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Human Resources Q & A
April 3, 2006
By Tim Rutledge

The question:
I'm hearing and reading a lot about a talent shortage that's supposed to be just around the corner. Our organization isn't really feeling this. Is this actually going to happen? What can I do about it?
Tim's Response:

Play Defense: Implement a retention strategy
There certainly is a lot of buzz about a shortage of talent. And for good reason: the boomer generation is set to retire, and there aren't enough talented workers to replace them.
For as far back as anyone can remember, North America has been in a buyer's job market; that is, there have been more job seekers than jobs. This gives the advantage in the hiring process to the employer, since job postings routinely generate dozens of resumes, many of which are from well-qualified candidates. The hiring manager is accustomed to choice.
Very soon, however, the advantage will shift to employees as a seller's market sets in. There will be more jobs than job seekers.
No one active in organizational life today has ever experienced a broadly-based seller's market. As a result, many organizations are behaving as if the buyer's market were permanent. But it isn't; it's a market. And it's about to move.
Check your assumptions
Certain practices have grown up and flourished in organizations because they're sustained by the buyer's market. One of these is an employee replacement strategy - a strategy that's based on an assumption:
Employees who resign can always be replaced.

In a buyer's market this is largely true. In the coming seller's market a different assumption is called for:
I need to identify my key employees and take steps to dissuade them from leaving, because I may not be able to replace them with comparable talent.

The first assumption has been valid for so long that organizations have acquired the habit of treating employees like commodities - replaceable parts. Most recruiting functions spend most of their time searching for replacements for departed employees. This is part of a replacement strategy; finding someone who will do exactly the same work as the person who left.
I'm not suggesting that this is always the wrong thing to do. But I am saying that it's the wrong strategy to pursue. Instead organizations need to develop a retention strategy.
Winning teams play offence and defense
Recruiting talented people is like playing offence. In a buyer's job market, that's all you really need to do. When employees resign, you just replace them. In a seller's market, however, you need to play defense, too. When new employees start with your organization you need to begin the process of making sure they don't leave. You may not be able to replace them with comparable talent.
We're neither very experienced nor very skilled at defense. But we'll have to learn.
Redefining "fair"
The first step in establishing a retention strategy is to differentiate the workforce. Develop criteria that allow you to identify your key employees, distinguish them from other employees, and build figurative walls around them to make it less likely that they'll leave. When the headhunters call (and they will call your key employees) you want them to answer with an engaged mindset: "Thanks for the call, but I really don't think there's anything all that much better out there."
What you don't want is a disengaged mindset: "Thank heaven you called. Get me out of here."
Rate performances honestly
Differentiating the workforce means assigning a new meaning to the word "fair". In a seller's market you no longer have the luxury of treating everybody pretty much the same regardless of performance. Differences in performance must be reflected in performance ratings. If your key employees believe that superior performance and average performance will be rewarded pretty much equally, they'll disengage and leave. The average performers will stay, and your organization's overall performance will reflect this.
The only fair way to treat top performers is to treat them differently from other performers. Treating them the same is unfair.
I'm not suggesting that you push average performers out the door. What I am suggesting is that if they resign you won't go out of your way to retain them, because they don't fit in a retention strategy. Your retention efforts are concentrated on your key employees, because they're the ones you don't want to face the future without.
Remember: you can't keep everybody, so spend your retention capital on your top performers.
How do I do that?
There are several elements to a retention strategy, and the most important by far is to have skilled managers and supervisors. Your key employees want their bosses to manage their performances, and if this doesn't happen for them, they'll start to disengage. So start your retention effort by selecting and training engaged managers.

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Tim Rutledge, Ph.D., is Partner, Retention Services and Director of the Centre for Employee Retention and Engagement Services with IQ PARTNERS Inc., an executive search and human resources consulting firm. You can contact Tim at rutledge@iqpartners.com.

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