In my speaking engagements around North America, I talk to hundreds of executives every year who gripe about their inability to attract and retain talent. As the old saying goes, "good help is hard to find."
The realities of full employment are exacerbating problems that already existed. Most companies suck at HR, and their tired playbook is only becoming less relevant. Things are going to get a lot worse.
According to Pew Research, a staggering 45 million baby boomers are within five years of traditional retirement age. Tenure of U.S. employees is in steady decline. 79 percent of millennials have student loans that "have a moderate or significant impact on their ability to meet other financial goals". According to Gallup, millennials are by far the least engaged employees (29 percent).
So, there are fewer people looking for work, they have less tenure and loyalty, and are under immense financial pressure. What could go wrong? Meanwhile, employment costs skyrocketed as a result of healthcare and minimum wage escalation. Depending on who you listen to, it's estimated that employee turnover costs our economy between $300 and $500 billion every year.
The script has to change. Consider the typical recruiting process:
Hiring managers often rely on HR (or in smaller companies, an HR consultant) to pool candidates on job boards. They conduct one-hour interviews to judge applicants' skills based on ability to answer questions. We all know behavior is more important than skill, but the focus in these interactions is often to assess capabilities and technical knowledge.
Then, companies hire applicants and spend less than a day onboarding them. Performance management is inconsistent at best. Incentive plans feel arbitrary. Companies spend little time on training. No wonder turnover is so high.
Today's contemporary workers are looking for much more than a paycheck, or even skills acquisition. They want to connect to something bigger-to be aligned with a purpose. Our business culture is moving away from hierarchical management and toward tribes and networks.
HR is undergoing a seismic shift. Specialized skills are required to succeed in this war for talent. One reason companies don't have the right people in the right seats on the bus is that their HR people aren't in the right seats.
It's time for companies to adopt a new playbook:
Have uber-high standards for hiring.
I know a CEO with about 60 employees. He does all the hiring personally, because he knows the cost of failure is just too high. He will not hire someone unless he is convinced the applicant is an A-candidate. Many companies reach because they're desperate. Hiring should be 24/7.
Be relentless in your hiring process.
The best employers use some form of Topgrading (see the book of the same name). At the least, a group of managers should be involved in interviewing because that promotes specialization. As one manager dives deep on the applicant's computer skills, another can dive in on communication skills, etc.
Have a strong employment brand.
Online presence, including telling your story online, is more important than it has ever been. Ensure your employer page has memorable content that highlights your culture and why you are a great place to work. Video testimonials and other rich media play well.
One of my clients completed an acquisition and did not perform background checks on the incoming management team. One of the executives ended up being dirty and costing my client hundreds of thousands of dollars. Don't buy the narrative that you can't get information from past employers. It is worth the effort to talk to past colleagues. It's amazing what you can learn.
Require a 90-day plan.
It's well-known that a disproportionate number of separations occurs in the first year of employment. The onboarding process is an opportunity to immerse new employees in your culture and teach them your trade craft. Supervisors should "sign off" that new associates have learned a skill. Invest in your new employees.
Set career paths from the beginning.
New employees-especially millennials-want to know where they can go from here. In small companies, that may not mean a new position, but perhaps the ability to acquire new skills or take on more stimulating projects. Every employee should have an annual learning plan and be held accountable for self-directed learning. Learning management systems provide access to cheap online learning.
Embrace continuous feedback.
Performance reviews are being replaced by feedback loops. Instead of administering reviews, HR's role should be to teach managers how to provide constructive feedback and support a high-trust culture.
Provide the best environment.
Today, employees care deeply about their working environment, as if it is part of who they are. In the hiring process, managers must truly understand the life stages of new applicants as to provide the ideal environment (best location, hours, etc.)