December 6, 2018 by Luke Mason
For any company, stopping to build a talent strategy is like stopping to change a tire when you should be going 75 mph. So if you need a talent strategy, but can’t afford to pull over, what should you do?
In this Market Research for Talent series, we’ll walk through five simple ways to use labor market information to build (or bolster) your talent strategy:
When an NBA star negotiates one of those monster, $20-million-a-year contracts, there’s often plenty of head-shaking. How could anyone ever justify paying someone so much just because they’re good with a ball? Surely the franchise owners have lost their minds—or at least their business sense.
But not so fast. These owners often have plenty of business savvy (just consider Mark Cuban) and can more than defend those big contracts. In fact, the actual value that a high-caliber player brings is much higher than their salary. Think about it. Great players put butts in seats, drive advertising dollars, and win games, all of which increases the franchise’s value. It is estimated that LeBron James’ return to Cleveland, for example, nearly doubled the Cavaliers’ value.
We see similar behavior at businesses like Facebook and Google. Granted, web developers aren’t making $20 million a year, but they are, at least, able to afford housing in the Bay Area.
The Economist’s 2015 article, “How to Bag a Geek,” says the battle for tech talent is so intense because virtually every industry, from automakers to appliances, needs people who can write code.
So here’s the point: The most vital, value-creating element behind any successful enterprise is talent. Without talent, there is no product. But if talent is so key, why do many companies struggle to find it?
Let’s start by considering what makes NBA franchises and major tech companies so talent-rich. True, everyone wants to work for them, but these companies don’t simply wait for talent to drop out of the sky. They acquire (and keep) the best people by building strong talent strategies.
So where do companies even begin to look for talent?
Returning to our NBA analogy, imagine you’re an owner looking to sell seats and win games. You have three main talent acquisition options to explore:
The same principles apply in the world of business. To develop a good strategy, you need to understand the following talent pools:
Here, you might object. After all, in basketball you can actually evaluate talent by watching them while they work; not so in business. This is correct, but keep in mind that NBA teams increasingly use data and analytics to refine their decision-making process and optimize their strategies.
Huge talents like LeBron tend to trump analytics, but LeBron cannot win a championship by himself. He needs the right players around him, which is where data and analytics become so valuable.
We’ll call this market research for talent: information on the external workforce that helps us make strategic, tactical decisions.
So, let’s see how data can help us approach the three talent pools.
1. The currently employed. Our economy is composed of over 161 million jobs spread across 50 states and hundreds of dense metro areas— some of which are bigger than entire nations, economically speaking.
With a labor pool this vast, it’s likely there are people you can hire. But it might be hard to know:
Plus, many employers deal with additional factors, such as employment brand, geography, and cost of living, which heavily influence whom they can recruit. A proper evaluation of the currently employed workforce can help you
make smarter decisions about the people you recruit—and where to go to recruit them.
2. The underemployed or unemployed. Companies should also look at data on the underemployed or unemployed workforce. For the underemployed, you should consider two primary elements:
Jobs that require similar knowledge and skills as the jobs you need to fill, but are below your pay rates
People who are qualified for the jobs but are currently employed in unrelated industries.
For the unemployed, you should perform searches with the state workforce agency to see who is available. In both cases, you are locating the people who are likely motivated and would be excited about the opportunities you offer.
3. Students in the postsecondary system. Finally, companies need to understand the students poised to enter the workforce. Who are they, where are they, and what are they learning?
Luckily, ample data is available to answer these questions. U.S. federal and state governments collect huge amounts of labor market information about the following:
For instance, the National Center for Education Statistics provides the number of graduating students by program (e.g., nursing, business, computer programming). More and more companies are establishing relationships with postsecondary providers precisely so they can develop a better pipeline of students and direct their recruiting efforts.
So who is typically responsible for developing a talent strategy? Talent strategy is a broad mission that runs from recruiting to strategic workforce planning.
Recruiting is where the rubber meets the road. Here, little or no macro-level data is needed. That said, a strategic-minded recruiter might use data to discuss the realities of finding (or not finding) candidates.
Strategic workforce planning owns the big picture. It requires a lot of data (both internal and external) and depends on solid research methodology. As a result, these planners often have backgrounds in statistics, IO psychology, business, and economics.
Somewhere in between are jobs like strategic talent acquisition or recruiting market research. These positions support the recruiting function especially and depend more on external than internal market data.
Our five-part Market Research for Talent series will cover these steps in detail:
To get started in any one of these areas, please let us know. We are ready to help!