During the recession, companies had to make tough decisions to survive tough market conditions. Many were forced to cut costs and become more efficient, with much of those efforts centered on headcount reduction.
While much of these efforts have been for the good of companies and enabled them to compete better globally and increase their cash reserves, there are some longer-term consequences that will most certainly hamper and even prevent them growing and competing over the next five years. It all has to do with the war for talent and the fact that many companies have reduced their staffing levels to a point where they no longer have a bench to support growth or to even replace employees who leave the company.
And they need that bench, as the “A” players who stayed put during the recession now are seeing better opportunities elsewhere, and Baby Boomers who delayed retirement are now reconsidering. Yes, the war for talent is on.
And many companies are already behind the eight ball in recruiting talent to replace these workers. How quickly a company reacts starting today both in recruiting top talent and ensuring they have the required skills and institutional knowledge will have a huge impact on their growth and profitability over the next several years and beyond.
Here’s what you can do.
Let’s say your company was able to survive the past five years by improving operations and reducing costs, including headcount. Like many companies, you are in an envious situation sitting on significant sums of cash reserves — just in case the country slips into another recession.
First, I would increase communication with all employees — make them aware of how the company is performing, the competitive challenges ahead and how they are part of the solution to gain buy-in and commitment to the company.
Second, I would re-recruit your star players. Don’t assume last year’s bonus is enough. Communicate and invest time with them. Use some of that cash reserve you have built to invest in developing your workforce. Investing in your employees will also improve retention and enable your company to compete more effectively in the global marketplace.
Now for that somewhat contrarian actions — increase your workforce strategically. Invest in recruiting “A” players and developing a bench — even if it costs you a short-term reduction in your profits. Partner with your HR team to sharpen the succession planning process and recruit top talent to fill key holes in your bench. Recruit new talent to the organization, even if it means over hiring. It creates a bench to draw upon to support your growth for the future. Encourage select baby boomers with immense and valuable institutional knowledge to defer their retirement or to work a part-time schedule. Pair these baby boomers with your less experienced workforce to help their assimilation and the passing on of valuable institutional knowledge. While this may increase your payroll expense in the short term, it helps prepare the next generation workforce who are lacking in certain skills and institutional knowledge to be effective.
Many companies have addressed their talent shortage by establishing their own in-house contingent workforce to supplement their core workforce. Such an effort could also help address knowledge retention by integrating retirees and other alumni. For certain functions with uneven workflow, this is a viable solution. For more key leadership positions, flexing with a temporary workforce is not an effective solution, though.
One solution to increase your workforce strategically is to develop a strong partnership with your retained executive search firm. The best executive search firms will partner with you in determining key bench positions. Based on their knowledge of the marketplace and experience working with other companies, they are well positioned -to offer guidance on organizational structure, job trends and what great talent looks like in the marketplace. This guidance helps you make strategic investments in talent as opposed to a more costly shotgun approach to building a bench.