Industry Addresses Recruiting Challenge
October 23, 2000
SAN DIEGO, Calif. - The challenge of labor recruitment and retention facing companies in the new economy was one of the major topics of discussion at the 2000 Operations Conference of the Investment Company Institute of Washington D.C. here last week.
A survey of 125 industry executives that the ICI will release at the end of the month indicated that executives are "very highly concerned with staff retention," according to Charles O'Neill of Diversified Management Resources of Boston, a consulting firm dedicated to recruitment for the financial industry.
"Clearly the subject of workforce retention has come to the forefront, not just in our industry, but in almost any one out there," said O'Neill.
Workforce retention came up as an issue repeatedly, throughout the conference.
Finding and retaining human capital is one of the major obstacles to the new economy, according to Larry Downes, a consultant on the impact of digital technologies on business strategies with Diamond Technology Partners of Washington, D.C.
"[Retention] is a challenge and a necessity," said Bruce Moulton, vice president for infrastructure risk management of Fidelity Investments of Boston. "If you don't take Herculean steps to retain people, you're toast."
Terry Mattison, vice president for human resources at Janus Capital of Denver agreed.
"I think a company makes a huge mistake if you're not always thinking about retention...you're asking for trouble," he said.
Retention is a problem because of low supply and high demand, said Mattison. National unemployment was at 3.9 percent in April, representing a 30-year low, according to Sandy Morris, human resources business partner with American Century Investments of Kansas City, Missouri. The economy is expected to grow 2.4 percent a year on average through 2008 while the growth rate of the U.S. labor force will be 1.2 percent during the same period, according to Morris.
From 1996 to 2006, jobs will grow 19 percent while the workforce will grow only 11 percent, according to William MacKenzie, partner in human capital at Deloitte & Touche of New York. The deepest dip in talent will probably be in 2005, he said.
"The available labor supply simply isn't keeping pace with labor demand," said MacKenzie. "Companies everywhere are fighting for what has become the most scarce resource - talent."
Despite the general predictions about the labor supply, planning too far into the future may be a mistake.
"It's almost impossible for us to give you any meaningful predictions over an extended period of time," said Terry Mattison of Janus. "It's like technology; the workforce of the 21st century is changing too fast to predict."
O'Neill said the labor shortage is a major reason for the labor situation, but cites company's internal problems as a major factor as well.
"According to the [ICI] survey, you said that people accepted jobs with your company because of the company reputation, because they liked you and because they would have increased responsibilities," O'Neill said. "You said they leave due to compensation and promotion. So basically, when it comes to hiring, we deserve the credit, but when we lose people, it's beyond our control."
"[This] directly contradicts what studies have shown us," he said. Studies have shown that people, not compensation or promotion, is the number one reason for investment professionals leaving, according to O'Neill.
"Capricious business is at the heart of the work retention problem," he said.
Of course, there is no clear-cut solution to the workforce problem, which encompasses both recruitment and retention. Many of the speakers addressed the higher expectations of the recruit and the additional perks they offer, in addition to increased compensation. Janus, for instance, offers day care, dry cleaning, and domestic partner benefits and sells stamps and movie tickets to employees to make their lives easier, according to Mattison. American Century offers, among other things, pet insurance.
"Some companies are offering cars," said Morris. "Nice cars...Porsches, BMWs."
These perks are not the only important part of the recruitment process. The use of technology is becoming increasingly important. American Century uses Internet job searches and recruits heavily on the Internet, according to Morris. Janus plans to enhance its own website for this purpose.
"We've not been very creative," said Mattison. "We're in the midst of changing that. It's going to be a much more interactive site."
Colin Kelton, senior manager for individual operations at The Vanguard Group of Malvern, Pa., stressed the importance of incorporating overall company strategy into the recruitment process.
"Ensure the staffing process is linked closely to the business plan," said Kelton. "If one doesn't drive the other, you're in trouble. It is not enough anymore to sit in an office and decide your workforce plan and then sit back and see what happens. You need to let the people in your company know what you're doing."
Companies have to be aggressive in the new economy, especially with recruitment, the speakers agreed.
"Any company that thinks it can sit back and wait for talent is kidding itself," said Morris. What we are seeing now is just the beginning."