Talent Shortage? The Truth About the War for Talent

Looking for the right person for the job can be a daunting task. When seeking out a key hire, the stakes are high and the number of applications coming in is often low. In fact, according to a Manpower Group study, 58% of employers are having difficulty finding skilled workers. Globally the number isn’t much better, with an estimated 40% of global employers reporting talent shortages both for skilled and unskilled labor.

The news doesn’t get better from here. According to a recent Gallup study, 50% of millennials do not plan on staying at the same workplace for more than a year, and 6/10 are open to switching jobs.

Does talent even matter? The answer is a clear yes. A 2016 Harvard Business Review article describes talent as even more important than people think. In a world where the 20% most talented people can account for 80% of the productivity, getting the right people for the job is more important than ever.

“If you can identify the vital few in a company, those are your most-talented employees. And your task is to predict who they will be before your competitors do. So that’s a very simple rule, you know, that talented people are the vital few.”– Tomas Chamorro-Premuzic, professor of business psychology at University College London

The paradigm shift redefines the traditional hiring process, where work culture matters more for potential and current employees than ever before. So how can companies adapt? There are essentially three main options:

1. Managers must adjust their expectations

“You can’t snap your fingers and invent the parts you might like to incorporate into your newest product design. They have to exist first, before you can use them. The same goes for people.”– Liz Ryan, Founder and CEO at Human Workplace

I can draw from my own personal experience here when I used to be a digital marketing consultant. Oftentimes clients and prospects alike were missing the talent resources needed to run a proper online marketing operation. This meant a team of professionals including a good content writer, a web designer, a performance marketer, etc. When I would point that out, their response was to create a job ad that sought one individual with several years of experience in SEO, html, javascript, Photoshop, Google Ads, community management, Analytics and perfect grammar knowledge.

From my calculations, this person had to be more or less 200 years old and feed themselves off of sunlight. Because the salary offer was usually inversely proportional to said requisites.

The point is, part of the reason why there is a talent shortage is because some managers are not given reality checks often enough by their HRs.

Creating a realistic job profile

When creating a job profile one should do two things:

1. Do a self-reflecting exercise by asking yourself ‘why’ for each skill listed. Try to answer with specific projects/tasks you envision that person executing on their work routine in a realistic timeframe.

2. If possible, consult with actual experts on the field you are hiring for to have a better grasp of what’s feasible and have your conceptions from point 1 checked.

If you can’t come up with specific tasks or if the amount of time it would take to perform them is longer than realistically available within the expected timeframe, you have a problem.

2. Offer more Competitive Wages

“Development can help great people be even better–but if I had a dollar to spend, I’d spend 70 cents getting the right person in the door.”–Paul Russell

In the past, when companies wanted to attract better people they raised wages. Even today this is a viable solution in some cases. People will move to where they can increase their living standard and it’s hard to fault them for that. The other nice thing about this solution is that it doesn’t require that much work.

Low paying blue collar jobs are perhaps the best example of this. A company like Walmart, the biggest employer in the world, has the ability to raise wages for cashiers in order to get more applications. Most companies that employ cheap labor can carefully manage their finances to overcome labor shortage.

For many companies, however, raising wages just isn’t a viable solution. Raising wages is usually expensive, and companies still run the risk of not finding the best people. Beware this should not be an excuse to offer Junior-level salary to Senior-level talents. Just like with any other product or resource, most of the times you get what you pay for.

This leaves employers looking for another option.

3. Solve the shortage by investing on Talent Development

“We all need people who will give us feedback. That’s how we improve.” – Bill Gates

Younger workers are looking for more flexible workplaces, free of the rigid schedules of the past. Compensation is still important, of course, but feelings of purpose, satisfaction, and growth matter more and more to young employees.

Research points to lack of growth opportunities as one of the other main reasons why employees leave early on after joining a company. David Foote, chief analyst and research officer at Foote Partners, says “it doesn’t matter if they like what they’re working on, who they’re working with and are compensated fairly or more than fairly, they have to feel there’s something in it for them personally,”.

He’s right.

Employees who lack room to grow will look for work elsewhere. Making sure employees are growing at work is a key component in keeping your best talent and avoiding shortages.

Real development only happens through proper feedback. Recognizing the problem areas early through constant communication between you and your talent can help the company’s bottomline as well as their personal growth.

Likewise, the ability to express gratitude towards another person is a very important part of positive psychology, according to professor Martin Seligman from the University of Pennsylvania. We also know that recognition is the basis for engagement and when employees aren’t engaged at work, it hampers their productivity.

Not finding the right people for the job can prove to be expensive. According to Korn Ferry Group, there will be a global talent shortage of more than 85 million people by 2030 which may result in a loss of about $8.5 trillion in unrealized annual revenues. With numbers like these, it’s no wonder why many of the world’s most innovative companies are changing the way they think about new hires in order to stay ahead.

For more tips on how you can improve your company culture and increase employee engagement, be sure to check out some of our other blog posts.