The economic downturn that has affected nearly all of our industry has had most firms scrambling for work to keep their people busy. No doubt this has been a top priority for you, too. As a result, we’ve observed one element that has been notably absent from strategic plans developed over the past few years: people.
We all remember the times building up to the downturn when work was plentiful and the qualified staff to do the work was in short supply, how dramatically that situation reversed, and what your firm did to address the change. As the economy begins to recover—albeit more slowly and not as robustly as we would like—we can look ahead into the not-very-distant future and forecast that firms will again be experiencing a shortfall of people due to a confluence of short-term and long-term trends:
Short term. On the “demand” side, there is no doubt that certain markets are recovering and many firms are showing more positive financial metrics—revenue, profit, multipliers and utilization—all of which point to the need for more employees. Your firm is probably beginning to feel the pinch as you read this, and you may be wondering where you will find the people to meet your firm’s needs.
On the “supply” side, since work began to dry up in 2008, most firms have been forced to cut staff, sometimes over the course of several cuts, sometimes fairly deeply. The people remaining have been the “keepers,” the most valuable employees, the biggest contributors, the ones firms couldn’t afford to lose.
Considering this supply and demand equation, where will your firm get the qualified employees it needs, and needs very soon? Most likely you will covet the best people still working in our industry, but not currently working at your firm. Rest assured that your competitors are thinking these same thoughts…about your firm.
Long term. Boomers are getting older at the same rate as everyone else, but as they look toward their own retirement—in some cases imminently—their firms face the prospect of an enormous loss of experience and institutional knowledge. Firms will have to fill this gap either by more aggressively developing and promoting from within, or by making more strategic hires from their competitors, or both. Combined with the short term factors described above, this will serve to further aggravate our industry’s talent shortage.
We’re already hearing stories of firms that are experiencing more significant turnover than in recent years, meaning that people who haven’t moved for a while are being shown more attractive opportunities elsewhere. We believe this is just the beginning, and the situation is going to get more acute as time goes on.
Does your strategic plan address staffing issues? What strategies do you have to make your firm a desirable employer so that you can attract, develop, and retain the talent you need? How is your firm preparing for the talent scramble? Get ready, because it’s coming.
