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“The
breadth of jobs that today are filled from the outside
– ranging from the mailroom all the way to the CEO’s
office – stands in stark contrast to years gone by
when recruiting was almost entirely focused on
entry-level positions. An increase in outside hiring
contributes to higher turnover, which forces employers
to be in a state of continuous hiring and gives rise
to the feeling that there is a shortage of workers
[let alone highly competent workers].” This is one of
the conclusions of a study by Peter Cappelli,
professor of management and director of Wharton’s
Center for Human Resources as he wrote in the August,
2002 issue of Organizational Dynamics. He also notes
that “employers may well face difficult challenges in
recruiting and hiring [exceptional] people in the
future. But those challenges will stem from
fundamental changes in the nature of the
employer-employee relationship that contribute to the
difficulty [in developing and] retaining employees,
but not from a shortfall in the number of workers…”
Continuing, Cappelli states, “Most firms have to
improve their recruiting, but doing so requires more
than just coming up with more applicants or filling
vacancies more quickly. The overarching goal should be
to make better matches between applicants [or
incumbents] and jobs…Matching the right person to the
right job not only leads to better performance but
also reduced turnover [and is the primary means to
exceed revenue, profit and performance goals].” In a
nutshell, this is “goodness of fit.”
Over the
past few weeks, three senior executives of clients
have spoken to me about “competency gaps” that they
see within their organizations. This is a term we are
hearing a lot as businesses have begun to ramp up
after surviving the last three years and returning to
desirable income performances. This concept appears to
be replacing last fall’s theory of matching the people
plan to the business plan.
What are
the differences? When we spoke with clients in 2001
and 2002, they were concerned with “right-sizing,”
first to achieve ratcheted-down expense targets. The
next compelling reason was, “if this is my people
budget, I need the right priced talent to achieve my
revenue, margin, expense and income targets.” This led
to job planning and talent road map modifications that
resulted in limited hiring, mostly geared to talent
upgrades. With proper guidance, the hope was that this
new and improved talent would at least hit the
business plan, and, perhaps, exceed it. As one COO
described it, “It was kind of like going on offense
while being overwhelmingly concerned about the salary
cap. You have players that probably maintained your
competitiveness but would not win championships for
you.”
A
rebounding and more robust economy has many company
leaders now thinking about competing for and winning
championships. The three I recently spoke with had
each performed, in various formats, an arduous, by
position analysis of their companies or divisions.
They started by reviewing their performance standings
within their industries and compared metrics to the
best in class within their industries or segments.
Every aspect from vision, product, supply chain,
distribution, marketing, sales, operations, finance,
and quality was analyzed. Hard numbers and percentile
ranks (and spreads between their percentiles and those
of the best in class) were established and charted. A
definition of “best in class” was determined for each
functionality and its leadership position. Then came
the hard question: “Do I have all the components in
place to become the best in class? Will my executive
in charge be able to conceptualize best in class,
build and implement strategies to become best in
class, and create new visions of best in class beyond
today’s definition?” In short, is there a competency
gap among the skills and capabilities of each
executive that will prevent their functional teams
from becoming best in class?
With this
new paradigm, these three clients realized that a
combination of incumbent position talent upgrades and
newly created positions would be necessary. One of
these clients, who runs a successful Internet company,
said “I took a step back, closed my eyes and asked
‘what would the organization look like if I closed
each of these competency gaps? What would it mean to
the industry? How would it impact me?’ I was staggered
by the possibilities and realized each was
achievable.”
What each
realized was that the annual or semi-annual review
process could not address the competency gap…it
usually reviews the past year’s individual
performance, speaks to areas to improve (i.e.,
weaknesses that are seldom overcome, just managed)
without looking ahead. Just as MBO’s and annual goals
provide guidance, today’s business environment is so
dynamic that goals, strategies and implementations
change monthly. To be the master and not the slave of
changes, closing or eliminating the competency gap is
critical. After all, when a company hires the wrong,
or even close but not perfect (closing the competency
gap) candidate for the job, revenue and income
expectations simply cannot be exceeded.
Chris
Cottey is a
Principal Consultant with
McDermott & Bull Executive Search
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