The looming technology workforce shortage
by Carey Bettencourt, Jeanne Urich and Dave Hofferberth, Service Performance Insight
In the first of a two-part article on the talent cliff, we presented some of the major talent management issues that professional services executives face. Here, we share insights and preventive actions to consider in avoiding the talent cliff.
As most professional services executives already know, they cannot depend on the U.S. federal government or the education system to bail them out. Washington tends to be short on ideas but long on programs. Generally, the solutions come from businesses working together to increase the pool of talented workers. Therefore, it is imperative that PS executives, and especially their younger workers, stay well connected to the university system in order to recruit talented people.
The new world of work depends on a multilingual, global, technically skilled, project-based workforce. Today’s professional services leaders must squarely confront the realities of attracting and retaining a new generation of consultants against the backdrop of technical labor shortages as skilled baby boomers retire. Globalization has significantly impacted workforce strategies, with many services providers providing hybrid on- and off-site resources through regional and global competency centers.
Engage the changing workforce
Changing workforce dynamics drive PS executives to create a different type of workforce that requires technical and client management competencies with equal parts of flexibility, autonomy and accountability. This change means that one of the most important challenges for leaders is competing for top talent in a level, global, Web-enabled playing field of “digital natives” who value collaboration and cool, new technologies more than security and remuneration.
Today’s human capital alignment challenges include:
- Attracting, retaining and motivating top talent.
- Managing through a technical labor shortage.
According to a Towers Watson Global Workforce Study, the top drivers of employee attraction, retention and engagement are competitive base pay, an organization’s reputation as a great place to work and a senior management team that is sincerely interested in employee well-being. Surveys continually show that creating a high-performance employee culture involves leadership, effective teamwork, access to high-quality training and career development plans rather than compensation alone. Table 1 shows the most effective retention strategies by generation.
One of the more interesting aspects of our research is the importance of an integrated human capital strategy. Finding, hiring, motivating and retaining key employees are just the beginning. We found that human capital alignment metrics contain the highest number of performance indicators with extremely strong correlation to success — meaning how employees perform once onboard dictates ultimate success or failure.
Our research shows major growth in the use of flexible scheduling options — 40 percent more organizations now have telecommuting programs than a year ago. And more than half of all companies now offer flex time so that employees can adjust work hours to minimize commutes and accommodate required travel and child care. Remote services delivery has rapidly become standard for professional services organizations, with 40 percent or more of all PS work now delivered virtually from an off-site location.
Implement innovative talent strategies
To fill the workforce void, more and more PS organizations are developing innovative new talent strategies: close partnerships with local universities; new hire internships; job-sharing programs; flexible work, study and child care options; onboarding programs; and on-the-job training and mentoring combined with extensive onshore assignments for offshore employees.
Increasingly the reputation of the firm as a great place to work is just as important as client referrals. What this all boils down to is that talent is fast becoming the No. 1 make-it-or-break-it element in professional services growth … or even survival.
To meet these demands, top PS organizations are:
- Focusing on programs to hire and train entry-level talent with skills in science, technology, engineering and math.
- Investing in internships and college hiring to groom the next generation of consultants.
- Cross-training current employees who have strong analytic abilities.
- Sponsoring training and work visas for international workers with strong backgrounds and skills in science, technology, engineering and math.
- Offering flexible work arrangements: work from home, job sharing, remote services delivery and child care options.
- Building a culture of excellence. Leading-edge technologies, clients and projects plus a culture that supports collaboration and innovation attract the best and brightest.
- Paying for performance that links compensation to knowledge and skills growth along with contributions to the practice — not just revenue generation alone.
- Investing in employee engagement because communication, training and recognition are essential to keep a talented workforce engaged.
Mitigate employee attrition
PS leaders should also closely monitor voluntary attrition. In an industry as highly
specialized as professional services, workers who leave take a great deal of expertise, experience and enthusiasm with them. Our six years of benchmarking have shown that as the attrition rate rises, so do a number of issues negatively impacting organizational performance and profitability.
Table 2 highlights some of these issues. PS organizations with higher levels of attrition tend to be less successful at growing their client bases and struggle to deliver projects on time and within budget. All this translates into slower growth and profitability for the PS organization. At a time when global growth is important, and larger organizations are acquiring smaller ones, it is imperative that PS organizations grow and remain profitable. Without profitable growth their long-term prospects are severely reduced.
STEM-ing the talent cliff
The talent cliff is looming. For professional services organizations, the talent management strategies implemented will be the most critical factor in determining long-term success. Organizations that effectively manage the talent cliff will be positioned for growth and prosperity. But those organizations that fail to understand and manage this burgeoning issue will face increasing business risk and diminishing success.
And one final note for those of you who are parents with children in high school — encourage them to major in science, math, engineering or technology!