Insights into the forces shaping our industry.
Talent Acquisition in a Declining Supply
by Ted Konnerth
Most people assume that with high unemployment, the availability of quality talent is as easy as posting an opening and waiting for the flow of hundreds of well-qualified applicants. Let’s disabuse you of that notion and begin by using facts:
1. Unemployment is 9.5% of the working population
2. Unemployment for those with a college degree is 4.8%
3. Baby boomers have begun to retire, with estimates of that pace predicted to quicken as the stock market and therefore retirement accounts return to levels prior to the Great Recession.
4. Emerging markets in the electrical industry are attracting experienced talent away from traditional employers, thereby depleting the available pool.
5. Levels of employee engagement are at record low levels, which will drive employers demand for more replacement talent*.
With the recession slowly subsiding, the electrical industry in particular will be facing a remarkable demographic tsunami. With the boomers marching away, new companies attracting talent with dreams of large equity plays in investment-owned startup companies and a historically low level of recruitment emphasis at college graduate levels, the industry will be caught in a war for talent unseen in recent history.
In just 4 years there have been over 400 new manufacturers of LED products, plus the entrance of global players in wind and solar energy, plus the large growth of electronics development in both existing companies and new entrants. The sum of those effects is that all of these companies have needs for experienced talent who understand the complexities of the electrical industry: channel partners, specification influences, buying influences and product needs. The current level of available experienced talent is already low; despite the constant din of news media reporting the millions of unemployed people.
The majority of the unemployed are laborers; skilled or unskilled. Their plight is unlikely to dramatically improve going forward as many of their jobs have been shipped offshore. Additionally, the talent skills that the emerging companies need today require far more education than traditional laborers. College or technical school diploma-level attributes in IT, computer sciences, electronics and semi-conductors are in high demand.
The US is already in an engineering shortage. We’ve seen wage increases for engineering talent grow dramatically over the past 3 years as companies have made extraordinary concessions in salary offers and added benefits to attract qualified engineers: relocation, signing bonuses, vacations, etc. Major corporations have constant openings for electronic and electrical engineers. Smaller companies are making multiple offers to engineers to try to attract them.
The war for talent issue has been moving forward for the past ten years. We were all forewarned this day was coming, but in the teeth of a deep recession it’s difficult to rationally increase hiring to prepare for the imminent shortage. Leading companies are already doing exactly that. Our larger clients in distribution have been hiring for the past year, and the manufacturers are just recently addressing their needs for the coming growth period.
If there is a call to action, I would suggest three specific actions:
1. Enact retention strategies for your top talent immediately. Losing a key contributor is extremely costly, not just in the replacement costs, but in the lost down time to ramp up the replacement.
2. Implement succession plans for the top talent. A recent study found that less than 50% of corporations have a defined succession plan for their CEO’s.
3. Create a recruitment plan that addresses three issues:
a. Building a bench. Start a college recruitment program.
b. Direct recruitment department. Focused on the college recruiting and the lower level positions that experience higher turnover rates, an internal recruitment organization can effectively meet these needs.
c. Sourcing partnership. For critical talent, that can only be identified through direct recruitment processes, identify a third party firm who can partner with your organization, acting as a pure recruitment organization and as a talent scout for opportunistic hires when ‘best athletes’ become available.
The next ten years will be exciting on so many levels: new technologies, new markets of growth and a melding of electronics and electrical into changing channels. There will be winners and losers in this battle as always, but for those who view the path to winning through attraction of qualified talent, the odds will be significantly higher.
*The Herman Group – www.hermangroup.com
Global Employee Engagement Declining