Enterprise systems help employers cope with the global skills shortage.
by Minda Zetlin
Unemployment is a problem everywhere, averaging 8 percent worldwide in 2011, according to a Gallup poll published in April 2012. An additional 17 percent of workers are underemployed, according to Gallup. So you might get the idea that for a job of any description, there’s a line of qualified candidates stretching out the door.
Today’s CEOs know better. In PwC’s 15th Annual Global CEO Survey with more than 1,200 respondents, 31 percent said a shortage of skilled talent had limited their companies’ innovation; 29 percent said it had prevented them from pursuing market opportunities, and 21 percent said it had lowered the quality or timeliness of their products and services.
Things are only going to get worse. While there may be a surplus of 90 or 95 million unskilled and semiskilled workers on the global market in the coming years, employers will find themselves increasingly pressed to find the skilled labor they need, especially in the coveted science, technology, engineering, and mathematics (STEM) fields, according to a recent report by the McKinsey Global Institute. The report predicts that, “absent a massive global effort to improve worker skills” there will likely be a shortage of up to 40 million high-skilled employees by 2020.
“The talent paradox is evident all around us,” says Alan Maxwell, chief strategist of HR technology at Lockheed Martin. “Most global companies are struggling to find critical skills though unemployment remains high. You have more students coming out of schools, but fewer in STEM, and you have this core base of unretired employees who will be exiting the market soon. In fact, in certain regions of the world, for the first time in history, we’re starting to see more people leaving the market than entering it.”
percentage of surveyed executives who said a shortage of skilled talent had limited their companies’ innovation (Source: PwC)
Indeed, demographics play a critical role. For example, in the US millions of employees of the “baby boom” generation are nearing retirement. As these workers leave the workforce, there are fewer new workers to replace them—just as managers are planning to increase their head counts, according to PwC survey respondents.
“It’s the ‘silver tsunami,’” Maxwell says of the wave of retirements on the horizon. “It’s been dampened by huge recessionary issues, but at the end of this decade, it’s really going to break free. Organizations need to get a lot smarter and have laser focus on technical talent across the board. As the exponential growth curve of technology steepens, this will prove to be imminently consequential for the future of our nation and the global marketplace. And the talent war will explode.”
In this constrained hiring environment, managers will need to come up with smart solutions to keep their organizations operating at full capacity. IT will play a critical role, with enterprise-class talent management software providing insight into the skills, training, and career aspirations of a large and widely dispersed group of employees.
For the first time in history, we’re starting to see more people leaving the market than entering it.
“Like a lot of organizations, we have experienced rapid growth,” says Julie Carroll, director, people and capability, at Sydney, Australia–based Leighton Contractors. “We had multiple disparate systems across the organization. Some people were managing employee competencies through a spreadsheet, some through active databases. Other people were just relying on the filing cabinets in the back sheds on their project sites.” With approximately 12,000 employees and another 12,000 contractors, this made it hard to keep track of the training requirements and competencies of Leighton’s people.
This approach had real drawbacks: bringing people with the appropriate skills and certifications to each job is essential to Leighton Contractors’ success. “We’re a contracting organization,” Carroll explains. “For example, the government might ask us to build roads, or we could be the major contractor for a mining operation. Safety is our first priority. So we need to be very confident that our employees have the right training, the right competencies, and the verification of those competencies to be able to work on those sites.”
After a careful review by Carroll and the executive leadership team, Leighton Contractors chose to replace the company’s disconnected systems with Oracle Learning Management, combining all information about employees into a single database. Managers could easily tap that source to find out just who had what skills, and where. “Given the number of disparate geographies we work with, our need to understand all the skills and capabilities of our employees, to be able to verify their competencies and then potentially match them to the next projects they work on—it was difficult to do that when we were managing that information inconsistently,” Carroll says.
With Oracle Learning Management, Leighton Contractors’ managers can easily identify employees with critical skills as a job is nearing completion, so workers can quickly move on to the next project. “Typically within construction, employees will work on a job, and then they’ll finish up and look for the next job,” Carroll says. “But we want to retain our people and be able to move them from job to job within our organization.”
Talent management software can also help managers find employees who might be a good fit for an opening, whether or not they would normally be hired from their current positions. “We’ve taken something out of the consumer world called faceted search,” says Jason Blessing, senior vice president of application development at Oracle. “The facets are all those different dimensions that exist in an employee’s profile.”
percentage of surveyed CEOs who plan to put their personal time and effort into talent management strategies (Source: PwC)
Lockheed Martin’s Maxwell says that’s the kind of capability his organization is working toward. “That is the holy grail, when we have an architecture that allows the flow of talent across the organization—a quantum leap in organizational agility,” he says.
At Leighton Contractors, that flow is enabled by talent mapping. “Our talent mapping is an annual process where we review employees, their qualifications, and the leadership programs they’ve completed,” Carroll says. “We use that to determine where the gaps are for them, what their next role could potentially be, and what leadership training we need to provide to move them into that role.” Then, when leadership positions become available, Leighton Contractors’ executive leadership team can review the talent map to find qualified candidates. This means they can continue to grow their own talent internally.
To make this possible in the new world of employment, employees take charge of their own careers and work directly with talent management portals rather than waiting for someone in HR to enter information about them. “It’s empowering people, maximizing productivity, and delivering exceptional performance,” Maxwell says, noting that today’s talent management focuses on capabilities rather than roles.
“People maintain their own data, just like they do their Facebook pages,” says Dan Staley, principal and Oracle Fusion Human Capital Management practice leader at PwC. Employees update their data to reflect training they’ve completed, Staley explains, or new jobs they’ve taken.
Smart talent management software helps employees seek out and connect with mentors, choose their own career paths, and develop skills for new positions. “Ten years ago, employees were a lot more reliant on someone else. And now, especially the younger generation are used to controlling their own destinies,” says Sheryl Johnson, director and Oracle Fusion Human Capital Management practice leader at PwC.
Part of controlling those destinies is getting the training and certifications needed to maintain a current job or move to the next one. Talent management software can help both employees and employers keep up with those training needs. “We do know what our employees’ training requirements are, but now we are better able to plan the training when we are notified 90 days in advance,” Carroll says. Oracle Learning Management generates an automatic workflow notification telling Leighton Contractors when employees’ certifications are due to expire. “That means we know what training we have to schedule for our people,” she says.
You need to start today hiring and developing talent for the future.
The software helps with scheduling, but also gives Leighton Contractors a competitive edge. “When we bid for work, we often have to prove to the client that we’ve got people with the right skills to work on that job,” she says. “Now we can print the training they’ve completed as well as the qualifications they’ve obtained, and their previous experience.” Having that information available in a single database allows managers to respond to bid requests more quickly. It also makes it easier to do a gap analysis and take appropriate action if more employees are needed with a particular certification.
A 2011 study by AARP found that costs associated with replacing an experienced employee add up to at least 50 percent of the employee’s salary—and that the figure is even higher for skilled employees. With that in mind, it’s almost always a better idea to find talent in-house, either finding someone among existing employees with needed skills or training them for new roles. But not every job can be filled internally, and talent management software can help when it comes to recruiting new employees.
“Typically, the best source for talent after internal hiring is employee referrals,” says Blessing. Formerly a key executive at talent management software firm Taleo (acquired by Oracle in 2012), Blessing says Oracle’s more recent acquisition of SelectMinds, provider of cloud-based social talent sourcing and corporate alumni management applications, introduces social networking into the recruiting process. Staffing managers can use the talent management software to supply employees with information about open positions and help them share those jobs among their social networks. “It’s kind of a force multiplier,” Blessing says.
The new social capabilities from SelectMinds add gamification to the mix. “We have leader boards built into the software that show who the top referrers are in the company so they can earn recognition or incentives,” Blessing says. “You can see real-time feeds of jobs being referred out and candidate traffic coming in.” A further benefit is that the software can automatically track where job candidates link from to arrive at the site to apply for a job, which can help employers better plan where advertising dollars should be spent.
The biggest benefit of using talent management software is that it allows enterprises to be strategic about their human resources. And that’s timely. The PwC survey shows upper managers moving toward a more strategic view, with two-thirds of CEOs saying they plan to put more of their own time and effort into talent management. 78 percent say they will change how their companies handle talent management, and 79 percent have the company’s top-level HR executive reporting directly to the CEO.
“Some companies have been so fixated on the basics they haven’t really gotten themselves into strategic positions to figure what skills and capabilities their organizations will need to be successful,” Johnson says. “But you need to start today hiring and developing talent for the future. You can’t wait until the CEO says, ‘I have a great opportunity in Malaysia and I need you to give me the people in our organization who have these 10 qualifications.’ By then, it will be much too late.”
Minda Zetlin is coauthor of The Geek Gap: Why Business and Technology Professionals Don’t Understand Each Other and Why They Need Each Other to Survive (Prometheus Books, 2006).
Big data may be a buzzword these days. But a data-driven approach to talent management has clear advantages. “One weird thing we’re learning is that very often the answer to whom you should be hiring and promoting is at least somewhat in the data,” says Andrew McAfee, principal research scientist at MIT’s Center for Digital Business and coauthor of Race Against the Machine: How the Digital Revolution Is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy (Digital Frontier Press, 2012). Research has shown that expert interviewers who pride themselves on sussing out the best candidates are fooling themselves: following the data is actually more effective.
Data analysis can increase that effectiveness by providing huge amounts of useful information. “Oracle can do some unique things for our customers using our big data,” says Jason Blessing, senior vice president of application development at Oracle. Blessing was formerly an executive at Taleo, a talent management software company that Oracle acquired in 2012.
“Taleo had about 300 million users,” Blessing says. “The software tracks all of the information in a talent cloud, providing hundreds of terabytes of data for aggregation.” This information becomes benchmarks used by customers of the software. Now, as part of Oracle, that data set has grown exponentially.
Among other things, this sort of detailed data can let companies solve retention problems before they happen. “Harnessing the data and the trends it shows will help predict what will happen to your talent or if they’re at a high risk of leaving,” says Sheryl Johnson, director and Oracle Fusion Human Capital Management practice leader at PwC. “You can do some what-if scenarios so that, as a manager, you can be alerted if the system is detecting that one of your key employees is at risk of leaving. You can make sure you’re taking care of that employee before he or she starts interviewing with other companies.”
It can even help determine if your efforts will be successful. “If you look at some of the predictive analytics today, there are proven scientific mathematical algorithms based on historical data that you have,” says Dan Staley, principal and Oracle Fusion Human Capital Management practice leader at PwC. “So you can ask, ‘What if I gave this person a promotion? An opportunity for an overseas assignment?’ It can tell you whether that will reduce the risk.”