaining secrets was covered last week.)

20 Benefits of Transparency in High Potential Selection

1. The designation motivates and increases engagement — openly recognizing the potential of individuals certainly excites and motivates the employee, and because other employees know, they will get additional reinforcement actions from your coworkers. Their manager might also feel excited, proud, and recognized because they now know that their development efforts were successful. Employee engagement may also increase as a result of your proactive action.
2. The designation helps to reduce anxiety — during weak economic times, even high-performing employees are naturally anxious about their future. Designating an individual as high potential helps to reduce their level of anxiety and uncertainty about their future. The designation lets them know that they will be continually developed and that they will have a major role to play in the future of the organization.
3. You can expect increased retention among HiPos — one of the primary advantages of telling HiPos of their status is to give them a sense of belonging. Being designated a HiPo is a form of recognition and accomplishment, and openness allows the firm to send a message to the individual that there is a high probability of a bright future for them. HiPos should also be made aware that should they leave this current organization and move to another, it is unlikely that, even with their outstanding track record, they will automatically receive the same “high-potential” designation until they have proven themselves. This level of rotation combined with the uncertainty should they move to another organizations helps to improve their retention rate.
4. The designation may cause HiPos to take themselves more seriously — after being notified that they are high-potential, individuals who are not self-aware of their potential may begin to take their careers more seriously. As a result, they may increase their learning and self-development or they may even pursue advanced degrees now that they know that that development or learning will actually be put to use by the organization.
5. Designation allows a more targeted focused use of resources — when a limited number of individuals are openly designated as high-potentials, it’s obviously easier for everyone involved to prioritize and focus their development resources and opportunities on these individuals. When the individuals’ names are kept secret, managers may devote too many development resources on individuals who are not likely to become future leaders and top performers.
6. It is easier to develop when the employee knows why it is happening — openness makes it more likely that any development advice and recommended actions will be taken seriously because the employee involved knows that they are being groomed for possible succession. If the selected individuals are not told their status, it can be awkward having development conversations and scheduling increased levels of development without revealing the reason behind it. It is also true that when everyone involved knows the goal of the development conversation, it allows for a more direct and honest exchange about the HiPos’ weaknesses and their development needs.
7. Keeping the names secret is hard work and openness makes everything easier — if your policy is to keep the names secret from all employees and managers, reaching that goal will be difficult and time-consuming. This is because employees are naturally curious and they will devote time to finding out who is on the list. You will need to keep secret not only the actual list of names but also the title and the invitee list of all development meetings that are designed exclusively for high-potentials.
8. They will find out anyway — experience tells us that despite your secretive efforts, employees will eventually learn who is on the list. Even if they don’t find out for sure, they will guess, and if they guess wrong, a great deal of confusion can occur.
9. Openness reduces the confusion over who should be a role model — if employees are aware of the HiPo designations that have been made by management, it will be much easier for them to select “the right individuals” to emulate and copy as their role models. If employees are also seeking a mentor, they now have a strong list of individuals to approach.
10. Reinforcing your communicated values and skills — you powerfully reinforce the existing messages that you have sent to all employees and managers about what behaviors they should copy, when you designating employees with those same skill sets, behaviors, and results as high-potentials.
11. Releasing the names reinforces the message of openness — if your organization espouses of the value of “openness” and transparency, having an open high-potential list will enforce that value.
12. An open list increases the likelihood of diversity — having a closed list can unfortunately lead to speculation about favoritism, however when the list is open, everyone can see if you have actually practiced diversity.
13. Openness can reinforce employees’ faith in management decision-making — if the high-potential selection process is fair, open, and accurate, it will likely select individuals who employees already admire and respect. The net result will be that your employees’ faith in management decision-making, and rewards for performance will be significantly reinforced.
14. It can eliminate speculation by managers — in some cases, being secretive extends to most managers, who will not be told who is high-potential. Not knowing for sure may cause some managers to treat those who they presume to be HiPos differently. Taken together, being open can eliminate this inaccurate speculation, wasted time, resources, and effort.
15. Openness will encourage managers who develop employees — with an open list, managers who have successfully developed high-potentials in the past will be rewarded as other employees gravitate toward them in the hopes of also being developed.
16. An open list may improve promotion decisions — unless managers are provided with a HiPo list, they cannot know for sure who should be considered for a promotion. By providing every manager with a list of high-potentials, you make it much more likely that managers will include these HiPos in their interview process for promotions and development assignments. Widely distributing the list also increases the chances that they will interview “lesser-known” individuals from other business units or regions who otherwise a manager might not have known about.
17. Knowing the high-potentials who are likely to be targeted makes it easier to focus your retention efforts — openly designating high-potentials can make them likely targets of external recruiters. However, in the same light, knowing that these individuals will be targeted may allow you to focus your retention and blocking efforts on these individuals, so that the net result may actually be a decrease in the turnover of these key employees.
18. If you periodically remove individuals from the list, you help to reduce an entitlement mentality — having a high-potential list can help to develop a two-class mentality between HiPos and the rest. However, if employees see that individuals are periodically removed from the list, there is less of a likelihood that they will see this as a permanent class distinction. If individuals in lower job levels are also included on the high-potential list, more employees will feel that they have an opportunity development.
19. Customers and vendors might feel more valued — openly designating HiPos will likely mean that your firm’s major customers, strategic partners, and vendors will become aware of who is on the list. If they have the opportunity to work directly with these HiPos, they are more likely to feel valued as a customer and partner.
20. Transparency may improve your employer brand image — the fact that you have an open process and are direct and honest with your employees may build your external employer brand image and help with recruiting as employees spread the word on their external social networks.

Final Thoughts

Obviously the decision between having an open or closed list has historically been a difficult and complex one. As the practice of management and HR progresses, there has been an increasing emphasis on openness and transparency. This is partially a result of growth of the Internet and internal and external social networks, which make it incredibly easy to spread “secrets.” In addition, it has been widely reported that new generations entering the workforce have come to expect (or even demand) a dramatically higher level of transparency.

As a result of these factors, most organizations should reconsider their decision to keep most elements of their succession plans secret. Obviously there are some drawbacks to openness but I have found that all of them can be overcome if you commit your best thinkers to the problem. The pendulum is steadily shifting toward the time where the succession planning variation of “don’t ask, don’t tell” will become an historical footnote.

Many are cynical about transparency in people-planning processes because there are numerous real and imagined consequences associated with revealing the names of the chosen few. Regardless of where you sit personally on this subject, realize that the impact of both positive and negative consequences can often be negated with poor/great approaches to the practice. Doing anything exceptionally well requires foresight and planning, something I hope this list helps you accomplish.

(A future post will highlight the positive consequences of sharing high-potential status.)

Negative Consequences of Openly Acknowledging High-potential Status

1. The probability of poaching increases — if you tell employees that they are high-potentials, it is highly likely the news will spread both inside and outside the organization. In time, many external recruiters can put together a list of your high-potential talent, which may lead to increased poaching.
2. Increased frustration and turnover if opportunities don’t follow — acknowledgement leads to expectations, and unfortunately advancement opportunities do not always materialize as planned. Failure to deliver opportunity in line with the high-potentials’ expectations can lead to frustration and turnover.
3. Employees may not take development efforts seriously — if the individual is not aware of their status, they may not see the value in actively self-improving. In addition, because they don’t know the reason behind them, they may not take full advantage of any improvement and development opportunities offered.
4. Confusion over where to improve — if managers are not made aware, they may do little to develop the strengths of the individuals or improve their weaknesses.
5. Reduced effort after “making it” — following acknowledgement, high-potential employees may expect things to happen automatically, going into coast mode as they assume their future is set.
6. Ego issues — notifying high-potentials lets them know they are valuable, but may also create an ego boost that results in a change in behavior; i.e., arrogance, sense of entitlement, etc.
7. Increased expectation of promotions — while in many organizations the high-potential designation is a signal of potential, for some highly motivated employees it may be akin to saying “you are ready now,” leading to an expectation of immediate promotion, which may or may not be forthcoming in the flat and lean organization of today.
8. Increased expectation of more money and exposure — notifying high-potentials may cause them to expect more money and more exposure opportunities, leading to disappointment and disenchantment when those benefits don’t come as fast as they expect.
9. Career micromanagement may make them dependent — individuals who are on the HiPo list are likely to be given more attention. This can result in the micromanagement of their career by the development team. Providing HiPos with a development plan and career path may cause them to reduce the effort they put into their own development and career planning.
10. There may be sabotage — a HiPo could face subtle or direct attacks from individuals who feel that they don’t deserve the designation. Once identified, others within a competitive organization may work to slow them down or even sabotage them out of bitterness. Also, once they know that they are a high potential, these individuals may consciously sabotage the managers above them, in order to more quickly open up a position for themselves.
11. A HiPo designation may be permanent — once designated as a HiPo, they may remain a HiPo in perpetuity because many organizations have no formal process for removing individuals from the HiPo list. This can be problematic if the skill sets for the organization change in the future, and these HiPos have not developed these new skills.
12. Openness makes it difficult to later drop individuals from the list — once an individual knows that they are on the list, should they need to be removed in the future, you face the difficult task of informing them. By keeping the list secret, you avoid the difficult situation of having to confront individuals. Whenever you remove an individual from the high-potential list, you obviously need to plan for negative consequences, up to and including turnover.
13. Managers may not accurately identify high-potentials — if the nomination or selection of high potentials is made by individual managers and the names are revealed to all managers, selfish managers may purposely under-rate individuals. Individual managers may learn that nominating someone on their team for HiPo status results in the quickening of the loss of that individual to their team. The end result may be that individual managers may purposely hide or refuse to designate true HiPos in order to keep them “off the radar” longer.
14. Increased hoarding — if the high-potential designation is made by the leadership team, it may cause managers to realize the value of key talent and drive hoarding behavior. In order to keep them longer, managers may restrict their visibility and even consciously reduce their performance ratings to prevent them from leaving the team. Limiting their visibility and slowing their movement may result in the HiPo becoming increasingly frustrated.
15. Frustration among those not designated — if the selections are announced, employees may question the validity of the identification process. If the selection or calibration criteria for HiPos are either kept secret or if they are unclear, employees who are not selected may become frustrated. In addition, if the designation process is viewed by other employees as biased or not fair, the announcement of HiPos could cause a revolt among non-designated employees. Together these factors could lead to reduced productivity, increased turnover, or even legal issues.
16. The potential for class warfare — no one likes to be labeled as “low potential,” so announcing high-potentials can cause some employees to feel less valued. In addition, if the level of treatment between HiPos and non-HiPos is significantly different, the non-HiPos as a group may begin to think of themselves as second-class citizens. This can lead to reduced cooperation and collaboration and a “have” and “have-not” division between employees.
17. Others will treat them differently — if employees know that an individual is a HiPo, employees and managers may begin to treat them differently and align with them, so that they can take advantage of their new power and “move up with them.” This may result in a “self-fulfilling prophecy,” in that the designated individuals (even those that turn out not to actually be hi-potentials) will actually succeed within the organization simply because everyone begins treating them differently. The self-fulfilling prophecy may skew your metrics, so that your succession program appears more successful than it actually is.
18. Increased gravitation toward HiPo-rich groups — if your open designations of HiPos are concentrated in a narrow group of functions or business units, that concentration may send a signal to all employees that they must find a way to transfer into those business units. This actual or perceived designation as “talent launching pad groups,” may inadvertently weaken other important departments and functions (especially overhead and service functions). The net result maybe a disproportionate “draining” of talent from groups with no or few HiPo designations and an increased level of difficulty in recruiting new talent into these groups and functions.

Final Thoughts

Historically, there are many valid reasons why you should not tell hi-potentials about their designation, but the trend is moving towards openness and transparency. While social communication tools have played a role in making secret designations harder to maintain, there are a number of ways to mitigate the negative consequences discussed here as well as leverage the positive consequences of disclosure, which will be discussed in a subsequent post. Combined, these changes in the landscape of business are driving many corporate leaders toward transparent people planning.

For more podcasts, webinars, and articles on HR be sure to check out TLNT!

According to the Journal, the odds are the highest since the start of the recovery and rose 4 percentage points since the August survey. In addition, the economists in the survey doubt that anything the Federal Reserve will do during its meeting next week will make a difference.

The Journal‘s survey follows a similar Reuters poll earlier this week in which a consensus of economists put the likelihood of recession at 31 percent. A similar survey in August put the chance at 25 percent.

The Reuters survey of some 70 economists also found them cutting their growth predictions to 1.9 percent in the current quarter and 2.0 for the fourth quarter. Previous surveys had them expecting 2.3 percent and 2.6 percent growth rates in the 3rd and 4th quarters respectively.

Almost as if on cue, the nation’s two largest ports reported a slowdown in cargo during August. Imports fell 5.8 percent at the Port of Los Angeles and 14.2 percent in Long Beach over last year. Economists and Wall Street watch those numbers as an early indication of what retailers expect for the holiday season. August is when the first shipments of holiday merchandise begin to arrive, so a slowdown in imports may mean retailers are expecting slower sales this year.

Thursday’s unemployment report offered little reason for optimism. Initial unemployment claims rose by 11,000 to 428,000 for the week ending Sept. 10. A year ago, the number was 450,000.

“It feels like a recessionary environment,” Bart van Ark, chief economist of The Conference Board, told the Wall Street Journal. He put the odds of a recession at 45 percent, a signal event, the paper noted, since for the last 23 years, a downturn has followed every time The Conference Board’s estimate topped 40 percent.

With the economy sputtering, corporate leaders are becoming ever more cautious about their hiring. Manpower’s quarterly employment outlook predicted hiring in the 4th quarter would be slightly better than last year, but for the first time in just over two years, it will be lower than the quarter before.

Says Manpower: “The Net Employment Outlook for Quarter 4 2011 is +7%, up from +6% during the same period last year and down from the +8% Outlook during Quarter 3 2011.”

What should HR be doing? In his HR Executive column, Professor Peter Cappelli, director of the Center for Human Resources at The Wharton School, recommends scenario planning.

“First, talk to whoever is in charge of setting strategy, goals, direction for the organization. Ask them what the two most important uncertainties are right now that will affect the future of the operation in the next year or so,” he says. Then draw up a box matrix of the uncertainties and possible outcomes and “tell the human resource story associated with it.”

Share it with senior management. By getting ahead of the curve, he says, “It demonstrates that you, as a leader, understand how to contribute to the strategy process.”

For more podcasts, webinars, and articles on recruiting be sure to check out ERE.net!

For more podcasts, webinars, and articles on recruiting be sure to check out ERE.net!

Boehner is not alone. A lot of people of all political, economic, and social persuasions seem to be asking the same question. But because many of us have been exhorting for years that such a scenario was inevitable, the current job crisis should be no surprise. More importantly, it should be more than obvious that strategies that worked in the past would not work in the future. As Peter Drucker once said, “the greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic.”

A new report released by McKinsey Global Institute seems to confirm that political rhetoric and populist driven strategies won’t be enough to see the United States return to full employment before 2020.

The report includes quite a few compelling statistics that I hadn’t seen before, at least not in these terms:

• 7 million: decline in the number of U.S. jobs since December 2007
• 21 million: jobs needed by 2020 to return to full employment
• 40%: proportion of companies planning to hire that have had openings for six months
• 1.5 million: estimated shortage of college graduates in the workforce in 2020.
• 23%: drop in rate of new business creation since 2007, resulting in as many as 1.8 million fewer jobs; the number of employees per new business has been falling, from eight in the 1990s to fewer than six in recent years.
• 20%: proportion of men in the population, not working today; up from 7% in 1970.
• 1 in 10: the number of Americans who move annually, down from 1 in 5 in 1985.

All told, between 2000 and 2007, the United States posted a weaker record of job creation than during any decade since the Great Depression. Total employment from 2000 to 2007 increased by 9.2 million — and 1.2 of those jobs were in sectors directly fueled by the credit bubble. The current job crisis didn’t start with the recession. The recession only accelerated and exacerbated it.

Under several job-creation scenarios, McKinsey estimates that as few as 9.3 million jobs could be created to as many as 22.5 million. Unfortunately the low-job-growth creation scenario is too familiar and will be the result of continued contraction in manufacturing employment, continued automation and offshoring in administrative and back-office positions, and new automation in retail (such as more opportunities for self-checkout.)

To achieve a high-job-growth scenario, our economy will have to rely on the healthcare sector. If this scenario comes to fruition, another 5 million jobs might be created thanks to rising demand from an aging population and the addition of millions of newly insured Americans to the healthcare system. If this scenario is accurate, politicians and citizen movements calling for an end to the proposed healthcare plan could win one battle (health care) but lose another (new job creation). In addition to healthcare, continued growth in business services might add another 6 million jobs. A housing recovery could create another 3 million jobs.

To reemploy the millions of unemployed with less than a college degree, the high-job-growth scenario must become a reality. The catch-22 is that to fill many of the jobs in the high-job-creation scenario, candidates with college degrees will be required. McKinsey projects that by 2020, 56.5 million members of the workforce will have college or graduate degrees. But to fill all the jobs created, an additional 1.5 million workers with college degrees would be needed. On the other hand, 64 million workers will have a high school degree or less, leaving 5.9 million more high school dropouts than jobs available.

But job creation alone won’t solve the problem. Those job creation-job filling scenarios assume that the fields of study pursued by the workers matches the needs of the employer and economy. Unfortunately that’s a faulty assumption.

Based on current trends, t0o few Americans who attend college and vocational schools choose fields of study that will give them the specific skills that employers are seeking. Twice as many students in the U.S. will graduate with degrees in social sciences and business rather than the much-needed skills in science, technology, engineering, and mathematics (STEM). Potential shortages loom large for nutritionists, welders, nurse’s aides, computer specialists, and engineers.

This skill gap is no longer pending as 64 percent of companies interviewed for the McKinsey study reported they cannot find qualified applicants, with management, scientists, and computer engineers topping the list.

The report offers three recommendations to achieve full employment: (1) sustained demand growth; (2) rising U.S. competitiveness, and (3) better matching of U.S. workers to jobs. Two of the three strategies seem to be out of the control for all but maybe the large multinational organizations. Better matching of workers to jobs offers the single best solution — and maybe the only one — for businesses committed to hiring and retaining a skilled, competitive workforce.

For more podcasts, webinars, and articles on recruiting be sure to check out ERE.net!

I Like My People, Even if They Don’t Perform!

Talent managers, in the designing, planning, and executing of a given plan, usually restrict themselves to the question: “Who internally can I preserve or develop to replace Jane Smith if she leaves,” and disregard the question “who externally can I attract” for consideration with Jane for that same position.

The implications of not using all available sources in succession management programs and not including talent acquisition as part of the plan (which also means integrating it with workforce planning) is apparent: What can be the greatest strategic competitive advantage in the human resource and human capital management arena is reduced to nothing more than a tactical, possibly irrelevant process, likely documented on a seldom-used Excel sheet.

In a Caliper Corp. survey conducted in 2008, and published (PR Newswire) in November of that same year which was titled “Caliper Survey Finds Hiring People a Daunting Task” researchers found that out of 190 corporate responders across a gamut of different industries, 69% found it to be easier to work with the “’devil they know’” rather than an “’unknown’” and a mere 31% found it to be “harder to manage the people they have than to select new employees.”

This survey and many others just like it show evidence that the bias toward a talent management and executive leadership approach to directing succession management can be caused (partly) by the internal attitudes of the organization. “Let’s replace people from the inside because we know them—or at least plan to do so” — hiring managers might say when they are faced with the issue of succession.

The First Rule of Succession Management: HIPOs! HIPOs! HIPOs!

Succession management comes down to identifying and developing the high potentials. But, if that survey and the ones that mirror it are valid, then it would also apply to the selection of the HIPOs in the succession management program for positions of leadership in the organization. This means that executives and managers (probably unknowingly) assume that “my high potential is different from all the other high potentials in other organizations.” This assumption is not supported.

One must then consider what makes a high potential a high potential if they are to fully analyze the issue of high potentials in the workplace; recruiting leaders need to understand who it is they need to attract and how to attract them. I discuss that also in the Journal.

But this is where the recruiting leader can assist their succession management counterparts–identifying high potentials in other organizations or in their industry and including them as potential replacement candidates for the internal succession management program. Of course, the recruiting leader must assess what makes the external candidates high potentials and align recruiting methods to attract them. If this method is applied, it would augment and supplement succession management activities and bring the strength of succession management to a whole new level.

What we have to communicate to our talent management partners is that no organization has a monopoly on the best talent, or the best development methods, or the best recruitment processes. The best any organization can do is to develop a top-notch comprehensive human resource and talent management system based on sound strategy and superior tactics that are aligned with their internal goals and objectives, and hope that the best talent in the world will choose the organization because of it.

Don’t Worry, We’re Already Doing it—Kind of!

The concept already exists in what is commonly called “passive candidate recruiting.” I simply propose that an organization should recruit passive candidates in a much more strategic fashion, and for purposes of enhancing succession choices. Target high potentials in other organizations proactively and long before they are needed, develop close relationships much earlier than one would in other cases, and then maintain those relationships for prolonged periods of time.

They Might Not Like it, so Get the Buy-in!

Talent acquisition departments must seek out their talent management and executive team member partners and create a real and functional partnership. They must convince their counterparts that internal succession management can be a much more valuable activity for the organization if they were to augment it through the use of highly targeted and well-developed external possibilities. Then, for each key position or key professional, the recruiting team should provide quality alternatives for discussion in the planning phase.

The team then must choose from their combined pool of internal candidates and external possibilities. Clear advantages of this method occur in situations where the internal candidate or candidates who were to succeed their supervisor for a particular position are either unavailable, have also left the organization, or are critically needed elsewhere.

It’s One Big Yellow Submarine, and We’re All in it

Tools and processes of the human resources profession should never be used in silos. Leaders of the recruiting profession always should measure their tactics with respect to their counterparts, and to seek inclusiveness in their methods. Succession management and workforce management are two sides of the same coin. They must work together and not against each other.

It wasn’t among the questions posed to debaters Jason Averbrook, CEO at Knowledge Infusion, and Gartner’s Managing VP Jim Holincheck, though it lurked behind their generally affable agreement on most of the talent management issues that arose during their time on stage.

For instance, when show co-chair and debate moderator Bill Kutik asked about the meaning of strategic human capital management, and, later, about just what workforce planning is, there wasn’t much debate.

The former is the linkage of employees, their skills, training, performance, management, compensation, and deployment directly to the business goals and needs of the enterprise. As Holincheck said, it is “more than talent management,” and as both agreed, it is well more than the mere automation of HR functions.

Workforce planning was a little more complicated.

Distilling what the two said, workforce planning is the collection and analysis of human capital metrics to produce actionable plans positively impacting the performance of the enterprise.

What happens, though, when you have multiple best-of-breed systems from different vendors? There’s lots of data being collected, but the first obstacle to using it is integrating it.

Holincheck observed that 30 percent of his firms did no core HR integration. One problem, one big problem, is, he said, that “HR is still siloed.”

Averbrook echoed the silo comment, pointing out that talent management and workforce planning is “measured by what value it brings.” The implication being that without stitching together all the data and linking it to business talent management is, if not useless for business planning, certainly of limited value.

It was at this point that the differing views of best of breed began to emerge. While neither of them articulated it quite this way, best of breed can be decided component by component. That’s pretty much what we have been doing for years.

Makes sense, no? If you’re going to buy a talent acquisition system, you want the best of breed. Or at least the best you can afford. Same for onboarding. Ditto for performance management, and so on.

The problem with that approach, as countless employers have discovered, is as Averbrook energetically observed: “Is there a way of pulling all this data together?”

“Do you have the IT support to go with a bifurcated approach? The vendors aren’t going to string it together for you.”

Another way of looking at best of breed is holistically. Even if each piece may not be the Rolls Royce in its field, does a vendor’s complete talent management suite do what you need it to do effectively, smoothly, efficiently, and work in a way that makes it easy for people to use? Then for you, that may be the best of breed.

The HR tech vendors have been sensing the shift to product suites for the last few years. It’s one reason why so many acquisitions and partnerships have been happening.

Not an hour after the Great Debate ended, I was talking with Terrence McCrossan, division VP marketing and strategy for ADP. We were talking about the growing HR software line from ADP and the morning’s debate.

“Convergence there,” he said, referring to the issue of suite vs. best of breed, “is a big one.” Customers are looking more and more, he agreed, to comprehensive solutions for all the reasons Averbrook cited.

None of this means second rate is acceptable. And the larger employers with the IT and financial resources to make things work together, will probably still take the component approach. However, it does mean we’re taking a broader view of what it means to be  “best of breed.”

Once you have the data, however, you compile it. Then what do you do with it? Both debaters agreed that most of us are still in the early stages of making best use of the information the systems now give us.

One more observation from the debate: How do you introduce the social collaboration tools to your enterprise?

Averbrook counseled HR to “take the lead,” and not leave it to other departments or IT. “Start with it,” rather than add it incrementally to the work process.

Holincheck didn’t disagree with HR being involved, but he cautioned an incremental approach. Go slow. Let the use of social tools grow virally.

“I think it has to be part of the (TM) strategy, but I don’t think it has to be first.”

For more podcasts, webinars, and articles on recruiting be sure to check out ERE.net!

Lots of factors can take down a CEO unexpectedly, and major corporations have a fiduciary responsibility to shareholders to have a plan in place. While BP won’t be on anyone’s list for excellence in corporate management, even it had a well-groomed and prepared successor in place for Tony Hayward. Based on my experience and observations over the years, I’ve fashioned the following checklist to assess the success/failure of changes in senior leadership and the subsequent checklist to assess the design of succession planning.

Assessing a CEO’s Release and Replacement

1. Was a succession plan followed? Organizations may need to replace a CEO suddenly for a variety of reasons including illness (Apple), lack of confidence (GM), arrest (Stanford Financial) and accidents (Chevron); it is simply reckless not to have a succession plan in place. HP has a well-documented recent history of failing to prepare for succession, most notably the painful and public departure of CEO Carly Fiorina.
2. Did the stock price improve following the change? There is no better indication of successful succession then having shareholders affirm the decision with their wallets. Unfortunately, HP gets a failing grade here as well because HP has lost more than 10% of its market value following news of Hurd’s separation and absence of a succession plan.
3. Were strategic partners and major customers publicly supportive? Managing the reactions of major customers and partners is a critical success factor. HP deserves a clear zero here because Larry Ellison, CEO of Oracle, went so far as to publicly lambast HP’s decision in a public letter to the New York Times.
4. Was a permanent replacement designated immediately? The purpose of the succession plan is to be able to designate a permanent replacement within a week. Obviously, without a succession plan HP will not be naming a permanent replacement anytime soon. Yet another zero!
5. Was a recruiting team/plan pre-designated? Being prepared is better than being forced to react, but being prepared to react is better than no preparation at all. HP earns another zero with regard to this factor because the board had no protocol in place prior to Hurd’s departure. It had to hurriedly put together an ad-hoc recruiting team of board members to begin the search and select a search partner. Having a pre-designated team and executive search partner charged with continuously monitoring potential replacements could have shortened the cycle immensely.
6. Did the press coverage cease quickly? Well-planned and executed CEO successions generate little press compared to poorly executed changes. Based on the current tone in the press, it’s clear journalists feel there is more to this story, and will continue digging for weeks/months until more details emerge and a replacement is hired.
7. Has employee morale been affected? Following any dramatic change in senior leadership, organizations need to reassure employees and keep them moving forward. While HP has communicated with employees, it’s still unclear whether the communication efforts offered enough to prevent distractions in the workplace and support a sustained focus on customer, operational, and innovation needs.

Of the seven factors highlighted above, HP failed with regard to six of them;  number seven is “wait and see.” By all accounts, HP has demonstrated failure, and other organizations can/should learn from its mistakes.

Top 25 Design Features of a World-Class Succession Plan (a Checklist)

If you want to avoid the common design errors and omissions that many firms make, ensure your process includes the most important features, including:

Foundation Elements

• Continuous process — effective succession planning is integrated into all normal business planning and reporting processes and has as its primary goal ensuring that the organization has access to the right people to step into the right role at the right time.
• Written — great succession plans aren’t hidden in PowerPoint presentations or buried in enterprise reports; they are stand-alone, documented plans distributed periodically to everyone the plan touches.
• Clear goals and metrics — like all good plans, succession plans are governed by specific, measurable, appropriate, realistic, and timely goals for which measures of success have been predetermined.
• Ensure supply — succession planning is all about mitigating the impacts of a vacancy by ensuring that the organization has access to talent capable of stepping in/up as a need arises. Great efforts coordinate with workforce planning to model the type of talent, amount of talent and location of talent needs. Leveraging the forecast, great succession plans build supply chains of internal and external candidates to map supply to worst case demand.
• Broad focus on increasing movement — world-class succession plans are not static plans; they are operational plans calling for the proactive movement of resources through stretch project assignments, lateral transfers, and job rotations and promotions to develop organizational bench strength.
• Proactive job movement — rather than waiting for key development and assessment positions to open up naturally through retirements, reorganizations, or turnover, a proactive plan creates openings by reassigning incumbents.
• Supports “jumping” — most succession plans are silly in that they document only obvious lateral and horizontal candidates. The best plans identify the “non-obvious” candidates and individuals to “jump” one or more levels, to new job families, and to unrelated departments.
• Personalized treatment — rather than viewing only the individual as the flexible resource, assignments called for by the succession plan are tailored to allow for better assessment and development of up-and-coming talent. Assignments are selected by looking beyond job requirements to ensure that talent is placed with the right manager, right motivators, at the right time, and with the right team, etc. Every person on a succession plan should have a written, individualized development, challenge, and learning plan.
• Plan transparency — world-class succession plans are public, meaning that those on and off the plan can review it and challenge reasoning for inclusion/occlusion.
• Supports retention goals — transparency around succession planning can motivate some resources to stay, while frustrating others and encouraging them to leave. World-class succession planning efforts coordinate with retention programs to ensure those currently on the plan and those who may enter the plan soon are motivated to stay with the organization.
• Owned by managers — succession management should be integrated into other core business planning processes and routinely championed by senior leaders so that all managers take ownership of it as a key business activity. HR must facilitate the process by providing infrastructure, removing barriers, and holding parties accountable (including the program manager).
• Key and mission-critical focused — most succession plans focus on the leadership tier of an organization. World-class programs look beyond the top of the organization at all key and mission-critical roles. The goal, have at least one backfill (someone prepared to step in immediately) for all keys roles to mitigate the impact of a sudden and unplanned vacancy.
• Integrated — rather than operating in isolation, the succession plan is developed and executed in tandem with leadership development, executive search, retention, internal redeployment, and strategic planning activities.
• Articulated business case — the foundation for any succession plan is a clear and compelling business case, one that outlines to executives and managers the dollar impact on revenue and profit of planning for effective succession, i.e. mitigating risk of vacancy.

Elements Related to Plan Coverage

• Multi-source selection — because identifying the right high-potential individuals is critical for success, rather than relying exclusively on managers to nominate those to be included in the plan, multiple sources are used to find “hidden” talent, increase diversity, and decrease the impact of individual biases.
• Business-strategy aligned — Most succession plans focus on individuals who are visible, versus roles that are essential relative to the current business priorities. In addition to focusing on key and mission-critical roles, the succession plan should focus on near term succession planning for roles relative to near-term business strategy.
• External consideration — the focus of world-class succession planning is ensuring access to top talent in key roles. It isn’t probable that the “best” talent for a role will always come from inside the organization, nor is it likely that an organization will have the development wherewithal to produce enough volume of successors. For key roles on the succession plan, the organization should identify and track externally suitable talent. Doing so will help motivate internal talent to remain competitive skill/knowledge-wise with external talent and enable third party search partners, if used to proactively source.
• Supports diversity initiatives — most succession plans underperform when it comes to selecting international and diverse employees. The best plans take proactive steps to ensure that these individuals are represented in the assessment slate for plan positions.
• Periodic housekeeping — selection for inclusion on the succession plan should not be a lifetime entitlement. Life changes. Roles that were once highly important may decline in relevance, and individuals who were once growing rapidly may plateau. The best plans see turnover of 20% or more in plan incumbents.

Elements Related to Plan Administration

• Strong communications — the succession plan must include a process for effectively communicating to employees, plan participants, and shareholders. Communications should how high-potentials are identified and why movement is necessary.
• Rewards for effectiveness — managers should be rewarded for accuracy in identifying high-potentials and for success in developing plan participants, i.e. periodically releasing and not “hoarding” talent on the plan.
• Employee input — the most effective plans involve the individuals who are most likely to be part of the plan both in plan design and high-potential identification. There should also be an avenue to complain or appeal if an employee feels that they have been treated unfairly or that a promotion was inappropriate.
• Use of technology — crafting a living succession plan that goes beyond mapping obvious moves among senior leaders requires collaboration, and collaboration in large complex environments requires technology. World-class succession planning programs aggressively leverage technology to profile talent, manage development project deployment, and model resource movement.
• Data-based decision making — important succession planning decisions (who to include, how to develop, where to move) must be primarily based on data rather than emotion or intuition.
• Periodically audited — succession plans should be audited every two years, and failure analysis conducted following every succession movement that produces unsatisfactory results.

Final Thoughts

Executive tenure is declining, and events that CEOs once survived now take down their career. When volatility increases in any system, there is a need for more robust planning and risk mitigation. Unfortunately, most succession planning processes and the plans they produce are poorly designed, limiting their effectiveness. I urge you to use this checklist to assess your efforts, aim higher, and expect more.

They always say time changes things, but you actually have to change them yourself. --Andy Warhol

It is time to change the recruiting game. Someone has to reinvent a process that is aged, inefficient, and marginally successful in procuring high-performing employees.

Over the past 20 years recruiters have been given magical tools starting with applicant tracking systems, then the Internet, job boards, recruiting websites, and now an array of social media tools. Yet, it is a sad fact that a single recruiter can deal with no more open positions than he could two decades ago, still feels overworked, and is deluged with unqualified candidates.

It is time to challenge our assumptions and reinvent the entire recruiting process. Let’s start by asking dumb questions: why does recruiting exist as a function? Is it to hire people? Surely given our technology, hiring managers could be trained to screen and select the people they need. Is it to screen candidates, schedule interviews? All can be automated. Is it to sell the organization to the candidate? That often happens prior to any recruiter contact through the products and services you offer, through fellow employees, through brand and reputation, and through your location. What the recruiter adds to this is useful, but probably minimal.

So, then, how can recruiters add value?Automation and Process Simplification

The recruiting process is made up of somewhere around 10 sub-processes which include employment branding, communicating with a hiring manager and developing a position description, sourcing, screening, assessment, candidate communication, and marketing (CRM), offer negotiation and presentation, closing, and in some cases onboarding.

Each of these sub-processes need to be examined and assessed for their efficiency and value. You should ask yourself whether that process needs to be done at all, and if so should it be done by a recruiter, and if not, by who? You should also ask whether that step could be automated, even partially, and even if it would be less than ideal. You need to apply the 80/20 rule to recruiting automation: if a tool, system, program, or application can do at least 80% of what a recruiter does, than you should switch to the automated process.

I believe that much of what the average recruiter does can either be simplified, eliminated altogether, or be done by automated systems. For example, is it really necessary to interview all candidates? Why can’t you develop and use a screening test of some sort and rely on that alone? Why does every potential candidate need to complete the usual intensive application process when all you need to know are one or two things in order to move the candidate forward? Why can’t you develop and use good CRM techniques and processes to ease the communication problem. There is a lot of room for improvement in the basic processes we follow rather blindly. By adopting a simplified and more automated approach, you free up recruiters so that they can really add value and improve the reputation and significance of the recruiting function.

Redefine the Need

Recruiting should not be a reactive function, only responding to the mandates of hiring managers. Recruiting needs to be the talent partner within the organization. It needs to have the labor market and available skills knowledge to help managers make the best decisions of the type of people to hire.

The model recruiting functions should work very closely with hiring managers, human resources, and other internal professionals to redefine the positions most commonly open. One method is to interview good employees, as defined by hiring managers and performance reviews, and then construct profiles of these employees that can, in turn, be used to construct screening questions. Building a profile of success saves hundreds of hours of recruiting trial and error. This process also affirms which roles are really important and which ones may be less so. Less-critical positions can be outsourced or put on a lower priority. Many times this process identifies changes that need to be made in the skills, competencies, or experience required for a particular role. Looking at the positions that you are being asked to fill in a constructive but positive way, adds to your credibility and aligns the needs more closely to the market.

Workforce Planning

The next step has little to do with traditional recruiting and is usually called workforce planning. It the skill of building forecasting capability and ensuring that the organization has, or can quickly get, the talent it needs to achieve its business objectives.

It requires some knowledge of demographic, economic, and business trends. It also requires a deep knowledge of the talent marketplace and familiarity with the level of education and experience available in the appropriate geography. It means collaborating with the internal training function, senior management, compensation, and human resources in general to agree on which talent is best sought externally, which is best sourced and promoted internally, and which needs to be developed by the company, because recruiting them is difficult and expensive. These tradeoffs and discussions have almost never happened in the past, yet they are becoming what differentiate a great recruiting function from an ordinary one.

Predicting who you will need, what skills will be important, or what experience will be best aligned with needs is not possible. What you can do by combing workforce planning with a talent community is build the potential — a capability to meet future needs — that did not exist before.

Building Talent Communities

Following all of this, only then is it productive to start sourcing and attracting potential candidates to a talent community. My article last week pointed out how a community differs from a talent pool or a database, and the distinction is significant. Talent pools are inefficient and in the end leave you where you started — with a large pool of unknown people who need to be further screened and qualified. A true community screens by the way people interact, by how they communicate, and by who they are connected to.

When an organization has a talent community, it has a dynamic and ever-changing pool of talent, skill, and experience to meet almost any need that might arise.

Recruiting is in dire need of change. Disruptive recruiting will showcase technology and apply it in a practical way toward improving and simplifying the processes that make up recruiting. Disruptive recruiting will also mean that recruiters need different skills, including those of networking and community-building.

Why the Need

Growth and recession are hard to predict. Neither are typically gradual or linear. There may be a sudden need to add dozens or hundreds of employees in new business areas or in different parts of the world. Or, there may be a sudden shift in products that makes many employees redundant. Economies can suddenly slow and business can evaporate quickly. Replacement planning does not deal well with any of these scenarios. And this is why typical workforce planning is looked on with scorn by many human resource professionals as well as business managers.

Traditional workforce planning (and often recruiters, as well) has made a number of assumptions that are no longer valid and can be grossly misleading. The first and largest assumption is that there are enough skilled workers available to meet current and future needs. The second is that these skilled workers will accept the employment conditions and salaries offered. The third assumption is that universities or other educational institutions will produce the right talent to meet these emerging needs.

While there are plenty of people, only a small fraction of them have the skills and motivation to meet or adapt to emerging needs. And, many who have skills are choosing to start their own businesses or work in small firms where they can have significant influence over working for traditional organizations. This is especially true of Generation Y (those under 25).

American educational institutions have suffered massive budget cuts and loss of staff, and except for a handful of elite universities, are ill-equipped to educate the numbers of people that will be needed — even if they could identify the necessary skills and put in place academic programs and staff in a timely way.

Recruiting the right skilled people has already become a challenge, internal development functions have been eliminated or reduced, and the information most firms have about their current employees’ skills and abilities is lacking. Very few organizations have a comprehensive, current,  and searchable database of employees and their skills, abilities, interests, and education. Organizations that rely on the assumptions outlined above or believe that the changes taking place today are nor revolutionary will be unlikely to prosper financially.

The current convergence of political, economic, and social trends, including the decline of large-scale manufacturing, the automation of many activities done by people, the growing importance of the developing world as consumers and inventors, genetic engineering, the rise of educated and childless women, and the gradual shift of economic power and consumption to Asia, and particularly China, means that we will need to re-skill and re-staff every existing organization. New firms will also spring up creating positions and functions that do not exist.

Therefore, the need for a strategic and forward looking talent plan is becoming essential to business success.

Many firms are realizing that it is not enough to just calculate turnover and projected growth and then go recruit people. The whole process of acquiring, developing, and retaining talent requires more sophisticated thinking and tools than have previously been characteristic of the human resources function.

An effective workforce planning process should focus on the following four areas:

1. Gaining market awareness in order to better understand emerging trends and to do competitive analysis around skilled talent.
2. Integration of talent planning with business planning so that business needs can be translated into needed skills and abilities and so that an understanding of available skills can be included in the business plan.
3. Development of a system-level focus on identifying key positions and integrating employee development, internal mobility, succession planning, and recruiting.
4. The use of scenario planning and dynamic modeling to help focus activity and justify investments in a variety of approaches

Step 1: Market Awareness

Workforce planners need to be aware of business, economic, political, demographic and social changes, and trends. They also need to keep up-to-date on emerging skills needs within their organizations as well as the industry.

For example, the Future of Talent Institute that I founded tries to provide this information to clients. It focuses on identifying emerging trends, sorting the significant ones from the insignificant, and in making sense of the information as it pertains to developing a talent strategy.

Data such as this can be very useful. For example, several years ago Cisco Systems identified the need very early for HTML web programmers. They realized that there were few who had those skills, so they started hiring college grads with backgrounds in music and math and trained them in HTML programming. This gave them a decisive advantage over the competition, leaving the competition scrambling to catch up.

Keeping tabs on who has critical skills and where they are located will be a differentiator in how successful your sourcing will be. It will also provide the inputs you need to calculate whether a development program would be more cost-effective than a recruiting approach or what combination would be most economical and effective for your organization.

Talent supply data is the most difficult information to get today, partly because we have not clearly defined needed skills. It is almost impossible to know how many people with a particular skill are in the market. Social networks, data mining, growing corporate databases, and other tools may improve this situation, but focused effort is going to be required for many years to get the level of knowledge we will need.

Step 2: Integrating Talent Planning With Business Planning

Business planning is becoming talent planning. Any business decision that is made today has to factor in the availability of skilled talent to execute the plan. As we stated above, it is an unsafe assumption to believe that the people you need are available and are willing to be employed. Business planning and analytical tools should be applied to the people side of business to identify skills, find people who have the needed skills, conduct experiments to determine the minimum set of skills needed to accomplish a job — rather to go for the maximum set of skills as is common today.

Step 3: Systems Integration Approach

In a market where certain skills may not exist at all or where they are very scarce, recruiting cannot be relied on as a sole supplier. In many cases, it may be possible to find the skills needed internally or it may make more sense economically to develop internal or external people to meet those needs.

By making workforce planning the highest-level activity and integrating employee development, internal mobility, recruiting, retention activities, and succession planning with it, organizations can begin to acquire above-average talent.

Removing talent supply from being the sole responsibility of recruiting to broader set of functions allows more comprehensive thinking about people.

Whenever the need for talent is identified today, most organizations go immediately into hiring mode. A hiring manager opens a requisition for a new person. There may be a cursory look for an internal candidate, but it is unlikely that one would be found. After several weeks and numerous interviews, someone is hired. Then there is a wait for them to actually start, a learning period before they are productive, and a high probability that they were not a good hire and will leave or be terminated.

Imagine instead that rather than immediately opening a requisition, a hiring manager, along with a talent manager, go through a process of looking at internal talent, modeling the costs and time involved in training someone for the position, predicting the available supply, time to recruit, and the time it takes to train them. They would then decide on an employment model: regular employee, part-time, contractor, and so on, to see which offers the highest benefit and the lowest risk and cost.

This requires an integrated function with data about internal and external data about talent and a desire to find the fastest, highest-quality employment model to achieve the business goal.

Step 4: Scenario Planning and Dynamic Modeling

Although scenario planning is no longer new, having been around since the 1960s, HR has just recently adopted it to look at various potential talent-demand situations.

Scenario planning, sometimes simplistically referred to as what-if planning, looks at a variety of economic and business trends, as well as other factors that have been identified as possibly impacting the supply of talent. Using different sets of factors, scenario planners develop recommended responses to meet the supply challenge.

By including in this process some of the mathematical modeling tools that are available, a talent manager could project, for example, the benefits of training over hiring or of the value of one source of candidates over another based on turnover and time to productivity.

Talent planning will become a critical function within the human resources area and will greatly enhance the ability of the organization to have the talent it needs available when and where it is needed. Recruiting is a vital part of that success, but it cannot stand isolated and alone as it does now.

• Replacement for key employees
• To support anticipated growth
• To address and deal with talent shortages

Unfortunately, however, succession planning is too often considered an exercise, a means to an end, a human resources task to be checked off and moved into the done pile. This is absolutely the wrong way to think about succession planning.

Succession planning is a talent and organizational improvement initiative that enables a business (i.e. your organization) to grow and thrive now and in the future.

Businesses and organizations can neither succeed nor grow without management talent. It’s really that simple. What’s not as simple is developing, nurturing, and grooming your talent pipeline.

We are coming out of the worst economic downturn since the Great Depression. Sure, the unemployment rate is still high, which makes some executives believe that the talent pipeline is strong … when they need a management/executive resource, all they will have to do is pick up the phone, post an ad, or look on sites like Monster and CareerBuilder, and snap, their talent needs will be resolved. Heads up: many of your competitors are seriously positioning themselves for growth and are truly hoping you continue to believe this.

Good talent is hard to find — in both good and bad economies. It’s hard to find because talent is a combination of skills, behaviors, motivation, organizational fit, and passion. And that is truly hard to find, especially when a fast hire is needed (yesterday).

Consider the three reasons for a succession plan in more detail.

Reason One: Replacement for key employees

Many people we’ve talked to believe the only reason to do a succession plan is to have a replacement picked for the CEO and perhaps one or two key executives. This is clearly one of the reasons to do a succession plan. The more complete reason is to have replacements identified (and in the process of being prepared) for all key positions within the organization, not just the CEO and key executives. This is often referred to planning several levels deep,” that is, executives to departmental managers and division leaders; those roles that are necessary (even if not obvious) to keep critical business going.

Remember, executives set strategy, and managers implement strategy. You need strength in both areas to succeed.

Executives and managers will leave. They may leave to take another job; they may be fired; they may retire, they may become ill, they may leave because of a spouse’s relocation. When an executive or manager’s vacancy is anticipated, a smooth transition is possible, simply because there is time to manage the transition. It is when the vacancy is unexpected that a challenge exists. Maintaining continuity is important and it results in less cost and less service disruption.

As the economy improves, growth will occur and an organization can only support and sustain growth if it has the talent to manage the growth.

Reason Two: Support anticipated growth

This is different than the replacement strategy noted above. In this case, new positions are needed to support growth initiatives. For example, growth initiatives could be:

• Expanding current products or services into new markets;
• Creating new products or services to introduce into the marketplace;
• Initiating new ways to market (i.e., viral marketing) your products or services

When anticipating growth, identify internal talent and also build and maintain a talent network comprised of viable candidates who currently work for other organizations.

Reason Three: To address and deal with talent shortages

Talent shortages occur even in a down economy. Examples include pharmacy managers, nurse managers, engineers, and sales representatives. If a pharmacy manager resigns in a hospital, research shows that finding a replacement can be extremely difficult. How will the organization respond? What strategies will be put in place to avoid a lengthy leadership void? This may require promoting candidates before they are fully ready for the position. While this will only be done when there are no viable options available, who you select and how you support the candidate’s transition should be thought out in advance. Knee-jerk placements — fast hires and “not ready for prime time” (unless there is an integration strategy) hires — do not often fair well.

Succession planning is a process and not an event, and it is a process that is critical for all organizations whether they are anticipating turnover and vacancies, planning for growth, or working to adjust to talent shortages.

To manage the process effectively, we recommend the following steps:

• Assign responsibility for succession planning to the executive team members (and make its success part of their evaluation process)
• Identify needs/key roles currently and in the future that reflect several layers deep
• Develop and use methods/tools/techniques for identifying employee competencies and aspirations
• Implement a structure for developing potential successors
• Implement a structure for transitioning successors to and in new role(s)
• Identify and emergency or interim process to fulfill a role if for some reason the potential successor does not work out.
• Align your recruitment initiative to succession planning by forecasting key needs and interviewing for growth orientation and adaptability
• Evaluate plan effectiveness and update the plan as required, at least annually

Out of 2,900 respondents to the survey, only 45 percent reported being satisfied with their job. In 1987, when the question was first asked, 61 percent reported being satisfied.

By now, the numbers may have changed. The survey was conducted last summer when huge monthly job losses were being reported and the unemployment rate was climbing. I should also point out that the survey is not without its challengers and that the results are at odds with other polls, notably the Gallup and University of Chicago, which found workers much more satisfied with their work.

Still, The Conference Board survey shouldn’t be dismissed out of hand. Its other surveys, including the much-watched Consumer Confidence Index, supports the suspicion that many of you have of a general worker malaise. A Salary.com survey released a year ago reported similar, though somewhat less dramatic, results.

In any case The Conference Board survey clearly touched a nerve. Since its release there have been hundreds of blog posts mentioning it. And many more discussing a CareerBuilder survey conducted in November and released on Jan. 7 that says 19 percent of workers will jump ship in 2010.

ERE blogger Rob Jannone talked about this a few days ago in a post he headlined “The Mass Exodus of Talent.”

“Halfway through the 1st month of 2010 and a theme emerging in the blogosphere and social media as it relates to Human Capital Management, is that the mass exodus of talent is imminent,” writes Jannone, who goes on to suggest three steps that might help to improve morale and reduce the potential exodus.

There’s one more bit of data to consider: least satisfied with their job are workers under 25 years of age.

What does this mean to recruiters? Depending on which side of the fence you happen to be on at the moment, it can be a boon helping you attract better talent. If you’re the one losing the workers, it means the internal pressure will go up as the remaining staff, already piled on with the workloads of the previously departed, have to cover, if only for “a while.”

The surveys, and a reading of the blogs and observations by recruiters and HR thought leaders, offers some scenarios for the coming months:

1. High achievers, your best talent, will be the first to leave since they are in demand. Even now they’re doing their networking due diligence, waiting for the right opportunity to come along. That wasn’t so easy in 2009 when 4.2 million jobs disappeared. But in 2010, with every indication pointing to recovery, opportunities will begin to turn up.
2. Young workers, many of whom took any job they could find, will bolt when they can. Some may be excelling in the careers they fell into and may stay because they’ve discovered they like it. The majority — 64 percent — are not happy. In such a large percentage inevitably will be good workers, performing well, who you would like to keep.
3. Older workers who are in the age group typically most satisfied with their jobs, aren’t. They stay because the value of their investments and 401(k)s have fallen so far they can’t afford to retire,; they have fewer options due to age, and are less likely to relocate for work.

The implications of these scenarios, if unchecked and unaddressed, can easily lead to a workforce imbalance with dire consequences. I haven’t seen any of the bloggers predict imminent corporate collapse or anything but a slow, if mass, exodus. However, an incremental workforce change may mask its very effect.

Put those three scenarios together and you get a slow ebb of talent, beginning with the loss of promising young talent first. (Statistically speaking, based on The Conference Board’s demographic breakdown of dissatisfaction.) Simultaneously, top talent will leave. Not all of it, of course. But enough to have a noticeable effect. Finally — and this may be two or three years or more from now — older workers who have recovered financially will retire, taking with them the experience and knowledge that otherwise would have been passed down the line to the up and comers.

How likely is this picture of the workforce future? It is certainly a possibility if you do nothing. And there will be employers who do nothing. They will end up being among those who find themselves having to quickly fill vacancies, if only to keep the phones answered.

For everyone else, take a look at Jannone’s suggestions at the end of his blog post; see how your own workforce compares to the results of The Conference Board survey; and, do some workforce planning with your own scenarios.

We (hiring managers, executives, HR folks, and recruiters) set up expectations and define jobs based on what is traditional. We work from habit and past experience. This is not necessarily bad, but may not match our current needs or the available supply.

Some of us say that we cannot find qualified C# programmers, for example, when we all know that there are very few people with good skills in this area. We are left with choices: hunt like crazy on the Internet and elsewhere to find someone we can influence to leave their current position, wait to find a disgruntled one, or decide to do something different. Something different might be to rethink the job entirely so that it more closely matches someone we already know is available. It might be to increase the supply by developing training programs or taking on apprentices. It might be to merge the job with another one. There are lots of possibilities beyond just doing what we have always done.

Many emerging jobs require a new perspective, rather than an entirely new skill set. An interior designer could easily do the new job of home stager — someone who decorates your house prior to selling it — but for a much lower price. Many skills for jobs in the healthcare arena can be learned quickly, but are all based on a common set of skills around patient care, communication, and appreciation for and understanding of technology. The real challenge is perspective, attitude, and sometimes the willingness to work for less.

Developing People is a Requirement for Success

I spent many years working in the semiconductor industry when it faced a labor shortage of skilled process engineers and equipment operators. We eventually devised training programs that took basic electrical engineers and developed them into capable process engineers quickly. IBM trained thousands of programmers throughout the 1960s and 1970s to meet its own huge needs. At the same time, IBM and other companies quietly worked with academic institutions to develop today’s academic computer curricula.

This training and development does not have to be of the same type that a person would receive at an ordinary academic institution. In most every case, corporate training can concentrate on skills that are needed right now and forego the theoretical, the basics, and the nice-to-have-but-not-critical things. Whether or not a person goes back at some point to get those basics remains a question, but I believe that efficient training can address the labor shortage issue quickly.

In both world wars, the U.S. Armed Forces reverted to intensive training programs to fill critical positions. They have learned that this can be as efficient a process as having a huge standing army.

The trick is in accepting that there is a responsibility on the part of employers to develop the people they need. Employers should be willing to provide the training and development for the jobs they have a need to get done. Waiting for the school system or the government to do your job for you has never been a very good strategy.

We Need to Expand the Labor Pool

Many available people are older or retired and have skills that have become obsolete or are not needed right now. However, these people could be retrained for some of the open positions if we took a different attitude. Unfortunately most of us, or most of our employers anyway, would rather spend money on search fees, agency fees, administrative overhead, and advertising rather than on intensively training people with decent basic skills. Granted, we cannot train people for every job because many of them do require experience, or time in the saddle, as they say, in order to be successful. However, I think we could significantly lessen the labor shortage if we were willing to be a bit wider in our job expectations and definitions.

This is why I constantly argue for integrated staffing and development because I believe their functions are inextricably intertwined. It is very difficult to do one without doing the other. If we are to look at recruiting as a process, we are going to have to incorporate development into our staffing thinking and staffing into our training thinking.

Whether this is done through merging departments or whether it is done simply through good collaboration doesn’t really matter. What is critical is that there is a dialogue between the two functions. If you work in a small company where there are no separate training and recruiting functions, then this becomes even easier for you to do.

You need to always think whether an open position is better trained for or hired for. Is it a job that would be impossible to train someone for in a reasonable period of time, or is it a job that someone could be trained to do fairly quickly?

When management and recruiters both develop a broader understanding of the issues and step up to the fact that in many cases skilled people are just not available at a reasonable cost, then developing people becomes sensible and cost effective.

There are no labor shortages or surpluses — there are just shortages of imagination and an unwillingness to accept responsibility for filling our own needs.

What is even more interesting than the actual volume of candidates is the response I hear from business leaders as to how they are dealing with this issue.

Overwhelmed

The most common response is that corporate recruiters are now overwhelmed by the number of resumes they must review. ATS systems are bursting at the seams, with unqualified applicants who are taught to apply to every posting available in order to get their resume in front of a recruiter. Once again recruiters have to focus on the transaction of recruiting. They don’t have the time to develop the right relationships with the right candidates for the right time.

Speaking with the SVP of talent acquisition at a large financial institution, she indicated that her staff of more than 100 recruiters only review the first 30 to 40 applicants (on average) per requisition. They eliminate the remaining due to the sheet volume they must review. Whether organizations admit this openly or not, this is a common practice today that results in recruiters missing many exceptionally qualified candidates who did not happen to be one of the first 40 to apply to the position or posting.

Although a real issue, being overwhelmed can be dealt with by adding additional resources to properly review all the candidates who apply. Expensive? Yes. Possible? Also yes. Smart? Definitely yes.

Over-hiring

A second theme currently pervasive among business leaders at all levels is the concept of over-hiring during poor economic times when candidates are plentiful. As I recently listened to discussions about this topic on Sirius radio, I began to grow concerned about the impact this will have on the long-term success of certain organizations. The commentator was interviewing the chief operating officer of a large manufacturing facility located in the southern United States, who was extremely proud of the fact that he only hires candidates with a bachelor of science degree in Manufacturing or Engineering. On the surface this sounds like many organizations. The difference is that these positions were primarily production floor operators with an average wage of $12 per hour.

This well-respected COO went on to say that his organization is taking advantage of the current economic conditions by over-hiring and under paying at all levels within his organization. He continued by stating that he recently hired a plant manager who most recently was the president of his closest competitor, at a salary level that was less than 60% of his previous compensation.

I began to wonder how prevalent this attitude is today, and what the impact will be tomorrow to these same organizations. As I reflected on a number of meetings I had recently with company executives who were of like opinion to this COO, I picked up my cell phone, called into this executive’s organization, and asked for the plant manager! Within 10 minutes I was engaged with this president-turned-plant-manager, discussing his current circumstances and long-term career outlook. As I spoke to this individual (let’s call him ‘John’), I soon found out that there were many others like him within the organization who were considered over-hired and grossly underpaid.

John and these other individuals are currently learning how the organization operates, who their customers were, what their long-term strategy is, and even learned certain proprietary manufacturing methodologies used by the organization. John went on to explain that a large number of the current employees were just waiting for the opportunity to leave their current employer as soon as the economy improved, leaving the COO to find replacements, train them, and potentially lose a substantial amount of intellectual capital.

I realized after my conversation with John that the United States may find itself in an employment situation not unlike what we experienced in 2005 and 2006. Companies across the country were struggling to find the “right” candidates for the “right” amount to sit in the “right” seats on the bus. Many organizations who have taken advantage of this over-hiring mentality risk having a mass exodus of experienced talent leave their organizations as the economy improves. It might not be this month or next month. But the economy will improve, and these candidates will find better paying jobs closer to their skill levels and expertise. These companies may pride themselves on saving money at the time, but they aren’t thinking of the amount of time, money, and productivity wasted when new talent has to be hired and trained … again!

After speaking with John, I continued my search for information and validation and began speaking to both executive and middle management candidates who are either contemplating a job change or recently accepted a position that could be considered beneath their current skills and/or abilities. The overwhelming theme was that they are basically biding their time until the economy improves, at which point they would be seeking more meaningful employment. I heard comments that included “I am only here until a position opens up with our main competitor,” or “This organization has shown their lack of commitment to me by taking advantage of my situation; I will be gone in a matter of months.”

Although shocked by many of these comments, I began to understand their perspectives and began to wonder about the impact a mass exodus of candidates could have on some of these organizations. The bigger question is: what can organizations do to avoid circumstances such as these and protect themselves from a potential loss of talent and intellectual capital? In speaking with these candidates, they would tell you loyalty is built on two basic principles:

1. Fair Compensation: This does not mean pay equal to what a candidate had in the past in better economic times. Fair compensation is a fair wage for the work being performed and the impact being made on the organization with planned and incremental increases based on hitting specific and defined objectives. Being fair in tough times will create a level of loyalty that is vital, tremendously strong, and virtually guarantees the employer will keep their top talent as the economy improves and qualified candidates become sought after.
2. Honesty: If you are over-hiring a candidate for the short term, tell them. Most candidates stated they were OK with knowing that the role could be temporary, or there was little room for real advancement. Honesty from the employer regarding the circumstances of the positions and the financial situation of the organization goes a long way to building a dedicated and loyal workforce, even if for a short time.

If you are going into the market with a short-term view and the intent of over-hiring and underpaying due to the economic conditions, start preparing for future fallout and loss of employee loyalty. If you value your employees and are focused on long-term gain, being fair in such an economy will pay large shareholder dividends in the future.

There is some truth to the saying: “Short-term pain leads to long-term gain, and short-term gain often leads to long-term pain.”