FILLING JOBS WISELYBy
What do building an airplane and finding finance and accounting talent have in common? In the case of Boeing’s 787 Dreamliner, more than you’d imagine. Boeing uses more than 1,000 suppliers to deliver this airplane’s specific parts—a number that’s so high because the company focused on finding the highest-quality parts instead of the lowest-cost supplier who tried to do everything. As a result, the overall product is of a far better quality than it would have been with a one-size-fits-all approach in which a single supplier provided all the parts.
For years, companies like Boeing have employed the principles of supply chain management to enable leaner operations and position themselves more competitively in the marketplace. Supply chain management is the process by which the flow of materials—including raw materials, work-in-progress inventory, and finished products—moves from the supplier to the consumer by means of an effective infrastructure that allows for the synchronizing of supply and demand.
Because it’s adaptable, effective supply chain management reduces inventory and enables companies to forecast peaks and lows in demand, thereby facilitating a lean, agile system of input and output. As a result, companies minimize the possibility of a surplus of inventory and decrease the resources necessary to purchase and store this inventory—all while maintaining an open supply line to the materials they need. In short, supply chain management is about being as effective and streamlined as possible while enhancing quality and reducing risk.
TALENT SUPPLY CHAIN MANAGEMENT
It’s also entirely possible to apply the principles of supply chain management to the supply and demand of finance and accounting talent. After all, for most companies, talent is the number one resource and the foundation of their competitive advantage. Using the experience of Boeing as an analogy, talent supply chain management (TSCM) involves using the right supplier for each specific and unique hiring need as well as establishing the right supply chain implementation, coordination, and, when necessary, remediation.
With an established infrastructure of talent pipelines and oversight of how talent needs to be deployed to meet business objectives, companies can optimize their talent strategies, maximize the potential of their human capital, and minimize waste. In other words, by using TSCM—also referred to as “holistic” or “integrated” talent management—companies can create strategies that encompass talent across all labor categories and that are aligned with business goals.
As Teresa Carroll, senior vice president and general manager at KellyOCG, points out in “Talent Supply Chain Management Readiness” (http://bit.ly/1PCP1DC), most companies that utilize TSCM still focus primarily on meeting their current talent needs. But that approach fails to harness the full power of TSCM, which allows companies to forecast their talent needs in one year, two years, or further into the future. By assessing what type of talent they will need in order to reach specific business goals and combining that information with data about workforce trends, organizations can pinpoint talent gaps before they occur and create strategies to deal with them. Tapping into this predictive ability is the key to success in today’s evolving workforce where skills shortages, work preferences, and increased globalization play interrelated roles.
THE EVOLVING WORKFORCE
In this competitive labor market, companies are struggling to come to terms with an evolving workforce. Prompted in large part by changing attitudes toward work because of the influx of Millennials and the impending retirement of thousands of Baby Boomers, as well as technological advancements and increased globalization, the configuration of available labor categories is changing.
Whereas employees used to remain with a single employer throughout their careers, today’s talent is much more mobile and independent. Recent research from KellyOCG shows that 65% of finance workers plan to look for a new position in the upcoming year. Moreover, 52% would give up higher pay for a greater work-life balance. These statistics indicate that, unlike previous generations, today’s workers are more likely to actively seek opportunities that are a better match for their career objectives and lifestyles. And as Rob Asghar explains in his January 2014 Forbes article, “What Millennials Want in the Workplace (And Why You Should Start Giving It to Them)” (http://onforb.es/1zWd2Uu), the youngest generation of workers doesn’t just want a good work-life balance; they want work-life integration because they realize how tightly work is woven into the fabric of their lives. While they’re highly aspirational, they want to make a positive impact on the world through their work—and they don’t necessarily want to do that in a conventional hierarchical workplace.
At the same time, many Baby Boomers reaching retirement age aren’t prepared to leave the workplace completely. Whether it’s because of financial pressures or simply because they don’t want to stop working, a significant portion of Baby Boomers are looking to remain active, but often with reduced hours or in a different capacity than full-time employee.
Last, but not least, technological advancements and increased globalization are making the world of work smaller. More and more companies rely on remote workers to complement their on-site teams, while, at the same time, workers are more inclined to relocate nationally and even internationally for the right job.
As a result of these changes, many companies now have a mix of the following labor categories at their disposal:
- Full-time employees—top talent to fill pivotal positions;
- Temporary staff—contingent labor to fill noncrucial roles during peak demand times, such as those surrounding mergers and acquisitions, tax reporting, injections of new capital, or seasonal business surges;
- Independent contractors/freelancers/e-lancers—outside contractors hired specifically for their specialty when in-house staff can’t provide the expertise;
- Service providers (Statement of Work)—companies to whom specific tasks or processes are outsourced in order to reduce overhead and risk and to promote agility; and
- Alumni, retirees, and interns—workers with knowledge of the company who can function as ambassadors and even be sourced as potential workers when necessary.
What’s crucial here, however, is that the majority of companies don’t have insight as to how and why the different labor categories are deployed within their organization. That’s when establishing TSCM can make all the difference in succeeding in a competitive business environment.
Recent recruitment trends point to the emergence of a new normal. There’s an increase in skills shortages, and talent is spread farther and farther around the globe. As a result, the labor landscape is more competitive, so companies need new strategies for locating, attracting, and retaining workers.
Predictions from the U.S. Bureau of Labor Statistics show that most finance and accounting occupations are set to grow by an average of 12.5% by 2022. In Europe and other regions, this trend is likely to be similar. Yet despite this predicted growth, companies already are struggling to fill open positions—a situation that could very well become dire in the upcoming years. There are a number of reasons for this trend:
An aging workforce. Over roughly the next 15 years in the United States alone, 10,000 workers a day will turn age 65, leaving a distinct gap at the senior level of many companies. Since this development also means these workers will take a significant portion of intellectual property with them, it’s only logical that employers are looking for ways to keep this knowledge in-house, either by finding ways to retain older employees or by establishing work arrangements that facilitate the transfer of knowledge within the company.
Inadequate entry-level skills. Despite a growing number of finance and accounting graduates, entry-level positions are proving difficult to fill. According to research by APQC (American Productivity & Quality Center) and IMA® (Institute of Management Accountants) that was published in the report “The Skills Gap in Entry-Level Management Accounting and Finance” as part of the Competency Crisis initiative (http://competencycrisis.org/apqc-research), hiring managers in general expect a higher level of aptitude and experience from entry-level candidates than this youngest generation of workers possesses.
Higher standards. After recovering from the recession, hiring managers also expect more from experienced talent, searching for candidates who can demonstrate consistent advancement and accomplishments as well as adaptability to new industry regulations. As a result, the pool of talent with more advanced qualifications becomes smaller. For example, the new Proposed Accounting Standards Update 2015-240, “Revenue from Contracts with Customers,” an update of Financial Accounting Standards Board (FASB) Accounting Standards Codification® Topic 606, could impact the need for talent who understand how to implement these new revenue recognition guidelines.
Lack of industry-specific experience. In many instances, companies are looking for talent with industry-specific experience, such as in the energy and banking fields. Nevertheless, many employees with this kind of experience left those industries during the recession and may not be interested in returning.
It’s important to understand that there’s no one-size-fits-all solution when it comes to talent supply chain management. Every company is unique and has unique needs that can vary over time along with changing objectives and external circumstances.
Also, every organization has one or more talent supply chain—methods by which the various departments source their talent—with human resources, procurement, and operations often acting independently of each other. For example, one department might work primarily with a recruitment agency, while another might have its own network of independent contractors. In general, these methods usually are based on historical processes that have proven to be effective but are implemented with little or no thought to the company’s overall business goals. Yet awareness of these objectives should tie together every business process a company undertakes.
TSCM gets operations, human resources, and procurement together to evaluate all the existing talent supply chains in a company. This includes gaining an overview of how the various labor categories are sourced and why. It also involves gaining insight into the effectiveness of existing talent strategies and how they support or impact overall business objectives. For example, a department might use independent contractors to meet its objective of quality and speed, but if the company’s primary business objective is cost savings, then this particular part of the strategy may need rethinking.
Examining existing talent pipelines and assessing how they fit into the big picture can indicate which ones should be kept and where new ones need to be established that better align with business goals. It’s important to understand the role of talent suppliers at this point because they can offer more targeted and effective support when they’re aware of a company’s primary drivers regarding talent.
One important aspect of TSCM that shouldn’t be overlooked is risk mitigation. Many companies rely heavily on contingent labor but have no insight as to who these workers are or how they perform. Especially when it comes to finance and accounting talent, the deployment of contingent and third-party workers carries significant risk if they fail to deliver the quality of work expected. While full-time employees can easily be held accountable by their direct supervisors, establishing accountability is much harder when it comes to contingent talent, especially workers without a direct report in the company.
There’s also the complication of safeguarding a company’s intellectual property that contingent workers may learn about or contribute to during the course of their engagement. Although some companies are adding provisions for managing and safeguarding intellectual property to their contracts, this is still an area that requires significant attention.
By gaining insight into talent pipelines and deployment, companies are better equipped to evaluate where risk occurs and establish processes to ensure quality and protect intellectual property. This involves clearly defining accountability for each role filled as well as delineating the lines of report. In addition, companies should create strategies and measures that govern instances when compliance or confidentiality is breached or quality is compromised so they can remedy the situation quickly.
THE ROLE OF WORKFORCE ANALYTICS
Gaining insight into how talent is sourced and deployed—and subsequently creating strategies that better support business objectives—is the all-important first step in TSCM. But the true potential of this method doesn’t stop here. When implemented properly, it offers predictive capacities that can greatly add to a company’s competitive edge. And the key to unlocking this potential lies with workforce analytics.
Tom Tisdale, vice president of Talent Supply Chain Analytics at KellyOCG Centers of Excellence, identifies in “Does Your Talent Supply Chain Measure Up?” (see http://bit.ly/1KY7ERz) that companies are prone to making four mistakes when managing their talent supply chains:
- Using their own historical data instead of global best practices as benchmarks.
- Ignoring the how and why of workforce planning.
- Using gut feel instead of objective data.
- Focusing more on managing individual talent suppliers instead of managing the entire talent supply chain.
Workforce analytics makes it possible for companies to gain insight into the overall dynamics of internal and external factors that govern the talent supply chain. When measuring objective internal data against industry data, companies can gain an understanding of where they can improve their talent strategies by looking at how their talent pipelines function, including how well their recruiters and contracted workers are performing in comparison to the rest of the industry.
At the same time, asking the how and why questions and, instead of relying on gut feel, using actionable data to find answers offer in-depth insights into the causes of and possible solutions to talent gaps and blockages. For instance, if a company is planning an expansion that calls for financial talent with advanced analysis skills but doesn’t have anybody with these skills in-house, it can evaluate what the best course of action is to attract the right professional. This could involve recruiting in a different geographical area or even retraining an existing employee to acquire the specialized knowledge.
As an integral part of TSCM, workforce analytics can truly transform how companies create and adapt their talent strategies. By providing insight as to how supply chains are functioning, how suppliers and the talent they deliver are performing, and how and why obstacles occur, it becomes easier to establish a holistic TSCM strategy that’s agile enough to meet current talent needs while predicting and preparing for future demands.
MAINTAINING TALENT PIPELINES
With an overview of a company’s needs and the best mix of talent to deploy in order to meet business objectives, organizations need to turn their attention to how best to locate, engage, and retain these workers.
In many cases, companies will look first and foremost for local talent to fill open positions. Especially in industries with distinct geographical hubs (such as Silicon Valley for software engineers or New York City for talent in money management) or situations where there’s the possibility of partnering with local educational institutions to establish curricula that cater to the industry’s needs, sourcing local talent can prove to be a fruitful and long-lasting endeavor. For example, local businesses can work with regional colleges to establish specific accounting and business management courses, contributing expertise and even offering work-study arrangements in the hopes graduates will seek employment with local firms.
Not surprisingly, however, when it comes to top talent who demonstrate exceptional skills and experience, the talent pool becomes smaller and more geographically dispersed. This makes it more difficult to locate good candidates, but technology can play an invaluable role here. A professional social networking site like LinkedIn makes it possible for employers to seek both active and passive candidates and approach them directly about opportunities. Likewise, online talent communities like Inside Zappos and LinkedIn professional interest groups can play an important part since they allow candidates and employers to interact in a less-pressure-filled setting than a job application process. By using technology to their advantage, employers can establish and maintain relationships with different categories of workers across a wide area, making it easier to approach them about work when the need arises.
Engaging employees is the next step, and here it’s key to know what workers want. Competitive salaries and benefits packages, a good work-life balance, and clear opportunities for career growth are essential to attracting full-time finance and accounting employees. They also want work environments that are flexible, collaborative, and innovative.
For example, an organization that has a core team of full-time employees but needs somebody with in-depth knowledge of industry-specific accounting might only be able to find that expertise with a retiree who doesn’t want to work full-time. So the company hires him as a consultant, enabling him to work fewer hours with a flexible schedule while still contributing his considerable knowledge to the company.
What all of this means is that employers need to be continuously aware of worker preferences and, where necessary and possible, adapt work arrangements to accommodate them. Interestingly, this can contribute significantly to a company’s bottom line because it maximizes worker satisfaction, promotes retention, and keeps the core team of full-time workers to a minimum, allowing the organization to remain agile and adaptable.
THE COMPETITIVE ADVANTAGES OF TSCM
As we’ve demonstrated, TSCM offers your organization a number of competitive advantages when implemented properly. Among them are:
Improved workforce planning. Companies are better equipped to make sound workforce planning decisions when they assess all available talent pools and labor categories and understand how deploying talent affects overall business goals. This is particularly advantageous in high-demand, low-supply fields such as math and technology where organizations can source from all the labor categories at their disposal and create work arrangements that meet the requirements of this skilled talent.
Oversight. Workforce data is the foundation of well-informed, objective workforce planning. Benchmarking internal workforce data against external, industry-standard data enables companies to gain an accurate overview of where and how their workers are deployed. This enables them to adapt their workforce strategies to better align with industry best practices.
Predicting talent needs. By combining workforce analytics with workforce planning, companies are capable of pinpointing skills and talent gaps as well as predicting future needs. This enables them to plan proactively and create strategies to make better use of all available labor categories.
Risk mitigation. Experts estimate that up to half of an organization’s workforce is contingent. But in many cases, employers lack an overview of who these contingent workers are or what roles they fill. This means that many companies aren’t effectively tracking the talent working on their behalf, which creates significant risk. Companies need oversight of all their talent and need to know how these people are performing and where a possible lack of compliance and/or performance could compromise operations. They should also know how to react in these adverse situations.
Access to a wider range of talent. To a large extent, today’s talent—especially top talent—calls the tune. Establishing work arrangements that are attractive to freelancers, project workers, independent contractors, interns, retirees, and alumni, as well as expanding a company’s network of suppliers to encompass a wider geography, helps create greater and enhanced talent pipelines.
Implementing talent supply chain management is an ongoing company-wide process that needs to be performed with careful attention to detail and full awareness of company and talent priorities. And with the oversight that comes from a holistic approach to talent management, companies can create more resilient talent strategies that support their business objectives while allowing for flexibility and adaptability when and where necessary.