Category Archives: Talent

The Talent Series VI: The Impending Crunch

THESE are heady days for most companies. Profits are up. Capital is footloose and fancy-free. Trade unions are getting weaker. India and China are adding billions of new cheap workers and consumers to the world economy. This week the Dow Jones Industrial Average hit a new high.

But talk to bosses and you discover a gnawing worry—about the supply of talent. “Talent” is one of those irritating words that has been hijacked by management gurus. It used to mean innate ability, but in modern business it has become a synonym for brainpower (both natural and trained) and especially the ability to think creatively. That may sound waffly; but look around the business world and two things stand out: the modern economy places an enormous premium on brainpower; and there is not enough to go round.

So starts the well-written article “The Search for Talent” (subscription required) in a recent issue of the Economist. You know that talent acquisition is a real issue when even the economist starts harping about it!

According to the article, companies of all sorts are taking longer to fill jobs — and, according to a survey quoted therein, many companies say they are having to make do with sub-standard employees! In addition, they say there is evidence that the talent shortage is about to get worse! In addition, the proportion of American workers doing jobs that call for complex skills has grown three times as fast as employment in general. Moreover, as other economies move in the same direction, the global demand is rising quickly! For example, where are our best construction engineers? I’d bet some of them are in Dubai working on the Dubai Mega Islands project while tens of thousands more are probably scattered on engineering projects the world over! After all, the talent crunch is worse in some countries, with Mexico, Canada, and Japan leading the pack. And when you consider that by 2025, the number of people aged 15-64 is projected to fall by 7% in Germany, 9% in Italy and 14% in Japan, talent these days truly has global opportunity.

Not to say the talent crunch isn’t bad at home … with the baby-boomers preparing to retire, some estimates predict that half the top people at America’s 500 leading companies will go in the next five years! Ouch! And the Economist is not the only publication to point out this fact in recent times, an article in last month’s Inside Supply Management, entitled “The Greying Supply Chain” notes that 76 million baby boomers in the United States will soon be eligible for retirement!

And it’s going to be just as hard to replace our leaders as it is replacing everyone else. After all, with all of the downsizing, outsourcing, and rightsizing crazes of the eighties and nineties, employee loyalty is a distant memory for many employers who will continue to lose current and potential employees to the highest bidder. (There’s something to be said for putting your employees before your stock price!)

So what can you do? First of all, you can prepare to open your checkbook. Talent is not cheap … but when you consider the ROI on a talented employee vs. a sub-par employee, it’s not as expensive as you think … especially when a talented supply chain professional can save your firm millions upon millions of dollars with just one brilliant idea. How do you attract talent? Although my last post was a bit lengthy on the topic, the answer is simple. Really simple. Be a Great Place to Work!

The truth is … talent is attracted to talent, and great places to work attract talent. This starts with an innovative culture focused on success and the people who enable it. One where employees are empowered and encouraged to try new things, even if they fail once in a while. We often learn more from our mistakes than our successes, and a failure in a small controlled experience is often worth more than a major success. (Read my earlier posts on innovation here and on eSourcing Forum.)

What can you do to prepare for the impending crunch that will result from your retiring workforce? The ISM article provides some good tips.

  • Make sure you understand the demographics of your supply chain organization.
    Who’s nearing (early) retirement? What do they do? And, more importantly what do they know?
  • Put plans in place to preserve your most critical institutional knowledge before it walks out the door!
    Your employees, and the knowledge in their heads, is your most critical asset. Give them time to document it, buy systems to help them document it, and make sure those systems are accessible by all employees.
  • If you haven’t already, put alternative work arrangement programs in place.
    Can your employees work part time? Remotely? On a project basis? Not all employees may want to go from 60 to 0 right away – you need to be prepared to take advantage of those who want to phase into retirement slowly.
  • Work on an open organizational culture that accepts and respects everyone.
    You need the knowledge of the seasoned veterans, the education of the new graduates, and the raw skills of the experienced individuals in between. Everyone should feel wanted – and needed – and each individual should be able to contribute on her or his strengths.

In parting, the following quote from the Economist article sums up the situation nicely: Eventually, supply will rise to meet demand and the market will adjust. But, while you wait, your firm might go bust.

What makes a Procurement Professional?

Even though it had a very academic bent, a good presentation at the Fourth Annual International Symposium on Supply Chain Management was Paul Larson’s presentation on “A Survey of Professionals on Topics, Tools, and Techniques for SCM”.

In this presentation, he overviewed a number of surveys carried out over the past few years that, as part of their design, attempted to determine what skills were required by a procurement professional. All of these surveys demonstrated that an effective procurement professional requires a broad cross section of skills to succeed. This indicates, at least to your author, that a procurement professional needs to be a very talented and skilled employee and that a good procurement team has the potential to be the superstars of your organization.

A study by Giunipero and Percy in 2000 identified the following skills:

  • Strategic
  • Process Management
  • Team
  • Decision Making
  • Behavioral
  • Negotiation
  • Quantitative

A study by Gammelgaard and Larson in 2001 identified:

  • Teamwork
  • Problem Solving
  • Supply Chain Awareness
  • Ability to see the BIG picture
  • Listening
  • Speaking
  • Prioritizing
  • Motivation
  • Cross-functional awareness
  • Leadership

And the recent study performed by the presenter identified the following top ten tools, topics, and techniques:

  • Communication
  • Negotiation
  • Teamwork
  • Computer (Analytics) Skills
  • Leadership
  • Contract Management
  • Price and Cost Analysis
  • Purchasing and Supply Management
  • Supplier Selection / Evaluation
  • Relationship Building

In other words, your average procurement professional needs the same breadth of skills required by a senior manager in any other department of your organization. Thus, it should be no surprise that a best-in-class procurement organization can make unparalleled contributions to your bottom line.

The Talent Series V.V: Breaking Update!

Two pieces of news to report to you today.

First of all, Jason Busch, The mighty Prophet of the spend management space of Spend Matters, has started his own mini-series on the issue. You can read “The Spend Management Talent Game (Part 1)”* through the link. I’ll summarize and post my thoughts when he finishes the series in a later post.

Also, Next Level Purchasing (acquired by Certitrek), which was recently recognized as the Innovative Business of the Year by the Pittsburgh Airport Area Chamber of Commerce (PAACC), is going to launch the first video installment of their “Purchasing & Supply Management Podcast Series” next Tuesday (October 17, 2006) on the importance of contract management. Be sure to take advantage of this free educational opportunity!

* All posts prior to 2012 were removed in the Spend Matters site refresh in June, 2023.

The Talent Series V: Driving Competitive Advantage thru an Effective Talent Supply Chain

Another great presentation at the Fourth Annual International Symposium on Supply Chain Management was Head2Head Purchasing’s talk on Driving Competitive Advantage thru an Effective Talent Supply Chain.

The presentation by Wayne Burgess & Paul Dodd, Managing Partners, pointed out that the human element makes talent procurement distinct and volatile. According to them:

  • Attraction is Critical
  • The best talent is most at risk of flight
  • Talent is extremely volatile & unpredictable
  • Ownership is complex; you need to consider
    • Physical Asset Nature
    • Knowledge and Skills Retention
    • Intellectual Property
    • Work Product
  • Appreciation in Value over Time
  • Expensive Maintenance
  • Expensive Disposal Costs

Furthermore, some markets are even tougher than others. Right now, the countries that are worst off are Mexico (78%), Canada (66%), and Japan (58%). In Canada, Calgary and Vancouver are the hardest hit (over 80% in some industries). Furthermore, each market has its own unique skill pressures.

One of the high points of the talk was where they pointed out that most companies with client acquisition issues had one or more of the following issues:

  • Poor attention to employment and job brand
  • Poor understanding of the best supply channels
  • Supply strategies are stagnant
  • Supply and Demand are rarely linked
  • Reactive recruitment is typical
  • Little attention to supply surety
  • Workforce competition is often an afterthought

Why was this a high-point? Knowing the issues allows you to identify mitigating factors. In particular, these issues identify the following key success factors in the attraction of talent:

  • marketing of employment and job brand
  • supply channel knowledge
  • effective talent sourcing strategy
  • integration with demand generation
  • effective resource planning
  • relationships
  • market and internal data management

Furthermore, attraction, through marketing and PR campaigns, is often the differentiator. Good PR campaigns that create the buzz … continuously … across multiple supply channels.

Everyone knows that some channels work better than others, but one thing that surprised me was how much better some channels were than others. The presentation highlighted the following statistics that serve to indicate just how effective your marketing dollars can be expected to be:

Channel Avg Success Rate
Referrals 50.0%
Career Site 13.3%
Agencies 11.4%
HR Database 10%
Campus Recruitment / Events 9.8%
Advertisements 5.5%

In other words, your most effective channels are often your lowest cost channels. When you consider the cost of an agency, a job fair, or an advertisement, an employee referral program, even at 5K a head, is cheap in comparison. And when you consider the national, and sometimes international, visibility of a career site, their four figure fees pale in comparison to the number of applications you can receive if your ads are appropriately placed.

The Talent Series IV: The Talent War

This series seems to get more relevant by the day. On Thursday, the European Leaders Network published “The War for Procurement Talent” where they noted that you need the right environment to attract and retain the highest calibre procurement talent. After all, talented people tend to make above average contributions to any organisation; every good business has talented and motivated people at its heart.

According to the article, the best way to attract talented individuals is to ensure that the purchasing challenge presented to the candidates is BIG and NEW. Great talent is drawn to the opportunity to work on big things and to apply new thinking. Furthermore, it states that the best way to keep them is to ensure your business has the capacity to change. Talented people need to be successful, and change creates the opportunities that talented people can exploit in pursuit of success.

However, as the article points out, not every category is big or wrought with the opportunity to change the business. So how do you attract talent to these categories? One possibility is to hire recent graduates. A recent article in Canadian Business (Sep 11 – 24, 2006 print edition) by the title of “Hire Education” offers some good advice in this area.

The article, which discussed the results of a survey of 30,000 students from 143 post-secondary institutions across Canada, jointly conducted by Toronto based Brainstorm and D-Code to guide recruiters on what the new crop of employees want found that the number one attribute young people value most when considering employment is opportunity for advancement. Since they will be starting at the bottom of the pyramid, if you have a decent size organization, you can offer them lots of opportunity for advancement – or at least change – by rotating them through different categories to broaden their skills and bring a fresh view. In addition, the number two and three attributes were good people to work with and good people to report to. So build a good team, and talent will be attracted to you.

As you have probably guessed from my recent posts, I more or less agree with these statements. Opportunity attracts, while the capacity for change and advancement retains, but, as I’m quick to point out, only if the compensation is fair and balanced. Otherwise, they’ll probably be attracted to the bigger carrot on the shinier stick held out by your competitor.