I recently met the chief business development officer for a highly successful consulting firm. He works for a firm with a backlog of work that would be envied by most. We shared a great deal with each other about our respective businesses including our value propositions, successes and opportunities. As often happens in these meetings, the more we became familiar with each other and with each other’s businesses, the more we thought of ideas on how to help each other and people we could introduce to each other.
Interestingly, when I asked him about the backlog of work, he mentioned that his firm had a difficult time hiring the right people. They had tried hiring professional consultants, but found they were unable to transition to the unique work of his firm. They also tried hiring individuals from their niche discipline, but very few had survived the rigorous interviewing process, which includes several behavioral interviews and at least one case study. He admitted that their inability to hire and retain more talent was keeping them from making progress on their backlog.
It may be worse than that. Even though the firm’s consulting service is in demand now, the backlog may go away for a variety of reasons – loss to a competitor who can deliver more quickly, change of spending plans by their clients, etc. In addition, the work load on the existing consulting team may lead to burnout and turnover. These costs and dangers may be hidden, though, since the firm is going full speed. Like with cost of turnover calculations, indirect costs and opportunity costs are difficult to measure, so often ignored.
An Ernst & Young survey of CEO’s revealed that 29% had lost out on revenue opportunities because of a lack of appropriate quality and quantity of talent. While this statistic is eye-opening, it is unlikely to be viewed as an outcry for major changes in talent strategy and management practices. Maybe it should.
Another recent study, this one by McKinsey, showed that companies that have a talent strategy aligned to their overall strategy experience a 20% higher return on equity (ROE). Imagine the long term benefit of growing ROE 20% each year.
If you don’t have an aligned talent strategy, you’re not alone. In addition, it is unlikely that lacking one will be viewed as a threat to your organization. However, designing and implementing an aligned talent strategy is an opportunity for most organizations. I believe those who take advantage of the opportunity will be the clear winners in the ongoing war for talent.