Filling the Leadership Gap: It’s Time To Raid HP

We all acknowledge the fact that for the past few years we have been fighting a war for talent. While the war may have subsided as the economy retrenched, don’t let the calm before the storm catch you off guard. A major problem is about to descend upon U.S. corporations: the “leadership gap” is coming. If you are not already aware of the upcoming leadership gap, you soon will be. Most U.S. corporations stand to lose as much as 40% of their senior leaders and experienced people as they become eligible for retirement. The root cause of this potentially large exodus of employees is the significant variation in birth rates between the so-called “baby boomers” who were born in the late 1940s and subsequent generations. Because of the up-and-down birthrates between 1945 and 1965, there is a shortage in the number of experienced mid-level people who will be available to move into the positions vacated by retiring boomers. If companies don’t act soon, it will be too late to hire and assimilate the large number of “replacements” that will be needed. The war for talent you just fought will look like a minor skirmish compared to the battle that will emerge for talent as boomers vacate their current roles. While it is not expected that all boomers will opt for retirement, it is accepted that many will alter their work/life balance, focusing in on part-time and consulting-type roles. The shear percentage of leadership positions held by this aging population tells us this battle will be ugly. This new “mid-level talent war” differs from the last war in that recruiters will now be faced with the recruiting and retention of talent that has well-established career paths and lifestyles, as well as in-depth knowledge of their value. Why You Must Poach Top Talent The choices managers have to minimize the impact of the leadership gap are limited. Traditional techniques to minimize the impact of talent shortages such as job sharing and working remotely cannot by themselves solve this shortage. Recruiting internationally won’t help either, because the majority of the other countries are about to face a leadership gap of their own (in some cases, such as Japan, the leadership gap will be more serious than ours). Managers are pretty much left with two options. They can rely on leadership development programs to upgrade their “junior” talent as quickly as possible ó a highly risky, yet viable, option. Or they can poach away mid-level talent from other firms right now (so that they can be assimilated by the time that the retirement race begins) ó an option with much lower risk and potentially higher ROI. Training “junior people” to become senior leaders is a daunting process, which fails as often as it succeeds. But just like in basketball, if you need top-performing talent, the highest success rate comes from poaching experienced top performers from other teams rather than developing “your own” junior players. While most firms are likely to choose a two-pronged approach ó opting for both recruiting and development options ó ultimate success will come down to what you do right now. Poaching talent has two advantages over active candidate recruiting and development: your firm gets stronger while simultaneously weakening the competition as a result of the recruiting transaction. Raiding the Best Firms for Mid-Level Talent Mid-level managers are normally very difficult to poach. And because they have been rewarded and recognized within their current firm, they are often difficult to dislodge. However, the odds change dramatically in your favor when the firm they work for is undergoing turmoil and transition. Hence the catchy title to this article ó “Raid HP” ó because we all know about the prolonged turmoil regarding their recent merger with Compaq (please note that I don’t literally mean raid Hewlett-Packard, which is a wonderful company with some of the best managers on the planet). However, the well-publicized turmoil they have undergone serves as an excellent illustration. When a firm like HP announces a merger combined with layoffs and changes in the product mix, almost every employee becomes anxious about their future. Incidentally, the anxiety is often higher at the acquiring firm, because these employees also realize that the merger will result in a surplus of talent that will in turn dramatically decrease the number of promotional opportunities within the firm. It is this uncertainty about the future, coupled with the lack of growth and promotional opportunities, that makes poaching mid-level talent easier. Firms that have received a lot of negative publicity like HP, Enron, Global Crossing, and Arthur Andersen are actually not strong targets for poaching, because their notoriety and fame probably mean that the top recruiters from executive search firms have long since poached away most of the willing talent. A better choice for poaching are instead the numerous other firms that have received less publicity but are still currently undergoing uncertainty due to recent mergers or stock and market fluctuations. The managers at these firms are “ripe for the picking” because their firms are in a no-growth mode. A lack of growth and promotional opportunities frustrate people in mid-career, because they are beginning to realize that they have little time left to make their mark. The current economic downturn only increases the turmoil and the fear of being laid off. If your firm offers a stable environment with increasing opportunities for promotion and growth, you will find attracting mid-level talent is relatively easy, if you act quickly. Ethical Concerns? Salespeople steal “paying customers” away from competitors everyday, and they call it “their job.” In a similar vein, recruiting away top talent is no more or less ethical than stealing another company’s customers. Regardless of ethical concerns, however, poaching a competitor’s talent is a necessity because of the dramatic shortage of mid-level talent. Incidentally, in addition to recruiting, it is equally as important to build a “blocking and retention strategy” (see my previous article on the subject) to keep your own mid-level talent from being poached away! Steps in Building a Mid-Level Talent Recruiting Program Now Your first step should be too examine the average age of your more senior employees and to calculate the percentage of your population that will be eligible for retirement within five years. If you find that the percentage that will be soon eligible to retire exceeds 15%, it’s time to put together a formal program to fill the “leadership gap.” This gap-reduction program should include internal leadership development as one component, while the second element needs to be a mid-level recruiting strategy that:

  • Identifies the firms that are undergoing turmoil
  • Identifies by name the best mid-level talent at these firms as targets
  • Immediately begins to build a relationships with each of the “targets”
  • Identifies the targets job-switching decision criteria
  • Provides them with job offers and opportunities once trust has been built between both parties

Conclusion Strategic recruiters don’t just look at current openings. They also look at the future demand for and the available supply of talent. Demographics don’t lie; the impending shortage of experienced top-level talent is real. The time to begin developing your own “blocking” and poaching strategies is now. If you fail to act now and instead wait for a year or two, the economy will have turned around, other firms will have woken up to the leadership gap, and the competition for this highly desirable mid-level talent will make them “unaffordable” to most firms. The time to identify firms (and individuals) in turmoil is now, because in an economy in turmoil ó they are everywhere.

About Dr John Sullivan

Dr John Sullivan is an internationally known HR thought-leader from the Silicon Valley who specializes in providing bold and high business impact; strategic Talent Management solutions to large corporations.

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