Why you need a new playbook to attract talent

Before the mask mandates and lockdowns, I can recall going to Costco and seeing people loading up on toilet paper. I wondered, "what in the world? Why are people buying so much toilet paper?"

As it turned out they knew that toilet paper would soon be in short supply. People were hoarding toilet paper as they would do with hand sanitizer and Lysol anything over the next few weeks.

Today, people are a lot like that toilet paper. Let me explain.

According to the experts, today's labor markets are unlike any other.

There were prognostications that a recession would alter labor market dynamics shifting the balance of power from employees to employers. Some hoped that fear of layoffs in a downturn would pressure employees to comply with return to the office mandates.

The thinking is straight from Dr. Evil's Handbook of Talent Management. As of yet, there are no such changes.

I doubt there will be for two reasons.

The first relates to the transition from an analog to a digital economy. The disruption caused by digital technologies (e.g., cloud, IoT, artificial intelligence, machine learning) and their use in new business models accelerated when the pandemic forced organizations to adopt new technologies at a breakneck pace. These are the technologies that organizations adopted widely to make remote work possible for two years.

The second reason is more profound than the first. The Covid-19 pandemic changed beliefs about work and life itself. In my opinion, this second reason has a more significant impact on the ability to attract talent than the first.

Because of the cost and difficulty of recruiting in this environment, employers are "labor hoarding." Rather than laying people off as they have done in past recessions expecting to rehire when conditions improve, employers are retaining as many people as they can. Of course, the quit rate is still historically high, so many employers continue to search for new hires.

COVID-19 and the Great Reevaluation

When beliefs change, you're dealing with something bigger than behaviors. Changing behaviors is difficult enough to manage. Digital technologies, as an example, have changed behaviors. How we shop, make buying decisions, and engage with friends, family and coworkers have all changed due to digital technology. The Covid-19 pandemic caused a more significant change. People "reevaluated" their beliefs about work and life. That's a change that is not easily undone.

Will a recession impact beliefs and behaviors more than the Covid-19 pandemic?

Analysts will no doubt point to other factors impacting the labor market today. But I think these are the two factors affecting the labor market most. Employers who want to win will adapt.

Recently, McKinsey released a report articulating their views and providing recommendations to employers .

Here's what McKinsey has to say,

Employers continue to rely on traditional levers to attract and retain people, including compensation, titles, and advancement opportunities. Those factors are important, particularly for a large reservoir of workers we call ‘traditionalists.’ However, the COVID-19 pandemic has led more and more people to reevaluate what they want from a job—and from life—which is creating a large pool of active and potential works who are shunning the traditionalist path. (emphasis added)

As a result, there is now a structural gap in the labor supply because there simply aren't enough traditional employees to fill all the openings. (emphasis added)

Notice that McKinsey says the change is structural, meaning employers will need to address attracting talent that is not traditional in a fundamentally different way for the long-term.

The Traditionalists and Wage Inflation

Who are the traditionalists that respond to LinkedIn job postings and recruiter inquiries? They're "career-oriented people who care about work-life balance but are willing to make trade-offs for the sake of the jobs," according to McKinsey. Most people who have not quit their jobs, approximately 35% of the potential talent pool, are traditionalists.

McKinsey notes that a significant cause of wage inflation is that traditional recruiting and hiring methods are reshuffling these traditionalists. What's worse is that workers are increasingly moving across industries. This is a fundamental dynamic that will continue to impact the competition for talent. As business model innovation accelerates, the lines between sectors will blur. ?

Think about how Amazon is an e-commerce company that is also an entertainment company selling millions of Echo household devices for its security company, Ring. Google is a search engine company with the G Suite productivity software and household devices for its security company, Nest. Apple is a consumer products company enabled by technology that is also an entertainment company offering exclusive content through AppleTV.

That market dynamic is only going to intensify with time. It is a feature of digital technology. As more companies successfully digitize and transform, they will pull the best talent from their analog cousins who failed to adapt quickly enough. It's the equivalent of catching a cold and dying from bloodletting.

Social Capital Enablement

Referrals have always been the easiest way to find and hire talent. Recruiting through employee social networks is the most cost-effective and fastest hiring method. Earlier this year, I shared the importance of social capital enablement in my article, Why fostering social connections is the next step for employee well-being and competitive advantage . Social capital is the connection between various forms of human capital. Here's what Valdis Krebs, the Chief Network Scientist and Founder of Orgnet LLC, says about it. It's insightful.

The new competitive landscape requires focusing on between-employee factors, the connections that combine to create new processes, products, and services. Social capital encompasses communities of practice, knowledge exchanges, information flows, interest groups, social networks and other emergent connections between employees, suppliers, regulators, partners, and customers.

It's not what you know, but whom you know, and who knows, you wouldn't be a cliché if we didn't intuitively understand the impact of social capital.

The good news is that building relationships and networking is a skill. It's a skill that organizations can invest in to solve their talent recruitment challenge. We can help people connect, build relationships and be authentic with enablement and practice.

McKinsey emphasized that talent recruitment and attrition problem is long-term. It will require an investment in sourcing that is creative and personalized. Here are the four actions McKinsey recommends to solve the problem.

First, sharpen the traditional employee value proposition. This value proposition focuses on titles, career paths, compensation benefits, having a good boss, and the overall prestige of the company. Traditionalists love this stuff, and they're the easier to hire. Traditionalists are also the easiest to recruit away—one of the reasons that job movement is creating significant pay increases for these employees.

Second, build a nontraditional value proposition. This value proposition targets the majority of people, a very diverse group with differing priorities. This nontraditional value proposition addresses flexibility, mental and behavioral benefits, a strong company culture, and different forms of career progression. Most important, McKinsey says this.

The value proposition and the way companies pursue these prospective employees should be more creative—and personalized. The sheer churn in the labor market and organizations means that a massive portion of the workforce will remain new.

Third, companies can broaden their talent-sourcing approach. My colleague, Peter Laughter, discusses why traditional sourcing approaches are no longer practical and how we recommend organizations build their talent pipeline.

Finally, organizations can improve attrition, making jobs more "sticky" by investing in "more meaning, more belonging, and stronger team and other relational ties.

People being social is central to a competitive advantage in a social economy.

Being social and collaborating, internally and externally, on Teams and Slack, Twitter, and LinkedIn enables people to succeed in human relationships.

That's good for them, and it's good for the organization.