Has the “War for Talent” Become a Cold War?

Implications for Policy NGA 12.4.01

Peter Cappelli

The Wharton School

Our Agenda…The Talent Wars

• What’s different about the next generation– What do they expect?

• Will it continue to be hard to find good people?

• Will we return to loyalty and security?

Is There Something Really Different About Jobs Now?

• Yes. The notion of a secure, long-term career is harder to imagine.

• AMA survey – 63 percent cutting in one division and expanding in another

• Economy turning on a dime –– Employers expecting to hire 19% more college grads

in Spring 2001 than in 2000.– By Sept 2001, expecting to hire 20% fewer grads.

…What Else?

• Talent Management – the best really matter– Jobs offer more scope for contributions – And skill requirements rising– How do you feel about forced rankings?

• Demographics…?– A shortage of people, of new hires, or technical

skills?– The engineering “cobweb” model

Characteristics in First Employers*

Please rate the importance of each of the following in choosing a first employer• Challenging assignments

• Company values balance between personal life and career• Competitive benefits• Competitive salary• Financial strength• Good reference for my future career• High-achiever program• High ethical standards• Immediate responsibility• Likeable/inspiring colleagues• Ongoing educational opportunities• Opportunity to influence my own work schedule• Opportunity to specialize• Opportunities for continuous learning• Secure employment• Variety of tasks or assignments* From Pricewaterhouse survey of 1500 MBA students from around the world

Characteristics in First EmployersPlease rate the importance of each of the following in choosing a first employer

Good reference for my future career ---------------------------------------------------42%

Company values balance between personal life and career ------------------41%

Likeable/inspiring colleagues -----------------------------------------------------37%

Competitive salary -------------------------------------------------------------34%

Challenging assignments --------------------------------------------------33%

Competitive benefits ------------------------------------------------------32%

Opportunities for continuous learning ----------------------------31%

Opportunity to specialize --------------------------------------------30%

Secure employment ---------------------------------------------------30%

Financial strength ----------------------------------------------------29%

High ethical standards ----------------------------------------------29%

Ongoing educational opportunities ------------------------27%

High-achiever program ---------------------------------------26%

Variety of tasks or assignments ---------------------------26%

Immediate responsibility ----------------------------------24%

Opportunity to influence my own work schedule- 24%

Is The Next Generation Different?

• Yes. They don’t believe the old deal.• More willing to take risks -- failure ok• Building careers across jobs

– autonomy– clear performance management– prefer flat hierarchy

• What to do?– Explicit and short-term contracts– tailor job to individual

What Caused the Change?

• Institutional Ownership and Shareholder Value

• Pressures from Markets: Speed and Variety

• The Third Wave of Corporate Restructuring

• New Management Techniques: Bringing the Market Inside the Firm

Effects on Employee Management

• Employee Tenure:– Down with employer: Up with occupation– Dismissals quicker

• Training: Not rising

• Wages: Returns to seniority falling

• The Big Management Challenges– Retention, Training Investments, Commitment

Online Recruiting Changes The Game for Everyone

• Opening up the labor markets • Making info cheap, shifted the balance of power

to employees– Will employees continue to believe management?

• The “passive” applicant now SO easy to find and hire– Wetfeet survey – 36% happy with their job but willing

to move within 6 months!

– Auction sites like NurseAmerica.com – what’s next?

…So does this add up to something new?

• Yes, There is A New Deal at Work

• Challenges how we think about recruiting, retention, training

• Challenges how we think about managing the next generation

Has the Economic Slowdown Reversed All this?

• B-to-B and B-to-C….

• Jobtrak.com poll – year 2000 – 26% college students said start-ups were first

choice – 31% said Fortune 1000

• What’s it look like now…?

…not yet…

• In year 2001, 12% said start-ups v. 36% Fortune 1000 – away from start-ups, but no great flood back to big companies.

• For “hot jobs” in engineering, IT, still about 2 jobs per good applicant

How Are Employers Responding?

• Get More Sophisticated About Recruiting…

• Moving toward internships and coops –– 50% of grads may have commitments to

employers beginning of senior year– The GE Experience– Accenture – in Sophomore year

Employers Getting Closer to Schools….

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JobShadow

Mentor Intern Coop

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Training: Greater Need, Less Ability to Fund….

• The Challenge is to Finance the Investment

• Having Employees Share the Costs– Tuition– Training contracts

• Reducing the up-front investment– On-the-job, just-in-time

Policy Implications?

• State and Local Are Where Action Is….

• From Tax Incentives to Workforce Initiatives….– Can anyone navigate this system?

• Will Business Follow the Smart Workers?

What Will Remain from the Talent Wars?

• Faster cycles – recruiting even with downsizings

• “Talent” remains in short supply even if workers aren’t

• Open labor markets demand new skills from HR