Financial markets are in turmoil and the credit crisis is creating economic havoc. Credit has tightened to the point that even good companies are finding it nearly impossible to get the necessary credit to run their day-to-day business. While this scenario is playing out in the capital markets a similar crisis is developing in human capital markets.

Talent more crucial than ever

Cash may be king, but when it comes to human capital - talent is king. And in bad times, talent is even more important. Talent has become the key differentiator between success and failure.  Ultimately, companies without sufficient talent will fail.

Yet companies looking to fill key leadership positions are finding it ever more difficult to locate and attract serious talent. This is a systemic problem that has developed over decades. Without an immediate, concerted effort to remedy this situation, many companies will find it impossible to attract the necessary talent and will fall into downward cycle to a place called “mediocrity.”  Once there, companies will be in a constant battle to just hang on.  Victims of a profound talent squeeze. The only cure for individual companies is an intense focus on talent acquisition, talent development, and talent retention. And it must begin now!

Demand is up, supply is down, it’s that simple

The need for talent has grown dramatically as the global economy has expanded. But little has been done to replenish or grow the talent pool. In some industries and job functions the talent pool has been diluted to the point of crisis. And this situation will only get worse. Just one example is the lack of sufficient, talented, aviation and aerospace engineers. Across the board, companies are finding it difficult to fill key engineering leadership positions.

It’s gotten to the point where a decreasing number of talented engineering executives are simply being shuffled around, while nothing is being done to rectify the lack of engineering management talent. Recently Airbus announced it finds itself unable (shockingly!) to find sufficient qualified engineers and engineering managers within the EU and that it is engaging in a global effort to recruit talent from around the world.

What happened?

Talent dilution! And talent dilution coincided directly with advancements in transportation and telecommunications that made executives extremely mobile.  In 1959 when the first passenger “jet” aircraft took to the air in North America, the executive search business was a tiny cottage industry. Twenty years later when over 2,400 jet passenger aircraft were flying over North America, the search business had turned into a billion dollar industry.  Twenty five years later, with 3,500 jet aircraft flying in the skies, the executive search industry had grown to over $7 billion in annual revenue.

Connect the dots

As it became easier and easier to poach talented executives, companies became weary of needlessly training talent for fear of losing them to competitors. In the spirit of “if you can’t beat them, join them” many companies began cutting their investment in talent development and over time, relied more and more on external recruiting to fill leadership roles.

This trend was only exacerbated when corporations began aggressively cutting extraneous costs. Let’s face it, costs that aren’t directly enhancing profits inevitably become expendable.

Even companies that rarely use executive search began slashing development budgets, thus putting their companies in a precarious situation. It’s just not sustainable to rely almost entirely on internal promotions while simultaneously cutting development efforts. Over time, fewer and fewer positions are filled with real talent. Instead positions are filled with long time, well connected bureaucrats relying exclusively on their relationships rather than their talent.

For companies that do rely heavily on external recruiting and no longer produce talent in-house means these companies have willingly sacrificed their self-reliance.

While the shift to external recruiting has worked reasonably well for several decades; today the need for talent outstrips supply. Without replenishing the talent pool, there just aren’t enough talented executives to go around. And companies need to adapt.

Act now!

Companies are gambling with their future if they do not act. There are a number of things companies must start doing now:

1. Shore up the talent. Good enough just isn’t anymore. And companies cannot rely on the open market indefinitely to recruit talent. So get the talent you can, while you can.
2. Make mentoring and coaching skills a key requirement for all executive hires. These are unique skills that not all of us possess. Great executives with mentoring skills will help grow and groom other talented executives. This is only possible if a serious focus is placed on such competencies during the recruitment phase. Unfortunately, when talented executives without mentoring skills leave, companies are typically forced to go outside for replacements because nobody was groomed to take over. This is a travesty.
3. Adjust to the rising cost of talent. The cost of talent today is a bargain compared to what it will cost when talent becomes even more scarce.  The market determines the rate for talent, not a company’s internal salary scale.  Companies need to refocus their compensation parameters from a simple cost consideration to a value consideration. Get comfortable paying people commensurate to the value they provide the company.
4. Start investing more time, effort, and money on internal development.  Just putting a high-level priority on grooming talent can create a fundamental shift in the amount of time and effort spent on such activities. And recruiting and elevating natural mentors is a very efficient way to grow talent.
5. Talent retention is imperative. Everyone knows that it’s much easier to hold on to an existing customer, than it is to gain a new customer. So too with talent.  Acquiring new talent is much more difficult.  So work hard to keep talented executives motivated, challenged, well compensated, with a real opportunity for advancement.

Recently we were asked to conduct a secret search for a position that was currently occupied by an incumbent who had no idea he was about to be replaced. We declined.

Dealing with a hire before you fire situation is very touchy. My advice is to be extremely wary of using such an approach and to restrict its use to only the most extraordinary circumstances.

The simple truth is that a “hire before you fire” approach hurts companies more than it helps. Not only does it send a poor message to candidates, it sends a horrible message to current employees.

Your conduct is symbolic of who you are

How a company conducts a search for new employees creates a snapshot of the kind of company it is. Is it an open, honest, ethical environment? Is it a company people can respect? These questions are answered in part by the way you conduct your search.

The real question you need to ask is what kind of company are we? And what kind of company do we want to be? This should guide your actions. Even though a crucial employee may decide to leave prematurely if they learn they are going to be replaced, it’s the honorable thing to share this information. Of course, making contingency plans in case that employee does bolt prematurely is part of what good companies do. But attempting to actively go on the open market and fill the position in advance is another thing altogether.

Searches cloaked in secrecy create unintended consequences

Companies that engage in hire before you fire searches are usually oblivious of the unintended consequences. Secret searches are often difficult. Primarily because confidentiality is paramount. Often recruiters may not divulge essential information to candidates such as the company name, location, or other crucial details.

Mediocre or desperate candidates might accept this level of secrecy, but great talent definitely does not. “Come back to me when you can divulge all pertinent information,” one typically hears from talented professionals. And to their credit - it’s the answer I want to hear from them. Why? Because if they’re too interested in a position shrouded in secrecy, it makes me question if they’re really that good. Additionally, if they learn that an incumbent is unaware of the search and they see nothing wrong with it, it makes me wonder what kind of ethics and values they would bring to the company. Let’s face it, if a company is doing something sneaky, I have to assume willing candidates are quite willing to be just as sneaky.

One thing companies must understand is that every word, every behavior, every action, is evidence to potential candidates of the kind of organization they are dealing with. Everything communicates.

Our practice has turned away several hire before you fire assignments. What we have been willing to do in certain cases, is to prepare the search, conduct necessary research, identify the people we would want to approach, etc, so that we can jump into the search, full-speed, as soon as the incumbent has been informed of the company’s decision to replace them. Only then will we typically contact anyone about this search. Taking this approach frees us from maintaining secrecy and allows us to perform the best search possible, while reducing the lead time for bringing in candidates.

Search is more than just finding an executive

Of course the primary goal of any search is to find a suitable placement, but how you conduct a search is a a public display of the kind of organization you represent.  Don’t believe that simply because a search firm is running the search that your company won’t take a hit. The search firm you select and the way they run the search is equally telling as the interactions a candidate experiences with your company. After all, you hired this search firm, so the expectation is that you endorse their work and stand by how they represent you and your organization.

What’s more, engaging in a hire before you fire search is extremely damaging to your employees. It creates uncertainty and distrust. Don’t be surprised if a number of your employees start wondering if they might not be next.

But if all these factors don’t dissuade you from pursuing this approach, consider that such searches are often flawed, resulting in candidates who are not the strongest. Typically they are only incrementally better if that. And what kind of victory is that?

So think again and realize the upside of tackling the situation with integrity. Doing so will result in better results and a better reputation.

This article elaborates on a comment attributed to me in a column written by Eilene Zimmerman in the Business Section of the New York Times in March 2008.

Counting on a few hundred resumes you sent by mail to land job interviews is so old school. This kind of “push” strategy is like walking a well trodden path in the hope of finding a few remaining berries that haven’t already been picked by the hordes ahead of you; or like shooting buckshot in the air in the hopes of bagging a bear. Today it takes creativity to get off that well-trodden path and a more powerful weapon to bag a bear.

The simple fact is that the old-school approach results in infinitely more misses than hits and it leaves people frustrated and scared that they’ll never stand out in the crowd.

That’s a justifiable concern.

However, today there are so many creative ways to market yourself and the beauty is that these creative endeavors can live on and continue to help hone your reputation and visibility for years to come.

Social media tools give people the ability to vastly increase their visibility and credibility in ways that were unimaginable even five years ago. Thought leadership, forward thinking commentary, analysis, etc, allow you to connect with others in a powerful way. There is no telling what’s possible.

This really happens

I know a successful marketing executive who has been writing an insightful and entertaining blog for nearly two years. At a recent Facebook-themed conference, he met a social networking acquaintance who was working for a world-class marketing organization.

When his acquaintance forwarded the executive’s resume, an amazing thing happened. The hiring VP had already heard of the executive, and had been reading his blog for months. In that instant he turned from just another applicant to a rock star. It turned out several people in the organization had already been following the blog as well. His candidacy ended in a job offer and he now has the job of his dreams.

Think of the possibilities

This is reality today. An example of what’s possible in today’s world. Were it not for his blog he may never have gotten an interview. His blog gave him a competitive advantage over other candidates. It not only made them aware of him, but also gave them insight into his thinking and knowledge of marketing. It created both familiarity and credibility. How powerful is that?

Today there is no limit to how people can build their visibility and credibility and much of it is literally at our finger tips. The use of these marketing tools actually constitute a “pull” strategy that can draw company interest and develop a candidate’s credibility to such a degree that opportunities can come to the candidate without the candidate ever having to pound the pavement with a resume in hand.

So what can “you” do?

Start by thinking outside of the box. Your “pull” strategy is limited only by your imagination. Anything that draws people to seek you out can be considered part of a “pull” strategy. I recall a story Ann Rhoades tells about a highly motivated individual who wanted a marketing job with Southwest Airlines and sent the founder and CEO at the time, Herb Kelleher, a bottle of Wild Turkey which he was known to drink. It looked like a normal label, but if you looked closely the label was actually their resume.

Wow, talk about creative. There really are no limits.

I believe that developing thought leadership and forward thinking commentary and analysis is a good way to go. Why? Because it allows you to share how and what you think in a setting that is not in any way related to a job search. It’s you putting your thoughts out in the world to help and advise people. It gives people the opportunity to gain insights about you they otherwise would not have.

Find your voice

Wordpress, Twitter, Utterli, You Tube, are all ways to get your message out. And best of all - they’re FREE. But first you have to do something absolutely essential. You need to reflect on who you are. What you stand for. What you believe in. Because this kind of “pull” strategy relies on you creating a unique voice not just yada-yada-yada.

Yada-yada-yada will fall on deaf ears, but an original voice will not. It will create music for all the people who connect with your message and who are looking for the insights you have to share with the world. It’s important to realize that you do not have to connect with everyone. For that matter, not even with most people. You only need to connect with people who resonate with your message. After all, that’s what a good “fit” is all about.

Some simple and free social media tools

Wordpress.com

Wordpress is free and priceless, what a combination. This blogging tool is great. They have sharp, professional, looking templates and it’s simple to use and edit. When you write a new piece it’s online within seconds. If I can do it - so can you. This very blog is written with Wordpress.

But be cautious. Review your entries, check for typos, and be certain you stand by what you are writing, because once it’s out there - it’s really out there. Even if you decide to edit or redact the material later, good luck, anybody who has an RSS link to your material will have your original entry and there is nothing you can do to get it back.

Twitter.com

Twitter is an “out of this world” kind of tool that is less about the tool than the community that uses it. I heard of a person who put a request for job opportunities on his Facebook profile and after two months had one opportunity come his way. He then made two “tweets” (messages) on Twitter and received seven or eight concrete opportunities in less than a week. What makes Twitter so different is that its community operates in real time. When a “tweet” is sent it’s read by people that very moment. While an entry in Facebook or LinkedIn requires members to check their account or email to actually get the message.

While I can’t speak to the Twitter “community” I can speak to a few interesting benefits of Twitter. One is that search engines love it. You can write the most inane thing like “Right now I’m eating a Pinkberry frozen yoghurt on Melrose Avenue.” And lo and behold I can actually find that entry with a Google or Yahoo search even months later. It’s amazing how such comments can stay alive online. So imagine the value of “thoughtful” messaging that can take on a life of it’s own.

Second, Twitter can be used to disseminate your messages to various locations without you having to enter them at each site. For instance, Twitter comments can be set up to publish directly to your Plaxo account, Facebook, and a host of other online sites. Additionally, people can subscribe to your posts using an RSS link and have them go directly to their browser or feedreader.

But again, be cautious. Even though it’s just a micro-blog with a maximum 140 words -once it’s out there, there is no telling where it’s going to end up.

I believe Twitter will become much more prominent in the coming years.

Utterli.com

Utterli (formerly Utterz) is my current favorite even though I do not yet use it. Utterli is an audio-blog. Instead of writing it, you can speak it over your cell phone or upload an MP3 to your account and the world can hear your thoughts and ideas. I would describe it as an audio version of Twitter. For a perfect example of how it can be used, check out David Petherick’s Ten Tips to Creating a Powerful Online Profile. When you hear it, you’ll get the idea. Imagine what you might be able to share about your area of expertise?

Utterli also allows you to disseminate your entries all over the web to Facebook, Twitter, Wordpress blogs, even your website, you name it. Additionally, just like with Twitter, people can subscribe to your entries so that whenever you post one it immediately goes to the subscribers’ email or feedreader.

Be creative, but be cautious

The power of these tools is that they can take on a life of their own. They can be picked up by all the search engines and be nearly impossible to get off-line. So be sure you stand by what you are posting. It should represent the real you and what you proudly stand for. Always think about what you are going to post and ensure it’s not anything you will regret.

Given all the benefits, I still urge people not to rely entirely on high-tech solutions, but rather to mix it up. There are non-technology opportunities to develop visibility and credibility as well. Get involved with public speaking. Participate at conferences, sit on discussion panels, etc. Engage a PR firm to introduce you to journalists looking for subject matter experts in your field. Again, you are limited only by your own creativity.

Be inspired

The purpose of this article is not to push you into anything. But rather to give you a sense of what’s possible. It should be exciting that you no longer have to rely entirely on a boring resume to make yourself known. The sky is the limit and the idea that there are all kinds of creative ways to become known and to share the “real” you with the world should be invigorating and most of all - liberating.

The benefits these alternative marketing tools have is cumulative and they take time to develop. So the greatest benefit goes to those individuals who realize that you can’t wait until you are out of a job to start using these tools. They should become part of what you do on an ongoing basis, regardless if you are actively looking or not. What you will find is that over time, opportunities will come to you.

Now go!

I just read an article touting the use of a mentor programs as a good way to help new hires integrate into their new company and to develop people long-term. However, it’s been my experience that such programs yield limited results, often creating more busy work than results.

Some common problems with corporate mentor programs

Finding natural mentors

The real key is to identify natural mentors within organizations as well as to look for strong natural mentoring skills whenever you are conducting an external search to fill key executive positions. Natural mentoring skills aren’t easy to learn and it takes a certain kind of personality.

Perhaps the best way to develop new mentors is to have talented people work with the great “natural” mentors you identify within your organization. My experience is that some of the very best mentors are those people who were once under the wing of a great mentor themselves. But this is a long process that results in long term benefits. In a world driven by a short term focus - this is not something many companies deem important.

Jump start the number of good mentors in your organization

One way to expand mentoring is to encourage and reward “productive” mentoring, not just busy work, and to steadfastly seek mentoring skills with every key executive search you conduct. With most hiring managers this is nothing more than an afterthought and often not part of the selection criteria at all.

The most important thing to realize is that the best mentor programs are not the result of institutional processes developed by corporate and pushed out to managers in glossy manuals. That would be akin to taking glass and putting it under man made pressure and calling it a diamond.

Far better is to have the real thing and it starts with looking for them.

Also read “Re-discovering the value of mentors” for more detailed information.

Setting yourself up for success in a new job is all about addressing a few key aspects. Among the most crucial aspects is fully understanding the expectations the organization and your boss will have of you; getting along with new co-workers and colleagues; understanding the unwritten rules of your new environment; and, creating positive patterns in terms of how your position relates to key colleagues within the organization.

Communication is crucial to fitting in, even before you accept your job

Communication is the key to integration. And some of these communications should be performed well before you accept the job. For instance, you don’t want to wait until you’ve already accepted the job, to learn what their expectations are. What if the expectations are impossible to meet? Likewise, exploring the culture and operating dynamics around this new environment should be done before accepting the position, because it might materially impact your ability to fit in and/or perform the job. And finally, smart professionals want to speak with key colleagues before accepting the job to ensure there’s a good fit in terms of personal compatibility. Such communications will increase the likelihood of a good fit and easier transition once you do accept the job.

Actively integrate yourself

After you accept your new job, there is plenty you can do to improve the transition. One crucial key is to create a feedback mechanism for yourself. Tap someone at your new job that you connect with well on a personal level and who is knowledgeable about the organization, but who ideally is not directly vested in your appointment. This individual can share the ins-and-outs of the organization, answer questions that pop up, provide suggestions about how to maneuver through the organization, tell you where the land-mines are buried, and finally, provide you with feedback about how you are doing.

Of course it’s important to immediately work on developing a rapport with your boss and hopefully receive similar help from your boss as you are from your “feedback” colleague.

Be sensitive to what’s going on around you

You need to be extra sensitive at the start of your new job to recognize the subtle dynamics at work in your surrounding environment, so as to avoid becoming the proverbial bull in the china shop. Most of all, people appreciate individuals who are respectful of an organization and its legacy. While new ideas and impulses are desired, it helps to show that you are interested in being part of the team and not just a rogue newcomer with little respect for the people who are already on board.

Help set the pattern

Perhaps the most important advice is to establish yourself as competent and confident as soon as possible, without alienating people. Voicing your opinions in a respectful way is important from the very start.

What most people don’t realize is that the patterns that are set within the first 3 months of starting a new job, most often become permanent patterns. For example, if in the first few months it becomes common practice to have your superior sign off on your decisions, it will easily turn into a pattern where your boss will expect to have your decisions continuously run past them.

It’s more difficult to change existing patterns than it is to establish positive patterns right from the start. This is crucial. While initially it may seem like a good idea to run decisions by your boss or watch and listen the first few months, you have to learn how to respectfully establish yourself, so as not to become marginalized simply because of your good intentions.

It wasn’t so long ago when companies would throw gobs of money into developing managers. Management training programs, job rotations, international assignments, institutional mentor programs, education assistance - all were once common. Over the years many companies have pared down such programs due to the inherent high costs and in part to keep other companies from poaching these expensively, well trained executives.

Why stress? We’ll find talent on the open market

It just seems easier to go on the open market and recruit people who already have the requisite experience and expertise. And that has worked reasonably well for decades - but as the demand for talent has risen and the number of talented executives has shrunk it’s become harder and more costly to recruit talent on the open market.

The pendulum is shifting and the importance of developing talent internally is growing. There are benefits to developing managers that goes beyond a well trained executive - development is becoming a recruiting tool. How? Great talent is looking to grow. They want to learn and develop new skills and gain necessary experiences.

Talent wants more than money and a title

In many cases, money and title alone are no longer enough to draw talent. Joining a company that offers great development opportunities is a huge draw for talented individuals. Creating a development minded environment will draw motivated and talented people to your organization, while repelling those that aren’t. For companies and driven professionals, it’s a win-win.

The real question is how do companies create development programs that are both effective yet cost efficient? Of course the simplest solution is to bite the bullet and throw money at the problem. However, the reality is that a good chunk of the work developing talent does not require expensive training programs, but rather “attention” and “time” from talented superiors.

The value of natural mentors

While costly training and education programs should continue to be performed selectively, many development needs can be met with a powerful yet cheap method, one that many companies seem oblivious to – that being naturally gifted mentors. No doubt every company should work tirelessly to encourage mentoring. Yet, most companies have few if any exceptional mentors and natural mentoring skills aren’t easy to learn.

Case in point. I know a truly exceptional senior executive working for an international corporation who really understands how to motivate, lead, and grow people. She has a knack for identifying talent and giving them challenges that allow them to grow. She informally advises and counsels many staff members on an ongoing basis. Much of what she does comes naturally to her. She treats people like she wants to be treated, she gives people opportunity to tackle challenges, similar to the way she was exposed to challenges along the way. Most of all she is willing to take risks and give her direct reports duties that her peers would never give up.

After being voted the company’s most admired manager several years in a row, the company was anxious to figure out how she did it. So in typical corporate fashion they had industrial engineers tagging her every step. Thinking all along that there was some magic bullet. Something they could institutionalize. She laughed as she told me…it’s really so simple, but for it to be credible with the company it has to be complex.

Don’t take their word for it

One surefire way to develop internal mentoring capabilities is is to diligently push for external hires to possess good mentoring skills. During interviews don’t just take the word of the candidates. Seek specific examples and then follow up with in depth references.

Obtain concrete information about how well an individual actually mentors people. How many direct reports have been promoted? How many have been recruited to bigger positions elsewhere? How long were those individuals under the sponsorship of your candidate? Have positive results within your candidate’s organization correlated with the development of key staff? How do the more talented staff members assess their boss’ mentoring skills? Can these staff members provide concrete examples that shed light on their boss’ mentoring skills?

Skills that keep on giving

Good, natural mentors possess valuable traits - they are good communicators, willing to share insights and give people chances, confident to hand over important work to direct reports and junior staff members, know how to provide constructive criticism and active support, and care deeply about the welfare of those who work for them. These people have qualities akin to teachers and coaches. And these are skills that companies would be wise to add to the requirements for most key vacancies.

When you have people like this in your organization it’s amazing how much developing is going on that doesn’t cost the company a dime. It’s just a natural part of the way such people work. From my experience, such people also rub off on the people they mentor. In other words, good mentors seem to create good mentors in the process.

Unfortunately, mentoring skills are usually the last thing companies look for when hiring key executives. Yet, there is never a better and faster way to develop important competencies as when a company is filling a vacancy. Ensuring that openings are filled, not only with talented professionals, but ones who have strong, natural, almost instinctive, mentoring skills is important and over time will reduce the need to go to the open market to bring in talent.

The writing is on the wall

Companies can no longer rely solely on the open market to supply all the talent necessary to propel a company forward. Companies must focus on developing more people internally. Bringing talented mentors into the organization will go a long way to ensure that existing employees with potential are properly developed and prepared to fill key vacancies. It’s time to create balance between external recruiting and internal promotions…and the key is to develop potential from within.