Employers finally hit the hiring wall

Enterprise companies need to brace themselves for a looming IT labour crunch and tweak training programs geared toward retaining their existing talent pool, according to human resources experts.

By 2016, there will be a three-million person workforce shortage in North America, according to consultancy firm IDC of Framingham, Mass.

Within the next five years, IDC said, about 19 per cent of the region’s white collar workers are expected to retire.

Domestic sources, however, could not be expected to fill the gap since unemployment rates for college graduates are at about 2.1 per cent.

Off-shore labour sources might not be much help either since countries such as India and China are expected to have their own shortfall in IT engineers and business process staff.

“The skills shortage and the resulting war for quality talent, will affect every organization,” according to Cushing Anderson, vice-president of project-based services for IDC.

Presently the majority of companies are already finding it difficult to fill positions in IT, finance and sales, Anderson said during his presentation at the IDC Human Resources Forum in Toronto on Wednesday.

Retaining talent is a major concern of more than 79 per cent of Fortune 500 firms, according to a recent survey conducted by IDC. The impending labour shortage is on the top of minds of HR executives in about 45 per cent of the firms.

Anderson said companies should be mindful of certain key changes in trends and demographics.

More than 65 per cent of workers listed “interesting work” and “personal choice” as a reason for signing up with a company.

On the other hand, only nine per cent cited “career advancement,” five per cent listed “better than average compensation” and five per cent cited “job security” as important factor in employment choice.

Anderson also noted a diminishing level of loyalty among today’s younger workers.

He said slightly over 80 per cent are “confident in their ability to find a job”, about 70 per cent are likely to switch jobs on their own and over 40 per cent will change jobs every three to five years.

To counter trend, companies should concentrate in retaining and improving the skills of its existing workforce, according to the IDC analyst.

Success in this area can help companies realize substantial savings. A 20 per cent reduction of turnover in a 5,000 employee organization can result in annual savings of US$1 million to US$5 million, said Anderson.

The cost on replacing a senior executive, on the other hand, averages two to five times that executive’s annual salary, he added.

“It’s not about who you can attract anymore but who you can keep,” he said.

One way to do this, Anderson said, is to align learning programs with performance management programs to ensure that training received by employees improve their capabilities and accommodate their career objectives as well.

Ideally, Anderson said, there should be an automated process of performance evaluation that evaluates learning needs and approves training modules.

Ironically, the IDC survey found that there has been very little progress in this area since 2004.

For instance only seven per cent of companies have fully integrated learning and performance programs. A large number of companies keep track of training and performance data on Word documents rather than automated HR management systems.

The use of manual evaluation tools make the process tedious and discourage managers from conducting up to date and ongoing appraisals, Anderson said. “It’s annual because it’s manual.”

A top executive of an American packaging company agrees on the need for fine tuning performance and learning programs.

“We take pains to measure the rate of engagement our co-workers have with their jobs,” said Thomas Sarnecki, vice-president and general counsel for human rights affairs at Amcor Sunclipse Ltd. in Buena Park, Calif.

Sarnecki, was one of three human resources experts who took part in a panel discussion on talent management following Anderson’s presentation.

For instance, he said, the company’s U.S. managers are periodically gauged for the “performance and potential”. Their scores are set against an “organization matrix” to determine if improvement is needed.

Amcor also tries to “leverage company culture to gain the allegiance” of its workers, said Sarnecki.

Just as nearby Disneyland refers to its personnel as “actors,” Sarnecki said, Amcor calls it employees “co-workers.”

Co-workers are made to feel special. For instance, employees get special treats on their employment anniversary. “We celebrate the hell out of employment anniversaries.”

Every co-worker also gets a regular one-on-one meeting with his or her immediate superior every month.

For Culligan International Co. a water company based in Northbrook, Ill, ensuring a lasting employee-employer relationship means getting “the right fit” from the very beginning.

“I zero in on the candidate’s values,” said Janet Snow-Godfrey, executive vice-president on human resources for Culligan.

“What a company has to offer must mesh with an employee’s values,” Snow-Godfrey, one of the panelists, said.

She said skills and experience can easily be gleaned from a candidate’s resume, but assessing core values often need deeper assessment. “I passed up a very qualified candidate because I realized he valued security, but at that time our company was going through some difficult changes.”

Faced with a pressing need to fill critical positions, companies often call upon corporate recruiting firms to scout for possible candidates.

Jeffrey E. Goodman, labour lawyer for Hennan Blaikie LLP of Toronto, says companies should keep a close eye of recruiters to “prevent problems down the line.”

“Sometimes, recruiters will promise candidates things that the company is not prepared to give. These ‘broken promises’ can be brought before the court when the employment relationship sours.”

Having employees sign “notice provisions” that clearly spell out what they are entitled to and what is expected of them may prevent legal battles, Goodman said.

Companies should also keep the notes that recruiters took when they interviewed candidates, he added.

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