"We don't like their sound. Groups of guitars are on the way out."
Decca Studios in turning down the Beatles in 1962
"There is no reason anyone would want a computer in their home."
Ken Olson, president of Digital Equipment Corp. 1977
Knowing well the folly of making predictions about the future, most of us are compelled to do so nonetheless. All planning relies on forecasts, deciding whether to go long or short on a mortgage requires a determination of where you think interest rates are headed. For recruiters and staffing managers, forecasting the supply and demand for workers, and their knowledge, skills and abilities, is a critical part of the job.
It has become near gospel among human resources professionals that a severe labor and skills crunch is just over the horizon. Much of this derives from the post-traumatic stress of tight labor markets in the late 1990's. Much also derives from a now famous "quote" based on U.S. Bureau of Labor Statistics as follows:
"There will be a shortfall of 10 million workers in the United States by 2010." --Roger Herman and Joyce Gioia, 2003
This prediction has spawned countless articles, presentations, books and even consulting careers over the past few years. Nevertheless, by 2010, it is likely to join in infamy the quotes above. When you factor in labor force growth (the U.S workforce will grow each year beyond 2010) and the need to absorb the 7-8 million still unemployed, the economy would have to create almost 500,000 net new jobs per month from now through 2010. Sustained employment growth of this magnitude is very hard to imagine.
Why? Since 2000, organizations large and small have discovered offshore outsourcing for a wide range of skilled and semi-skilled jobs. Moreover, average productivity per worker in the U.S. has risen at historic levels. Together, these phenomena significantly offset the need for new workers. Psychology also plays a role. After the downsizing pain in the last recession combined with 9/11, SARS, Iraq, volatile energy markets and ongoing geopolitical uncertainty, most organizations' approach to traditional hiring is decidedly cautious.
Yet the threat of renewed labor and skill shortages must be taken seriously. The workforce is aging and the birth rate is declining. Based on current patterns, there are not enough new workers coming in behind those retiring. The exceptionally large cohort referred to as the baby boomers are now beginning to retire while, for at least a few decades out, smaller and smaller generations will join the workforce.
Demographic analysis differs vastly from most other approaches to predicting the future. We know the population and its age characteristics. Give or take several thousand, we know how many 15 and 55 year olds are in the United States today. We can accurately predict how many will join the workforce and how many will leave. Despite mildly fluctuating immigration rates, the size of the U.S. workforce 5, 10 and even 15 years or more out, is often referred to as nearly "locked-in."
So aside from outsourcing more work overseas and squeezing ever more out of the existing workforce, what can a staffing VP do when labor markets start to tighten? The answer may be right in from of them, even if they are looking in the mirror: hire older workers.
Older workers (those aged 55 and over) represent the fastest growing segment of the workforce. In many organizations, this is the age when early retirement options might present themselves, when training opportunities and stretch assignments suddenly stop - when workers start receiving subtle and not so subtle signals that it may be time to move on.
Perverse as it seems, most American organizations and society itself are set up to discourage valuable older people from remaining attached to the workforce. Even as employers are demanding more skills, more knowledge and an ability to "hit the ground running", this group is often overlooked. Collectively, our knowledge society has an inexorable appetite for talented people. More and more, the only place we'll find them is in the "older worker" category.
So when the labor markets turn and it becomes more difficult to hire and retain talent, remember the resource that is or will one day be you. Take the time to know which of your older workers has the skills and performance attributes you may need. Cater to those older workers' needs. Make staying a more attractive option than retiring. Offer phased retirement programs, job sharing, telecommuting and part-time or seasonal work options.
Even after a top worker retires they may still be interested in being in your consultant talent pool. These are ex-employees that know your business, your customers and your culture. In many cases, organizations are able to place them on temporary assignments at daily or weekly rates that are pro-rated based on their last salary - likely a cost-effective solution compared to hiring an external consultant.
There you have it, a few more predictions and a few suggestions. Like Digital and Decca before me, I'm pretty confident I'm right.
Got a comment on this topic? Post your thoughts in the Inc. Forums.