Do you love your job? On Sunday nights, are you chomping at the bit to tackle that project on your desk, or do you mostly feel grief for the loss of your fleeting two days of freedom? Employment surveys and workforce studies keep telling us that the vast majority of people are in the second category. Most people don’t love their job, and this is quietly setting the stage for a global talent crisis.
Labour Market In Crisis
Since the corporate world is so focused on stock prices, you’d think that Wall Street analysts would consider what the underlying driver of economic growth is when making their financial forecasts. Today, talent, not assets or market presence, is the enabler of growth or the bottleneck to it. And virtually every talent measurement is telling an alarming story. Only 13% of the world’s employees are actually enthusiastic about their work, and employer’s efforts to ‘incentivize’ good morale has largely failed. Millennials keep dumping their employers in search of a company that stands for something other than profit. And 86% of employers aren’t able to effectively develop their existing workforce to replace the tsunami of Baby-Boomers retirees.
The combination of these issues is creating a perfect storm in the global labour market—and most organizations aren’t checking the weather report!
Is it possible that there is an underlying cause to the current upheaval in the labour market? Or in other words, could all these indicators be telling the same story? I didn’t ask this question myself until the answer was staring me in the face.A perfect storm is brewing in the global labour market and most organizations aren’t checking the weather report. Click To Tweet
The Strategic Flaw
In doing research for my book Succession Planning That Works I discovered that only about 10% of companies are truly good at systematically developing their talent. Although each company in this minority approached talent development a little differently, I noticed they all had a common theme: people are their top priority. Yes, of course, every company says “people are our greatest asset,” but few actually walk their talk.
I’ve attended many corporate strategy meetings, and the discussion about the company’s priorities typically goes something like this:
Typical Corporate Priorities
- Profit. “Our overarching goal is to achieve $___ EBITDA.” (or some other financial metric)
- Customers. “We will target these markets, customers and projects.”
- Products & Processes. “We will acquire new business by introducing these products and services, streamlining our processes, and following this business development strategy.”
- Employees. “… oh, and I guess we’ll need a lot of people to do all this. HR, please ensure that this many qualified people materialize within the next 3 months.”
When companies order their priorities this way, no amount of corporate PR platitudes can mask it. Employees can feel that they are truly their company’s last priority. The message they hear loud and clear is “You are simply an input into our money making machine.”
Is it any wonder that only 13% of the world’s workers are actually enthusiastic about their work? Can you really blame Millennials for dumping their employers in search of something better? Does is really surprise you that managers are so focused on priorities 1 – 3 that they forget to develop their people?Employees are fed up with being treated like an input into a money-making machine. Click To Tweet
The Enlightened Strategy
Companies that have a strong talent development process consistently demonstrate that their people are truly their top priority. One such organization is Earls Kitchen + Bar, a North American restaurant chain. Earls has only four strategic priorities, listed in order of importance, as follows:
- Develop Leaders
- Employee Engagement
- Financial Results
Earls has effectively turned the traditional list of corporate priorities on its head. The reason for this reordering of priorities is because Earls believes that if they hire the right people, develop them, and ensure their employees are engaged, financial results are sure to follow. Craig Blize, the VP of Operations, told me that there is a direct correlation between the restaurants with the highest employee engagement and the restaurants with the highest sales and profits. Conversely, there is also a direct correlation between the restaurants with the lowest employee engagement and restaurants with the lowest sales and profitability. In fact, Earls views employee engagement as a leading indicator of store sales and profitability.
But Earls is not alone. Southwest Airlines and WestJet (modeled after Southwest airlines) are two companies’ whose employee-first cultures are legendary. A journalist asked Southwest Airlines founder Herb Kelleher who is his top priority, his shareholders or his employees. Kellher replied “Well, that’s easy. Employees come first and if employees are treated right, they treat the outside world right, and the outside world uses the company’s product again, and that makes the shareholders happy.” WestJet is not a whit behind Southwest Airlines employee-first focus. WestJet’s tagline “Owners care” is more than a tagline, it’s a reflection of their priorities: employees are treated as owners (because they literally are), and they in turn care about their customers who come back for the experience that the employees create for them.
Costco is another company with an employee-first strategy. One of the ways they demonstrate their employee-first strategy is by paying employees about 40% more than competitor Sam’s Club employees. A Wall Street analyst criticized Costco’s strategy saying “Costco continues to be a company that is better at serving the club member and employee than the shareholders.” Ironically, Costco’s stock has outperformed Wal-Mart’s stock (Sam’s Club parent company) by over 400% over the last 10 years. Analysts scratch their heads wondering why Costco consistently outperforms Sam’s Club. If they’d deign to look at non-financial data, such as the fact that Costco’s employee turnover is consistently five times less than Sam Club, perhaps they’d be able to connect the dots.
The list goes on…
Lead the Talent Revolution or be Left Behind
Sooner or later, the most talented and sought-after employees will join their Millennial co-workers to find an employer that consistently puts people and purpose before profits. Sooner or later, employers are going to realize that the key to winning the war for talent is not to somehow magically lure talented employees away from other employers, but to care about their own employees enough to develop them. Business leaders and managers have an increasingly urgent choice to make: lead the talent revolution or be left behind.Business leaders have an increasingly urgent choice to make: lead the talent revolution or be left behind. Click To Tweet