Talent in 2017 – Private company issues and opportunities | Deloitte US has been added to your bookmarks.
Talent in 2017
Private company issues and opportunities
The US labor market is tighter than it’s been in years. After unemployment peaked at 10 percent in October 2009, it’s been on a steady descent; by January 2017, it had dipped all the way down to 4.7 percent.1 As the labor market tightens, small- to midsized businesses report having a harder time finding qualified workers. The share of small businesses with few or no qualified applicants for job openings recently hit a 17-year high in November 2016.2
These findings are backed up by Deloitte’s annual survey of the US middle market, in which more than a quarter of the respondents listed skills shortages as a top obstacle to their company’s growth.3 With nearly half of those companies expecting to increase their full-time headcount in the year ahead, the question becomes how they are going to find and retain top talent, particularly among younger people just entering the workforce.
The unprecedented change of pace in the development of new technologies has caught many private companies flat-footed, as the explosion of new innovation has outpaced both business productivity and the ability of firms to keep up. One challenge they face is that the younger, tech savvy workers they need to help deploy such technologies are attracted to employers that are already making use of them, says Jeff Alderton, principal, Deloitte Consulting LLP.
“There’s a certain expectation among younger workers when it comes to the use of technology,” Alderton says. “And when they don’t see that, they’re going to assume the company isn’t on the technology grid.”
Another constraint is the way many private companies are organized. For example, family-run businesses can be pretty traditional in their corporate hierarchy, in what Alderton calls “sticks and boxes” reporting relationship between managers and their subordinates. This tends to conflict with younger workers’ expectations for autonomy and team-based collaboration. “They’ve spent their school lives working in teams and ruling by consensus, and that structure contrasts with the way family-owned businesses and most mid-market firms are oriented,” Alderton says.
Other expectations they often have coming into the workforce are being able to work in urban centers or remote locations that suit their lifestyle needs, he says. That can be an issue for smaller companies confined to smaller suburban or rural communities where they were founded.
While many private companies are worried about the cost of keeping up with technological advances – it tied with regulatory compliance as the top obstacle to the growth of the business in Deloitte’s latest mid-market survey—many technology solutions are becoming more affordable. For instance, the cost of putting computing and data storage into the online cloud is getting cheaper as cloud providers rush to build new data centers and battle for market share.4
Alderton says one way private companies can get off on the right foot with younger job candidates is by relying on emerging technology platforms when it comes to recruiting. New cognitive analytical tools provide visibility to candidates’ social media feeds, while virtual calling platforms are allowing employers to handle interviews in remote settings. “Not only does this send the right signal to potential employees but it can significantly reduce onboarding costs,” Alderton says.
It might be a stretch to expect smaller, family-run businesses to abandon their traditional organizational structures, but here too, companies can experiment at the edges by forming teams to collaborate around specific business challenges. “You need to be thinking about how to apply team-based approaches to part of your decision-making,” Alderton says. He adds that it’s important for younger workers to be able to collaborate with co-workers of their own age, and from diverse backgrounds.
With more mid-market companies looking to expand their operations abroad, Alderton sees a great opportunity to build loyalty among younger workers by sending them on business trips with more seasoned co-workers. Coaching and mentoring opportunities are a critical aspect of leadership development, as they can be used to expose high-potential employees to diverse challenges and solutions that go beyond the usual assignments with established managers. Smaller, private companies often have an inherent advantage in this respect, because they typically provide closer access to senior leaders. “If your younger talent wants to go somewhere, send them there, but do it in a way that helps form bonds and creates opportunities to learn,” Alderton says.
On this last point, many leading companies are now espousing learning and educational opportunities for employees in addition to traditional technical training programs. Technology has made training on specific skills readily accessible to those who need them, and often times they can learn more quickly on their own without having to go through a company-sponsored program. “You can learn a skill online these days in the blink of an eye, and this is a generation of fast learners,” Alderton says. “Leadership development is more about education and self-growth now, and encouraging that in a multi-generational way.”
Questions to consider
- Are you using digital technologies to their fullest potential when it comes to recruiting new employees?
- Have you considered how your organization might benefit from team-based approaches for solving specific strategic decisions?
- Are you encouraging mentor relationships between new employees and business leaders?
- Do you have a formal leadership development program that includes ongoing educational opportunities?
1 Bureau of Labor Statistics, https://www.bls.gov/news.release/pdf/empsit.pdf.
2 Jeffrey Sparshott, “Skilled Workers Are Scarce in Tight Labor Market,” Wall Street Journal, February 2, 2017, https://www.wsj.com/articles/skilled-workers-are-scarce-in-tight-labor-market-1486047602.
3 “America’s economic engine – Breaking the cycle, “ Deloitte LLP, February 2017, https://www.deloitte/us/dges/breakingthecycle.
4 Staff, “The cheap, convenient cloud,” The Economist, April 18, 2015, http://www.economist.com/news/business/21648685-cloud-computing-prices-keep-falling-whole-it-business-will-change-cheap-convenient.