By Aaron Dodd, Operations Director of the Mindset Group

Prior to the GFC we saw articles almost daily on the so-called talent shortage. Such clichéd headlines as “Winning the War for Talent” were commonplace. My own company, Mindset used them as did everyone else. These headlines and articles have subsided of late but the talent shortage is still there. It's like a wild beast hibernating; waiting for the thaw - which will be here sooner than most Australians think. In fact, many would argue that it’s waking now as the extra cold metaphorical winter we've just experienced comes to an end.

Apart from the shortage of growth capital that the GFC has induced, the biggest threat to corporate growth in Australia (indeed the Western world) is the shortage of talent. The only reason the headlines have subsided is that the demand side of the economic equation has dropped. The supply side has not moved.

So what has caused this talent shortage?

• The populations of Western economies, such as Australia, are aging. As more of the population retire and leave the workforce, we have relatively fewer productive members remaining in it.

• The dwindling labour supply is increasingly less qualified. In Australia this is the result of decades of financial neglect of the country's schools, TAFEs and universities. Both Labor and Liberal parties have been guilty of this, although under John Howard, the issue  became noticeably worse with a corresponding increase in expensive private school enrollments as desperate aspirational parents attempted to provide their kids with an education supposedly better than the States' systems (although often not).

• The increasing affluence of Australian society has meant that most people are wealthier. Many formerly working-class families are now economically classed as “middle-class” although most would not realise or acknowledge it. What this has meant is that their children now have different career expectations  and are now no longer interested in the sorts of labour-intensive jobs their parents may well have been happy to accept at their age.

What is the effect of the talent shortage? 

 

• Like any economic equation the shortage of talent has put pressure on its cost; i.e. wages have increased relative to their productive merit. This has in turn put pressure on the prices of services and manufactured goods. In numerous cases it has become more cost effective to manufacture goods in talent rich, low-cost countries such as China and India. Even services are now often outsourced to call-centres in India, the Philippines and others. 
• If a business cannot pay more for its staff, find more productive ways of utilising their people or relocate then it is likely to be in serious financial trouble in the medium-term. As we move out of the effects of the GFC, there will be a significant period of employment turmoil within Australia. Many unhappy employees who were biding their time will start actively looking for alternative employment. Adding to this, as employer confidence returns they will start seeking more employees to help them grow their businesses...i.e. the demand side of the equation will rise again increasing the gap between the static supply side and the rising demand side still further.

As an employer, what can you do?

• Proactivebusinesses are focusing on their existing staff NOW. They are putting in place whatever measures they can to retain their staff and minimise the losses they expect from the coming turmoil. My company Mindset, has been active with numerous clients determining staff engagement levels, coaching managers to be better motivational leaders and putting in place effective performance management, feed-back and feed-forward systems.

• Other businesses are utilising Mindset's talent-mapping processes to effectively understand and develop relationships with the key people in their sector so that when they need those people they can simply tap them on the shoulder and draw them into their businesses with minimal fuss and expense.

•  Many organisations are reviewing their relationships with their recruitment suppliers. They are re-establishing relationships so that when the need comes they can speed up the briefing process. Most companies are now looking for relationships with highly consultative recruitment suppliers recognising that traditional transactional contingent recruiters offer little value, especially when the going gets tough and they have to find candidates from outside the industry or from alternative more innovative sources.

   

For maximum strategic impact these actions need to start NOW. For a confidential discussion on how Mindset's transformation, talent and technology divisions can work together to deliver an integrated approach to delivering  solutions to your business's forthcoming recruitment and retention challenges, please contact us. 

HR Daily have written an article explaining that the brands of top-performing companies are characterised by an emphasis on the experience of employees instead of customers.

The article explains that the “best employers” are differentiated from other employers in five key ways, one of these areas is leadership.

Leadership commitment
Leadership commitment is the fundamental starting point for high-engagement employers, David Clarke says. "This commitment is not about saying the right things, but exhibiting behaviours and making decisions that clearly signal people are their greatest asset."

The behaviour of leaders needs to demonstrate that developing and retaining strong talent is a critical element of business success, he says, "but their role goes beyond this. Leaders in 'best employer' organisations play a pivotal role in defining and championing the organisation's values and building a culture and an environment that values people".

Leaders, he says, set the tone through their openness, involvement and leadership style. "While they instil a strong sense of accountability, they also make a commitment to growing and stretching their people."

Clarke notes that while senior leadership is generally ranked in the top five most important engagement drivers during stable times, it ranks in the top two during times of change.

"Clearly, in the current economic environment, it is critical for leaders to demonstrate their commitment to the people in their organisation, and ensure that this message is effectively cascaded to managers."

Atlassian are a Sydney-based, enterprise software company. They provide products to over 15,000 customers in 113 countries. They are currently recruiting 32 engineers for their Sydney office.

Atlassian have set specific rules for recruiters who want to work with them. Calling them Bounty Hunters and they've set the following recruiting rules:

Rule 1: You can't empty your candidate database into our inbox.
The first time you send us candidates, you can only submit a maximum of 4 candidates (across a 5 month period).

Rule 2: Great candidate, means a great relationship
Make sure that these candidates are awesome. If one (or more) of these 4 candidates is hired, you are eligible to submit more candidates and become our recruitment partner.

Rule 3: Unsuitable candidates, sorry mate!
If none of these candidates you put forward is good enough, then we must unfortunately part ways.

More information can be found on the atlassian website.  

Our response to this is:

Mindset's talent division operates with a different process and methodology to most. Mindset takes a long term consultative partnership approach with its clients to ensure that the role is scoped in its entirety using our High Performance Role Clarity (HPRC) Definition process.

This takes in not just skills, qualifications and experiences but also maps out the ideal personality profile for that particular role at that point in time. The HPRC takes into account the multiple and often conflicting requirements of the role’s various stakeholders.

Once the role is scoped Mindset then goes through a comprehensive talent sourcing exercise so that we then have a pool of candidates to select from. Mindset then works with its clients through a structured screening interview, assessment, debrief and reference checking process to be able to make a final recommendation to our clients.

The HPRC, our process, the assessment etc all create significant value for our clients, not least of which is that they end up with a candidate who will deliver the required results in a shorter ramp-up time and with an excellent fit for the company culture, and a much longer “guarantee” period. However to deliver this result, a Mindset consultant must also do significantly more than a conventional “flick & stick” recruiter and as a result we have to charge more for our services, and only a retained basis.

Throughout the GFC our recruitment volumes have increased as a result of this focus on creating client value. Mindset has been recruiting new consultants to keep up with the volume of work while others have been shedding staff.

Our take on Atlassian is that it is an approach that will work to screen out the vast bulk of contingency recruiters who add little value to their clients’ businesses. However, the Atlassian approach also takes little account of innovative more-value added recruitment and selection approaches. It tars the whole industry with the same brush.

Mindset won’t participate as 1) the fees aren’t worth our efforts and 2) Atlassian probably wouldn’t appreciate the value of our approach and therefore be prepared to pay what our service is worth....and hey, we’re cool with that! Some companies just aren’t ready for us.

Human Resources IQ has written an article claiming that the current economic situation is creating difficulties for human resources leaders.

The economic challenges that we are facing are creating a difficult environment for human resources leaders. Many companies are simultaneously experiencing surplus and scarcity of talent and are struggling to find the right human resources delivery models, the right labor and organizational structure and solutions for attracting and retaining key talent. In recent years, a distinct trend has emerged. More companies are selecting human resources leaders who do not come from traditional human resources backgrounds. An unscientific look at recent changes in human resources leadership shows that nearly two in five human resources leaders have come from outside the human resources function in the past five years versus pervious trends of one in 10. Reasons cited by corporations are many, including:

• An increasing need to get the people part of the business right
• Concern over the ability of traditional human resources leaders to understand the company and deliver business-oriented solutions
• “Human Resources Transformation” initiatives that are too slow to deliver results
• An inability of human resources to get costs under control
• A lack of robust people analytics

The emerging model is to place a strong operations leader in the top human resources spot and surround him or her with the appropriate experts who have deep functional knowledge. Operations leaders tend to have demonstrated strong people management skills in their roles and are seen as strong people managers. The expectation is that these leaders can model the behaviors of good managers and better balance business needs with more traditional human resources concerns. In addition, there is a strong focus on operational leaders who have led business transformation efforts and have a strong grasp of metrics and cost-cutting. Their mandate is often to simultaneously make human resources more efficient and effective with a strong focus on improving business results.

This trend has been enabled by a number of changes in the vendor marketplace, including the evolution of both the human resources outsourcing and human resources systems markets. Companies have more and more options for getting core human resources services and technology delivered and can find others to do many of the transactional activities. This allows these operational leaders to leverage their external relationships while focusing on the most strategic human resources priorities for the business. In addition, having the right staff with the appropriate expertise is critical to making these leaders successful.

Read the full article.

HR Daily has published an article about how to emerge from the GFC as a leading employer and how important authenticity, integrity, transparency and substance is for your company. 

Executive bonuses will tumble and "people factors" come to the fore as leading employers emerge from the global financial crisis, according to a new book on organisational change.

"One of the impacts of the GFC has been the investor angst and community outrage concerning the payment of obscene bonuses to some executives," says corporate psychologist Colin Beames in Transforming Organisational Human Capital (ISBN 9780980644203).

"People are now no longer in the mood to tolerate hypocrisy, lack of transparency and actions that promote blatant self-interest.

"The pendulum is shifting back in favour of authenticity, integrity, transparency and 'substance' over 'spin'."

In a post-GFC world, Beames says, the shareholder will no longer be king.

Performance standards that push for risk-taking and expediency will be discouraged, he says, and the fixation on short-term profits will necessarily diminish as stakeholders are forced to adopt a more sustainable perspective.

"Investors will come to realise that it is the less tangible and constantly evolving people factors that are increasingly the drivers of value and the developers of competitive capacity."

People management, accordingly, will become a core operational process - as opposed to a support function - as talent emerges as the key corporate asset, Beames says.

Employers restructuring - or leaping into the fire

According to Beames, the current economic climate provides CEOs and executives with a perfect opportunity to restructure, outsource non-core activities and discard unsustainable business models or unprofitable products and services.

"It provides them with legitimacy for change and possibly the pursuit of new opportunities."

Some employers, however, have leapt from the frying pan into the fire, Beames says, with impulsive and uncoordinated responses to the downturn, including:

• the slash and burn approach to labour cost-cutting, in which employees in more critical, specialist or core roles are let go as the result of an arbitrary percentage decrease;
• indiscriminate outsourcing, resulting in the loss of relationship capital (between the company and its clients), critical skills, intellectual property and "coal face" control;
• ad hoc employee-benefit cuts, such as the axing of flexible work arrangements, which lead to disengagement;
  recruitment freezes, resulting in the neglect of critical roles or a drop in performance due to the redeployment of unsuitable people; and
• the "peanut butter" (or spread evenly) approach to salary cuts, encouraging high performers to seek employment elsewhere.

The crisis, Beames says, has left an "indelible footprint" on the corporate culture, and employers must play by a new set of rules.

He says the age of "short termism", or get-rich-quick schemes, is over, and that sustainability will hinge on assessing and mitigating risk and more stringent corporate governance.

The "cult" of the CEO - which Beames describes as "a simplistic and convenient perspective where the CEO's impact on an organisation's success is accorded more weight than it deserves" - will be replaced by a focus on the team, and compensation systems will be overhauled so that executive pay is aligned with sustainable profits.

The current debate over proposed legislation to limit extravagant remuneration practices (such as excessive executive termination payments, see related article) is "clear evidence of the winds of change", he says.

The future of management

The traditional work of management will be performed less by managers as employers transform post-crisis, Beames says.

"It will be pushed out more to the periphery and embedded in systems via technology," he says.

"Decision making will be more peer-based with power based on competence, and less on authority vested in organisational structures."

Managers will have to earn authority, he says.

HR managers and other leaders must employ a more collaborative, transparent, and respectful approach in order to motivate staff.

"The hope is that more enlightened approaches to managing people will be adopted," Beames says.

"Irrespective of their status, one universal should prevail - that of treating all employees with honesty and respect."