Where Has the Talent Gone?
The labor participation rate is still under the pre-pandemic rate. According to the Bureau of Labor Statistics, the rate is still running almost 1% below the pre-pandemic rate. This is no surprise to clients as they simply do not have the talent needed for key positions in Manufacturing, Planning, Purchasing, Customer Service, and more. Read more about the Skills Gap in our article.
We believe there are several key reasons for this continuing trend:
- Baby boomer retirements: 44% of the Baby Boomer generation are at retirement age. By 2030, the youngest of the largest generation in history will be older than 65.
- Pandemic career changes: The pandemic made people realize that they wanted to find what would fulfill them, and several have changed careers. Also, Families changed their view on how to raise children. In some situations, one parent changed and/or reduced focus on his/ her career (unless flexible) while his partner stayed focused on her career.
- Current Leadership: The generation following Baby Boomers (Generation X) is not as large. Across clients, whoever is remaining in a leadership role (typically a Baby Boomer, Generation X or Millennial employee) is completely overwhelmed and running around like a chicken with his head cut off.
- Newer employees: Generally, they are gaining experience, but do not have the knowledge to “figure out complex issues”.
- The advancement of technology: Technology continues to advance as companies realize they must embrace ERP systems, automation and robotics, artificial intelligence, predictive analytics and more. This has reduced the need for low skilled resources, but it has increased the need for high-skilled resources.
Lack of training & mentoring: For many years, companies could hire talent from the competition. Although this is still possible, there are fewer and fewer resources with the practical experience, systems and data knowledge, and process expertise to fill the roles.
We wish it was an exception, but clients are scrambling (and frequently in chaos). This situation is no longer the exception. It has become the norm. As key people leave the organization or critical changes occur, the resources simply do not exist to successfully navigate these situations as smoothly as they did previously. Thus, clients are scrambling on a day-to-day basis.
For example, multiple clients pop to mind with a key planning, supply chain or operations resource who is completely overloaded. This team member is “juggling multiple balls in the air while doing jumping jacks”. In essence, they are running around filling gaps, resolving issues, and bringing up topics proactively. However, internally, the resource is seen as the issue because she is always racing to keep up with Sales changes, rescheduling due to production ramp up challenges, uncovering system issues, and bringing up potential problems. There was a ‘brain drain’ of expertise and this resource continues to absorb additional tasks to try to keep the balls in the air.
The process is dependent on the system, and the system is dependent on the resources (design, setup, training), the data and transaction disciplines. In our examples, there are completely different situations (challenges, leadership styles, geographies, ERP system maturity, etc.). Yet the result is the same. If the process is dependent on a person, the process will not succeed. On the other hand, the process, system and resources need to be upgraded (including training and education) in conjunction with one another. Our consulting role is to partner with the client to assess the situation, design an upgraded path forward, and partner with the client to roll out and achieve sustainable results.
What it used to take to deliver bottom line results for clients absorbs around 20-30% more effort on average than it did pre-pandemic due to this skills gap (even with our greater experience and internal process upgrades). In some cases, it requires 50-100%! If this situation was an outlier, we wouldn’t be concerned, but it is no longer an outlier. Thus, we are pivoting and will be aggressively highlighting the key issues, warning signs and plans of attack earlier in the process. It will be less comfortable for clients to absorb this news earlier (with less time to absorb the facts), but we are experienced in seeing the signs and knowing the best route to “right the ship”, and so we will force these uncomfortable corrections early on. Fasten your seat belts!
Strategies for Success
There are a few key recommendations to start to “right the ship”.
- Leadership & Culture: There are fewer resources to bring on board to jump in, figure out a situation and “right the ship”. People follow people; not companies. Thus, you must have exceptional leaders. The only way you will have exceptional leaders is to have an excellent company culture. Of course, company culture goes back to leadership. There are no magical solutions. It take a LOT of hard work, excellent people, the willingness to take risks and invest when no one else is investing, and establish a performance management process that weeds out the poor performers and recognizes the star performers. Read more about this topic is our article How to Attract People to Your Company.
- Training, education & mentoring: These are NOT the same topic. You can no longer rely on hiring key resources away from the competition. Instead, you must develop them. Provide training (step-by-step processes), education (the why behind what you are doing and how it fits into the big picture), and mentoring (follow me and watch my example as I’ve been there and done that).
- Supplement resources: Clients are supplementing with consultants, contractors, interim temporary resources etc. Although we are jumping in as consultants to assist clients with critical priorities, we are jointly prioritizing bringing them up-to-speed so that they can sustain the process upgrades on their own.
- Appreciate different pools of talent: Retired workers might be exactly what you need to help you over the hump and/or bring folks up-to-speed. There are other groups such as veterans to pursue as well.
- Revisit your job requirements: What do your most successful employees do differently? It might be that they need fundamental skills training but not a college degree. It might be that they need certain characteristics for certain roles but not specific experience. It might be practical ERP knowledge instead of the specific ERP system experience.
- Meaning, Flexibility & Opportunities for Advancement/ Learning: The name of the game to attract, engage and sustain employees is to ensure meaning, flexibility and opportunities for advancement and/or learning.
Talent is such a critical topic that we will keep our eyes and ears out for unique strategies and fresh ideas for success. Please keep us in the loop with your ideas and success stories as well. It will be a key differentiator in the next decade.
If you are interested in reading more on this topic:
Where is Your Supply Chain Talent?