by Kelly O Kay, Global Managing Partner of the Software Practice at Heidrick & Struggles
During the worst of the recession, the approaches companies took to talent fell into three broad categories. Some simply froze hiring or made across-the-board cuts. Others, assuming a buyer’s market for talent, failed to attract or retain genuinely top talent. Still others continued to make strategic hires – no matter what it took and despite economic turbulence – putting themselves in the best position to ride out the rough waters and to meet the rising tide of recovery.
The first two groups of companies now need to make up lost ground. The good news is that there is still time. The bad news is that as the recovery gets under way, all three groups will be fiercely competing for the same limited pool of top talent – even those farseeing companies that continued to make strategic hires will need to work to hold the ground they’ve gained in strategic hiring and to advance as growth returns.
Learning the lessons of the previous downturn
The recent market downturn was steep, but it’s hardly the first of its kind. Just eight years ago, the U.S. economy experienced a sharp contraction, one that particularly affected the technology sector. The executives who led companies through that downturn learned the hard way how to refocus organizations on the fly and they applied those lessons to their recruitment activities during the more recent recession – lessons from which other companies could profit while the present window of opportunity remains open. “Unless an organization is going out of business, it should always be thinking about recruiting,” says Mark Tapling, now CEO of Language Weaver, who successfully steered a high-tech company through that sector’s 2001 free fall. “Many companies I know have had to hire in new talent to re-position themselves for success in this turbulent economy. And hiring the right people is never easy.”
The right staff with the right stuff
As companies adjust to economic uncertainty, they likely need a set of skills that they didn’t previously require or have in-house. Hiring in these new skills is pivotal for the ability to adapt to the changing economic conditions and seize new opportunities. Unfortunately, some companies, as a result of the uncertainty in the market and their own uncertain futures, have been reluctant to invest in recruiting the top-level talent they need in order to successfully reposition themselves. Typically, they have tried to delay hiring or make do with what they have, promoting someone internally into a stretch position or using their internal networks to try to locate the person they need.
It’s certainly understandable that companies have taken that cautious approach. During the initial trauma of the downturn, boards and stakeholders were demanding swift, decisive action. In the face of frozen credit markets and plummeting stock prices, most organizations had to put aside grand strategic plans and focus on immediate operating plans. But they should have also started seriously evaluating their future staffing needs.
Though the emotional and logistical turmoil of downsizing leaves most organizations feeling like they don’t have enough staff, the truth is more subtle: companies typically don’t have the right staff to achieve their objectives. For example, in a growing market, companies typically focus resources on branding, voice, and demand generation. But in a shrinking market, they’re more likely to need tight segmentation and skill in packaging products to meet the needs of specific communities. An executive who’s strong in demand generation may not have the segmentation skills to double down on segments where the business has been successful to drive maximum profitability.
“All change is disruptive,” says Dave Habiger, CEO of Sonic Solutions. “But ultimately, it can either advance your business or undermine it. Any winning strategy is partly a talent strategy. You can have the perfect business plan, but it’s the people who make it work.”
The illusion of a buyer’s market for talent
Some companies recognized early on the need for new skills called for by the uncertain economy. However, some of them also bought into a widely held – and largely unexamined – belief about the effect of the recession on the talent pool. “People think that even the very best people, the ‘A-players,’ are a dime a dozen,” says Tapling. “That belief is dangerous.”
While there are certainly more people out of work, it is usually the best people that smart companies do their utmost to retain. So, while the talent pool was larger in absolute numbers, top talent remained in relatively short supply. As Mark Tapling suggests, the notion of a talent market that overwhelmingly favors buyers is an illusion. Companies that have been laboring under that illusion have typically made two mistakes.
First, they have underestimated the difficulty of finding the talent with the demanding mix of skills needed to see the company through the recession and prepare it for recovery. As a result, they have failed to fully understand how difficult it is to get top external talent – believing that they could get “A” players at “B” prices and with a “B” recruiting effort.
Second, the notion of a buyer’s market may have made them complacent about retaining the top talent they already have. “There’s a belief out in the market – just as there was in the previous downturn – that absolutely nobody is hiring,” says Tapling. That has also proved to be a dangerous belief for those companies that have seen some of their top talent seek greater appreciation elsewhere.
The drive for efficient recruiting
Companies that do understand the real dynamics of the talent market have not only been hiring strategically but have also been doing it in a systematic way, with a full commitment of resources and an understanding of what it takes to define, find, and attract top talent.
SumTotal Systems took that approach. “First, we fleshed out our new strategy and operating plan, including reductions,” says Arun Chandra, the company’s CEO. “Next, we defined the roles and skills that we required to succeed in this new environment. Then we started discussing execution: what skills we would need to achieve our new goals, and what skills we already had in-house. From there, we moved on to discussing specific positions that we would need to create and recruit for.”
Once companies have developed their plans to create new roles, they face the biggest hurdle: the difficulty of finding top talent. Not only is the idea that there are great people just waiting for a call a myth but also the existence of many more candidates, most of whom are unsuitable, makes the market noisy and complicates the process of finding candidates who really fit.
Even more challenging is the fact that when organizations try to bring in new skill sets, they’re often venturing into unfamiliar territory, where it’s all too easy to make mistakes. Hiring new talent also carries other risks, especially when new hires are high-priced corporate change-makers. Such executives are expensive and inherently disruptive, and in today’s rapidly changing environment they’ve got to be successful quickly.
Minimizing the hiring risk
Companies can meet the challenges of strategic hiring and minimize the risks by working closely with an experienced executive recruiter. The recruiter can help the company thoroughly explore corporate strategy and requirements, conduct a systematic search to identify the best candidates, implement a skillful recruitment and integration process – and make all the difference in the company’s ability to compete successfully for talent that will only get harder to find.
“Some of the roles I had defined in the plan were not just new to me, but also new to the culture of the company,” says Christopher Franey, President of Kensington, a wholly owned subsidiary of ACCO Brands. “We didn’t have experience in evaluating candidates with those skill sets – and we couldn’t afford to learn through trial and error.”
Sonic Solutions’ Dave Habiger had a similar experience. “We needed help in identifying who the key candidates would be, and how to qualify them through interviews and reference checks,” he says. “Finding and recruiting the best and brightest is a time-consuming process that requires precise expertise not typically found in-house. Plus, we couldn’t afford to have our executives spending time and energy on dozens of interviews. Now more than ever, we need them to be focused on operations.”
Efficiently choosing the right person is especially important because, with the pressures on businesses today, companies can’t afford hiring mistakes or slow starts – especially in a crucial rain-maker position. “If you’re going to the board and asking for a strategic hire, you’ve got to make your case strongly, and it’s your credibility on the line,” warns Tapling. “Whoever you bring in won’t have time to learn on the job. They’ll have to perform as expected, right out of the box. And you’re going to be accountable for their performance.”
Overcoming ‘organizational freeze’
Savvy companies are also looking for ways to reduce or eliminate “organizational freeze,” the operational paralysis that tends to occur between identifying a critical new position and filling that role. One such solution is “talent mapping.” At Heidrick & Struggles, we find companies coming to us and saying that although they’re not ready to launch a full search, they want to get started so they can move quickly once they get the authorization they need. We draw up a profile of what they’re looking for and identify specific individuals who fit that profile. When they get sign-off to hire for a position they can move swiftly to interviews and offers, often saving a month or two in the process.”
Some of the best-run companies have also been looking past the most pressing needs on their talent maps and asking recruitment firms to introduce top talent on an ongoing basis. With a full commitment of resources and an understanding of the real dynamics of the current talent market, they are taking advantage of the opportunities created by market uncertainty to secure A-players before the recovery dramatically heats up the competition for top talent.
It’s not just who you know
The A-players who could make all the difference to an organization’s success are usually still employed. Further, economic uncertainty has made many people reluctant to leave positions they regard as safe. But even if they’re not employed, they typically have had the financial success or foresight to allow themselves to be choosy about their next position. Finding them isn’t easy, and persuading them to join a new company and stay for the long term is even harder. Just knowing the people isn’t enough. You also have to know how to pry them out of their current positions or lure them out of wait-and-see hiatuses in employment.
“Top talent always has options,” says Lori Goler, Head of Human Relations at Facebook. “We’re thoughtful, creative and aggressive about targeting the right candidates, yet nearly every situation is a competitive one. If nothing else, we’re competing against a candidate’s incumbent company, which can represent a comfort zone. And, good companies are doubling down on their best talent, which makes them even harder to lure away. In these cases, knowing your company’s value proposition and being able to convey it compellingly is the key to success in getting top talent to make a move.”
A company that is aiming high must position the role as exciting and the company as superior to other companies, with far more upside potential. Organizations often need to adjust their recruiting strategy to the needs of the individual being recruited, considering such factors as money, security, and career potential.
Retention as recruiting
Persuading a desirable candidate to say yes is just the beginning. Before the new executive begins work, a comprehensive onboarding process should be firmly in place. The onboarding process should set expectations with the new hire and current employees in order to smooth the path and address any of the cultural differences or anxieties that people may have about the new star on the horizon. Organizations can’t afford to create the kind of disruption that might make the new hire less effective or lead other talented staff to consider other offers.
Organizations also cannot afford to neglect retention of these A-players, especially as recovery approaches. These talented executives will have far more opportunities, both as a result of economic expansion generally and as companies that have been sitting things out or haven’t fully understood the recent talent market commit to making up lost ground.
Talented staff must be carefully nurtured and managed, with ongoing development, training, and professional opportunities that keep them fully engaged and committed to the future and the success of the company. Think of it as a kind of ongoing recruiting that can pre-empt the need for at least some actual recruiting – with its uncertainty and time lag – when the recovery takes off. Companies that do not do a good job of retention are likely to find themselves with a talent gap at precisely the time of greatest opportunity.
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About Kelly O Kay
Kelly is the Global Managing Partner of the Software Practice for Heidrick & Struggles, conducts searches on a worldwide basis for a wide range of technology companies.
About Heidrick & Struggles International, Inc.
The world’s premier provider of senior-level executive search and leadership consulting services. The firm’s executive recruiters and leadership experts operate from principal business centers in North America, Latin America, Europe and Asia Pacific. In Mexico, Heidrick & Struggles operates offices in Mexico City and Monterrey. For more information about Heidrick & Struggles please visit www.heidrick.com
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Business trends and the current recession are forever changing the way corporations hire and retain talent. 
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