Finding, hiring, and keeping next-generation talent
With the coming shortage of critical talent, such companies may find themselves going head-to-head over a new generation employees—one that presents unique challenges.
By Suzanne Deffree, Managing Editor, News -- EDN, May 19, 2008
While the high-tech industry continues to expand by leaps and bounds, bringing more advanced devices to the mainstream every year, it faces a coming challenge in the all too near future: a shrinking talent pool to fuel next-generation innovation.
Indeed, the technology industry is already exhibiting this here in the United States. According to the US Bureau of Labor Statistics, the United States needs 135,000 new computer professionals a year, but as of 2006, its universities were only producing 49,000 computer science graduates a year. The Bureau also forecasts the need for science and engineering graduates will grow 26% to 1.25 million by 2012, while the number of graduates in those fields has remained relatively flat for two decades.
Beyond a new flow of talent, the tech industry is beginning to see a hastening stream of qualified talent exiting the workforce. Recent research from Deloitte Consulting LLP notes that as Baby Boomers begin retiring, the prime-aged portion of the workforce (defined by the firm as 25 to 54 years old) faces a steady decline of 7% up to 2020.
"There's a problem coming and we feel it today," William E. Mitchell, chairman and CEO of Arrow Electronics Inc, said. "Added to the fact that the workforce is aging is the reality that the American educational system, for whatever reason, is not turning out an adequate number of scientists, engineers, and mathematicians and technically trained people to fill the needs in the workforce. There simply is no pipeline behind those people retiring. And that's a real concern."
Mitchell is not alone in his apprehension over the education system; his concerns are shared by people throughout the tech industry. Indeed, those concerns were much of the reason DEKA Research president and Segway human transport system creator Dean Kamen started FIRST (For Inspiration and Recognition of Science and Technology), a multinational competition that teams professionals and young people to solve an engineering design problem with the goal of encouraging a next generation of inventors. Kamen has taken his message of needed education reform as high as the Oval Office to encourage greater supply of and demand for STEM (science, technology, engineering, and math) learning here in the US. Industry pundit Bill Gates has also spoken before members of Congress urging education reform to inspire tomorrow's leaders to look at tech careers.
"We as a technology world have not done a particularity good job of going out and selling the benefits of a technical education and how it opens up an intriguing and exciting world and provides a very satisfying career path," Mitchell said. "We have to do that. We are in competition with lots of other disciplines. People have many more [career] choices than they have before and we need to do our part in making sure we paint a positive picture of the world we live in and why it's a good place to be and why it provides an exciting career path."
Crucial to this Baby-Boomer exit isn't only the need to fill positions. Deloitte reminds that along with the decrease of the more experienced prime-working-age employees, tech companies will face a significant loss of skills and key institutional knowledge as Baby Boomers leave the workforce.
Compounding this is the loss of talent fueled by the tech industry's merger and acquisition (M&A) activity, consolidating staff and forcing labor shifts to lower-cost locations like China, and the qualified US talent pool gets even more shallow.
According to Deloitte's research, "Talent Management for the Technology Sector," "high-quality employees are the most significant contributing factor to growing technology companies, and CEOs continue to find that recruiting and keeping them are the biggest challenge to managing growth." The company found that "finding, hiring, and retaining qualified employees" is identified as the top operational challenge in managing growth and that high-quality employees are the number one cited growth factor to tech companies (see charts, "Which factor has contributed most to the growth of your company" and "What is your biggest challenge in managing your company's rapid growth?").
How to attract talent: Don't just show them the money
In a separate Deloitte survey of 150 tech and telecom companies in North America, the firm found that only 6% of respondents expect the size of their workforce to decline while two-thirds expect their workforce to grow over the next 12 months.
"There are lots of candidates to interview. The issue is 'qualified,'" remarked Jeff Alderton, principal and national industry leader with Deloitte Consulting's human capital service area.
Alderton said that as the talent pool continues to recede, tech and telecom companies will compete heavily for "critical talent," which Deloitte defines as "groups and individuals that drive a disproportionate share of their company's business performance and generate greater-than-average value for customers and shareholders. … Critical workforce segments possess highly developed skills and deep knowledge, not just about the work itself, but also about how to make things happen within the company."
Alderton points to development, intellectual property, and sales delivery areas as critical workforce segments in the tech and telecom industries.
"They [companies] are seeing that there are certain job titles that are more important, if you will, that are a necessity to have versus a nice to have. The technology and telecom companies are beginning to drill down into those critical workforce segments and are beginning to populate their recruitment efforts in the areas that will drive their business in the next five to six years."
Deloitte's study based on the survey, "Competing For Talent," found that the 71% or respondents are relying on financial incentives to attract and retain employees. In contrast, the study found that today's workforce values greater freedom in schedules and control of where and how they work over financial compensation. (See chart, "How do attract and retain talented employees")
"The conflicting perspectives between technology and telecommunications employers and employees suggest that the respondents are significantly challenged in how they capture their fair share of talent in the near term," said Alderton. "Despite our experience in seeing organizations wanting to shift focus on long-term retention strategies, the urgency of 'getting talent in the door' versus showcasing career scenarios to new recruits is causing some disconnection whereby companies still view financial incentives as a quick fix."
The Deloitte survey reports that workers "aren't as interested as they used to be in hefty compensation packages and fancy retirement plans. Today's workers don't mind working hard. They just want to do it on their terms." In some cases, that means working from home or off hours built around their own schedules, entry-level employees working closely with higher-ups in a company, or setting personalized career development plans for workers.
"To attract their fair share of talent, companies should consider adopting programs that meet the needs of the company – and each employee – instead of offering people big financial incentives, but then forcing them to adapt to the requirements of the job. These days, that traditional approach just doesn't fly," the study reports.
Generation Y
Alderton noted that the trend of job attraction based on less on salary and more on direct and personal control over when, where, and how employees work is particularly strong with one group, Generation Y, defined as workforce age 20 to 27.
"They are looking for a customized career that matches their customized workplace. It's not the money, it's the experience and the exposure to anyone they want to talk to," Alderton said of this next generation of talent. "The social norms are incredibly different and we are finding that very much in technology and telecomm firms. They are breaking the old organizations structure."
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Generation Y employees, by and large, are not shy, he said. "They are taught in school to be 'out there' with your comments, to push the envelope. It has to do with [Generation Y] wanting to keep on growing and they don't need all of this infrastructure getting in the way of meeting with the vice president of R&D to learn more about what he or she is doing."
Of course, generation Y talent isn't without its issues. The gadget friendly age group, weaned on text messaging and cell phones, lacks in-person business experience.
"The younger workforce doesn't really know how to work in teams face to face," Alderton said. "I'm making a broad sweeping statement and that's at the exclusion of those who can do it. But there's something very different about today's environment in tech and in telecomm where people are needing to have more social skills rather than just being on your iPod, on the phone, IMing, and doing work all the time in the same hour."
Still, this next-generation is important when looking to fill talent holes. The Deloitte survey found that roughly a third of respondents regularly discuss the talent shortage at board meetings, while another third discuss it once or twice a year. Moreover, nearly half of the surveyed companies have started to conduct workforce planning to identify critical skills and talent gaps.
"There are lots of people out there who want to join [tech and telcomm companies] but [companies realize they] has to start working harder on critical workforce segmentations, what's going to drive the business harder, deeper in the next five to six years, and have to fine tune these younger folks to what the company needs, not necessarily to what they want."
Deloitte reports that many tech and telecomm companies have already begun implementing such cultural changes to the workforce with increases in internal communication, mentoring, and learning and development. (See chart, "Increases in talent investment in 2007 relative to 2006")
"I have to applaud the technology firms. They are working as hard as they can [to gain and keep top talent]. This whole issue of customizing careers in a customized workplace is probably the biggest nut to crack," Alderton said.
"Technology a fabulous sector to be in, it's going to grow by leaps and bounds," Alderton concluded. "I think that workforce-workplace customization is going to be an interesting ride."
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This is a result of poor management by employers over the years. As a result of greed and worrying more about their bottom line and the value of their stock options they have neglected and even abused the very people who make the company sucessful to begin with. As a result younger people, including me, have had no incintive to pursue an engineering job. Why should we? I see engineers in my company make less money and work longer hours that the skilled labor on the production floor. To make matters worse I see people with not much more than an AS in business making the same if not more money tham me with years of technical training and experiance. In short nearsighetedness caused by greed has caused the field to become unattractive to the upcomming generation. There are easier more rewarding ways to make a living and their taking them. Remember you always get what you pay for, and you reap what you sow.
Stephen Jones - 2008-20-5 04:43:00 PDT -
Tom''s hangdog comments depress me.
A good engineering master''s degree in the UK with around three years experience will fetch around UK£80K or about US$175K. Perhaps he should join all the other illegal immigrants we have over here!
Most UK engineering graduates are enjoying boom times as the salaries in mainland Europe are even higher and they are flocking there.
Our hiring agencies are reporting that even non-degree engineering qualifications are commanding UK£42(US$80)an hour.
However salaries apart, Tom should recognise that his skillset is no better than someone else''s, just because it deals with so-called hard issues. I have advanced degrees in both engineering and business. The engineering stuff is simple and straightforward. Identify the problem. find the right formula (or nowadays the right software), apply it and voila a result.
When doing the business stuff life is a lot more complicated. The fabled "Philadelphia Lawyer" has it easy by comparison. I spend most of my time bouncing between finance, corporate governance, manufacturing processes, emergency and continuity planning, team management and of course dealing with people like Tom
IanP - 2008-20-5 00:42:00 PDT -
Just another me-too, non-sense article about the inevitable trend of technology talent exodus. As an engineer with technical Master's degree who had to deal with several layoffs and to struggle to find jobs with miserably salaries (compared to those bean-counter MBAs) and long free "overtime" hours (which make the salaries even more miserable), I just do not see why someone with technical talent should go to engineering at all. Engineers are one of the most expendable "talents" of the companies these days. What's more, there won't be many technical jobs left in the US thanks to those greedy CEOs who have been exporting all those jobs to other countries. Sorry but I don't think articles like this can fool anyone in the US to go to engineering any more.
Tom - 2008-19-5 14:50:00 PDT
