News Flash: Why U.S. Companies Are Losing the War for Talent

In the May 13 Los Angeles Times, a front-page story described how top-tier college grads were making decisions about which of their many job offers to accept. The article started with the idea that when the demand for talent is far greater than the supply, companies need to be more aggressive and more creative in their recruiting efforts. It went on to say that with the first wave of baby boomers starting to retire, and with fewer replacements graduating from college, demand would continue to outpace supply for the foreseeable future.

With this scenario at play, the grads involved were going to be choosier. No surprises here. What was a surprise, though, was how they were choosing one job over another. While the company brand was important, it was not the overriding criteria. The actual job itself and who the person they would work for were far more important. This is especially vital as companies develop their recruiting strategies. Top Gen-Ys decide to take one job over another based on the specific challenges the job involves, the chance to grow, the chance to be mentored by a strong manager, an opportunity to learn new skills, the opportunity to work as a team of other top people, and the chance to do something important. Oddly – or, maybe not – this is pretty much the same criteria which top experienced people use when accepting a new offer. Look at your online job descriptions and the documents you provide to potential new hires, whether those hires are entry-level or experienced professionals.

Do your online job descriptions meet the more discriminating selection criteria that top people use when deciding to explore new career opportunities?

When you make offers to top performers who have multiple career choices, including taking a counteroffer from their current employer, do they have a clear understanding of the specific challenges and opportunities involved in the job?
Are the criteria written and in a form that the candidate can use to present a persuasive case to his or her friends, family, and advisors as to why your offer should be accepted?

If you answered no to any of these three questions, you are probably losing the war for top talent. Now for another newsy recruiting idea. In the Sports section of the same LA Times, there was a story about David McNab, the assistant GM for the NHL’s Anaheim Ducks hockey team. For the non-hockey fans, the Ducks are considered the “moneyballers” of the NHL. (Moneyball: The Art of Winning an Unfair Game, by Michael Lewis, describes how the Oakland Athletics have successfully used non-traditional criteria to assess talent.) The article went on to say that the Ducks have drafted some great, young, unnoticed talent due to McNab’s relentless recruiting efforts and his ability to look beyond the traditional resume. Many of his best hires attribute their signing with the Ducks despite other offers to McNab’s personal involvement. Ask yourself these follow-up questions:

Are your hiring managers totally committed and personally involved in the hiring and recruiting process? Will they go out of their way to meet candidates at odd times; will they conduct exploratory interviews, and will they meet for dinner and bring their team to make the offer?
Does your online selection criteria allow for people with great potential but not the exact experience to easily apply, or are they automatically excluded either by poorly written knockout questions or by job descriptions or managers that say candidates must have this or that?

If you’ve answered no to these first five questions, you are now losing the war for talent as you ignore great people who don’t find your opportunities too exciting or great people who have non-traditional backgrounds. It remains to be seen if you’ve lost the war completely. The final five questions will help clarify this. But some more news first: In the April 26 edition of The Wall Street Journal, Gary Hamel had a great piece in the editorial section titled “Management ? la Google.” (Hamel is a guru in the business strategy space, and if you want to be at the strategic table, you need to read everything he’s written at least twice.) Here’s the paragraph that says it all:

The ultimate test of any management team is not how fast it can grow its company in the short-term, but how consistently it can grow it over the long-term. In a world where change is relentless and seditious, this demands a capacity for rapid strategic adaptation. In recent years, we have witnessed adaptation failures by incumbents across a wide variety of industries: airlines, pharmaceuticals, automobiles, newspapers, and recorded music. In many cases, companies haven’t been changing as fast as the world around them. What the laggards have failed to grasp is that what matters most today is not a company’s competitive advantage at a point in time, but its evolutionary advantage over time. Google gets this.

The article is worth reading (more than twice), but here are a few questions that relate to how well your company is handling the increasing rate of change required to consistently hire top talent now and in the future.

Are there programs in place today that are improving your quality of hire and time to hire? If you can’t tell if you’re hiring better people faster, you’re not measuring the right stuff. The key here is to determine if you’re increasing your market share for good talent. Some indirect clues that you’re doing well are massive reductions in turnover rates, significantly increasing client satisfaction scores, and more referrals of good people. If you’re flat in any of these areas, things will rapidly begin to get worse.
Do you have a forward-looking hiring and workforce planning process in place that overwhelms the status quo? As a minimum, this requires a rolling one-year forecast by quarter detailing future hiring needs by position which is updated quarterly. If you have a workforce plan in place, do you compare forecast-to-forecast changes for future quarters in order to see changes in hiring requirements before they need to be filled? This is also how you move from a reactive to an anticipatory hiring process. Without a plan, all you do is react. There is no recorded war in history that was won by the opponent who was reacting.
Are you using aggressive talent-centric sourcing techniques like the building of talent pipelines and proactive employee programs? If you’re not building a future pipeline of talent, you’re not even in the talent hiring game. If this pipeline is increasing and you’re filling it with good people, you’re increasing your supply of talent before you need it. This is how you get ahead of the power curve. You should be filling at least 35-50% of this pipeline with referrals from your current employees. If you’re proactive, you should be asking your current employees for the names of all of their best coworkers from previous companies, especially those not looking. Then, you can network with these people and get even more names of top people to add to the pipeline.
Are you hiring experienced recruiters who have their own way of doing things, or exemplary salespeople who can be trained to become great corporate recruiters using the new model? Are your recruiters holding you back by resisting change? Do you have a collective vision of where your recruiting department is going based on the “best practices for hiring in the 21st century” – or have you hired a bunch of “independent” independent contractors? If they’re all complaining that they don’t have the right tools, have too many reqs to fill, don’t think things are getting better, or they turnover quickly, you’re definitely losing the war for talent. Your recruiters are your front line, and they collectively offer the best gauge of how well your company is doing.
How well are you doing on retention, diversity hiring, employee satisfaction, percent of offers accepted, ability to get more resources, speed of change, and influence of the recruiting department to affect company direction? Is your recruiting budget increasing faster than your hiring needs? If these trends are not moving in a positive direction, you don’t have a chance to win the war for talent.

How many yeses did you get on these 10 questions? If less than five, you are losing or have lost the war. If you’re losing, you might want to reconsider this advice from Gary Hamel:

In many cases, companies haven’t been changing as fast as the world around them. What the laggards have failed to grasp is that what matters most today is not a company’s competitive advantage at a point in time, but its evolutionary advantage over time. Google gets this.

What is going to be your company’s competitive recruiting advantage in 2007 and 2008? If you don’t know yet, it’s almost too late.