I recently read an article from the Harvard Business Review titled “Manage Your Talent Pipeline Like a Supply Chain”, by Joseph Fuller and Matt Sigelman. The growing deficits in available employee labor as a resource are striking. At the same time, demand across industries is rapidly increasing, but not for the typical reasons you think of given the global pandemic and “the great resignation,” like retirement, childcare demands, and desired flexibility options.
In addition to shortages, Fuller and Sigelman provide details of a growing skills gap impacting the labor deficit. New entrants to the labor market are obtaining certifications, community college degrees, and even four-year bachelors’ degrees that do not provide the skills employers seek. Merely “18% of certifications issued through career and technical education programs were actually being sought after by employers.” For example, in the Logistics field:
“Today, almost 20,000 logisticians are expected to leave the field each year, and we have a projected growth of 56,000 new jobs over the next decade — but only 10,000 people are graduating each year with logistics degrees. More broadly, consider this: The average job has seen 30% of its skills replaced during the past decade, far outpacing change in typical training programs. The graduates of those programs, in other words, aren’t getting trained in the skills that employers are going to need.”
The three tips they give for companies being prepared with the workers and skills they need now and in the future are:
1. Employers must work actively to draw from a broader talent base.
2. Employers must invest in “growing their own.”
3. Employers need to implement fundamental principles of supply-chain management for TA.
In my experience with our growing company over the past ten years, I have never experienced a greater need to follow these tips. The Logistics situation hits very close to home. The skills Personify needs from employees are not taught in any programs, so we have built a more robust internal training system for employees that includes a dedicated in-house trainer. We know that in order to keep up with the demand of the industry and staffing needs, a significant portion of our employees’ industry knowledge must come from within, and those employees are only going to be qualified to perform and progress if we dedicate ample resources to training the necessary skills.
Once employees have gone through the initial phase of the training program, they continuously receive feedback on performance and development via routine check-ins with their managers. We also know that the markets and industries we recruit in are constantly fluctuating, and it is imperative that our continuing education methods within the business stay on pace with that. Managers are equipped with various quality tools to promote continuous improvement along with continuous learning, including monthly Quality Management System review meetings, QDIP walks, a standard work, and incremental improvement programs, to constantly advance our processes and remain a top service provider in the RPO space.
And just as the article implies, when you’re able to continuously teach employees once they’re hired, it allows you to broaden the scope of your candidate search initially and expand the relevant candidate population. All in all, these methods create a sort of employee supply chain method that helps to cut down that growing labor deficit we’re all facing.
We are confident in recommending this supply chain method due to our success in implementing these steps in 2021, a year with unheard of employee turnover and supposed to be nearly impossible to hire recruiters. Yet, we successfully onboarded over 50 new employees into Personify and trained them with our recruiting expertise. By applying this TA supply chain method to our own hiring and development at Personify, we always have a team of expertly trained and prepared employees available, ready to deliver world-class recruiting services to our customers.
See Harvard Business Review’s article “Manage Your Talent Pipeline Like a Supply Chain” below.
Manage Your Talent Pipeline Like a Supply Chain
Supply-chain disruptions are on everyone’s mind these days. But there’s one that few people are thinking about. It involves talent, not goods — and it poses a serious long-term threat to our economy.
In the wake of the pandemic, employers are struggling, with increasing exasperation, to find the workers they need. Commentators ascribe the problem to the Great Resignation, a phenomenon comprised of such contributing factors as a surge in retirements, a shortage of affordable childcare, and the reevaluation that many people are making of the role of work in their lives.
But structural shortcomings underlie all of that: We don’t have a good supply chain for talent.
With supply chains, you get what you plan for. Think about, say, ball bearings. To ensure a ready supply, Ford coordinates with its suppliers years in advance. How would it work if the company were only to coordinate with those suppliers on a short-term basis, reaching out at the beginning of each month to source only what it needed for the next month? Anybody with even a rudimentary grasp of business will recognize that idea as absurd. On such short notice, Ford’s purchasing agents would have trouble identifying vendors who could meet the required volume and specifications at a competitive price. But here’s the thing: More or less, this ad hoc approach to sourcing is how most companies today are trying to meet their demand for talent.
Ever since the 1960s, we’ve witnessed a slide toward increasingly transactional employment relationships, with the expectation being that companies can hire and fire at will. In this kind of environment — where there are no pensions, commitments to training, or promises of employment stability — workers naturally change jobs whenever better opportunities present themselves. Some observers argue that such a model offers greater efficiency and flexibility. That may be true, but the ability to staff up on demand depends on the availability of willing workers — a resource that, thanks to the Great Resignation, we only have in very limited supply today.
When labor is scarce, wages go up. But hiring also takes longer, and that matters greatly, because it compromises output. Workers who leave voluntarily aren’t soon replaced, and in their absence the workers who remain have to carry a greater load. This prompts some of them to leave themselves.
Absent a major change in immigration policy, our supply of talent is going to become even tighter than it is today. Between 2011 and 2021, nearly every county in the U.S. saw its working-age population decline. The pandemic is now accelerating these losses. The Pew Research Center estimates that 1.1 million more people retired than expected in 2020, while Bureau of Labor Statistics data show that 2.4 million women dropped out of the workforce during the first 12 months of the pandemic. The number of 18 year olds joining the workforce is also shrinking, which portends even less availability ahead.
Fighting the demographic tide would be hard enough. But our education and training system, the market’s primary pipeline of talent, also isn’t in sync with demand. An ExcelinEd Foundation and Burning Glass analysis found that just 18% of certifications issued through career and technical-education programs were actually sought by employers. At the same time, in some critical occupations, the number of graduates is insufficient to keep up with expected growth.
Consider this example, which relates directly to our current supply-chain troubles. Today, almost 20,000 logisticians are expected to leave the field each year, and we have a projected growth of 56,000 new jobs over the next decade — but only 10,000 people are graduating each year with logistics degrees. More broadly, consider this: The average job has seen 30% of its skills replaced during the past decade, far outpacing change in typical training programs. The graduates of those programs, in other words, aren’t getting trained in the skills that employers are going to need.
The problem has gotten so bad that many tech vendors have had to create their own digital training and certification ecosystems in order to ensure a sufficient supply of talent. They’re doing so to meet not only their own needs but also, perhaps more important, the needs of their customers. Why does Amazon invest so much in its AWS Training and Certification program? Why does Salesforce.com so heavily promote its Trailhead learning platform? In no small part, because they know companies won’t buy software if they can’t hire enough workers who know how to use it.
To return to a healthy balance of jobs and people, we’re going to need to move beyond the ad hoc strategy that most companies have been employing to source their talent.
Managing the flow of skilled workers into the market is a multistep process that requires careful orchestration. And keep in mind: Once you lose workers, they don’t just reappear. If employers want to ensure that they have the workers they need not only for the present but also the future, they’re going to have to get better at sourcing their own talent and actively developing their employees’ skills.
1. Employers must work actively to draw from a broader talent base.
This means recruiting from a wider set of feeder jobs and a wider set of geographies. Some candidates with unconventional backgrounds may not have all the skills needed for a job. Can the rest be trained? Employers will also need to reevaluate job requirements to determine which are truly necessary and which are “nice to have.” Our research shows signs of early progress, with 62% of occupations less likely today to require college degrees than they were in 2017. If that trend continues, over the next five years employers will open 1.4 million jobs to those without a degree.
2. Employers must invest in “growing their own.”
In many companies, employees find that the best way to move up is to move out, driving up turnover. Only 31% of workers with expertise in emerging technologies today, for example, were promoted from within. Employers need to invest in their workforce in the same way that they invest in R&D, by recognizing that near-term investments yield earn long-term returns. Workers can’t be trained overnight, so companies should invest in preparing them as soon as it becomes apparent that important new skills are emerging. It will always be wiser to have too much talent, too early, than to being reduced to playing the spot market. Building from within also means showing workers how they can move up within the company, giving them a reason to think twice about the attractiveness of jumping ship. The best companies make planning for promotion a part of each performance review.
3. Employers need to implement fundamental principles of supply-chain management.
In the case of talent, these are often community colleges and technical-training academies. As with other suppliers, companies need to share detailed job specifications with colleges, meet regularly with them, provide them with access to relevant experts and technology, discuss their emerging requirements, evaluate their reciprocal performance, and offer data-driven feedback. That’s especially important given the persistent misalignment between America’s community-college system and the job market. A majority of schools emphasize facilitating the transfer of their two-year, associate’s degree students to four-year schools, so they might enjoy the full benefit of college-graduate earnings premium. That’s a noble ambition, but only 17% of community-college enrollees make it all the way to a bachelor’s degree — even though there’s clear evidence that when their programs offer career and technical education, they consistently produce materially better income outcomes than the general-education programs that a majority of students pursue.
Americans have never been willing to accept shortage as a permanent reality. Even though the U.S. labor market is tight, we need not assume that an enduring talent shortage — and the shortage in goods and services that it begets — is foreordained. A complex modern economy requires sophisticated, expertly managed supply chains. It’s time to start building a good one for talent.
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