Mid-Size Companies Choosing Tech Over Talent

Oct 26, 2011
This article is part of a series called News & Trends.

“Technology — rather than hiring — is on the minds of most executives of mid-market companies.”

So says Mid-Market Perspectives: America‘s Economic Engine – Competing in Uncertain Times, a Deloitte survey of almost 700 executives at companies with revenue of $50 million to $1 billion.

A majority of the executives expect both revenue (61.2 percent) and profitability (52.6 percent) to increase next year, despite limited faith in any significant improvement in the national economy. What drives their optimism is a continued focus on cost controls and increased productivity.

Of the 70 percent of executives reporting an increase in productivity, the average saw a 6.1 percent improvement since the beginning of the recession. The majority of executives credit the rise to improvements in business processes (62.2 percent) and technology (50.3 percent), especially the automation of business operations and increased use of data analytics for business intelligence.

Less than 30 percent of the respondents attributed improved productivity to making better hires (29.7 percent) or better workforce training (28.6 percent). As the report declares, “if a job can be automated — if it can be reduced to an algorithm, an application, or a set of instructions — it probably will be.”

While 44 percent of the respondents expect to increase headcount of full-time employees next year, hiring is being restrained, 45 percent say, by the need to wring more productivity out of the company. Labor, say 49.3 percent, is the cost the company is most focused on controlling.

Another problem, survey respondents identified, was the challenge in finding new workers who can hit the ground running. The Deloitte report says 47 percent of mid-market business leaders report difficulty finding employees with the skills and education to become productive immediately.

This is becoming a hotly argued issue at ERE’s sister site, TLNT. A post by editor John Hollon asks, “Are We Short of Skilled Workers, or Is it Just a Training Problem?” The post amplifies the discussion that began here with a reference to an opinion piece in The Wall Street Journal by Dr. Peter Capelli.

He argued that employers are wrongly blaming schools for failing to train workers. “The real culprits,” Capelli says,” are the employers themselves.”

What’s interesting to note in the Deloitte survey are the responses to the question, “What organizational changes, if any, has your company attempted to implement since the onset of the U.S. recession?” Of the eight options, 60.8 percent chose “Improved business processes.” That would be where streamlining workflow and automation fit in — essentially the tech over talent decision.

“Improving training” was selected by 37.8 percent. “Higher standards, in terms of skills or education, for hiring new employees” was the choice of 35.2 percent.

This article is part of a series called News & Trends.
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