The market for talent has turned this year in North Texas. Every day there are more new jobs and fewer quality candidates. Some company CEOs have already been affected by the growing war for talent and many more will be impacted by this change in coming months.
CEOs realize that one of the keys to their success in today’s market is building, developing and keeping great teams. This should be an easy task with unemployment at 8.6 percent and millions of unemployed workers. Yet in many ways the talent market this year is more difficult and complex than ever. There are fewer candidates available than ever and more candidates changing jobs. For the first time in years, candidates are seeing multiple offers.
A CEO’s first problem may be keeping their teams intact. The latest Gallup Poll shows that 59 percent of employed workers are unengaged with their current employers and 14 percent are actively complaining about their jobs. This means that existing teams are subject to unexpected losses to better opportunities. Cost cutting often impacted benefits and compensation just as the North Texas labor market was beginning to tighten. Most companies have fewer employees doing the same work with longer hours for less compensation.
The Texas Market
Texas has been a center for job growth over the last ten years with the strongest markets in North Texas and Houston. October unemployment was nine percent for U.S., 8.4 percent for Texas and eight percent for North Texas. Texas has become a low cost place to start and build businesses because the cost of living is lower than elsewhere and there has been a talented and educated workforce. Local and state government played a part in this growth, minimizing business regulation and taxes. The housing bubble was not as significant in North Texas, leaving financial institutions today in better shape to support local growth.
Key industries native to Texas are in an up cycle, adding jobs. These include oil and gas, distribution, manufacturing, retail, hospitality and professional services. These are also labor-intensive businesses, making Texas a very attractive place for unemployed workers.
Texas is also impacted by national demographics. Experienced and skilled employees from the baby boomer generation are retiring and adding to the need for new employees. This especially impacts positions requiring technical skills and engineers and experienced managers.
New Competition from Corporate Immigrants
Low taxes, distribution infrastructure, business friendly state and local government have made Texas an attractive location for companies from California, the Midwest, Florida, Michigan and Nevada. They are moving to Texas and often leave behind key parts of their management team, becoming a source of new jobs and new competition for local talent.
The Candidate Fear Factor
While Gallup’s employee satisfaction index has dropped from 89 percent to 87 percent over the last two years, many employees are unwilling to move without significant increase in opportunity and compensation.
Compensation Chaos and Opportunity
These changes to the job market have caught many companies off guard. They were used to hiring talent with lower compensation, living in a seller’s market. Now, good talent commands higher compensation which often includes significant upsides and even signing bonuses. Higher salaries for new hires impact morale of existing employees. All of this while benefit costs are changing and increasing.
The Flight to Quality
North Texas is an increasingly competitive labor market and this means the best talent will be moving and soon to quality companies. The key for CEOs is to make sure their company becomes known as one of those destination companies for great employees at all levels.
A Six-Step Action Plan for CEOs
1. Start with Employee Attitude Surveys and Action Plan
Small and middle market companies need to make more use of employee attitude surveys. They identify strengths and weaknesses and key supervisors needing training and improvement. Most surveys focus on trust and engagement. Do the employees trust management to take care of them and are they competent to run the business? A CEO must however be committed to responding to issues identified during the surveys.
2. Do Compensation and Benefits Surveys and Adjustment
As the economy continues to strengthen, compensation consultants and benefit experts become key resources to any action plan. Employees want to know they are being kept at market rates. This is an opportunity to increase the variable and performance based portion of compensation. It is also a good time to look at HSAs (Health Savings Accounts) and Non-Subscriber programs to become more efficient with each benefit dollar. Smart companies communicate the often hidden costs of benefits, including social security.
3. Implement Succession Planning
Succession Planning prepares you for sudden losses in key positions. More importantly, it defines a strategic talent development program that increases employee morale and loyalty. This is especially important with the younger generations, the Millennials and Y Generation.
4. Implement Process Improvement
Building cross-functional teams to look at processes to simplify and speed up processes, improves trust and profitability as Stephen M. R. Covey notes in his book, The Speed of Trust. The added benefits include a greater sense of teamwork and fewer hours for the streamlined organization.
5. Look to Boomers
The Baby Boomer generation is reaching retirement age and smart CEOs will find ways to bring them into organizations. Some need or want to continue working. They can be loyal employees without the requirement for advancement of younger workers.
6. Strengthen Corporate Culture to Increase Employee Engagement
The low level of employees who feel engaged, committed and passionate about their company and their roles is a risk and opportunity for CEOs. Defining and driving corporate culture is a great way to increase engagement, improve loyalty, sales and profits. This can only be done by the CEO and now is the time to increase culture, communication and excitement.
Smart CEOs who plan and implement programs today to increase employee engagement and are competitive in compensation and benefits will be the winners in the growing war for talent.
John Casey is founder of Dallas based John Casey & Associates, a specialty search firm matching candidates with clients’ cultures and provides human resource consultants and coaches. John was CEO and CFO for 19 years and earned his MBA from Harvard Business School. www.jcaseyassociates.com