The war for talent is a term coined by Steven Hankin of McKinsey & Company in 1997, and refers to an increasingly competitive landscape for recruiting and retaining talented employees. The war for talent has increasingly intensified due demographic shifts in the United States and Europe…there are simply fewer post-baby-boom workers to replace the baby-boom retirement. And while most organizations have focused much of their efforts on recruiting to win the talent war, this strategy is quickly becoming a zero-sum gain. I believe every organization should be building their own private talent marketplace.
Cutting edge organizations understand the value of talented employees and are beginning to put as much effort into developing those employees as they put into recruiting them. In the modern organization skills, reputations, and relationships generate the highest value. Effective resource allocation means unleashing the value of talent by mobilizing talented people for the best opportunities—including opportunities to become even more developed by finding work that creates distinctive new skills and knowledge.
By developing internal talent marketplaces, organizations provide managers the best opportunity to quickly access the talent they need for success while giving employees better opportunities to utilize and develop that talent. Talent marketplaces work by leveraging individual self-interest to drive enterprise-wide collaboration…rather than relying on top-down mandates around job rotation. The goals of an internal talent marketplace are to help an organization get work done more effectively and increase the value and allegiance of talented employees by expanding their company-specific knowledge. Many of these companies also find that allocating talent effectively can make enormous impacts such as profit per employee, lowering turnover rates, and decreasing recruiting costs. According to a recent McKinsey Global Institute study they “calculate that the adoption of these platforms could increase the output of companies by up to 9 percent and reduce the cost of recruiting talent…by as much as 7 percent.”
Talent marketplaces sound great, but why should I implement something like this for my organization?
The Millennial Generation. Coming of Age.
One of the largest generations in history is about to move into its prime working years. Millennials are poised to reshape the workforce; their unique experiences will change organizations, forcing companies to examine how they operate for decades to come.
Millennials have come of age during a time of technological change, globalization and economic disruption. That’s given them a different set of behaviors and experiences than their parents. Take for example their view of the employer/employee relationship:
- Millennials don’t adhere to the idea of climbing the “corporate ladder” like their parents. They prefer the “corporate lattice” …willing to move into roles that are horizontal (or even down) from their current positions to gain certain skills or knowledge. They expect “experiences” that provide them with rich learning that taps into their interests, passions and career goals. They also seek career mobility with most Millennials expecting to have multiple careers in their lifetime. According to the Bureau of Labor Statistics, the average young adult has held an average of 6.2 jobs by age 26. Why not enable them to shift careers within your organization?
- Of the 15.5 million freelancers in the United States, the largest percentage of this demographic are young. According to a recent study 38 percent of Millennials freelance which is higher than any other generation in history. Millennials are technologically savvy and leverage the internet and have become very adept at working for multiple clients while cutting out the middle man (the employer). Thanks to the digital age they are self-confident and able to acquire complex skills and learn multiple trades at once. This is why almost 30 percent of Millennial employees will quit their jobs if they don’t feel it aligns with their career goals. They’re confident they can make it happen on their own.
- The statistics are already showing the results of this changing dynamic:
- The median tenure of workers ages 55 – 64 was 10.2 years while workers ages 25 – 34 years was 2.8 years.
- Of workers ages 30 – 34 only 13% had 10 or more years of tenure with their current employer (vs. 55% for workers ages 60 – 64).
- The turnover rate for workers ages 24-and-under exceeded 50% in the first quarter of 2016.
We’ve blogged about this demographic before here. The Millennial generation is the biggest in US history; even bigger than the Baby Boomers. Soon these 92 million will make up a majority of your workforce, but are you ready?
A Move Towards Global, Networked Teams
Historically companies have leveraged functional structures to organize their workforces. But today’s fast moving and global economy has forced companies to deconstruct their antiquated organizational models to compete. In a recent study by Deloitte “92 percent of companies believe that redesigning the organization is very important or important” making it number one in ranked importance. These companies are implementing structures that allow them to decentralize authority, move towards a product- and customer centric organizations, eliminate silos of information, and empower their teams to set their own goals and make their own decisions.
To move to this more agile organizational structure companies must encourage people to work across teams to promote collaboration. Leveraging techniques such as hackathons, open office spaces, and project-based job rotation have been used successfully to give teams a common understand of each other. Organizations also need to enable people to move from team to team as needed. This is similar to what most global consulting firms have employed as their model for years…understand the skill sets and expertise of your talent and deploy the appropriate team that is best suited to solve the issue (project). This shifts the concept of job description to that of a mission specialist and senior leaders become more focused on planning, strategy, vision, and culture.
The Rise of the Gig Economy
The “gig economy”, “shared economy”, or whatever you want to call it is no longer a fad, but a major change that organizations must consider when managing their workforce. More organizations are moving to flexible workforce models which include the use of contingent workers, freelancers, contractors, and vendors. A recent survey showed that 93% of companies (US based) already identify the blended workforce as they’re seeing freelance workers teaming up with employees on projects. While another study showed that at least 40% of the workforce (US) will be freelancers within the next few years.
These “external talent pools” can provide organizations with many benefits (i.e. flexibility, cost), but they also offer various challenges including:
- Most HR systems were built for employees not external talent so how do I manage these resources?
- How do my managers access vetted external talent in a scalable manner?
- How do I ensure compliance with proper onboarding and documentation?
- How do I shift our focus on the quality of the worker results, not the process by which they are created?
A Private Talent Marketplace in Action
How might a private talent marketplace work? Let me walk you through a few real-life scenarios (with fake company names):
Scenario #1: Acme Corporation
Acme Corporation is a large healthcare provider in the United States. Recently Acme noticed an increase in recruiting costs and an abnormally high turnover rate within the younger demographic of their employee base. After completing a survey with this demographic, they quickly realized they had an issue with perceived career mobility and development…these employees simply felt that they needed to “go outside” of the organization to get the career opportunities they were looking for.
Acme Corporation decided to leverage a talent marketplace to help with this issue. Their HR team worked with C-level executives to develop and curate projects that would be high impact for the organization and would be something that any employee would highlight on their resume. These projects were posted into their talent marketplace where interested employees could view the details of each project (description, skills to develop, etc.). They then communicated out to this specific demographic with the details of the program (i.e. how this could help the employee grow their career, learn new skills, etc.) and asked them to sign-up to the talent marketplace. Once signed up to the talent marketplace these employees could be auto-matched to projects based on skills/expertise, skills they wanted to develop, or simply interest areas. Employees could also browse all open projects (those recruiting help) and easily express their interest in joining a specific project.
The early results for Acme have been very encouraging. Within one week of opening their talent marketplace to their younger demographic they hit their pilot quota of 400 participants. They have also seen an 80% placement rate for their open projects and all participants (both project hosts and employees) have rated the program very high in follow up surveys. The program has been so successful the team who developed the talent marketplace are now working on the program full time, have an executive sponsor, and report through the office of the CEO.
Scenario #2: Global Corporation
Global Corporation is one of the world’s largest organizations with various lines of business throughout the world. Global Corporation is constantly competing with both large organizations and start-ups across their current businesses and in new, emerging areas. To stay competitive, Global Corporation needed to easily access and leverage outside expertise when looking to innovate or develop these new lines of business.
Global Corporation decided to leverage a talent marketplace to help with this issue. Their operations team worked with their executives throughout the world to document their current list of outside experts (i.e. consultants). They then invited this group of experts to join their private talent marketplace so they could officially onboard (sign agreements, NDA’s, etc.) and provide relevant profile details (skills, work history, education, areas of expertise, etc.). Their executives were then invited to the talent marketplace to post their projects (short consults, short and long term projects), recruit and staff from their outside expert network, and manage all SOW’s, invoices, and payments related to their project(s).
Global Corporation’s private talent marketplace has been a big success. They now have a formalized way to recruit and onboard their external experts, allow executives to find and share their experts, and streamline the invoicing and payment processes (which was a major pain point). By implementing a talent marketplace Global Corporation can now scale their program across the company and begin to allow a broader audience (i.e. managers) to leverage these outside experts.
The Future of Work
As the Baby Boomers continue to retire, global competition continues to increase, and start-ups disrupt industries overnight it will become more important for organizations to more efficiently and effective leverage their most important resource…their people. We at Rallyteam believe this can be beneficial for both the employer (being more agile, innovative, efficient) and the employees (career mobility and development, skills growth, higher engagement) and will be the future of work.